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PRESENTATION ON INVESTMENT

ADVISORY SERVICES

By
ULTIMATE INVESTMENTS
Nurturing Wealth

SHANTHA KUMAR T.S


INVESTMENT AVENUE

 FINANCIAL ASSETS  NON-FINANCIAL ASSETS

 DEBT  Real Estate


(Bank Deposits,Postoffice
Schemes, Debentures,
 Gold
Bonds, Debt MF’s)

 EQUITY
Shares, Equity MF’s)
MARKET

DEBT EQUITY
Difference between Debt & Equity,Contd..

DEBT EQUITY
Return is subject to tax. Dividend is completely free from tax.

No capital gain tax is applicable. It is applicable (short & long).

No ownership on the company. Ownership is available.

Governing body is RBI. Governing body is SEBI.

No capital growth possible. Capital growth is possible.


Difference between Debt & Equity

DEBT EQUITY
Tenure of investment is always Not applicable.
fixed.

Quantum of returns is always fixed. Not applicable.

Coupon rate & YTM are always Not applicable.


variables.

Frequency of return is possible. Not applicable.


Nomenclature for the return is The return in equity is called
called Interest. Dividend.
Equity Investments

Stock market Mutual Fund


STOCK MARKET
TOTAL 23 STOCKS EXCHANGES
IN INDIA
North Zone East Zone West Zone South Zone
Kanpur Bhubaneswar Ahmedabad Bangalore
Ludhiana Calcutta Baroda Chennai
New Delhi Gauhati Indore Cochin
Jaipur Patna Mumbai Coimbatore
Pune Hyderabad
Rajkot Mangalore

Interconnected

National Stock Exch

OTC Exchange of India


Bombay Stock Exchange History

1830's Business on corporate stocks and shares


In Bank and Cotton presses started in Bombay.
1860-1865 Cotton price bubble as a result of the
American Civil War
1870 - 90's Sharp increase in share prices of jute
industries followed by a boom in tea stocks and coal
1900s
1978-79 Base year of Sensex, defined to be 100.
1986 Sensex first compiled using a market
Capitalization -Weighted methodology for 30
component stocks representing well-established
companies across key sectors.
The voting machine & the weighing scales
(short term volatility & long term returns)
N O . YEA R EN D SE N SE X R O L L IN G 1 R O L L IN G 5 R O L L IN G 1 0 R O L L IN G 1 5
YR G R O W T H YR G R O W T H YR G R O W T H YR G R O W T H

0 M ar-7 9 100
1 M ar-8 0 129 29
2 M ar-8 1 173 35
3 M ar-8 2 218 26
4 M ar-8 3 212 -3
5 M ar-8 4 245 16 20
6 M ar-8 5 354 44 22
7 M ar-8 6 574 62 27
8 M ar-8 7 510 -1 1 19
9 M ar-8 8 398 -2 2 13
10 M ar-8 9 714 79 24 22
11 M ar-9 0 781 9 17 20
12 M ar-9 1 1168 50 15 21
13 M ar-9 2 4285 267 53 35
14 M ar-9 3 2281 -4 7 42 27
15 M ar-9 4 3779 66 40 31 27
16 M ar-9 5 3261 -1 4 33 25 24
17 M ar-9 6 3367 3 24 19 22
18 M ar-9 7 3361 0 -5 21 20
19 M ar-9 8 3893 16 11 26 21
20 M ar-9 9 3740 -4 0 18 20
21 M ar-0 0 5001 34 9 20 19
22 M ar-0 1 3604 -2 8 1 12 13
23 M ar-0 2 3469 -4 1 -2 14
24 M ar-0 3 3049 -1 2 -5 3 15
25 M ar-0 4 5591 83 8 4 15
P ro ba bility o f L o s s 1 0 /2 5 3 /2 1 1 /1 6 0 /1 1
STOCK MARKET

Primary Market
Secondary Market
(IPO's)
PRIMARY MARKET
INITIAL PUBLIC OFFERING (IPO's)
Company's
Lead manager
Syndicate member
Broker
Registrar
Lead Manager
The commercial or investment bank which
has primary responsibility for organizing
a given credit or bond issuance. This bank
will find other lending organizations or
underwriters to create the syndicate,
negotiate terms with the issuer, and
assess market conditions. also called
syndicate manager, managing
underwriter or lead underwriter.
Syndicate Member

An investment bank,
brokerage, or bank which
participates in a
syndicate.
BROKER
An individual or firm
which acts as an
intermediary between a
buyer and seller, usually
charging a commission.
For securities and most
other products, a license
is required.
Registrar
The organization, usually a
bank or a trust company,
that maintains a registry of
the share owners and
number of shares held for a
Mutual fund, bond or stock,
and makes sure that more
shares are not issued than
are authorized.
What are the eligibility for on unlisted
company for making a public issue?
An unlisted company has to satisfy the following criteria to be
eligible to make a public issue. Networth of the co. should not
be less than Rs.1 crore in last 3 out of last 5 years with
minimum networth to be met during immediately preceding 2
years and track record of distributable profits for at least 3
Year out of immediately preceding 5 years and the issue size
(i.e. offer through offer document + firm allotment +
promoters’ contribution through the offer document) shall not
exceed five (5) times its pre-issue networth. In case an
unlisted company does not satisfy any of the above criterion, it
can come out with a public issue only through the Book-
Building process. In the Book Building process the company
has to compulsorily allot at least sixty percent (60%) of the
issue size to the Qualified Institutional Buyers (QIBs), failing
which the full subscription monies shall be refunded.
Within how many days an investor should
receive the refund order/allotment advise?

Dispatch of refund orders / allotment advice


is to be within 2 working days of finalization
of the basis of allotment. Companies are
required to finalize the basis of allotment
within 30 days from the closure of the issue
in case of a fixed price issue and within 15
days from the closure of the issue in case of
a book building issue or else they are liable
to pay interest @ 15% p.a.
What is a Green-shoe Option?
Green Shoe option means an option of allocating shares
in excess of the shares included in the public issue and
operating a post-listing price stabilizing mechanism for
a period not exceeding 30 days in accordance with the
provisions of Chapter VIIIA of DIP Guidelines, which is
granted to a company to be exercised through a
Stabilizing Agent. This is an arrangement wherein the
issue would be over allotted to the extent of a
maximum of 15% of the issue size. From an investor's
perspective, an issue with green shoe option provides
more probability of getting shares and also that post
listing price may show relatively more stability as
compared to market.
What is a Rights Issue?
Rights Issue (RI) is when a listed company
which proposes to issue fresh securities to
its existing shareholders as on a record
date. The rights are normally offered in a
particular ratio to the number of securities
held prior to the issue. This route is best
suited for companies who would like to
raise capital without diluting stake of its
existing shareholders unless they do not
intend to subscribe to their entitlements
MUTUAL FUND
What is a Mutual Fund?

Mutual Fund is a mechanism of pooling


resources (Money) from investors & invest in
securities (stocks & bonds) which will be
managed by professional people called the
Fund Managers also known as portfolio
managers. The investment proceeds (loss or
profits) are then passed on to the respective
individual.
MUTUAL FUND BIRTH PLACE

UNITED KINGDOM
First mutual fund in India

Unit Trust of India

Year 1963

First Schemes US 64
First Private mutual fund in India

Kothari Pioneer

Year 1994
SPONSOR
APPOINTS
 Trustees
 Asset management company
 Custodians
 Registrars
 Banks
 Distributors
How is a mutual fund set up?

Mutual fund is set up in the form of a trust,


 Which has sponsor, trustees, asset management company
(AMC) and custodian.
 The trust is established by a sponsor or more than one
sponsor who is like promoter of a company.
 The trustees of the mutual fund hold its property for the
benefit of the unit holders.
 Asset Management Company (AMC) approved by SEBI
manages the funds by making investments in various types
of securities.
 Custodian, who is registered with SEBI, holds the securities
of various schemes of the fund in its custody.
 The trustees are vested with the general power of
superintendence and direction over AMC. They monitor the
performance and compliance of SEBI Regulations by the
mutual fund.
Mutual Fund Operation
Flow Chart
Organization of a Mutual Fund
Advantages of Mutual Funds
 Professional Management
 Diversification
 Return Potential
 Liquidity
 Transparency
 Flexibility
 Choice of schemes
 Tax benefits
 Well regulated
Disadvantages of Mutual Funds
 Choice of Stocks
 Tailor made Portfolio
 Management Fees
 No Guaranteed Returns
 Management risk
 Discretion of fund manager
 Tax on profit made
Investment Parameters
PARAMETERS OF PROFILE OF INVESTOR
INVESTMENT

Safety Age
Liquidity (tenure) Present income
Flexibility Present expenses
Tax implication Future capital expenditure
Return Future capital aspiration
Tax bracket
Existing portfolio
MUTUAL FUND

OPEN ENDED CLOSE ENDED


FUND FUND
MUTUAL FUND
.

OPEN ENDED CLOSE ENDED


Open for all the time Open for Fixed Period

No Duration Duration 3,5and 7 years

Repurchased all the time Repurchase fixed time.


As Repurchased so not listed Stock listed at stock ex.
ex.
Switchover Allowed Switchover Allowed
Types of Schemes
 By Structure
 Open Ended Schemes
 Close Ended Schemes
 Interval Schemes
 By Investment Objectives
 Growth Schemes
 Income Schemes
 Balance Schemes
 Money Market Schemes
 Other Schemes
 Tax Saving Schemes
 Special Schemes
 Index Schemes
 Sector Specific Schemes
Frequently Used Terms
Net Asset Value (NAV)
Net Asset Value is the market value of the assets of the
scheme minus its liabilities. The per unit NAV is the net
asset value of the scheme divided by the number of
units outstanding on the Valuation Date.

Sale Price
Is the price you pay when you invest in a scheme. Also
called Offer Price. It may include a sales load.

Repurchase Price
Is the price at which a close-ended scheme repurchases
its units and it may include a back-end load. This is also
called Bid Price.
Risk & Safety of a Mutual Fund

Sectoral
Risk Funds

Equity Fund
Medium Risk Balanced Fund
Index Fund

Income Fund
Low Risk Gilt Fund
Floating Fund
Short-Term Fund
Liquid Fund
What is Sector fund ?
They are the riskiest among equity funds, as they invest only in
specific sectors or industries. The performance of sector funds is
married to the fortunes of the specific sector or industry. This can
work both ways for sector funds. One way to maximize your returns
from sector funds is to get into the sector when it is expected to
zoom and get out before it falls. However, it is easier said than done.
Since you have managed a nodding acquaintance with various equity
funds, how do you choose the right one for you? First, identify the
category of equity funds you want to invest in. Next, evaluate the
performance record of the fund. Find out how it has performed over
the years compared to its competitors. Also, check out the reputation,
transparency in operations, etc.Make sure your fund has a diversified
portfolio. Avoid funds that have exposure to a few sectors or stocks,
as the performance of the fund will be tied to the performance of only
these stocks and not to the entire market performance. Also make
sure that the fund has a diversified investor base. A fund with a few
large investors will be forced to take orders from them, which may
not be in your interest.
What is Equity Scheme ?
Equity schemes are those that invest
predominantly in equity shares of companies.
Although an equity scheme seeks to provide
returns by way of capital appreciation, these
schemes are exposed to higher risks and hence
the returns may fluctuate. They invest only in
stocks, and hence, are the riskiest among
mutual fund schemes. However, these funds
offer the possibility of superior returns since
equities have historically outperformed all other
asset classes. At present, there are four types of
equity funds available in the market.
What is Balanced Schemes ?
Balanced schemes invest both in
equity shares and in income-bearing
instruments in such a proportion that
the portfolio is balanced. They aim to
reduce the risks of investing in stocks
by having a stake in the debt
markets. Thus debt and balanced
schemes offer a reasonable return
with a moderate risk exposure.
What is index fund ?
These funds track a key stock market index,
like the Bombay Stock Exchange Sensex or
the National Stock Exchange S & P CNX
Nifty. They invest only in stocks that form
the market index, as per the individual
stock weight ages. The idea is to replicate
the performance of the benchmarked index
to near accuracy. Index funds are
considered a passive investment vehicle, as
the performance of the fund will be almost
the same as the index concerned, except
for few minor points.
What is Gilt fund ?
Funds that invest only in government securities
and treasury bills. Such funds generally provide
marginally higher returns than a money market
fund, and are a good option for investors who
seek protection of principal. Gilt funds can also
be volatile due to increase or decrease in
interest rates. Gilt schemes invest in
government bonds, money market securities or
some combination of these. They have medium
to long-term maturities, typically of over one
year and have moderate returns. Since the
issuer is the central or state Governments, these
funds have reduced risk of default and hence
offer better protection of principal.
What is MIPs ?
MONTHLY INCOME PLANS are basically
debt schemes, which make marginal
investments in the range of 10-25
percent in equity to boost the scheme's
returns. MIP schemes are ideal for
investors who seek a slightly higher
return than pure long-term debt scheme
at a marginally higher risk. Declining
returns from income funds and
improved equity market performance
are two main reasons, which have given
an opportunity to launch these funds.
What is Debt Scheme ?
Debt schemes invest mainly in income-bearing
instruments like bonds, debentures, government
securities, commercial paper, etc. These instruments
are much less volatile than equity schemes. Their
volatility depends essentially on the health of the
economy e.g., rupee depreciation, fiscal deficit, and
inflationary pressure. Performance of such schemes
also depends on bond ratings. These schemes
provide returns generally between 7 to 12% per
annum. These funds invest in fixed-income
securities like bonds, Government of India
securities, debentures, commercial paper, call
money, etc. There are three types of debt funds.
What is Money Market Fund
Money Market Mutual Funds (MMMFs) : Such
funds have an objective of taking advantage of
the volatility in interest rates in the money
market instruments. The funds are invested in
certificate of deposits (CDs), interbank call
money market, commercial papers, T-bills and
short-term securities with a maturity horizon of
less than one year. Investors can participate
indirectly in the money market through
MMMFs. E.g. Money Market Fund. Its objective
is to preserve principal while yielding a
moderate return. MMMF's are favoured by
investors seeking low-risk investment avenues
that offer instant liquidity.
WHAT IS ELSS

EQUITY LINKED SAVINGS SAVINGS SCHEME


where investor is eligible to get tax benefits
U/s 80 C of Income Tax Act, 1961 up to Rs.
1 Lakh in a financial year. It has a lock in
period of 3 years from the date of
investment which is minimum among any
tax saving instrument available in India &
with the highest returns on investments. The
fund manager selects value stocks to invest
in ELSS which gives good returns in 3 years
OPTIONS UNDER SECTION 80C
Investment
Non-investment oriented
The Investment options would comprise of the following
 Employee Provident Fund (EPF) and General Provident Fund(GPF)
 Public Provident Fund (PPF)
 National saving certificates (NSC)
 Bank deposits
 Life insurance premiums
 Equity linked saving schemes (ELSS)
 Pension policy premiums
 Pension schemes of mutual funds
 Senior citizens’ savings schemes (SCSS)
The non-investment options would include:
 Home loan principal payout
 Children’s school and college fees
WHAT IS SIP
SYSTAMATIC INVESTMENT PLAN

1. FIXED DATE
2. FIXED AMOUNT
3. FIXED TENOUR
Date Amount NAV Units
10-Jan 10000 20 500.00
10-Feb 10000 18 555.56
10-Mar 10000 14 714.29
10-Apr 10000 19 526.32
10-May 10000 22 454.55
10-Jun 10000 20 500.00

Total 60000.00 3250.70


Present NAV 20.00
Value of investment 65014.05
Gain 5014.05
FINANCIAL PLANNING

“If you burn your money today you will


have a burning problem tomorrow”

A PRESENTATION ON SAVING,
INVESTING AND INVESTMENT OPTIONS
PROCESS OF FINANCIAL
PLANNING

 Set a goal
 Prepare an investment plan
 Implement the financial plan
 Evaluate on a regular basis
Early start & regular Investments

10,133,456

7,643,653

4,999,569
Savings
Returns

350,000 330,000 300,000

Saves from 25 to 60 Saves from 27 to 60 Saves from 30 to 60

Assume an annual savings of Rs. 10,000 in an instrument


providing return of 15 % p.a.
Cost of Living
Items 1987 1997
( Rs ) ( Rs. )
Colgate toothpaste 8.05 18.90
( 8.91 % )
( 100 gm tube )
Hamam Soap 3.05 7.85
( 9.92 % )

Masala Dosa 3.50 14.00


( 14.87 % )

Petrol 7.99 25.48


( per
( 12.30 % )

L P G Cylinder 56.15 137.85


( 9.40 % )

Zodiac men’s shirt 225.00 510.00


( 8.53 % )
Cost of Living
Items 1997 2017
( Rs ) ( Rs.)
Colgate toothpaste 18.90 104.00
( 100 gm tube )
Hamam Soap 7.85 52.00

Masala Dosa 14.00 224.00

Petrol 25.48 259.12


( per liter )

L P G Cylinder 137.85 830.85


Zodiac men’s shirt 510.00 2620.27

Assuming inflation to grow at the same rate during 1987-97

( 8.53 % )
Escalating costs of Higher
Education*
(*in Rs.)

YEAR MBA 0.5 lacs


1990 MBBS 1.0 lacs
Engineer 0.3 lacs

MBA 3.2 lacs


YEAR
MBBS 5.0 lacs
2000
Engineer 2.4 lacs
Escalating costs of Higher
Education*
(*in Rs.)

YEAR MBA 3.2 lacs


2000 MBBS 5.0 lacs
Engineer 2.4 lacs

YEAR
MBA 8.3 lacs
2010 MBBS 12.9 lacs
6.2 lacs
Engineer

YEAR MBA 21.5 lacs


33.6 lacs
2020 MBBS
16.2 lacs
Engineer
Estimate of marriage expenses
.

Year 2000 Year 2010 Year 2020

Rs. 2.0 lacs Rs. 5.2 lacs Rs. 13.5 lacs

Rs. 5.0 lacs Rs. 13.0 lacs Rs. 33.6 lacs

Rs. 10.0 lacs Rs. 25.9 lacs Rs. 67.3 lacs

Rs. 20.0 lacs Rs. 51.9 lacs Rs. 1.34 crores

* At an average annual inflation of 10% p.a.


INFLATION ROBS YOUR PURCHASING POWER
(Assuming inflation @10% p.a.)

Rs. 5,000 today 226,000

87,000

33,500
12,900

10 years 20 years 30 years 40 years


Equities are the best long term bet
Cumulative annualized returns (1980 -98)

Source: RBI report on Currency & Finance (1997-98); BSE Sensitive index of Equity prices - BSE
Equities are the best long term bet
percentage of studied period in which
`

14%

37%
44%
Stocks
outperformed
56%
86%
63%

1 year 3 year 5 year


KEY FOR SUCCESS IN
FINANCIAL PLANNING
1. Risk Cover through Life Insurance General Insurance for
insuring assets)
2. Invest only after ensuring adequate liquidity - have a
minimum of 3-6 months of monthly expenses in liquid debt
products
3. Classify the needs -Short term, Medium Term & Long Term
4. Diversify your investments using the principles of Asset
Allocation
5. While investing in equities, average out - timing is difficult
6. Be realistic in expectations of return (sustaining high
returns is difficult - probably impossible!)
7. Invest for the long term
8. Patience is the key
TERM PLAN
 Short Term
 Banks / Liquid Funds
( 1 to 3 years)

 Medium Term
 Debt or Debt Related Funds
(3 to 5 years)
Mix of Debt/Equity or funds With
an appropriate mix (Balance)

 Long Term  Equity or Equity Related


(>5 years) Funds
No Investment Product is
Superior ! A Mix is Essential
This is what Asset Allocation is all about!
You need to choose a mix that suits your needs and risk
taking capacity
Portfolio Growth Income Liquidity
(Equity) (Bonds) (Banks)
Aggressive 75% 15% 10%

Balanced 50% 30% 20%

Moderate 35% 45% 20%

Conservative 20% 40% 40%


Tips To Smart Investing

 .

Asset Allocation Time Reduces Risk

Start Early Diversify

Stay Invested Don’t Time The Market

Watch Out For Inflation & Taxes


RISK FACTORS
All investments in Mutual Funds securities are subject to
market risks and the NAV of the schemes may go up and down
depending on the factors and forces affecting the securities
market. There can be no assurance that the scheme’s
investment objectives will be achieved. The past performance
of the Mutual Funds is not necessarily indicative of the future
performance of the scheme. The sponsor is not responsible or
liable for any loss resulting from the operation of the scheme
beyond the initial contribution of an amount of Rs. 1 lac made
by it towards setting up of the Mutual are only the names of
the schemes and do not in any manner indicate the quality of
the schemes, its future prospects or returns. Please go through
the offer document of the respective Funds before investing.
Investors in the Schema's) are not being offered any
guaranteed/assured returns.
SCAM IN INDIA
Ramalinga Raju Dinesh Dalmia

Harshad Mehta Abdul Karim Telgi

Ketan Parekh Virendra Rastogi

C R Bhansali The UTI Scam

Cobbler scam Uday Goyal

Sanjay Agarwal
Ramalinga Raju - Rs 8,000 crore
The biggest corporate scam in India has come from one of the most
respected businessmen. Satyam founder Byrraju Ramalinga Raju resigned
as its chairman after admitting to cooking up the account books. His efforts
to fill the "fictitious assets with real ones" through Maytas acquisition failed,
after which he decided to confess the crime. With a fraud involving about
Rs 8,000 crore (Rs 80 billion), Satyam is heading for more trouble in the
days ahead. On Wednesday, India's fourth largest IT company lost a
staggering Rs10,000 crore (Rs 100 billion) in market capitalisation as
investors reacted sharply and dumped shares, pushing down the scrip by
78 per cent to Rs 39.95 on the Bombay Stock Exchange. The NYSE-listed
firm could also face regulator action in the US. "I am now prepared to
subject myself to the laws of the land and face consequences there of,"
Raju said in a letter to SEBI and the Board of Directors, while giving details
of how the profits were inflated over the years and his failed attempts to "fill
the fictitious assets with real ones." Raju said the company's balance sheet
as of September 30 carries "inflated (non-existent) cash and bank
balances of Rs 5,040 crore (Rs 50.40 billion) as against Rs 5,361 crore
(Rs 53.61 billion) reflected in the books."
Harshad Mehta - Rs 4,000 crore
He was known as the 'Big Bull'. However, his bull run did not last too
long. He triggered a rise in the Bombay Stock Exchange in the year
1992 by trading in shares at a premium across many segments.
Taking advantages of the loopholes in the banking system, Harshad
and his associates triggered a securities scam diverting funds to the
tune of Rs 4000 crore (Rs 40 billion) from the banks to stockbrokers
between April 1991 to May 1992. Harshad Mehta worked with the
New India Assurance Company before he moved ahead to try his
luck in the stock markets. Mehta soon mastered the tricks of the
trade and set out on dangerous game plan. Mehta has siphoned off
huge sums of money from several banks and millions of investors
were conned in the process. His scam was exposed, the markets
crashed and he was arrested and banned for life from trading in the
stock markets. He was later charged with 72 criminal offences. A
Special Court also sentenced Sudhir Mehta, Harshad Mehta's brother,
and six others, including four bank officials, to rigorous imprisonment
(RI) ranging from 1year to 10 years on the charge of duping State
Bank of India to the tune of Rs 600 crore (Rs 6 billion) in connection
with the securities scam that rocked the financial markets in 1992.
He died in 2002 with many litigations still pending against him.
Ketan Parekh - Agrregate
Borrowings Rs1,500 Cr
Ketan Parekh followed Harshad Mehta's footsteps to swindle
crores of rupees from banks. A chartered accountant he used
to run a family business, NH Securities. Ketan however had
bigger plans in mind. He targeted smaller exchanges like the
Allahabad Stock Exchange and the Calcutta Stock Exchange,
and bought shares in fictitious names. His dealings revolved
around shares of ten companies like Himachal Futuristic,
Global Tele-Systems, SSI Ltd, DSQ Software, Zee Telefilms,
Silver line, pent media Graphics and Satyam Computer (K-10
scripts). Ketan borrowed Rs 250 crore from Global Trust Bank
to fuel his ambitions. Ketan along with his associates also
managed to get Rs 1,000 crore from the Madhavpura ercantile
Co-operative Bank. According to RBI regulations, a broker is
allowed a loan of only Rs 15 crore (Rs 150 million). There was
evidence of price rigging in the scripts of Global Trust Bank,
Zee Telefilms, HFCL, Lupin Laboratories, Aftek Infosys and
Padmini Polymer.
C R Bhansali - Rs 1,200 crore
The Bhansali scam resulted in a loss of over Rs 1,200 crore (Rs
12 billion). He first launched the finance company CRB Capital
Markets, followed by CRB Mutual Fund and CRB Share
Custodial Services. He ruled like financial wizard 1992 to 1996
collecting money from the public through fixed deposits, bonds
and debentures. The money was transferred to companies that
never existed. CRB Capital Markets raised a whopping Rs 176
crore in three years. In 1994 CRB Mutual Funds raised Rs 230
crore and Rs 180 crore came via fixed deposits. Bhansali also
succeeded to rise about Rs 900 crore from the markets.
However, his good days did not last long, after 1995 he
received several jolts. Bhansali tried borrowing more money
from the market. This led to a financial crisis. It became
difficult for Bhansali to sustain himself. The Reserve Bank of
India (RBI) refused banking status to CRB and he was in the
dock. SBI was one of the banks to be hit by his huge defaults.
Cobbler scam $600 million
Sohin Daya, son of a former Sheriff of Mumbai, was
the main accused in the multi -crore shoes scam.
Daya of Dawood Shoes, Rafique Tejani of Metro
Shoes, and Kishore Signapurkar of Milano Shoes
were arrested for creating several leather co-
operative societies which did not exist. They availed
loans of crores of rupees on behalf of these fictitious
societies. The scam was exposed in 1995. The
accused created a fictitious cooperative society of
cobblers to take advantage of government loans
through various schemes.Officials of the
Maharashtra State Finance Corporation, Citibank,
Bank of Oman, Dena Bank, evelopment Credit Bank,
Saraswati Co-operative Bank, and Bank of Bahrain
and Kuwait were also charge sheeted.
Dinesh Dalmia - Rs 595 crore
Dinesh Dalmia was the managing director of DSQ
Software Limited when the Central Bureau of
Investigation arrested him for his involvement in a
stocks scam of Rs 595 crore (Rs 5.95 billion).
Dalmia's group included DSQ Holdings Ltd, Hulda
Properties and Trades Ltd, and Power flow Holding
and Trading Pvt Ltd. Dalmia resorted to illegal ways
to make money through the partly paid shares of
DSQ Software Ltd, in the name of New Vision
Investment Ltd, UK, and unallotted shares in the
name of Dinesh Dalmia Technology Trust.
Investigation showed that 1.30 crore (13 million)
shares of DSQ Software Ltd had not been listed on
any stock exchange.
Abdul Karim Telgi - Rs 171.33 crore
He paid for his own education at Sarvodaya Vidyalaya by
selling fruits and vegetables on trains. He is today
famous (or infamous) for being he man behind one of
The Telgi case is another big scam that rocked India. The
fake stamp racket involving Abdul Karim Telgi was
exposed in 2000. The loss is estimated to be Rs 171.33
crore (Rs 1.71 billion), it was initially pegged to be Rs
30,000 crore (Rs 300 billion), which was later clarified by
the CBI as an exaggerated figure. In 1994, Abdul Karim
Telgi acquired a stamp paper license from the Indian
government and began printing fake stamp papers. Telgi
bribed to get into the government security press in Nasik
and bought special machines to print fake stamp
papers.Telgi's networked spread across 13 states
involving 176 offices, 1,000 employees and 123 bank
accounts in 18 cities.
Virendra Rastogi Rs 43 crore
Virendra Rastogi chief executive of RBG
Resources was charged with for deceiving banks
worldwide of an estimated $1 billion. He was
also involved in the duty-drawback scam to the
tune of Rs 43 crore (Rs 430 million) in India.
The CBI said that five companies, whose
directors were the four Rastogi brothers --
Subhash, Virendra, Ravinde and Narinder --
exported bicycle parts during 1995-96 to Russia
and Hong Kong by heavily over invoicing the
value of goods for claiming excess duty draw
back from customs
The UTI Scam - Rs 32 crore
Former UTI chairman P S Subramanyam and two executive
directors -- M Kapur and S K Basu -- and a stockbroker Rakesh
G Mehta, were arrested in connection with the 'UTI scam'. UTI
had purchased 40,000 shares of Cyberspace between
September 25, 2000, for about Rs 3.33 crore (Rs 33.3 million)
from Rakesh Mehta when there were no buyers for the scrip.
The market price was around Rs 830. The CBI said it was the
conspiracy of these four people which resulted in the loss of Rs
32 crore (Rs 320 million). Subramanyam, Kapur and Basu had
changed their stance on an investment advice of the equities
research cell of UTI. The promoter of Cyberspace Infosys,
Arvind Johari was arrested in connection with the case. The
officials were paid Rs 50 lakh (Rs 5 million) by Cyberspace to
promote its shares. He also received Rs 1.18 crore (Rs 11.8
million) from the company through a circuitous route for
possible rigging the Cyberspace counter.
Uday Goyal - Rs 210 crore
Uday Goyal, managing director of Arrow Global
Agritech Ltd, was yet another fraudster who cheated
investors promising high returns through
plantations. Goyal conned investors to the tune of
over Rs 210 crore (Rs 2.10 billion). He was finally
arrested. The plantation scam was exposed when
two investors filed a complaint when they failed to
get the promised returns. Over 43,300 persons had
fallen into Goyal's trap. Several criminal complaints
were filed with the Economic Offences Wing. The
company's directors and their relatives had misused
the investors' money to buy properties. The High
Court asked the company to sell its properties and
repay its investors.
Sanjay Agarwal - Rs 92 crore
Home Trade had created waves with celebrity endorsements.
But Sanjay Agarwal's finance portal was just a veil to cover up
his shady deals. He swindled a whopping Rs 600 crore (Rs 6
billion) from more than 25 cooperative banks. The
government securities (gilt) scam of 2001 was exposed when
the Reserve Bank of India checked the accounts of some
cooperative banks following unusual activities in the gilt
market. Co-operative banks and brokers acted in collusion in a
bid to make easy money at the cost of the hard earned
savings of millions of Indians. In this case, even the Public
Provident Fund (PPF) was affected. A sum of about Rs 92
crore (Rs 920 million) was missing from the Seamen's
Provident Fund. Sanjay Agarwal, Ketan Sheth (a broker),
Nandkishore Trivedi and Baluchan Rai (a Hong Kong-based
Non-Resident Indian) were behind the Home Trade scam.
STOCK MARKET CRASH 1929
The 1920's were a time of unbelievable
prosperity. The stock market was going through
the roof and the United States seemed to have
the formula for limitless prosperity. However,
the same formula that generated all of that
profit would also be the cause of Black Tuesday.
Investment during the 1920's was based on the
unstable however, adding to the crash of '29
was the slowing economy. The desire for
consumer durables (expensive items
refrigerators, radios, and automobiles) went
down as Americans became satisfied with what
they had. This in turn affected the companies
and workers that produced these items. A
downward spiral was set in motion. The crash of
1929 ended the seemingly infinite prosperity of
the 1920s. Millionaires had become paupers
overnight. Those who believe in the strength of
the economic bubble and invested everything
they had lost everything they had. Of course,
the economy weakened and the unemployment
skyrocketed. The Great Depression had begun.
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