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Purpose of Stock Market




              HERE WE GO………
IT’S EASY TO DREAM AS A RICH,
OFCOURSE EASY TO ATTAIN TOO….
Dhirubhai Ambhani
           How a Person can Make Billions w...
STORY GOES LIKE THIS
   Ever Wondered How they Become Rich ??




   If they could why can’t we ? ?




   Is it Possib...
What They Done ???????

                                How They Done ?????

Any Magic #!!!!!!!

                     May ...
HERE WE GO
   Stock Market

          Is all about Facts And Figures

   The Basic Ideology of stock market is to suppor...
THE STORY STARTED LIKE THIS …..
     To Run a business Every body Needs Money,

     The Money can be obtained by means of...
EXAMPLE
   Almost every large corporation started out as a small,
    became financial giants.

   Reliance Started with...
IN NUT SHELL
      Business         Reliance Industries     Bharathi Airtel



  Initial Investment       Rs.15,000       ...
HOW IT HAPPENS, AN STORY TO KNOW
   After getting married, a young couple decided to
    start a business. To Lead their ...
SUPER STAR FURNITURE

   Ten years later, the business has grown rapidly. The
    couple has managed to pay off the compa...
REVIEW
    Bought Loan Started Super Star Furniture's

                     Repaid Loan in Installment

                  ...
SUPER STAR FURNITURE
   The company approaches an “underwriter”, such as ICICI
    or Kotak Mahindra, who determines the ...
BOOK VALUE OF SUPER STAR FURNITURE
                      Book Value
={ (Value of the land + building +            Material...
BOOK VALUE OF SUPER STAR = RS.5 CRORE

   To expand the business the Young Couple need
    Money to expand business.

  ...
OWNERSHIP PARTITION
   Book Value = Rs.5 crore

    Couple decide to Sell 40% OF Their business to
    start the new Bra...
AND HERE THEY GO……
   Even Though the Couple Owns only 60 % they got Rs.2
    crore to Expand the Business.

They will I...
EXPANDING…
  Super Star Group          Profit

  Couple Will Have          24,00,000

  Others                    16,00,00...
WITHIN ONE YEAR THE VALUE

   For Couple the Value Increases From Rs.3 crore to
    Rs.5.4 Crore

   Similarly for The S...
“ We Have to Let our money
                 to work for us’’




FRIENDS THIS IS JUST AN EXAMPLE TO UNDERSTAND THE    PURP...
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Purpose of share market

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Purpose of share market

  1. 1. Purpose of Stock Market HERE WE GO………
  2. 2. IT’S EASY TO DREAM AS A RICH, OFCOURSE EASY TO ATTAIN TOO…. Dhirubhai Ambhani How a Person can Make Billions with the help of Thousands In a span 40 odd years Ended his journey with Rs.65,000 Crore o Warren Buffet His Salary at early days is $1,000 per month ,But he donated 85% of his wealth Roughly around $ 31 billion
  3. 3. STORY GOES LIKE THIS  Ever Wondered How they Become Rich ??  If they could why can’t we ? ?  Is it Possible
  4. 4. What They Done ??????? How They Done ????? Any Magic #!!!!!!! May be a Gimmick !!!!!!!! Any have they Done it …….. Not by Any Means ,,,,,, By One Way that is None Other Than ……..
  5. 5. HERE WE GO  Stock Market Is all about Facts And Figures  The Basic Ideology of stock market is to support business Growth with Mutual Benefits.
  6. 6. THE STORY STARTED LIKE THIS ….. To Run a business Every body Needs Money, The Money can be obtained by means of Banks, Financial Institution,Capitalist,Venture Capitalist ( The Person who Funds A Business). There Raises the need for an Intermediary or Regulatory to Get things done
  7. 7. EXAMPLE  Almost every large corporation started out as a small, became financial giants.  Reliance Started with the Investment of Rs.15,000, Similarly Bharathi Airtel began With The investment of 5,00,000  But now the Reliance Cumulative Assets is more than 2 lakh crores and Airtel Assets is More Than Billion Dollar  These small companies grow from tiny, hometown enterprises To Large Corporate because They raised capital by selling stock in themselves and increased revenues
  8. 8. IN NUT SHELL Business Reliance Industries Bharathi Airtel Initial Investment Rs.15,000 Rs.5,00,000 Current Worth More than 5,00,000 More Than 2 billion Crore This is not possible by the Profit from Business. There needs a Separate Tool to Grow beyond Limitation
  9. 9. HOW IT HAPPENS, AN STORY TO KNOW  After getting married, a young couple decided to start a business. To Lead their Life.Both husband and wife have always had a strong interest in furniture, so they decide to open a store in their hometown.  After borrowing money from the bank, they name their company “Super Star Furniture” and started business.  The first few years, the company makes little profit because the earnings are invested to compensate basic needs like tools ,Land , Machines ,Purchase of More Materials.
  10. 10. SUPER STAR FURNITURE  Ten years later, the business has grown rapidly. The couple has managed to pay off the company’s debt(loan) and profits are over Rs.20,00,000 per year.  Now the Couple desired to start the business in Neighboring Cities .  They searched for various options and finally concluded that they need over one crore to start new stores in neighboring cities  Borrowing the amount for interest is not possible because the limit for bank loan is over, so they decide to sell stock in the company.
  11. 11. REVIEW Bought Loan Started Super Star Furniture's Repaid Loan in Installment Bought Basic Things for First 10 years Business Like Machine, Material, Manufacturing Space( Land)etc. At The End Of Profit is More than 10th Year Rs.20,00,000 Now they Want to Expand Stores to Nearest Cities
  12. 12. SUPER STAR FURNITURE  The company approaches an “underwriter”, such as ICICI or Kotak Mahindra, who determines the value of the business. Let Us Calculate Book Value of Super Star Furniture 2,50,00,000 Sales Value (for Ex) 25,00,000 Profit 2,75,00,000 Total Business Values
  13. 13. BOOK VALUE OF SUPER STAR FURNITURE Book Value ={ (Value of the land + building + Materials + Wealth of Super Star Furniture )etc. – (company’s debt)} + Sales Volume For Example Book Value For Super Star Furniture = { 2,50,00,000 - 25,00,000} + 2,75,00,000 Total Book Value = 5,00,00,000 All the values are Imaginary Examples
  14. 14. BOOK VALUE OF SUPER STAR = RS.5 CRORE  To expand the business the Young Couple need Money to expand business.  Currently they are the 100% owner of the company. By Selling a part of ownership they can expand the business by the amount they got
  15. 15. OWNERSHIP PARTITION  Book Value = Rs.5 crore  Couple decide to Sell 40% OF Their business to start the new Branches Level Couple Own Others Own Cash Reserve Available For Owner To Expand Beginning Rs.5 crore Nil Nil Stage After 60% = Rs.3 Crore 40% = Rs.2 crore Rs.2 Crore Decision
  16. 16. AND HERE THEY GO……  Even Though the Couple Owns only 60 % they got Rs.2 crore to Expand the Business. They will Invest Rs.2 crore for opening Store in the Nearest Cities. By investing So the Profit Profit From Old Profit From New Total Profit Store Store 25,00,000 20,00,000 45,00,000 Within a year the Profit Increases as Well as Ownership Value Increases
  17. 17. EXPANDING… Super Star Group Profit Couple Will Have 24,00,000 Others 16,00,000 Total Value Of Total Business = Book Value of Old Business + Book VALUE Of New Business = Rs.5 crore + Rs.4 Crore = Rs.9 cr(Assumption) 60% For the Couple = Rs.5.4 crore
  18. 18. WITHIN ONE YEAR THE VALUE  For Couple the Value Increases From Rs.3 crore to Rs.5.4 Crore  Similarly for The Share Holders ,VALUE Increases From Rs.2 Crore To Rs.4.6 crore This is how the Wealth Grows and there raises the Purpose of Stock Market To Regulate and Administrate the Proceedings
  19. 19. “ We Have to Let our money to work for us’’ FRIENDS THIS IS JUST AN EXAMPLE TO UNDERSTAND THE PURPOSE OF STOCK MARKET YOUR’S :- V.SARAVANAN (MBA)

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