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Title: PRESENTATION ON INVESTMENT ADVISORY SERVICES


1
PRESENTATION ON INVESTMENT ADVISORY SERVICES
  • By
  • ULTIMATE INVESTMENTS


    Nurturing Wealth

  • SHANTHA KUMAR T.S

2
INVESTMENT AVENUE
  • FINANCIAL ASSETS
  • DEBT
  • (Bank Deposits,Postoffice Schemes,
    Debentures,
  • Bonds, Debt MFs)
  • EQUITY
  • Shares, Equity MFs)
  • NON-FINANCIAL ASSETS
  • Real Estate
  • Gold

3
(No Transcript)
4
Difference between Debt Equity,Contd..
5
Difference between Debt Equity
6
(No Transcript)
7
  • STOCK MARKET

8
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
9
  • 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.

10
The voting machine the weighing scales(short
term volatility long term returns)
11
(No Transcript)
12
  • PRIMARY MARKET
  • INITIAL PUBLIC OFFERING (IPO's)

13
Company's
  • Lead manager
  • Syndicate member
  • Broker
  • Registrar

14
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.

15
Syndicate Member
  • An investment bank, brokerage, or bank which
    participates in a syndicate.

16
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.

17
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.

18
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.

19
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 _at_ 15 p.a.

20
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.

21
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

22
  • MUTUAL FUND

23
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.

24
MUTUAL FUND BIRTH PLACE
UNITED KINGDOM
25
First mutual fund in India

Unit Trust of India
Year 1963
First Schemes
US 64
26
First Private mutual fund in India

Kothari Pioneer
Year 1994
27
SPONSOR
  • APPOINTS
  • Trustees
  • Asset management company
  • Custodians
  • Registrars
  • Banks
  • Distributors

28
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.

29
Mutual Fund Operation Flow Chart
30
Organization of a Mutual Fund
31
Advantages of Mutual Funds
  • Professional Management
  • Diversification
  • Return Potential
  • Liquidity
  • Transparency
  • Flexibility
  • Choice of schemes
  • Tax benefits
  • Well regulated

32
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

33
Investment Parameters
34
(No Transcript)
35
MUTUAL FUND
  • .

36
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

37
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 PriceIs 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.

38
Risk Safety of a Mutual Fund
Risk Medium Risk Low Risk
39
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.

40
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.

41
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.

42
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.

43
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.

44
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.

45
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.

46
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.

47
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

48
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
  • Childrens school and college fees

49
WHAT IS SIP
  • SYSTAMATIC INVESTMENT PLAN
  • FIXED DATE
  • FIXED AMOUNT
  • FIXED TENOUR

50
Systamatic investment plan
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
51
FINANCIAL PLANNING
  • If you burn your money today you will have a
    burning problem tomorrow
  • A PRESENTATION ON SAVING,
  • INVESTING AND INVESTMENT OPTIONS

52
PROCESS OF FINANCIAL PLANNING
  • Set a goal
  • Prepare an investment plan
  • Implement the financial plan
  • Evaluate on a regular basis

53
Early start regular Investments
Assume an annual savings of Rs. 10,000 in an
instrument providing return of 15 p.a.
54
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 )
225.00
510.00
Zodiac mens shirt
( 8.53 )
55
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 mens shirt
510.00
2620.27
Assuming inflation to grow at the same rate
during 1987-97
( 8.53 )
56
Escalating costs of Higher Education(in Rs.)
  • YEAR
  • 1990

MBA MBBS Engineer
0.5 lacs 1.0 lacs 0.3 lacs
3.2 lacs 5.0 lacs 2.4 lacs
MBA MBBS Engineer
YEAR 2000
57
Escalating costs of Higher Education(in Rs.)
  • YEAR
  • 2000

MBA MBBS Engineer
3.2 lacs 5.0 lacs 2.4 lacs
MBA MBBS Engineer
8.3 lacs 12.9 lacs 6.2 lacs
YEAR 2010
MBA MBBS Engineer
21.5 lacs 33.6 lacs 16.2 lacs
YEAR 2020
58
Estimate of marriage expenses
  • .

At an average annual inflation of 10 p.a.
59
INFLATION ROBS YOUR PURCHASING POWER(Assuming
inflation _at_10 p.a.)
60
Equities are the best long term betCumulative
annualized returns (1980 -98)
Source RBI report on Currency Finance
(1997-98) BSE Sensitive index of Equity prices -
BSE
61
Equities are the best long term betpercentage of
studied period in which

14
37
44
Stocks outperformed
56
86
63
1 year
3 year
5 year
62
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

63
TERM PLAN
  • Short Term
  • ( 1 to 3 years)
  • Medium Term
  • (3 to 5 years)
  • Long Term
  • (gt5 years)
  • Banks / Liquid Funds
  • Debt or Debt Related Funds
  • Mix of Debt/Equity or funds With an appropriate
    mix (Balance)
  • Equity or Equity Related Funds

64
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
65
Tips To Smart Investing
  • .

Asset Allocation
Time Reduces Risk
Start Early
Diversify
Stay Invested
Dont Time The Market
Watch Out For Inflation Taxes
66
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
    schemes 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.

67
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
68
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."

69
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.

70
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.

71
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.

72
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.

73
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.

74
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.

75
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

76
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.

77
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.

78
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.

79
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.

80
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