ZERODHA BROKING LTD.

SUPERVISED BY:
NIRENDU KONAR
PRESENTED BY:
21BSP1173_ABHISHEK KUMAR
21BSP3491_AMIT KUMAR JHA

21BSP3588_SANMITRA BHATTACHARYA

21BSP1220_PARTH SABOO

21BSP1241 _RIYA KESHRI

21BSP1278_VIVEK BHARDWAJ

21BSP1258_SHRISTY KESHRI

 INTODUCTION

Zerodha Broking Limited is an Indian financial services company offering retail

and institutional brokerage, currencies and commodities trading, mutual funds, and
bonds. Zerodha was founded on 15 August 2010 by brothers Nithin Kamath and
Nikhil Kamath. The company is headquartered in Bangalore. Zerodha works on an
online discount brokerage model wherein only online trading services are offered to
customers. It heavily uses technology to serve its customers and has very few
branches & offices. Technology helps them to scale and reduce the operational cost
which in-tern helps them to maintain huge profits despite offering low-cost trading.
 Zerodha is the largest retail stockbroker in India, contributing more than 15% of daily
retail volumes across all Indian stock exchanges. Zerodha is made of two words;
Zero and Rodha. Rodha is a Sanskrit word it means barrier (blockade, obstacle,
hurdle or difficulty).

The word Zerodha shows the company's commitment to offering the cheapest
brokerage to Indian investors. In fiscal year 2021, the Indian financial services
company Zerodha, had nearly 3.4 million active customers.

 Marketing strategies
The critical factors involved in the success of Zerodha are mentioned below:

1. Standard Proposition - The very first marketing strategy was to be crystal

clear about everything. Most users don't trust brokerage service because it
involves money. So they considered that thing by being clear about
everything. When the company put footsteps in the market, many
stockbrokers offered irrational prices and non-transparent pricing to clients.
Then Zerodha came up standard proposition with zero commitments. This
worked out well for the company. If you pay a look at the FAQ section of the
company, you will see the direct response and clear answers admired by
most of their users. The company doesn't believe in confusing its clients.

2. Concentrate on New Account Opening - The second reason for their vast
success was putting their minds to bring more customers. They didn't have
any relationship manager or dealer. They started focusing on getting a new
client. Today the company has more than 2.3 million clients.

3. Referral Program and Business Affiliates - The strongest pillar of Zerodha

marketing is the referral and affiliate programs. Rather than investing in an
advertisement, they came up with the idea of giving commission to their
referrals. Many bloggers and YouTubers promote the services through affiliate
programs on their platform, and in return, they earn commission on every
purchase. The referral program helped Zerodha to discover thousand of leads
that too without zero upfront cost.

4. Innovation and Technology - The company understands the importance of

change and evolvement for growth. They knew how important it is to take
advantage of technology and offer something innovative to their client base—
that's why they keep launching applications like Kite, Pi, and much more. The
platform was fundamental in the earlier days with minimal features, but then
they added advanced features like API integrations, third-party applications,
and much more. They keep adding new features so that their consumers
won't lose interest.
 5. Online Engagement and Digital Marketing - Every business knows how
important it is to gain online presence and engagement. This is why they kept
their users engaging on the platform by offering to educate about blogs and
much more. Varsity offers content that educates users, and it brings a chunk
load of traffic. The importance of digital marketing is that it provides a
subscriber base and improves the authority of the domain in the eyes of
Google. Also, clients find service genuine when they gain something in return,
such as learning about the stock market or trading.

 NITHIN KAMATH ON HOW ZERODHA GREW

WITHOUT ADVERTISING OR FUND-RAISING:

 In school, I was a below average student academically. I discovered trading and the
markets by accident at the age of 17. I’ve been through the boom and bust journey
every good trader experiences. In the early 2000s, I borrowed money and blew up
my trading account and then worked in a call center for 4 years trying to make up for
the debt, while also trading on the side. I met Seema while working there. I quit my
job when I met the first person who asked me to manage their portfolio.
I became a franchisee of Reliance Money (brokerage firm) to start a formal advisory
business. Around this time, Nik, who is a much better trader than I am, joined me.
With him trading, we figured I could set aside some time building a brokerage firm
that we felt we needed as traders. As we were figuring this out, we came across
NOW, a free trading platform that NSE was offering to brokers. Finally, in 2010, we
hustled and pulled together just enough money to start Zerodha. Venu, who had
been our friend for a long time, and was working with us since our Reliance Money
times, handled operations. Hanan, who had been trading with us, started taking care
of support. We started out as a small team, had no pedigree education, no
background in tech, no experience, but had a passion for capital markets and the
intent to help other traders like us.
With Zerodha, we were the first to introduce a flat fee model (a maximum of ₹20 per
trade), helping traders save upto ~90% of brokerage charges compared to the
exorbitant percentage fees which was common at the time. In addition, we offered
this single pricing plan to all our clients unlike the then incumbent players who had
opaque offerings for different groups of clients. While we started from zero, this
transparency slowly got us attention on online communities and via word of mouth.
However, our fintech journey really started when K joined us in 2013 and we started
our tech team. We should ideally be called FinKech. Our still tiny tech team
continues to build products which are unmatched, not just in the Indian brokerage
industry, but internationally as well.
Nik continued to do what he does best, trade and take care of risk management. He
has now set up a very successful hedge fund called True Beacon.
Karthik joined us in 2014 and wrote Varsity single handedly, which is now among the
top capital market education initiatives in the world.
Prakash my first customer, Austin who helped Zerodha get started, Om and Bharat
our CAs (who really are CFOs), and my parents who have always supported my life
decisions, have been key in this journey.
I have a team of young boys and girls, the Z team, with whom I spend a lot of time at
work. We discuss, debate, and ideate everything business and fun. And behind the
scenes, our ~1100 member strong team runs various parts of Zerodha.
Today, Zerodha is the largest retail brokerage firm in India by all measures, and one
of the largest retail trading platforms in the world by activity. We have achieved this
without ever advertising, or raising any external capital or debt. We focused on
innovative products and services, and it took us a slow and steady 10 years along
with a lot of luck.
It isn’t about the big beating the small anymore, but the fast beating the slow, as we
have proven. Having a nimble organisational structure focused on creating value for
customers without chasing revenue, growth, or valuations, is our big moat, our secret
sauce. This sounds counterintuitive and goes against what is taught to entrepreneurs
today who are constantly pushed to continuously raise capital, and to measure
success and growth in terms of notional valuation and meaningless growth metrics,
instead of creating businesses that are profitable and sustainable.
After the success of Zerodha, and more recently, the media bestowing on us
glamourised labels like “unicorn” and “billionaires”, I felt I should share my personal
perspective on business and life, and what success really means to me, beyond the
labels. If nothing else, I want to tell people that it is possible to be successful at
business by questioning the true cost of revenue, valuations, and growth, instead of
continuously chasing them. And that success is relative, impermanent, and a lot of
luck too.

 PROBLEMS IN ZERODHA:

As we already discussed, the Zerodha was growing in fast and furious mode, day by
day trading volume was going up, and the platform was making a record of the
highest number of trades and so on. However, with this pace, problems also started
creeping in.
I have been a trader most of my life and absolutely understand our clients being
upset when trades are affected by technical issues. But now, being on the other side
as a broker and a technology company, I know that there is no way to run a business
with zero downtime. Every business, exchanges to stockbrokers, banks to e-
commerce sites, everybody experiences technical issues and downtimes. Tech
giants like Google, Stripe, Cloudflare, Facebook, etc. have had multiple global
outages in the last three months. Two prominent Indian banks have had constant
downtimes in the last two weeks.
 At the market opening, especially between 9.14 to 9.20 we have an exceptional
amount of activity in terms of logins and order placement. The connectivity between
our trading platforms and the exchanges, the bridge, is managed by Thomson
Reuters’ Omnesys, an exchange approved OMS (Order Management System)
vendor. Thomson Reuters is the largest OMS vendors in India powering several
dozen brokers. Almost all brokerages use OMS vendor to power their platforms,
albeit at a much smaller scale – both in terms of orders and number of users.

Today at the market open, the OMS developed connectivity issues, which resulted in
orders piling up. We witnessed several lakh orders piled up waiting to be pushed to
the exchanges. This caused a snowball effect of customers placing more orders to
make up for the hanging orders, increasing the pile up exponentially. The Thomson
Reuters team tried to bring the pending order queue down, but it wouldn’t happen.
Since the OMS is their proprietary system that is licensed out to stock brokers, our
technology team does not have any control over the internals of the system.
This is not the first time such issues have happened, and over the years, we’ve built
more and more layers of technology in-house to reduce the dependency on the OMS
and other similar systems. In fact, as of today, over 90% of the activity load half a
million of our concurrent clients produce every day is handled by our systems
efficiently, but the rest of the 10% that still goes to the OMS sometimes acts as the
weakest link. Thomson Reuters’ OMS, despite being one of the best in the industry,
has struggled to cope with our growth.

Example -In 2017, a client called Prasad Bhavana said he could have realized
365.70 Lakh by selling Tata motors futures, but due to the shortage of margin
Zerodha has squared off his position earlier and so he could realize only 284.82
lakh, resulting in a huge loss.As per the client, the Zerodha did not inform him
regarding the shortage of margin else he would have added margin and would not
have squared off the position. However, the matter went into arbitration, and the
judge in 2:1 capacity, has ordered in favor of the client and found Zerodha guilty and
asking it to pay Rs.37 lakh as compensation.
  Why Zerodha is distinct from other?

 The reason for the same is that most users don't make impulse purchases
when it comes to stock marketing. Trading involves investment and the risk of
losing money, so the users try to be very cautious and attentive. Zerodha
analyzed their customer mentality, and they knew if stock marketing would
become an impulse, it won't benefit them. So they started shifting their focus
to word to mouth marketing. Most of the users on Zerodha are recommended
by another. Such users won't lose interest in trading because they really want
to make the best out of it.
 The reason why Zerodha is distinct from its users is their approach to educate
their users first. Zerodha does not provide stock recommendations but unlike
a full-fledged brokerage platform.
 Rivals of Zerodha:
If you are looking for close competitors of zerodha, that means you are looking for a
broker who offers kind of same services as them. Here are the broker who i think are
the most capable competitors of zerodha.

1. Upstox- Almost same services with almost same brokerage structure

.
2. Finvasia- Same services but pricing is different as they are offering zero
brokerage trading.

3. Fyers- Services and pricing structure as same as zerodha. Provides free API.

4. Angel Broking- Same services but margin offered is way higher.

5. 5 Paisa- Better services and

brokerage is lowers (Rs.10)