On Sore Instruments

7/29/2019 On Sore Instruments

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Presentation on : ONSORE INSTRUMENTS

Presented by :

Deep Kamal (10)

Gauri Manukar (38)

Prashant Gharat


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A share is one unit into which the total share capital is

divided. Share capital of the company can be explained as

a fund or sum with which a company is formed to carry

on the business and which is raised by the issue of shares.

Shares are the marketable instruments issued by the

companies in order to raise the required capital.

These are very popular investments which are traded

every day in the stock market and the value of the share at

the end of the day decides the value of the firm.

MEANING OF SHARES& SHARE CAPITAL


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The shares which are issued by companies are of two

types:

Equity Shares

Preference Shares

TYPES OF SHARES


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Equity Shares are issued and are traded everyday in the stockmarket.

Equity share holders only get dividend after preference

shareholders & debenture holders.

The returns on the equity shares are not at all fixed. It depends

on the amount of profits made by the company.

The board of directors decides on how much of the dividendswill be given to equity share holders. Share holders can accept

to it or reject the offer during the annual general meeting.

Equity shareholders have the right to vote on any resolution

placed before the company.

EQUITY SHARES


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1.They don't have no preferential right in respect of payment of dividendor in the repayment of capital at the time of winding of the company.

2.Equtiy shares are risk bearing shares because they are the actualowners of the company when ever company run into losses they have tobear the losses.

3.Equity share holders enjoys voting right whenever there is a meetingthey will enjoy their voting power, enjoys voting power in electing boardof directors.

4.Equity capital is the permanent capital for the company . The companyneed not to return capital . Company has to repay the capital only at thetime of winding up.

5.Equity shares are easily transfer from one person to another at thestock exchange according to the procedure laid down in the article of

association of the company. 6.Eompany gives the bonus shares to the equity shareholders at a free

cost on account of reserves . Undistributed profits and accumulatedprofit

7.Equity shareholder are give first priority when ever company want toraised fresh capital


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ADVANTAGES High Return Easily Transferable.

These can be easily liquidated.

Right to vote

Right to choose the board of directors.

Equity share holders have the right to oppose any of the decisions taken

by the board of directors.

( for e.g. This is what happened when Mr. Ramalinga raju tried to buy

Maytas company)

DISADVANTAGES High Risk

In worst cases less privilege given to equity share holders.


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ISSUE OF SHARESProspectus

Application

Repayment/

dividend

Allotment

Detail of a Company & Shares in Prospectus.

90 % application is necessary

If access application received then company issue

shares by pro rata basis

full amount can be called up by company at the

time of application or it can be paid up in

installments also (calls)

share of the company may be issued in any of the

following three ways:

1. At par;

2. At premium; and

3. At discount.


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These are other type of shares. The preference shares are

market instrument issued by the companies to raise the

capital. Preference shares have the characteristics of both

equity shares and debentures. Fixed rate of dividends arepaid to the preference share holder as in case of debentures,

irrespective of the profits earned company is liable to pay

interest to preference share holders.

PREFRENCE SHARE


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1) Return on Investment : It is in the form ofdividend and rate of dividend is prefixed and precommunicated to the investors.

2) Not Owners : Investors in preference shares are

not the owners of the company.3) Return of Capital : Capital raised by the companyby way of preference shares are required to berepaid during the existence of the company.

4) Non participation in management : Preferenceshareholders do not participate in the affairs of thecompany.

5) Risk: The risk is more on the part of the company.

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ADVANTAGES These yield fixed rate of returns Its a hybrid instrument having some of the characteristics of

debentures and equity shares.

DISADVANTAGES They do not provide the investor with any of the voting

rights.

If the company gets huge profits then they wont get any

extra bonus.


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Instrument of debt executed by the company

A certificate of loan

Company pays pre specified percentage ofinterest

Part of the company's capital structure

Debentures are generally secured against thecompanys assets

Convertible debentures can be either fully orpartly converted into Shares

Convertible debentures may carry a lowerrate of interest

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DEBENTURES


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1) Debenture holders of the company are the creditors of thecompany and not the owners of the company.

2) Capital raised by way of debentures is required to be repaidduring the life time of the company at the time stipulated by thecompany. Thus, it is not a source of permanent capital.

3) Debentures are generally secured.

4) Return paid by the company is in the form of interest which ispredetermined.

5) Debentures are very risky from companys point of view forraising long term funds.

6) Risk on the part of debenture holders is very less.

7) Debenture holders do not carry any voting rights.

8) Debentures are a cheap source of funds from the companyspoint of view.

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ADVANTAGES1. Control of company is not surrendered to debenture holders becausethey do not have any voting rights.

2. Interest on debenture is an allowable expenditure under income tax

act, hence incidence of tax on the company is decreased.

3. Debenture can be redeemed when company has surplus funds.

DISADVANTAGES1. Cost of raising capital through debentures is high of high stamps duty.

2. Common people cannot buy debenture as they are of high

denominations.3. They are not meant for companies earning greater than the rate of

interest which they are paying on the debentures.


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A debt instrument issued for a period of morethan one year with the purpose of raising capitalby borrowing . The Federal government, states,cities, corporations, and many other types ofinstitutions sell bonds.

Generally, a bond is a promise to repay theprincipal along with interest (coupons) on aspecified date (maturity).

Some bonds do not pay interest, but all bondsrequire a repayment of principal. When aninvestor buys a bond, he/she becomes a creditorof the issuer.

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Face value

A bond's face value or denomination, which is stated on the frontof the bond. This is usually a round figure.

Redemption date

The date on which the loan will be repaid is called theredemption date or the maturity date.

Coupon rate

The coupon rate or bond rate is the rate at which the bond paysinterest on its face value at regular time intervals until theredemption date.

Redemption value

A bond's redemption value or maturity value is the amount thatthe issuer promises to pay on the redemption date. In most casesthe redemption value is the same as the face value: if so, thebond is redeemed at par.

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ADVANTAGES

Diversification - Bonds tend to be less volatile than stocks and

can therefore stabilize the value of your portfolio during times whenthe stock market struggles.

Stability - If investors know they will need access to large sums of

money in the near future-for example, to pay for college, a home, etc.

then it does not make sense to place that money in a highly volatile

investment like stocks.

Consistent Income - Unlike stock dividends, coupon payments are

consistently distributed at regular intervals.

Taxes - Payments from some bonds are exempt from federal taxes .

For individuals in high tax brackets, these investments are often an

excellent vehicle for their portfolio


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DISADVANTAGES OF BONDS

Bonds are also subject to various other risks such as call and

prepayment risk, credit risk, reinvestment risk, liquidity risk,event risk, exchange rate risk, volatility risk, inflation risk,

sovereign risk, and yield curve risk.

Price changes in a bond will immediately affect mutual funds

that hold these bonds. If the value of the bonds in a trading

portfolio falls, the value of the portfolio also falls.

This can be damaging for professional investors such as banks,

insurance companies, pension funds, and asset managers

If there is any chance a holder of individual bonds may need to

sell his bonds and cash out, the interest rate risk could

become a real problem.


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Jaypee Infratech Ltd.

Sector 128, , District Gautam Budh Nagar , Noida , Uttar Pradesh - 201304Phone: 4609000 Fax: 4609783

Public Issue of 224799496 Equity Shares of Rs 10 each for Cash at a Premium

of Rs 92 per share.

Issue Open Date Issue Closing Date Application Money Allotment Money29/04/2010 04/05/2010 102 -

Listed atBSE, NSE

Object of the issue

.

The Issue comprises a Fresh Issue and an Offer for Sale. The Proceeds of Fresh Issue

The activities for which funds are being raised by our Company through this Issue, afterdeducting the proceeds from the Offer for Sale: (i) to partially finance the YamunaExpressway Project; and(ii) general corporate purposes. (collectively referred to herein as the "Objects"). Inaddition, our Company expects to receive the benefits of listing of the Equity Shares onthe Stock Exchanges.

IPO EXAMPLE


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THANK YOU

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