equityproject

8/7/2019 equityproject

1/87

CHAPTER 1

INTRODUCTION

1


2/87

Introduction

India is a developing country. Now a days many people interesting to investin financial market on Equities to get high returns, and to save tax in honestway. Equities are playing a major role in contribution capital to the businesssince from the beginning. Since from the introduction of shares/stockconcept more and more investors are showing interest to invest in stockmarket.

Though there is high risk in shares, there are also high profits. Equities incurrent situation is very good to invest as SENSEX crossed 13000 pointsIn October, 2006 and market is following bullish trend. So to enter into theStock market at this time is very good as the investor who wants to seekprofits with minimum investment.

Equity is a ownership in a company. The more shares the investors own themore dividends they gain. In financial world ownership is called Equity.

At this time a dynamic entrepreneur Sri. Nirmal Jain C.A (All India rank 2)Established India Infoline Ltd in 1995, at Mumbai.

India Infoline Ltd is one of the Countrys leading payers in the business ofinvestment advisory and Intermediation. Its primary business is Broking inEquities and Commodities (where it is popular known by its brand namewww.5paisa.com), Distribution of Mutual funds, and other personalinvestment products. Hence the company has decided to study onCommodities trading.

OBJECTIVES

TO STUDY OF THE VARIOUS TRENDS IN EQUITY TRADING. TO STUDY THE ROLE OF EQUITIES IN INDIAN FINANCIAL MARKETS

TO STUDY THE ROLE OF EQUITY TRADING WITH EMPHASIS ON INDIAINFOLINE LTD

Need for studyTo start any business capital plays a major role. Capital can be acquired intwo ways by issuing shares or by taking debt from financial institutions.Taking debt or borrowing money from financial institutionsThe owner of the company have to pay regular interest and principal amountat the end.

Stock is ownership in a company, with each share of stock representing atiny piece of ownership. The more shares you own, the more of the companyyou own. The more shares you own, the more dividends you earn when thecompany makes a profit. In the financial world, ownership is calledEquity.

2


3/87

Advantages of selling stock:

A company can raise more capital than it could borrow.

A company does not have to make periodic interest payments tocreditors.

A company does not have to make principal payments.

Stock/shares play a major role in acquiring capital to the business in returninvestors are paid dividends to the shares they own. The more shares youown the more dividends you receive.

At present Equity market provides various opportunities to the investors. Asthe Sensitivity Index crossed 13000 point mark in the month of October,2006. More and more investors are showing interest towards stock markets.And also NSDL & SEBI they are imposing strict rules on the stock exchangesto regulate the business and to protect the investors interest. SEBI imposedthe registration and regulation of the working of stock-brokers, sub-brokers,share transfer agents , banker to the issue, merchant bankers, underwriters,

portfolio managers and other intermediaries associated with the securitiesmarkets. SEBI also prohibited insiders trading in securities etc.

As the market is good for investing more and more companies are able togenerate money by issuing shares and there are more investors who areready to invest in the business are increased more in number than in thebeginning stage.

Till date Equity markets are continuing its bullish trend and it will alsocontinue in future also.

3


4/87

CHAPTER 2

RESEARCH

METHODOLOGY

4


5/87

RESEARCH METHODOLOGY

RESEARCH DESIGN:

Meaning of research design:The formidable problem that follows the task of defining the research

problem is the preparation of the design of the research project, popularlyknow as the research design, decision regarding what where, where ,howmuch, by what means concerning inquiry are a research study constitute aresearch design. A research design is the arrangement of condition forcollection and analysis of data in manner that aims to combine relevance toresearch purpose with economy in procedure. Infact, the research design isthe conceptual structure with in which research is conducted; it constitutesthe blue print for the collection, measurement and analysis of data. As suchthe design includes an out line of what the researcher will do from writing thehypothesis and its operation and implication to the final analysis of data.

The research methodology is a way to systematically solve the researchproblem. It may be understood as the science of studying how research isdone scientifically.

The study various steps that are generally adopted by a researcher instudying his research problem along with he logic behind them. It isnecessary for the researcher to know not only research methods but also themethodology.

Sources of data:The research can call for gathering secondary data, primary data or both.

Secondary data consists of information that already exists somewhere,having being collected for another purposes and primary data consists oforiginal information gathered for the specific purpose.

Data collection is very essential to study the information fact and figure thatare directly related to the problem that have being formulated. The kinds ofdata that has collected for this study are:

1.primary data.2. Secondary data.

PRIMARY DATA:

Data collected.Newspapers

1. Economic times2. Business standard

Internet1. www.bseindia.com2. www.nseindia.com3. www.5paisa.com

5


6/87

4. www.indiainfoline.com5. www.investopedia.com

BrokersMembers of 5paisa2. Secondary data:

Handbook of investors.Data provided by the 5paisa as a part of the class undertaken.Compendium of Top 500 companies in India published by CapitalMarket

6


7/87

LIMITATIONS OF THE STUDY

1. The Time allotted for the project work was short

2. The Study is Limited to National level only.

3. The Study is limited to Company's that have Equities

4. The Study is limited to India Infoline Ltd.

7


8/87

CHAPTER - 3

INDUSTRY PROFILE

&

COMPANY PROFILE

8


9/87

INTRODUCTION TO TRADING PROCEDURE

The trading on stock exchanges in India used to take place through open outcry without

use of information technology for immediate matching or recording of trades. This was

time consuming and inefficient. This, imposed limits on trading volumes and efficiency.

In order to provide efficiency, liquidity and transparency, NSE introduced a nation-wide

on-line fully-automated screen based trading system(SBTS) where a member can punch

into the computer quantities of securities and the prices at which he likes to transact and

the transaction is executed as soon as it finds a matching sale or buy order from a counter

party. SBTS electronically matches orders on a strict price/time priority and hence cuts

down on time, cost and risk of error, as well as on fraud resulting in improved operational

efficiency. It allows faster incorporation of price sensitive information into prevailing

prices, thus increasing the informational efficiency of markets. It enables market

participants, irrespective of their geographical locations, to trade with one another

simultaneously, improving the depth and liquidity of the market. It provides full

anonymity by accepting orders, big or small, from members without revealing their

identity, thus providing equal access to everybody. It also provides a perfect audit trail,

which helps to resolve disputes by logging in the trade execution process in entirety. This

sucked liquidity from other exchanges and in the very first year of its operation, NSE

became the leading stock exchange in the country, impacting the fortunes of other

exchanges and forcing them to adopt SBTS also. Today India can boast that almost 100%

trading take place through electronic order matching.

Technology was used to carry the trading platform from the trading hall of stock

exchanges to the premises of brokers. NSE carried the trading platform further to the PCsat the residence of investors through the Internet and to handheld devices through WAP

for convenience of mobile investors. This made a huge difference in terms of equal

access to investors in a geographically vast country like India.

9


10/87

NSE has main computer which is connected through Very Small Aperture Terminal

(VSAT) installed at its office. The main computer runs on a fault tolerant STRATUS

mainframe computer at the Exchange. Brokers have terminals installed at their premiseswhich are connected through VSATs/leased lines/modems. An investor informs a broker

to place an order on his behalf. The broker enters the order through his PC, which runs

under Windows NT and sends signal to the Satellite via VSAT/leased line/modem. The

signal is directed to mainframe computer at NSE via VSAT at NSEs office. A message

relating to the order activity is broadcast to the respective member. The order

confirmation message is immediately displayed on the PC of the broker. This order

matches with the existing passive order(s), otherwise it waits for the active orders to enter

the system. On order matching, a message is broadcast to the respective member.

SOURCE : NCFM CAPITAL MARKET MODULE

10


11/87

The trading system operates on a strict price time priority. All orders received on the

system are sorted with the best priced order getting the first priority for matching i.e., the

best buy orders match with the best sell order. Similar priced orders are sorted on time

priority basis, i.e. the one that came in early gets priority over the later one. Orders are

matched automatically by the computer keeping the system transparent, objective and

fair. Where an order does not find a match, it remains in the system and is displayed to

the whole market, till a fresh order comes in or the earlier order is cancelled or modified.

The trading system provides tremendous flexibility to the users in terms of kinds of

orders that can be placed on the system. Several time-related (good till cancelled, good

till day, immediate or cancel), price-related (buy/sell limit and stop loss orders) or

volume related (all or none, minimum fill, etc) conditions can be easily built into an

order.

The trading system also provides complete market information on-line. The market

screens at any point of time provide complete information on total order depth in a

security; the five best buys and sells available in the market; the quantity traded during

the day in that security; the high and the low; the last traded price. Investors can also

know the fate of the orders almost as soon as they are placed with the trading members.

Thus the neat system provides an open Electronic Consolidated Limit Order Book. Limit

orders are orders to buy or sell shares at a stated quantity and stated price. If the price

quantity conditions do not match, the limit order will not be executed. The term limit

order book refers to the fact that only limit orders are stored in the book and all market

orders are crossed against the limit orders sitting in the book. Since the order book is

visible to all market participants, it is termed as an Open Book.

11


12/87

COMPANY PROFILE

It was originally incorporated on October 18, 1995 as Probity Research andServices Private Limited at Mumbai under the Companies Act, 1956 withRegistration No:11 93797. we commenced our operations as an independent

provider of information analysis and research covering Indian businesses,financial markets and economy, to institutional customers. We became apublic limited company on April 28, 2000 and the name of the Company waschanged to Probity Research and Services Limited . The name of thecompany was changed to India Infoline.com on May 23, 2000 and later toIndia Infoline Limited on March 23, 2001.

In 1999, the company identified the potential of the Internet to cater to amass retail segment and transformed our business model form providinginformation services to institutional customers to retail customers. Hence thecompany launched Internet portal, www.Indiainfoline.com and startedproviding news and market information, independent research, interviews

with business leaders and other specialized features.

In May 2000, the name of our company changed to India Infoline.comLimited.

In the year 2000, we leveraged our position as a provider of financialinformation and analysis by diversifying into transactional services, primarilyfor online trading in shares and securities and online as well as offlinedistribution of personal financial products, like Mutual funds and RBI Bonds.

Our broking service as launched under the brand name of 5Paisa through our

subsidiary, India Infoline Securities Private Limited and www.5Paisa.com, thee-broking portal, was launched for online trading in July 2000. Besides wealso offerReal time stock quotes, market news and price charts with multiple tools fortechnical analysis

In December 2000, our subsidiary, India Infoline Insurance Services Limitedbecame a corporate agent for ICICI Prudential Life Insurance companyLimited. And emerged as one of the leading corporate agents for ICICIPrudential Life Insurance company Limited.

In the year 2004 , company launched commodities broking through our

subsidiary India Infoline commodities Private LTD.

At present company has a network of 73 branches across 36 cities in India .we plan to set up 77 additional branches in 50 cities across India for ourdifferent business including broking, insurance, commodities and distributionof mutual funds and other investment products.

12
http://www.indiainfoline.com/http://www.5paisa.com/http://www.indiainfoline.com/http://www.5paisa.com/


13/87

Board of directors

As per Articles of Association, Board shall consist of not less than three andnot more than twelve directors. They are as follows.

S.No Name Designation Directorships in othercompanies

1. Mr.Nirmal Jain Chairman andManaging Director

1. India Infoline securitiePvt. Ltd.

2. India InfolineInsurance ServicesLtd.

3. India Infolinecommodities Pvt. Ltd.

2. Mr.R.Venkataraman Executive Director 1. India InfolineInsurance ServicesLtd.

2. India Infoline.comDistribution companyLtd.

3. Mr. Sat Pal Khattar Non-ExecutiveDirector

1. AB Hotels Ltd.2. GTL LTD.3. Prime vetcare Pvt. Ltd

4. Mr. Sanjiv Ahuja Non-ExecutiveIndependentDirector

1. Pagro Foods Ltd.2. India Infoline

Insurance ServicesLtd.

5. Mr. Kranti Sinha Non-ExecutiveIndependentDirector

1. Hindustan MotorsLtd.

2. Larsen and ToubroLtd.

6. Mr. Nilesh ShivjiVikamsey

Non-ExecutiveIndependentDirector

1. Alpha Garments PvtLtd.

2. Miloni ConsultantsPvt. Ltd.

13


14/87

Key promoters of the company

Key promoters of our company are Mr. Nirmal Jain andMr. Venkataraman, professionals with a good academic and work experience.

Mr. Nirmal Jain has been the chairman and Managing Director of theCompany since its incorporation i.e., October 18, 1995.Mr. Jain holds a MBA degree form IIM Ahmedabad and is a member Instituteof Chartered Accountants of India and the Institute of Cost Accountants ofIndia. He started his career in 1989 with Hindustan Lever Limited, asubsidiary of Unilever Plc, in their commodities trading and exports divisionMr.Jain has a total experience of more than 15 years.

Mr. R. Venkataraman joined the Board with effect fromJuly 5th,1999. He holds a B.Tech degree in Electronics and ElectricalCommunications Engineering form IIT Kharagpur and an MBA degree formIIM Bangalore. He has held senior managerial positions in various divisionsof ICICI limited, including ICICI securities limited, their investment banking

joint venture with J P Morgan of USA. He also worked as an equity analystwith BZW and Taib Capital Corporation Limited. HE has also held the positionof Assistant Vice President withG E Capital Services India Limited in their private equity division. He hasvaried experience of more than 14 years in the financial services sector

Year wise Milestones of our evolution

October 1995 Incorporated as Probity Research And Services Pvt. Ltd.

March 1996 Launched Probity 200, research Reports on 200 leadinglisted Indian Companies.

June 1998 Launched Probity Sector reports.

May 1999 launched our internet portal www.Indiainfoline.com andchanged our name to India Infoline Limited.

April 2000 Our Company forayed into distribution of Mutual funds, fixeddeposits, RBI bonds and other small savings Products.

July 2000 Our Company launched www.5paisa.com the e-broking portaland started online Trading with membership of BSE & NSE.

December 2000Our Company obtained corporate agency For ICICI Prudential LifInsurance Company Ltd.

September 2001 Our Company became the Depositary Participant of NSDL.

March 2004 Our Company launched commodities trading by takingmembership of MCX.

April 2004 Our Company received license from SEBI to offer PortfolioManagement Services.

14
http://www.indiainfoline.com/http://www.5paisa.com/http://www.indiainfoline.com/http://www.5paisa.com/


15/87

Business

Indi Infoline Limited

Content related services- Equity research & Online

Media Property

India Infoline Securities PVt. Ltd.

Equities & Derivative Broking.

Depository Services.

Portfolio Management Services.

India Infoline.com Distibution Company Ltd.

Mutual funds

RBI Bonds

Fixed Deposits etc.

India Infoline Insurance Services Ltd.

Corporate agents for ICICI PrudentialLife Insurance Company Ltd.

India Infoline Commodities Pvt. Ltd.

Commodities Broking.

India Infoline Investment Services Pvt. Ltd.

Margin funding & financing

15


16/87

Brokerage Services

Online Brokerage : we offer subscribers real-time trading onThe NSE and BSE. Apart from this we also offer commoditiesTrading on the MCX and NCDEX. Customers can directly

Place Orders to buy and sell securities through our automated orderProcessing system.Offline Brokerage: we began offering offline brokerage services as a backupto our online brokerage offering through our branches. This was mainly toaddress the internet access problems faced by some of our retail customers.CompetitionBroking : we face competition from small local brokers (traditional) and panIndia Brokers like Kotak Securities Ltd. S.S Kantilal Ishwarlal securities Ltd,Indiabulls Securities Ltd, ICICI Web Trade Limited , Geojit Financial ServicesLtd etc.Distribution : We face competition from small retail distributors (typicallysingle outlet unorganized units), brokers who have a distribution setu, old

and established distribution companies like Blue chip Corporate InvestmentCentre Limited,Bajaj Capital Ltd, Karvy Securities Ltd, and banks includingtheir PMS and Wealth Management desks.Our Strength : Our strengths are our content and research onlinetechnology platform and customer services.Financial Performance:

Consolidated Financial Performance of India Infoline Ltd, (Excludingintergroup revenue)

Revenue (in Rs. Million) Year

ended 31st

March2005

Year

ended 31st

March2006

Nine months

ended 31st

December2006

Income

Revenue from operations

Equities Brokerage & RelatedincomeAgency Commission & Fees

Commodities Brokerage

Policy Commission

Media & Content Income

Other income

30.79

40.07

-

7.03

7.63

21.03

191.47

81.17

-

17.92

16.82

52.56

323.69

73.56

2.42

29.41

34.72

11.23

Total Income 106.54 359.94 475.03

16


17/87

Our consolidated total income has grown from Rs. 106.54 million in FY 2005to Rs. 359.94 million in FY 2006. That same year, we made a turnaroundand reported a consolidated cash profit of 103.84 million and a net profit ofRs. 74.8 million on the first nine months of FY 2006; we have reported aconsolidated total income of Rs. 475.03 million.As on December 31 2006, we had 28,215 customers for our broking servicesand we have sold mutual fund unit, company deposits government bonds orsmall savings schemes to over 0.15 million customers. India Infoline Ltd has85 branches across 36 locations in India, controlled by 10 Regional Offices inIndia. It has a branch in Dubai also.

Expenditure:

The following table sets out expenses as a percentage of its total income forthe fiscal years ended March 31, 2005, 2006, and the nine months endedDecember 31, 2006.

Rs. Million

Particulars Year

ended31st

March,2005

Year

ended31st

March,2006

Nine

monthsended 31st

Dec, 2006

Expenditure

Direct Costs

Employee Cost

Administration & Other Expense

Interest

Depreciation & Amortization

32.58%

29.41%

48.43%

1.46%

32.31%

30.12%

16.64%

21.51%

2.95%

8.07%

27.94%

14.65%

17.78%

1.46%

3.48%

Total Expenditure 144.18% 79.30% 65.32%

Our Expenses as a percentage of its total Expenditure is come down from1.44.18% o f 2005 to 79.30% in FY 2006. That same year we reduced the

total expenditure percentage of its Total income INS 13.98% in the firstthree Months of FY 2007, we have reported total expenditure % of its totalincome is 65.32%.

17


18/87


19/87

CHAPTER - 4

THEORETICAL FRAME

WORK OF EQUITIES

19


20/87

Introduction

Equity :

Stock or any other security representing an ownership interest.On the balance sheet, the amount of the funds contributed by the owners(the stockholders) plus the retained earnings (or losses). Also referred to as"shareholder's equity".Equity is a term whose meaning depends very much on the context. Ingeneral, you can think of equity as ownership in any asset after all debtsassociated with that asset are paid off.Stocks are equity because they represent ownership of a company, whereasbonds are classified as debt because they represent an obligation to pay andnot ownership of assets.

Equity Income:

Income that is earned through an investment in equity.A shareholder receives equity income usually through dividends or capitalgains. 2. This type of investment strategy attempts to provide astable income for investors by choosing securities that will provideboth capital appreciation and consistent dividends.

Dividend:

Distribution of a portion of a company's earnings, decided by the board ofdirectors, to a class of its shareholders. The dividend is most often quoted interms of the dollar amount each share receives (i.e. dividends per share orDPS). It can also be quoted in terms of a percent of the current market price,

referred to as dividend yield.

Dividends may be in the form of cash, stock or property. Most secure andstable companies offer dividends to their stockholders. Their share pricesmight not move much, but the dividend attempts tomake up for this.

20


21/87

Dividend Payout Ratio:The percentage of earnings paid to shareholders in dividends.

Calculated as:

The payout ratio provides an idea of how well earnings support the dividendpayments. More mature companies tend to have a higher payout ratio.

In the U.K. there is a similar ratio, which is known as dividend cover. It

is calculated as earnings per share divided by dividend per share.

Earnings Per Share EPS:The portion of a company's profit allocated to each outstanding share ofcommon stock. EPS serves as an indicator of a company's profitability.

Calculated as:

In the EPS calculation, it is more accurate to use a weighted-average numberof shares outstanding over the reporting term, because the number of sharesoutstanding can change over time. However, data sources sometimessimplify the calculation by using the number of shares outstanding at the endof the period.Earnings per share is generally considered to be the single most importantvariable in determining a share's price. It is also a major component of theprice-to-earnings valuation ratio.Equity Market Capitalization

A measure of the total market value of an equity market. The measure is

calculated by taking the market capitalization of all companies in the equitymarket and adding them together to arrive at the capitalization for themarket as a whole.

The measure is used to compare the increase or decrease in the size of themarket as a whole. The measure is also used to compare the value of theequity market to other segments of the economy, such as the value of thereal estate market.

21


22/87

Share Capital:

The portion of a corporations equity obtained from issuing shares in returnfor cash or other considerations.This is also called equity financing.

Equity Financing:

The act of raising money for company activities by selling common orpreferred stock to individual or institutional investors. In return for themoney paid, shareholders receive ownership interests in the corporation.This is when a company raises money by issuing stock. The other way toraise money is through debt financing, which is when the company borrowsmoney

Equity Fund

A mutual fund that invests in a broad, well-diversified group of stocks.

An equity fund typically won't invest in any bonds or notes. The investedfunds will either be in cash or stock.

Return On Equity ROE:A measure of a corporation's profitability, calculated as:

Essentially, ROE reveals how much profit a company generates with themoney shareholders have invested in it.

Shareholders' Equity:

A firm's total assets minus its total liabilities. Equivalently, it is share capitalplus retained earnings minus treasury shares. Shareholders' equity is theamount by which a company is financed through common and preferredshares.

Also known as "share capital", "net worth", or "stockholders' equity".Shareholders' equity comes from two main sources. The first and originalsource is the money that was originally invested in the company along withany additional investments made thereafter. The second comes from retained

earnings that the company is able to achieve over time through itsoperations. In most cases, the retained earningsStockholders' Equity:

The portion of the balance sheet that includes capital received from investorsin exchange for stock (paid-in capital), donated capital, and retainedearnings. This is equal to total assets minus liabilities, preferred stock andintangible assets.

22


23/87

Stockholder's equity is often referred to as the book value of the company.

Types of shares :

Stock is ownership in a company. In the financial world ownership is called

Equity.There are two primary classes of stock. Namely 1.preferred stock 2.commonstockPreferred Stock: preferred stock promises guaranteed dividends and aclaim on a companys assets that us above that of common shareholders.The tradeoff may be that preferred shareholders cannot vote or share otherspecified rights. Preferred stock pays a fixed dividend that is specified andset down in advance . unless the stock is retired or called back, it willcontinue paying dividends forever.

Limited voting Rights

When the company wants to merge with another

When the company wants to liquidate a large portion of its assets When the company wants to issue new bonds or preferred stock

Common stock: common stock represents ownership in a corporation.Common stock dividends may be paid in cash, stock or property. The mostcommon payment method is a cash dividend. The board of directorsdetermines whether or not to pay dividends to common stock holders.Common stock holders will receive the assets but only after all othercreditors, bond holders and preferred stockholders receive them first.

Investors may purchase stock on the primary or secondary market. A

company sells its stock to the public on the primary market through its InitialPublic Offering. Investors may sell their shares through brokers to otherinvestors on the secondary market.

23


24/87

STOCK MARKET

24


25/87

Stock Market

The market in which shares are issued and traded either through exchangesor over-the-counter markets. Also known as the equity market, it is one ofthe most vital areas of a market economy as it provides companies withaccess to capital and investors with a slice of ownership in the companyand the potential of gains based on the company's future performance.

This market can be split into two main sections: the primary and secondarymarket. The primary market is where new issues are first offered, with anysubsequent trading going on in the secondary market.

Capital/ Securities market

Primary market secondary market

Primary Market : The main function of New issue market is to facilitate thetransfer of resources from savers to entrepreneurs. The Securities issued bycompanies for the first time are designated as initial issue or Initial Publicoffer(IPO).

The new issue marketactivities was regulated by Controller of Capital Issue(CCI) under theprovisions of the Capital Issues(Control) Act 1947. After the abolition of theoffice of the CCI in 1992 the protection of the interest of the investors inSecurities market and promotion of the development and regulation of themarket/activity became the responsibility of SEBI.

25


26/87

Players in the Primary market :

Merchant Banker/Book Building Lead Manager.

Register and transfer Agent.

Collecting and coordinating bankers.

Advisor to the issue.

Underwriters/Broker to the issue.

Depository participant.

Printers, Advertising Agencies, Mailing Agencies etc.

Initial Public Offerings(IPOs)

Corporates may raise capital in the primary market by way of an initial publicoffer, rights issue or private placement. An Initial Public Offer (IPO) is theselling of securities to the public in the primary market. This Initial PublicOffering can be made through the fixed price method, book-Building method Or a combination of both.

In case the issuer chooses to issue securities through the book building routethen as per SEBI guidelines, an issuer company can issue securities in thefollowing manner:

a. 100% of the net offer to the public through the book building route.b. 75% of the net offer to the public through the book building process

and 25% through the fixed price portion.c. Under the 90% scheme, this percentage would be 90 and 10

respectively.

26


27/87

Issue Mechanism: The following are the methods by which newissue/Initial Public Offering (IPO) are made.

Public issue through prospectus.

Book Building.

Offer for Sale.

Placement and

Rights Issue Methods.

Public Issue through prospectus :

Under this method, the issuing companies themselves offer directly to thegeneral public a fixed number of shares at a Stated Price, which in the case

of new companies is invariably the face value of the securities, and in case ofexisting companies, it may include a premium amount if any.

The contents of Prospectus are as follows:

Name and registered office of the issuing company

Board of Directors

Authorized, subscribed and proposed issue of capital to public

Dates of opening and closing of subscription list

Name of Broker, Underwriters, and others form whomapplication forms along with copies of prospectus can be obtained etc.

27


28/87

OFFER FOR SALE :

Another method by which securities can be issued is by means of an offer forSale . under this method, instead of the issuing company itself offering itsshares directly to the public, it offers through the intermediary of Issuehouses/Merchant Banks/ Investment Banks (or) firms of Stock Brokers.

The advantage of this method is that the issuing company is saved from thecost and trouble of selling the share to the public.

Placement Method :

Sale by an issue house or broker to their own clients of securities which have

been previously purchased or subscribed. Under this method securities areacquired by the issue houses, as in offer for sale method, but instead ofbeing subsequently offered to the public, they are placed with the clients ofthe issue houses, each issue house has a list of large private and institutionalinvestors who are always prepared to subscribe to any securities which areissued in this manner.

Rights Issue :

In this case if companies whose shares are already listed and widely held,shares can be offered by the existing shareholders. This is called Rights

Issue. Under this method, the existing shareholders are offered the right tosubscribe to shares in proportion to the number of shares they already hold.

28


29/87

BOOKING BUILDING PROCESS

Book Building is basically a capital issuance process used in Initial PublicOffer (IPO) which aids price and demand discovery. It is a process used formarketing a public offer of equity shares of a company. It is a mechanismwhere, during the period for which the book for the IPO is open, bids arecollected from investors at various prices, which are above or equal to thefloor price. The process aims at tapping both wholesale and retail investors.The offer/issue price is then determined after the bid closing date based oncertainevaluationcriteria.

The Process:

The Issuer who is planning an IPO nominates a lead merchant banker

as a 'book runner'. The Issuer specifies the number of securities to be issued and the price

band for orders. The Issuer also appoints syndicate members with whom orders can be

placed by the investors. Investors place their order with a syndicate member who inputs the

orders into the 'electronic book'. This process is called 'bidding' and issimilar to open auction.

A Book should remain open for a minimum of 5 days. Bids cannot be entered less than the floor price. Bids can be revised by the bidder before the issue closes.

On the close of the book building period the 'book runner evaluates thebids on the basis of the evaluation criteria which may include -o Price Aggression

o Investor quality

o Earliness of bids, etc.

The book runner and the company conclude the final price at which itis willing to issue the stock and allocation of securities.

Generally, the number of shares are fixed, the issue size gets frozenbased on the price per share discovered through the book buildingprocess.

Allocation of securities is made to the successful bidders. Book Building is a good concept and represents a capital market which

is in the process of maturing.

29


30/87

Difference between shares offered through book building and offer ofshares through normal public issue:

Features Fixed Price process Book Building process

Pricing Price at which the

securities areoffered/allotted is known

in advance to the investor.

Price at which securities will be

offered/allotted is not known inadvance to the investor. Only an

indicative price range is known.

Demand Demand for the securities

offered is known onlyafter the closure of the

issue

Demand for the securities offered

can be known everyday as thebook is built.

Payment Payment if made at thetime of subscription

wherein refund is givenafter allocation.

Payment only after allocation.

Underwriting :

Underwriting means guaranteeing purchase of a stipulated amount of a newissue. Underwriting is a financial service which ensures the success of newissue. But mostly it is undertaken on a commission basis known asunderwriters commission.

Merchant Banking :

Merchant Banker is any person who is engaged in the business of issuemanagement either by making arrangements regarding selling, buying, orsubscribing to the securities as a manager, consultant advisor, or renderingcorporate advisory service in relation to such issue management.

30


31/87

Functions of Merchant Banks :

The basic function of these banks is marketing Corporate and othersecurities i.e. guaranteeing sales and distribution of securities.

They guarantee the success of issues by underwriting them.

They also provide all types of services related to receiving applications,allotment, collecting money, sending share and debenture certificatesand so on.

31


32/87

SEBI Guidelines

Securities and Exchange Board of India (SEBI) was initially established as a

non-statutory body in April, 1988. For

a) Dealing with all matters relating to the development and regulation.b) Providing investors Protection.

SEBI was authorized to

1. To regulate all merchant banks on issue activity2. To lay guidelines, and supervise and regulate the working of Mutual

funds and3. To oversee the working of stock exchanges in India.

Responsibilities of SEBI :

Regulating the business in stock exchanges and other securitiesmarkets.

Registering and regulating the working of stock-brokers, sub-brokers,share transfer agents, bankers to an issue, trustee of trust deals,underwriters, Merchant bankers, Portfolio managers, and otherintermediaries associated with the securities markets.

Registering and regulating of collective investment schemes including

mutual funds.

Promoting ad regulating the working of self-regulatory organizations.

Prohibiting fraudulent and unfair trade practices relating to securitiesmarkets.

Promoting investors education and training of intermediaries ofsecurities market.

Prohibiting insiders trading in Securities, and

Regulating substantial acquisition of shares and takeover ofcompanies.

32


33/87

SECONDARY MARKET

33


34/87

SECONDARY MARKET

Secondary Market deals in securities already issued or existing. It is amarket in which previously issued credit instruments are bought and sold.

STOCK EXCHANGE

Stock Exchange is a market where stocks, shares and other securities arebought and sold. It is a market where the owners of securities can disposethem of as and when they desire. Stock Exchange has both Primary andSecondary functions

There are at present 23 Stock Exchanges in the country which are recognizedby the government under the Securities Contract (Regulation) Act, 1956. 21of them are regional ones. Two other exchanges are set up in the reformsera they are

1. National Stock Exchange (NSE)

2. Over the counter Exchange of India (OTCEI).

Bombay Stock Exchange (BSE) is the countrys leading exchange. All stockexchanges are managed by governing body which consists of elected broker-directors, public representatives, and Government/SEBI.

Role and functions of Stock Exchanges :

A well-organised Stock Exchange performs a number of useful functions they

are as follows:

An organised stock exchange operating under the well-defined rulesand regulations minimizes the dangers of speculative dealings andprice manipulations.

Stock exchange provides a ready; market for trading securities andthis helps in mobilization of capital.

Stock exchange helps in determining the prices of securities.

Stock exchange facilitates the mobilization of savings of the surplus

units.

Stock exchange increases the creditworthiness of the businessenterprises.

34


35/87

BSE PROFILE

35


36/87

PREFACE

For the premier Stock Exchange that pioneered the stock broking activity inIndia, 125 years of experience seem to be a proud milestone. A lot has

changed since 1875 when 318 persons became members of what today iscalled "Bombay Stock Exchange Limited" by paying a princely amount ofRe1.

Since then, the stock market in the country has passed through both goodand bad periods. The journey in the 20th century has not been an easyone. Till the decade of eighties, there was no measure or scale that couldprecisely measure the various ups and downs in the Indian stock market.Bombay Stock Exchange Limited (BSE) in 1986 came out with a StockIndex that subsequently became the barometer of the Indian Stock Market.

BSE-SENSEX, first compiled in 1986 is a "Market Capitalization-Weighted"index of 30 component stocks representing a sample of large, well-established and financially sound companies. The base year of BSE-SENSEXis 1978-79. The index is widely reported in both domestic and internationalmarkets through print as well as electronic media. BSE-SENSEXis not onlyscientifically designed but also based on globally accepted construction andreview methodology. The "Market Capitalization-Weighted"methodology isa widely followed index construction methodology on which majority ofglobal equity benchmarks are based.

The growth of equity markets in India has been phenomenal in the decadegone by. Right from early nineties the stock market witnessed heightened

activity in terms of various bull and bear runs. More recently, the bourses inIndia witnessed a similar frenzy in the 'TMT' sectors. The BSE-SENSEXcaptured all these happenings in the most judicial manner. One can identifythe booms and bust of the Indian equity market through BSE-SENSEX.

36


37/87

INTRODUCTION

Bombay Stock Exchange Limited is the oldest stock exchange in Asia with arich heritage. Popularly known as BSE, it was established as The NativeShare & Stock Brokers Association in 1875. It is the first stock exchange inthe country to obtain permanent recognition in 1956 from the Government ofIndia under the Securities Contracts (Regulation) Act, 1956.The Exchangespivotal and pre-eminent role in the development of the Indian capital marketis widely recognized and its index, SENSEX, is tracked worldwide. Earlier anAssociation of Persons (AOP), the Exchange is now a demutualised andcorporatised entity incorporated under the provisions of the Companies Act,1956, pursuant to the BSE(Corporatisation and Demutualisation) Scheme,2005 notified by the Securities and Exchange Board of India (SEBI).

With demutualisation, the trading rights and ownership rights have been de-linked effectively addressing concerns regarding perceived and real conflictsof interest. The Exchange is professionally managed under the overalldirection of the Board of Directors.The Board comprises eminentprofessionals, representatives of Trading Members and the Managing Directorof the Exchange. The Board is inclusive and is designed to benefit fromtheparticipation of market intermediaries.

In terms of organisation structure, the Board formulates larger policy issuesand exercises over-all control. The committees constituted by the Board arebroad-based.The day-to-dayoperations of the Exchange are managed by the

Managing Director and a management team of professionals.

The Exchange has a nation-wide reach with a presence in 417 cities andtowns of India. The systems and processes of the Exchange are designed tosafeguard market integrity and enhance transparency in operations. Duringthe year 2004-2005, the trading volumes on the Exchange showed robustgrowth.

The Exchange provides an efficient and transparent market for tradingin equity, debt instruments and derivatives. The BSEs On Line TradingSystem (BOLT) is a proprietory system of the Exchange and is BS 7799-

2- 2002 certified. The surveillance and clearing & settlement functionsof the Exchange are ISO 9001:2000 certified

37


38/87

LOGO

The Stock Exchange, Mumbai, is now Bombay Stock Exchange Limited. TheExchange has a new name, and an entirely new perspective. A perspectiveborn out of corporatisation and demutualisation.

Bombay Stock Exchange Limited is Asias oldest stock exchange. It carries

within itself the depth of knowledge of capital markets acquired since itsinception in 1875. Located in Mumbai, the financial capital of India, it hasbeen the backbone of the countrys capital markets.

As a corporate entity, our new identity reflects our new perspective.Smoother, seamless, and efficient. Whichever way you look at it.

VISION

Emerge as the premier Indian stock exchange by establishing globalbenchmarks"

38


39/87


40/87

BSE also operates one of the largest private networks in India, comprisingcampus LAN, WAN set up within Mumbai and across some major metros inIndia, VSAT set up across the country, BSE Admin network covering BSEoffices and Internet set up supporting BSE Internet trading portal,BSEWebx.com; corporate website, and mail services and Regional Hubs forlocal fan out of leased lines within Metros backed by high availability trunkback bone to BSE. The regional technology hubs commissioned in Chennai,Rajkot, Jaipur and Bangalore provide cost-effective reliable services tomembers.

The trading and settlement activities of the member-brokers are closelymonitored through On-line Real Time System known as BSE OnlineSurveillance System (BOSS). The system enables the Exchange to detectmarket abuses at a nascent stage, improve the risk management system and

strengthen the self-regulatory mechanisms. Currently, BSE is in the processof evolving an integrated system for online surveillance of Cash andDerivatives Segment through BSE Online Surveillance System-Integrated(BOSS-i).

BSE uses higher end fault tolerant systems for its trading and relatedfunctionalities. It uses Integrity Non-stop S88000 systems for its onlinetrading systems (BOLT). The systems have been designed to deliver the bestperformance without compromising on key factors of availability, scalability,ROI and TCO. There are powerful RISC based Unix severs rp8400 from hp forour Derivatives, Settlement, Backoffice, Datafeed, BBS, RBBS and other

systems related to trading / non-trading and related functionalities. Thesystems are facilitated by the use of the robust and high available storagesubsystems from hp.

We use one of the most powerful RISC based Alpha GS140 and ES40 serversfor our Internet based trading system (ITS) enabling the end user to carryout the trading activities from any location facilitated by the internet.

we also use Intel 8 way and 4 way servers for bseindia.com web site, one ofthe best portal on information related to capital markets.

BSE strictly adheres to IS policies and IS Security policies and procedures forits day to day operational activities on 24 x 7 basis which has enabled us toachieve the BS7799 certification. In addition, BSE has also been successful inmaintaining systems and processes uptime of 99.99%.

40


41/87

SAFETY OF THE BSE MARKET

One of the objectives of the Exchange is to promote and inculcate honourable

and just practices of trade in securities transactions and to discouragemalpractices.

The surveillance function at the Exchange has assumed greater importance inthe last few years. The Securities and Exchange Board of India (SEBI) haddirected the Stock Exchanges in August 1995 to set up a separateSurveillance Department with staff exclusively assigned to surveillancefunctions. The Exchange has accordingly set up a separate SurveillanceDepartment to keep a close watch on price movement of scrips, detectmarket manipulations like price rigging, etc., monitor abnormal prices andvolumes which are not consistent with normal trading pattern and monitorthe member-brokers' position to ensure that defaults do not occur. This

Department, which is headed by a General Manager, reports directly to theExecutive Director.

The Surveillance Department monitors exposure of the members on a dailybasis. It also scrutinises the prices and volumes of the scrips on a daily basis.

As per the guidelines issued by SEBI, the Exchanges are required to apply adaily Circuit Filter of 20% on all the scrips except on the scrips on whichderivative products are available or are included in the indices on whichderivative products are available. On these scrips Exchange has imposeddummy circuit filters to avoid punching error by members, if any. The

imposition of circuit filters on scrips ensures that the price of the scrip cannotmove upward or downward beyond the limit set for a day.

The large variation in the prices as well as the volumes of the scrips arescrutinised and appropriate actions are taken. The scrips which reach newhigh or new low and companies which have high turnover, are watched. Alsothe prices and volumes in the newly listed scrips are monitored. In casecertain abnormalities are noticed, then circuit filters are reduced to make itdifficult for the price manipulators to increase or push down the prices of ascrip within a short period of time. The Exchange imposes special margin inthe scrips where it is suspected that there is an attempt to ramp up theprices by creating artificial volumes. The Exchange also transfers the scripsfor trading and settlement on a trade-to-trade basis which would result intogiving/taking delivery of shares on a gross level and no intra-day/settlementnetting off/squaring off facility would be permitted. In cases where theabnormal movements continue despite the aforesaid measures, trading in thescrip is suspended.

Detailed investigations are conducted in cases where price manipulation issuspected and disciplinary action is taken against the members concerned.

41


42/87

The Exchange has developed an On-line Real Time (OLRT) SurveillanceSystem, which has been commissioned from July 15, 1999. Under thissystem, alerts are generated by the system on-line, in real time, based oncertain preset parameters like the price and volume variation in scrips,members taking unduly large positions not commensurate with their financialposition or having concentrated position(s) in one or a few scrips, etc.

This system includes databases such as company profile, members' profileand historical database of turnover and price movement in scrips, members'turnover, their pay-in obligations, etc. The system generates alerts on thebasis of pre-set parameters during the trading hours and corrective actionbased on further investigations is taken in such cases.

42


43/87

LISTING OF SECURITIES

Listing means admission of the securities to dealings on a recognised stockexchange. The securities may be of any public limited company, Central or

State Government, quasi governmental and other financialinstitutions/corporations, municipalities, etc.

The objectives of listing are mainly to :

provide liquidity to securities; mobilize savings for economic development; protect interest of investors by ensuring full disclosures.

The Exchange has a separate Listing Department to grant approval for listingof securities of companies in accordance with the provisions of the SecuritiesContracts (Regulation) Act, 1956, Securities Contracts (Regulation) Rules,

1957, Companies Act, 1956, Guidelines issued by SEBI and Rules, Bye-lawsand Regulations of the Exchange.A company intending to have its securities listed on the Exchange has tocomply with the listing requirements prescribed by the Exchange. Some ofthe requirements are as under :-

I Minimum Listing Requirements for new companies

II Minimum Listing Requirements for companies listed on other stock exchanges

IIIMinimum Requirements for companies delisted by this Exchange seekingrelisting of this Exchange

IV

Permission to use the name of the Exchange in an Issuer Company's

prospectus

V Submission of Letter of Application

VI Allotment of Securities

VII Trading Permission

VIII Requirement of 1% Security

IX Payment of Listing Fees

X Compliance with Listing Agreement

XI "Z" Group

XII Cash Management Services (CMS) - Collection of Listing Fees

43
http://www.bseindia.com/about/abintrobse/#Ihttp://www.bseindia.com/about/abintrobse/#IIhttp://www.bseindia.com/about/abintrobse/#IIIhttp://www.bseindia.com/about/abintrobse/#IIIhttp://www.bseindia.com/about/abintrobse/#IVhttp://www.bseindia.com/about/abintrobse/#IVhttp://www.bseindia.com/about/abintrobse/#Vhttp://www.bseindia.com/about/abintrobse/#VIhttp://www.bseindia.com/about/abintrobse/#VIIhttp://www.bseindia.com/about/abintrobse/#VIIIhttp://www.bseindia.com/about/abintrobse/#IXhttp://www.bseindia.com/about/abintrobse/#Xhttp://www.bseindia.com/about/abintrobse/#XIhttp://www.bseindia.com/about/abintrobse/#Ihttp://www.bseindia.com/about/abintrobse/#IIhttp://www.bseindia.com/about/abintrobse/#IIIhttp://www.bseindia.com/about/abintrobse/#IIIhttp://www.bseindia.com/about/abintrobse/#IVhttp://www.bseindia.com/about/abintrobse/#IVhttp://www.bseindia.com/about/abintrobse/#Vhttp://www.bseindia.com/about/abintrobse/#VIhttp://www.bseindia.com/about/abintrobse/#VIIhttp://www.bseindia.com/about/abintrobse/#VIIIhttp://www.bseindia.com/about/abintrobse/#IXhttp://www.bseindia.com/about/abintrobse/#Xhttp://www.bseindia.com/about/abintrobse/#XI


44/87

[I] Minimum Listing Requirements for new companies

(A) Minimum Capital :

1. New companies can be listed on the Exchange, if their issued &subscribed equity capital after the public issue is Rs.10 crores . Inaddition to this the issuer company should have a post issuenetworth ( equity capital + free reserves excluding revaluationreserve) of Rs.20 crores.

2. For new companies in high technology ( i.e. information technology,internet, e-commerce, telecommunication, media includingadvertisement, entertainment etc.) the following criteria will beapplicable regarding threshold limit:

i. The total income/sales from the main activity, which should bein the field of information technology, internet, e-commerce,

telecommunication, media including advertisement,entertainment etc. should not be less than 75% of the totalincome during the two immediately preceding years ascertified by the Auditors of the company.

ii. The minimum post-issue paid-up equity capital should be Rs.5Crores.

iii. The minimum market capitalisation should be Rs.50 Crores.(The capitalisation will be calculated by multiplying the postissue subscribed number of equity shares with the Issueprice).

iv. Post issue networth ( equity capital + free reserves excludingrevaluation reserve) of Rs.20 Crores.

(B) Minimum Public offer :

As per Rule 19(2) (b) of the Securities Contracts (Regulation) Rules, 1957,securities of a company can be listed on a Stock Exchange only when at least25% of each class or kind of securities is offered to the public forsubscription.In case of IPOs by unlisted companies in the IT& entertainment sector, at

least 10% of the securities issued by the company may be offered to thepublic subject to the following:

Minimum 20 lac securities are offered to the public (excludingreservation, firm allotment and promoters contribution)

The size of the offer to the public is minimum 50 crores.

44


45/87

For this purpose, the term "offered to the public" means only the portionoffered to the public and does not include reservations of securities on firmor competitive basis.SEBI may, however, relax this condition on the basis of recommendations ofstock exchange(s), only in respect of a Government company defined underSection 617 of the Companies Act, 1956.[II] Minimum Listing Requirements for companies listed on other stock

exchangesThe Governing Board of the Exchange at its meeting held on 6th August,2002 amended the direct listing norms for companies listed on other StockExchange(s) and seeking listing at BSE. These norms are applicable withimmediate effect.

1. The company should have minimum issued and paid up equity capitalof Rs. 3 crores.

2. The Company should have profit making track record for last three

years. The revenues/profits arising out of extra ordinary items orincome from any source of non-recurring nature should be excludedwhile calculating distributable profits.

3. Minimum networth of Rs. 20 crores (networth includes Equity capitaland free reserves excluding revaluation reserves).

4. Minimum market capitalisation of the listed capital should be at leasttwo times of the paid up capital.

5. The company should have a dividend paying track record for the last 3consecutive years and the minimum dividend should be at least 10%.

6. Minimum 25% of the company's issued capital should be with Non-Promoters shareholders as per Clause 35 of the Listing Agreement.

Out of above Non Promoter holding no single shareholder should holdmore than 0.5% of the paid-up capital of the company individually orjointly with others except in case of Banks/FinancialInstitutions/Foreign Institutional Investors/Overseas Corporate Bodiesand Non-Resident Indians.

7. The company should have at least two years listing record with any ofthe Regional Stock Exchange.

8. The company should sign an agreement with CDSL & NSDL for demattrading.

45


46/87

TRADING AND SETTLEMENT

TRADING

Listed Securities

Permitted Securities

Tick Size

Computation of closing price of scrips in the Cash Segment

Compulsory Rolling Segment (CRS)

SETTLEMENT

Pay-in and Pay-out for 'A', 'B1', 'B2', T, S, TS, 'C', "F", "G" & 'Z' groupof securities

Demat pay-in Auto delivery facility Pay-in of securities in physical form Funds Pay-in Securities Pay-out

Funds Payout Penalty Norms Brokers Contingency Fund

46


47/87

TRADING

Trading on the BOLT System is conducted from Monday to Friday between9:55 a.m. and 3:30 p.m. The scrips traded on the Exchange have beenclassified into 'A', 'B1', 'B2','T', S', TS' 'F' ,'G' and 'Z' groups.

T he Exchange has for the guidance and benefit of the investors haveclassified the scrips in the Equity Segment into 'A', 'B1', 'B2','T', S', TS' and'Z' groups on certain qualitative and quantitative parameters which includenumber of trades, value traded, etc.

The F Group represents the Fixed Income Securities.

The T Group represents scrips which are settled on a trade to trade basis asa surveillance measure.

The S Group represent scrips forming part of the BSE-Indonextsegment . The TS Group consist of scrips in the BSE-Indonext segmentwhich are settled on a trade to trade basis as a surveillance measure.

Trading in Govt. Securities for retail investors is done under "G" group.

The 'Z' group was introduced by the Exchange in July 1999 and includes thecompanies which have failed to comply with the listing requirements of theExchange and/or have failed to resolve investor complaints or have not madethe required arrangements with both the Depositories, viz., CentralDepository Services (I) Ltd. (CDSL) and National Securities Depository Ltd.(NSDL) for dematerialization of their securities.

The Exchange also provides a facility to the market participants for on-linetrading of odd-lot securities in physical form in 'A', 'B1', 'B2' T','S', TS' and'Z' groups and Rights renunciations in all the groups of scrips in the EquitySegment.

With effect from December 31, 2001, trading in all securities listed in equitysegment of the Exchange takes place in one market segment, viz.,Compulsory Rolling Settlement Segment (CRS).

The scrips of the companies which are in demat can be traded in market lot

of one but the securities of companies which are still in the physical form aretraded on the Exchange in the market lot of generally either 50 or 100.However, the investors having quantities of securities less than the marketlot are required to sell them as "Odd Lots". The facility of trading in odd lotsof securities not only offers an exit route to investors to dispose of their oddlots of securities but also provides them an opportunity to consolidate theirsecurities into market lots.

47


48/87

This facility of selling physical shares in compulsory demat scrips is called anExit Route Scheme. This facility can also be used by small investors forselling upto 500 shares in physical form in respect of scrips of companieswhere trades are required to be compulsorily settled by all investors in dematmode.

Listed Securities:

The securities of companies which have signed Listing Agreement with theExchange are traded at the Exchange as "Listed Securities". Baring a fewscrips, all scrips traded in the Equity Segment at the Exchange fall in thiscategory.

Permitted Securities:

To facilitate the market participants to trade in securities of the companieswhich are actively traded at other Regional Stock Exchanges but are notlisted on the Exchange, the Exchange has in April 2002 decided to permittrading in such securities as " Permitted Securities" provided they meet therelevant norms specified by the Exchange.

Tick Size:

Tick size is the minimum difference in rates between two orders on the same

side i.e., buy or sell, entered on the system for a particular scrip. Trading inscrips listed on the Exchange is done with the tick size of 5 paise.

However, in order to increase the liquidity and enable the market participantsto put orders at finer rates, the Exchange has reduced the tick size from 5paise to 1 paise in case of units of mutual funds, securities traded in "F"group and equity shares having closing price upto Rs. 15/- on the last tradingday of the calendar month. Accordingly, the tick size in various scrips quotingupto Rs.15/- is revised to 1 paise on the first trading day of month. The ticksize so revised on the first trading day of month remain unchanged duringthe month even if the prices of scrips undergo change.

48


49/87


50/87

PENALTY NORMS

For settlement (Pay-in) defaults :

Violation/s Obligation>= 20%Of BMC &


51/87

4thinstance :Rs. 20,000/- or3 % of the funds obligationwhichever is higher will belevied

4thinstance : : 2% of thefunds obligation. Inaddition to the abovepenalty, BOLT Terminal tobe de-activated

immediately and to remainde-activated for additionalfive trading days afterclearance of the obligation,irrespective of the amountof obligation.

5thinstance : Rs. 40,000/-or 6% of the funds obligationwhichever is higher.

5thinstance : 3% of thefunds obligation. Inaddition to the abovepenalty, BOLT Terminal tobe de-activatedimmediately and to remainde-activated for additionalseven trading days afterclearance of the obligation,irrespective of the amountof obligation. Plus thematter would be referredto DAC.

6thinstance & above : : Rs.75,000/- or 10% of fundsobligation whichever ishigher. In addition the

matter would be referred toDAC. In case this is the sixthinstance within a period of 3months, on rolling basis,BOLT terminals of themember shall be de-activated immediately. Alsodeposit as funds shortagecollateral ** will becollected as per SEBIguidelines.

51


52/87

NSE PROFILE

52


53/87

The Organisation

The National Stock Exchange of India Limited has genesis in the report of theHigh Powered Study Group on Establishment of New Stock Exchanges, whichrecommended promotion of a National Stock Exchange by financialinstitutions (FIs) to provide access to investors from all across the country onan equal footing. Based on the recommendations, NSE was promoted byleading Financial Institutions at the behest of the Government of India andwas incorporated in November 1992 as a tax-paying company unlike otherstock exchanges in the country.

On its recognition as a stock exchange under the Securities Contracts(Regulation) Act, 1956 in April 1993, NSE commenced operations in the

Wholesale Debt Market (WDM) segment in June 1994. The Capital Market(Equities) segment commenced operations in November 1994 and operationsin Derivatives segment commenced in June 2000.

Our Logo

The logo of the NSE symbolises a single nationwide securities trading facilityensuring equal and fair access to investors, trading members and issuers allover the country. The initials of the Exchange viz., N, S and E have beenetched on the logo and are distinctly visible. The logo symbolises use of stateof the art information technology and satellite connectivity to bring about thechange within the securities industry. The logo symbolises vibrancy andunleashing of creative energy to constantly bring about change throughinnovation.

53


54/87

Our Group

NSCCL

IISL

NSE.IT

NSDLDotEx Intl. Ltd.

54


55/87

Our Mission

NSE's mission is setting the agenda for change in the securities markets in

India. The NSE was set-up with the main objectives of:

establishing a nation-wide trading facility for equities, debtinstruments and hybrids,

ensuring equal access to investors all over the country through anappropriate communication network,

providing a fair, efficient and transparent securities market toinvestors using electronic trading systems,

enabling shorter settlement cycles and book entry settlementssystems, and

meeting the current international standards of securities markets.

The standards set by NSE in terms of market practices and technology havebecome industry benchmarks and are being emulated by other marketparticipants. NSE is more than a mere market facilitator. It's that force whichis guiding the industry towards new horizons and greater opportunities.

Market Timings

Trading on the equities segment takes place on all days of the week (exceptSaturdays and Sundays and holidays declared by the Exchange in advance).The market timings of the equities segment are:

Normal Market Open : 09:55 hoursNormal Market Close : 15:30 hours

The Closing Session is held between 15.50 hours and 16.00 hours

Limited Physical Market Open : 09:55 hoursLimited Physical Market Close : 15:30 hours

55


56/87

Securities Available for Trading

The Capital Market (Equities) segment of NSE facilitates trading in thefollowing instruments:

A. Shares

Equity Shares Preference Shares

B. Debentures

Partly Convertible Debentures Fully Convertible Debentures Non Convertible Debentures Warrants / Coupons / Secured Premium Notes/ other Hybrids Bonds

C. Units of Mutual Funds

For the list of securities available for trading on the NSE .

Listing

Listing means admission of securities of an issuer to trading privileges on astock exchange through a formal agreement. The prime objective of

admission to dealings on the Exchange is to provide liquidity andmarketability to securities, as also to provide a mechanism for effectivemanagement of trading.

Listing on NSE provides qualifying companies with thebroadest access to investors, the greatest market depth and liquidity, cost-effective access to capital, the highest visibility, the fairest pricing, andinvestor benefits. NSE trading terminals are now situated in various citiesand towns across the length and breath of India.

Securities listed on the Exchange are required to fulfill the eligibility criteriafor listing. Various types of securities of a company are traded under aunique symbol and different series.

56


57/87

Listing Procedure

An Issuer has to take various steps prior to making an application for listingits securities on the NSE. These steps are essential to ensure the compliance

of certain requirements by the Issuer before listing its securities on the NSE.The various steps to be taken include:

Initial Discussions Approval of Memorandum and Articles of Association Approval of draft prospectus Submission of Application Listing conditions and requirements

In case company fulfils the criteria, the following information for furtherprocessing :

1. A brief note on the promoters and management.2. Company profile.3. Copies of the Annual Report for last 3 years.4. Copies of the Draft Offer Document.5. Memorandum & Articles of Association.

57


58/87

Listing Fees

The listing fees depend on the paid up share capital of your Company:

Particulars Amount (Rs.)

Initial Listing Fees 7,500

Annual Listing FeesCompanies with paid up share and/or debenture capital:

Of Rs.1 crore 4,200

Above Rs.1 crore and up to Rs.5crores

8,400

Above Rs.5 crores and up to Rs.10crores

14,000


28,000


42,000

Above Rs.50 crores 70,000

Companies which have a paid up capital of more than Rs. 50 crores willpay additional listing fees of Rs. 1400 for every increase of Rs. 5 crores or

part thereof in the paid up share/debenture capital.

58


59/87

Equities

NSE started trading in the equities segment (Capital Market segment) onNovember 3, 1994 and within a short span of 1 year became the largestexchange in India in terms of volumes transacted.

Trading volumes in the equity segment have grown rapidly with averagedaily turnover increasing from Rs.17 crores during 1994-95 to Rs.4,328crores during 2003-04. During the year 2003-04, NSE reported a turnover ofRs.1,099,535 crores in the equities segment accounting for 68.60% of thetotal Indian securities market.

The Equities section provides you with an insight into the equities segment ofNSE and also provides real-time quotes and statistics of the equities market.In-depth information regarding listing of securities, trading systems &processes, clearing and settlement, risk management, trading statistics etcare available here.

Current Settlement Statistics (Equities)

The Exchange has successfully completed its 1540th Normal Settlement

The Exchange has successfully completed its 1540th Normal Settlements(Rolling T+2 following SEBI directive) since inception i.e., SettlementNumber N 2006067 on April 17, 2006. The settlement statistics are asfollows:

Particulars Values

N 2006067

Total traded quantity (lakhs) 4618.43

Total traded value (Rs. In Crores) 10905.09

Total value of the settlement (Securities) (Rs. In Crores) 2957.25

Total value of the settlement (Funds) (Rs. In Crores) 1130.74

Shortages for the settlement 0.27%

% of Delivery ( No. of shares deliverable / No. of shares traded ) 28.02%

Retail Debt Market has completed its 814th settlements details of which areas follows :

Settlement No. Traded Value Settlement Value

Securities Funds

D- 2006067 NIL NIL NIL

59


60/87

COMPANY ANALYSIS

60


61/87

Satyam profile

Delivering What Business Demands

Satyam Computer Services Ltd. (NYSE: "SAY") is a leading global consulting

and IT services company, offering a wide array of solutions customized for arange of key verticals and horizontals. From strategy consulting right throughto implementing IT solutions for customers, Satyam straddles the entire ITspace. It has excellent domain competencies in verticals such as Automotive,Banking & Financial Service, Insurance & Healthcare, Manufacturing,Telecom-Infrastructure-Media-Entertainment-Semiconductors (TIMES). As adiverse end-to-end IT solutions provider, Satyam offers a range of expertiseaimed at helping customers re-engineer and re-invent their businesses tocompete successfully in an ever-changing marketplace.

Satyam's network spans 55* countries, across 6* continents. Over 28,000*dedicated and highly skilled IT professionals, work in development centers inIndia, the USA, the UK, the UAE, Canada, Hungary, Singapore, Malaysia,China, Japan and Australia* and serve over 469* global companies, includingover 156* Fortune 500 corporations.

We have strategic technology and marketing alliances with over 50* top-notch companies that help us provide end-to-end services to our customers.

Satyam's need-driven deployment of domain and technology expertise bringsto customers a range of solutions and products that enhance performanceand competitiveness.

Our unique RightSourcing TM delivery model allows us to leverage localcompetencies to offer global competitiveness to our customers.

Our consulting and IT solutions have resulted in technology-intensivetransformations that have met the most stringent of international qualitystandards. We have developed a unique quality hallmark, called eSCMSM

(eSourcing Capability Model), for IT Enabled Services (ITES), in collaborationwith Carnegie Mellon University and Accenture.

We follow a specially developed Business Continuity Model (BCM), whichallows us to continue mission critical operations of our customers, even in the

most challenging of times.

61
http://www.satyam.com/alliances/alliances.htmlhttp://www.satyam.com/aboutsatyam/a_right.htmlhttp://www.satyam.com/aboutsatyam/a_right.htmlhttp://www.satyam.com/aboutsatyam/a_right.htmlhttp://www.satyam.com/aboutsatyam/a_right.htmlhttp://www.nipunaservices.com/http://www.satyam.com/aboutsatyam/a_bcms.htmlhttp://www.satyam.com/alliances/alliances.htmlhttp://www.satyam.com/aboutsatyam/a_right.htmlhttp://www.nipunaservices.com/http://www.satyam.com/aboutsatyam/a_bcms.html


62/87


63/87

Satyam Computer Services Ltd

Financial performance (Rs . Cr)

Year-end 2007-06 2006-05 2005-04 2004-03

Equity 64 63 63 63

Net worth 3217 2581 2135 1930Enterprise value 10688 7474 4061 7326

Capital Employed 3227 2588 2153 1936

Gross Block 938 839 776 739

Sales 6228 4634 3464 2541

Other Income 182 380 102 113

PBIDT 1711 1571 972 774

PBDT 1703 1568 971 774

PBIT 1524 1246 868 663

PBT 1573 1445 867 662

Reported PAT(RPAT) 1423 1240 750 556

Adjusted PAT 1419 1232 751 542CP 1326 1146 854 667

Rev.Earning in FE 3032 2294 1870 1602

Rev.Expenses in FE 1806 1355 955 589

Book Value (Rs) 100.77 81.61 67.81 61.37

EPS (Rs) 22.85 17.06 9.49 14.24

Dividend (%) 175 350 250 200

Pay out (%) 21.89 23.49 31.61 8.32

Equity: Stock or any other security representing an ownership interest.

On the balance sheet, the amount of the funds contributed by the owners(the stockholders) plus the retained earnings (or losses). Also referred to as"shareholder's equity".

The equity of satyam computers ltd has been increased form 63cr to 64crsince from the year 2003To 2007.

Net worth : It the total of paid-up equity capital and free reserves andsurplus.Paid up capital is the has been increased in the year 2007 comparedto the year 2005-04.

Book value : the book value of the Equity share increased to 86.77 from

82.37.

EPS : Earning per share of the satyam company has been increasing inconsecutive yearsExcept in the year 2004. Due to down trend in IT sector but gradually it hasincreased to20.77 form 17.06.

63


64/87

Dividend :payment made to share holders usually once or twice a year outof a companysProfits after tax. Dividend is declared on the face value of the share and noton its market price.Bonus share is also a kind of dividend.]Calculated as:

The percentage of earnings paid to shareholders in dividends.

Calculated as:

Dividends paid to the share holders was Rs 175cr in the year 2007.

Pay out (%) : the pay out (%) of dividend is 21.89 from 31.61

Conclusion: satyam computers ltd is one of the multi national companysand it has been a legend in IT , satyam computers ltd has got Equity of64crs and net worth 3217Cr which is lower than wipro, and Infosys. But hasEps, Dividend pay out ration is more than wipro and Infosys.

64


65/87

Wipros Profile

Wipro Fluid Power Limited - Wipro Fluid Power offers world-class hydraulic

cylinders and truck hydraulic components and represents the Kayaba,Kawasaki, Sun Hydraulics and Teijin Seiki range of hydraulic products inIndia. With state-of-the-art manufacturing facilities and extensive productdevelopment and testing facilities, Wipro Fluid Power has emerged leader inthe in the hydraulic cylinders and truck tipping systems market in India.

Wipro Infotech India - Wipro Infotech is the IT services, solutions andproducts division of Wipro. It operates in the geographies of Asia-Pacific andthe Middle-East. Wipro Infotech is one of the leading manufacturers ofcomputer hardware and a provider of systems integration services in India.The company manufactures a popular line of desktops, notebook PCs, dataservers and offers a range of technology services.

Wipro Lighting - Wipro Lighting manufactures and markets the Wiprobrand of luminaires, lamps and accessories. Wipro Lighting caters to bothinstitutional and retail consumers, offering lighting solutions across variousapplication areas such as commercial lighting for modern work spaces,manufacturing and pharmaceutical companies, designer petrol pumps andoutdoor architecture.

Milestones

Our values are extremely important to us and form the bedrock of our visionand plans. Values are an integral part of our culture and present a commonface to our Customer. The four Wipro values: Human Values, Integrity,Innovative Solutions and Value for Money are encapsulated in our promise tothe customer and in our Identity.

These values shape our thinking, our behavior, our culture and how we comeacross to our customers, partners and to the world at large.

Innovation is Wipro - Wipro is Innovation is our statement of purpose. Thechallenge this pursuit presents to us every day is how does one make

Innovation Purposeful, ingrained and Deliberate in our organization.

We recognize and nurture innovative solutions as one of the four Wiprovalues. We prioritize focus and resources guided by this value. The Wiproway of Innovation is really about this deliberate sustained innovation.

Our purpose of Innovation is to create higher value for our customers. Thiscontinuous thought led us to foresee the benefit of partnering withtechnology companies to bring value to our customers. Combining these

65


66/87

relationships with our strong R&B talent led to the idea of Lab on Hire andsubsequently to offshore development centers which made offshoreoutsourcing truly mainstream. Pushing this idea a little further helped usconceptualize the remote infrastructure service model, branded as globalcommand center or GCC to manage the customers IT infrastructure. Today,we serve our customers with a wide spectrum of services fuelled by thepower of innovation.

Industries

Automotive ElectronicsAutomotive ITAvionicsComputing PeripheralsComputing PlatformsConsumer ElectronicsDistribution & LogisticsEnergy & UtilitiesFinanceGovernmentHealthScience

High Technology

66
http://www.wipro.com/webpages/itservices/industries/healthscience/index.htmhttp://www.wipro.com/webpages/itservices/industries/hitechindustry/index.htmhttp://www.wipro.com/webpages/itservices/industries/healthscience/index.htmhttp://www.wipro.com/webpages/itservices/industries/hitechindustry/index.htm


67/87

InsuranceManufacturingMedia & EntertainmentMobile DevicesRetailSemiconductorsSoftware ProductsStorage TechnologiesTelecom - Equipment VendorsTelecom - Service ProvidersTravel & Transport

67


68/87

WIPRO LTD


Year-end 2006-05 2005-04 2004-03 2003-02

Equity 141 47 47 46Net worth 4892 3508 3330 2533

Enterprise value 46720 31449 28225 39287


Gross Block 1763 1334 1162 962

Sales 10264 7276 5188 4040

Other Income 152 94 127 118

PBIDT 2635 1948 1237 1075

PBDT 2632 1942 1234 1072

PBIT 2036 1762 1085 937

PBT 2340 1756 1082 934

Reported PAT(RPAT) 2020 1495 950 813Adjusted PAT 2006 1483 906 802

CP 1886 1681 1066 951

Rev.Earning in FE 5374 3836 2887 2349


Book VALUE (Rs) 69.54 150.70 143.20 108.95

EPS (Rs) 20.55 35.59 34.84 37.26

Dividend (%) 250 250 1450 50

Pay out (%) 24.34 81.48 2.87 2.68



The equity of Infosys Technologies ltd has been increased to141cr from 46crsince from the year 2003 to 2006.

Net worth : It the total of paid-up equity capital and free reserves andsurplus.

Paid up capital is the has been increased in the year 2006

compared to the year 2004-03.

Book value : the book value of the Equity share decreased to 69.54 from150.70

EPS : Earning per share of the Infosys Technologies ltd has been decreasedin consecutive years. Eps has decreased to 20.55 form 37.26.

68


69/87


70/87

Infosys profile

Infosys Technologies Ltd. (NASDAQ: INFY) provides consulting and ITservices to clients globally - as partners to conceptualize and realize

technology driven business transformation initiatives. With over 52,000employees worldwide, we use a low-risk Global Delivery Model (GDM) toaccelerate schedules with a high degree of time and cost predictability.

As one of the pioneers in strategic offshore outsourcing of software services,Infosys has leveraged the global trend of offshore outsourcing. Even as manysoftware outsourcing companies were blamed for diverting global jobs tocheaper offshore outsourcing destinations like India and China, Infosys wasrecently applauded by Wired magazine for its unique offshore outsourcingstrategy it singled out Infosys for turning the outsourcing myth aroundand bringing jobs back to the US.

Infosys provides end-to-end business solutions that leverage technology. Weprovide solutions for a dynamic environment where business and technologystrategies converge. Our approach focuses on new ways of businesscombining IT innovation and adoption while also leveraging an organization'scurrent IT assets. We work with large global corporations and new generationtechnology companies - to build new products or services and to implementprudent business and technology strategies in today's dynamic digitalenvironment.

Infosys' Vision:

"To be a globally respected corporation that provides best-of-breed businesssolutions, leveraging technology, delivered by best-in-class people."

Infosys' Mission Statement :

"To achieve our objectives in an environment of fairness, honesty, andcourtesy towards our clients, employees, vendors and society at large."

70


71/87

Key milestones

Year of Incorporation : 1981

Became a public limited companyin India :

1992

ISO 9001/TickIT Certification : 1993

Attained SEI-CMM Level 4 : 1997

Listed on NASDAQ : 1999

Crossed $100 million in annualrevenues :

1999

Attained SEI-CMM Level 5 : 1999

Crossed $400 million in

revenues :

2001

Crossed $ half a billion inrevenues :

2002

Crossed $ billion in revenues : 2004

71


72/87

INFOSYS TECHNOLOGIES Ltd.


Year-end 2006-05 2005-04 2004-03 2003-02

Equity 135 33 33 33Net worth 5242 3253 2861 2080

Enterprise value 59468 31270 25427 23942


Gross Block 2183 1570 1273 961

Sales 9028 6860 4761 3623

Other Income 227 172 127 106

PBIDT 3146 2498 1702 1349

PBDT 3145 2497 1701 1348

PBIT 2936 2231 1471 1160

PBT 2736 2229 1470 1159

Reported PAT(RPAT) 2421 1904 1243 958Adjusted PAT 2415 1898 1239 952

CP 2173 1474 1147 969

Rev.Earning in FE 6105 4533 3378 2496


Book Value (Rs) 193.72 488.21 431.86 314.34

EPS (Rs) 68.82 170.01 142.76 314.34

Dividend (%) 900 230 2590 540

Pay out (%) 16.64 76.12 18.91 16.49



The equity of Infosys Technologies ltd has been increased form 135cr to 33crsince from the year 2002 to 2006.

Net worth : It the total of paid-up equity capital and free reserves andsurplus.Paid up capital is the has been increased in the year 2005 comparedto the year 2004-03.

Book value : the book value of the Equity share decreased to 193.72 from488.21

EPS : Earning per share of the Infosys

equityproject

Documents