To The Rescue!

It is just not possible that you don’t get an occasion to grumble, moan or whine against the company in which you are the stakeholder. There may be occasions when you may not receive your share certificate on allotment or on transfer, it may be that you did not receive the dividend/interest warrant or refund order; perhaps you did not receive the Annual accounts etc. First thing that pops in your mind is to approach the damn company and in that regard, you may not be satisfied with the company’s response. Your soul will definitely not be at peace. But don’t lose heart. Don’t fidget. There are still entities you can approach and happily complain to. Here are your resorts:

1. In case of re-validations of transfer deeds : Voice your grievance to Registrar of companies (RoC)

2. In case of bad delivery of shares: Run to the Bad Delivery Cell of the Stock Exchange

3. In case of shares or debentures in unlisted companies: Contact the Ministry of Corporate Affairs

4. In case of deposits in collective investment schemes like plantations etc: The saviour is SEBI

5. In case of units of Mutual Funds: The saviour is SEBI again!

6. In case of fixed deposits in Bank and Finance Companies: Run to the RBI!

7. In case of Fixed Deposits in manufacturing companies: Ministry of Corporate Affairs to the rescue!

8. In case of Non Receipt of Money: Either the Stock Exchange/SEBI will help

9. In case of non-receipt of equity shares (DEMAT and physical): Again the Stock Exchange or SEBI are the resort

10. In case of Non-Receipt of Debt Securities (DEMAT and physical): Yet again, run to the Stock Exchange or SEBI

11. In case of Non-Receipt of corporate benefits/entitlements: Stock Exchange and SEBI are God

12. In case of Non receipt of interest for delay in refunds, dividend, interest on debt security, redemption of debt security, securities: None other than Stock exchange or SEBI will help!

13. Other complaints including on adherence to corporate governance norms: You know who- Stock Exchange or SEBI are again of help!

Another important factor any investor should keep in mind is that ‘Investor Information Centers’ have been set up in every recognized Stock Exchange which does redress grievances. There are also ‘Rights and Remedies’ for investor grievances which one should look up and read.

Be aware and don’t stay quiet!

Gyaan for the Beginners

So you have finally decided to invest and have opened a DEMAT account. You are now staring down at the figures and have just a rough idea of what you are supposed to do. Well, just going ahead with some ideas in your mind will only just lead you to become another fool. Here’s a list of ‘General information’ for beginners like you. Read it carefully and follow the mantras:

1. Always deal with intermediaries registered with the SEBI/stock exchanges. Do not fall into a trap.

2. Always keep copies of all investment documentation (eg. Application forms, acknowledgement slips, contract notes). You never know when, what will be needed.

3. Send important documents by reliable mode/registered post to ensure deliver.

4. Ensure that you receive contract note at the end of the day/account statements for every transaction.

5. Ensure that you have money before you buy. (Never forget this one!)

6. Always settle the dues through the normal banking channels with the market intermediaries.

7. Ensure that you have holding securities before you sell.

8. Follow up diligently and promptly. Eg: If you do not receive the required documentation within a reasonable time then contact the concerned person immediately, ie; the Trading Member, Company etc.

9. Give clear and unambiguous instructions to your Trading Member/agent/depository participant.

10. Mention clearly whether you want to transact in physical mode or DEMAT.

11. Take an informed investment decision without being influenced by misleading recommendations given in the public media such as newspapers, electronic media, website, etc. Verify all the claims made in such advertisements.

12. Before placing an order with the market intermediaries, always check the credentials of the company, its management, recent announcements made by them and other important factors. The sources of information one can use are websites of Exchanges and companies, databases of data vendors, business magazines, etc.

13. Be cautious about stocks which show a sudden spurt in price or trading activity, especially low price stocks.

14. Always remember: There are no guaranteed returns on investments in the stock markets.

15. Adopt a trading/investment strategy with a risk bearing capacity as all investments carry some amount of risk which depends on what strategy you have adopted. So, always know how much risk you can take.

Young Minds, Big Investments!

It is the age of the new generation, of revolution and the young blood is something that should not be ignored. Be it politics, be it art, be it cinema- the young are there to conquer it all. So what is the view of the youth on the stock market and business? If one goes to explore, one will get interesting results. To true that, here is what I found after asking a set of three questions to 10 young women and 10 young men of the age group 18-21 respectively.

When asked the question, ‘Would you ever like to invest in shares and are you interested in the stock market?’ 70% of women answered affirmatively while only 40% of men gave an affirmative answer.

When questioned, ‘Would you ever like to start your own business and are you interested in the field of business?’ again, 70% of women were positive while 50% of men were positive.

When questioned, ‘Do you think the stock market and business are important to the common man?’ a whopping 90% of the female population answered positively while a baffling 60% of males gave a positive answer.

Surprising really ain’t it? Women had amazing replies such as this one by Rashmi Sharma, Wilson College, TYBA, ‘The stock market is of course important to the common man. Having a business- whatever sort of production trade or service provider it may be- brings more employment. And shares are helpful to gain more investment for a firm or to for profit making. Shares are a good way of investment but quite risky if one doesn’t have a diverse portfolio. So, if investing, I would like to choose a mutual fund which has a balanced portfolio benefitting me in the short term as well as taking care of my long term needs.’

On the other hand, men played it safe as Rohit, SYBMM, responded by saying, ‘I will invest if I have a lot of money which I won’t mind losing if I suffer losses. I am interested in business but I don’t think stock market prices make sense to the common man.’ On the other hand, Sean Sequeira, TYBMM gave a disinterested response by saying, ‘I am not interested in business. It does affect the common man as it is important but it is boring to me and I am not interested in it at all.’

Well, going by the figures above one can say it all provides a pretty interesting picture, right? Let’s see how the market prices soar when we step into it!

Towards Dematerialization

Mumbai, 1990- Pandya Bhai was in high spirits today. And so he wasn’t even tired of climbing all the way up to the 3^rd floor of the BSE. There was still a long time before Sharma would come and he was expecting Reliance to soar. Most of his fellow brokers had already assembled in the ring. He waited patiently. He took time off and made a call. ‘What’s the rate now?’ ‘110.’ Pandya grinned and ordered a cup of tea. He finished and went back. All of them were there. They all mounted the tables on the ring and started calling out loudly to each other. Pandya screamed aloud, ‘Reliance 120!’

Sharma waited outside the BSE, gazing up at it, biting his nails in the heat of May. Finally, Pandya emerged, looking solemn. ‘What’s the rate, bhaiya?’ Sharma asked. ‘Not much, only 105.’ Sharma nodded. ‘I’ll take it’. Pandya took out a piece of paper which Sharma signed. Pandya pocketed it and grinned widely.

Sharma waited for a month for the postal letter to come which would tell him if his investment was realized. Nothing happened. In desperation he called Pandya. ‘Bhai what happened?’ ‘What can I say bhaiya… if I haven’t received it as yet what can I give you?’ A troubled Sharma admitted defeat. His investment had failed. But little did he know how the price had soared and had been pocketed by Pandya.

Mumbai, 1995- The circular ring bearing resemblance to the Collosseum at BSE was desolate. It was just a historical artifact now. Two depositories- NSDL (National Securities Depository Limited) and CDSL (Central Securities Depository Limited) changed the face of investments. Rather than papers which were lost in the trading process, investments were now in the form of modules in the BSE. NSDL and CDSL acted like safe deposit accounts and trade became dematerialized (DEMAT). All the ups and downs of trade were now open to everyone to see and the role of the middlemen started to diminish. One could judge himself whether to buy or sell the shares and now, investments were possible only if one had a DEMAT account. Green figures meant rise in prices while red meant fall in prices. Shares and investments were realized in three days and communicated directly to the investor.

Mumbai, 1990- It was raining heavily- monsoons in Mumbai were never peaceful in July. Sharma was drenched as he stood opposite the BSE, tense. Pandya ran towards him, muck sprinkling across as he stepped in puddles. ‘Here, take this. Write your name and sign it’ he said. ‘But what of the previous one?’ he asked. ‘Arrey… That reached someone else… your certificate got delivered to someone else… forgive me…’ Sharma clapped a hand to his forehead.

Mumbai, 1996- Banks and top brokers joined hands as depository participants (DP) and introduced the trend of opening a DEMAT and trading account together. One had to get a share certificate and submit it to the DP for registration. One could withdraw it as and when required. After it had been submitted, the DP opened your account and gave you a code number against the certificate. It entered this code number and registered you as the owner of that particular account in its electronic system and destroyed the certificate. Hence, yet again, dematerialization was taken to a new level and conspiracies were avoided. One could sell the certificate by marking it as lien by easily accessing it online in its electronic form. Also, with the advent of online trading one could see the rising and falling prices of shares on the internet.

Dematerialization and electronic format has hence not only stopped corrupt practices but also made investments just a click of the mouse button away. Mr. Sharma could now breathe a sigh of relief.

Business Simplified- For the 'Marathi Manoos'

One never usually identifies business or investments with a Marathi Manoos. For most, and almost about always, Maharashtrians have been involved in the service sector. Chandashekhar Thakur, an activist, journalist and writer, made a move for increasing awareness amongst the Marathi community about commercial ventures and bringing forth the Marathi diaspora as market leaders.

Collaborating with the BSE and the leading Marathi daily Loksatta, Mr. Thakur started a series of seminars and lectures in Marathi on the above subject and that too, free of cost. On the 8^th of Febuary, last week, one such lecture took place in the Bhalerao Hall, Sahitya Sangh Mandir in Girgaum. Considering the fact that not many Marathi people were situated anymore in the Girgaum area, not a lot of Maharashtrians were expected to turn up. However, it was a pleasant surprise when one witnessed a serpentine queue outside the venue, right upto the footpath – all of them Maharashtrians, waiting for an entry to the lecture! And that also, one hour before the stipulated time!

The auditorium was packed with Maharashtrians – a sign that the common man was developing an increasing interest in the stock exchange. Mr. Thakur was accompanied by the General Manager of BSE, Mr. N P Pandya who was felicitated by an executive of Reliance Group- both of whom were instrumental in organizing the seminar.

Mr. Thakur gave a PowerPoint presentation introducing the meaning of shares, equity, share trading, how trade actually takes place- all in extremely lucid language. He also mentioned the safeguards for investors, how one can select a broker, what should be taken into consideration while entering into an agreement, and what the rights of investors are. The podium was then taken over by Mr. Ajit Mansure who then gave a practical presentation of the meaning of primary and secondary market, meaning of a company, shareholding, formation of the sensex of NIFTY and BSE. He also mentioned that all the dealings and tradings and recorded at the BSE and a backup of all that information is kept at a branch at Vashi. There is a third secret location where all the information if backed up but that is not known to anyone except the high post officials.

The fabulous part of the seminar was when Mr. Mansure showed a slide which showed how an investor had invested Rs. 10, 000/- in 1981 and bought 100 shares of a particular company. The chart then showed that after 3-4 years the company went on growing and the volume of production went on increasing to accommodate the capital. The company went of issuing bonus shares and also started splitting up shares. So, in a span of 30 years the man who had invested in the company was now having one lakh shares without doing anything- not buying or selling or doing anything to those shares. The 10 lakh shares were of the value Rs. 345 crores. And the company’s name was Wipro.

This shows how companies grow if investors show faith and the investors too, become rich. Hence, with patience, diligent study of the market and patience, one can become a happy, healthy and a rich investor.

Inside The Inn

Innumerable times I have thought, ‘Won’t opening a General store make me so much money?’ Innumerable times I have envied the shopkeeper who counted the pile of notes while returning my change. But only once did I manage to speak and be baffled by coming to know how the funda of running a store really is. The stock that is kept in the store is extremely alluring and you so wish that you owned it all. Nevertheless, as you dig deep you realize it isn’t all that easy.

Mr. Surendranath started his ice cream parlour cum general store ‘SNOWPOINT’ at Kalpak estate almost 6-8 years back. Things have changed ever since as demands are now different from what they used to be. ‘A phone booth used to be a complete hit back then and I made a lot of profit from it. But now, with the advent of the mobile phone, selling recharges is the order of the day.’ But how did one really operate the business strategy in a phone booth, I asked out of sheer curiosity? ‘Well, the booth and the system were all provided by MTNL or whoever the service provider was. At the end of every month, they would send us the bill. One had to pay only 75% of the quoted charge. The rest would be our profit money.’

The items that are stocked and sold include food products such as varieties of ice creams right from kulfi of Rs.2/- to ice cream cones, cups, bars; wafers, chocolates, samosas, chiwda and chaklis. The ice creams were of the brands Amul, Vadilal and Kwality Walls. The shop also stocked stationery items which were sourced from Abdul Rehman Street at Crawford Market. Stationery was bought from there in a wholesale quantity and sold here. The store basically sold all items of general use except pharmaceutical products.

How did this deal allow our proprietor to make a profit then? Well, apparently a margin of 20-25% was earned between wholesaling and retailing these items. A bulk quantity was bought so that a larger amount of profit margin was earned. This margin could go upto 35%. However, one had to be careful as to what products were purchased in wholesale or else the investment would become stagnant. For example, in the months from February to April, most students had exams and hence, products such as writing pads, pens, pencils, very more in demand. During the summer, a lot of art material is in demand as hobby classes start of. When schools and colleges reopen in June, there is demand for book covers, notebooks, and school and college bags, book labels and so on. If one stocks up on notebooks and book covers in April, no one will buy them and the stock will be stagnant and won’t move.

Also not to forget, the most profitable and product-in-demand always are soft drinks which of course allow Mr. Surendranath to make a good profit. He reveals, ‘The company provides the refrigerators and promotional material, allowing us to make a regular investment. The companies which I have stocked up are Parle, Coke and Pepsicola. They don’t allow us to keep credit. For a crate of 100 bottles, we are given 10 bottles for free. The brands which are in demand always like Coke and Pepsi are stocked in a large amount and other brands like Maaza, Minute Maid and stocked in average quantities. We apply cooling charges of about Rs.2/- or so and hence earn profits. The delivery is done by the company itself and hence we don’t have to pay for that. There are nil transportation charges.’

So does this whole deal and business that he started benefit him? ‘Well, I had invested almost a lakh in setting up this whole business. I have employed two boys to assist me who work in shifts. I pay them Rs. 2, 500/- every month including their lunch and snacks. I pay a rent of Rs.10, 000/- and the incidental charges (which include taxes, police, BMC license, etc) are almost Rs. 1,000/-. The electricity and other expenses are almost about Rs. 4,000/-. And the expenses on stock is Rs. 20,000/-. My turnover is Rs. 40,000/-. So you can say I make a profit of Rs.15, 000/- every month.’

Not all that lucrative to be true, but yeah, the whole deal does include a lot of effort. And considering the rising prices today, the scene is getting tougher to handle. ‘Well yes. We are losing quite some customers who prefer malls now-a-days. The malls offer lucrative deals and discounts and people also prefer buying in bulk all that they need when they get their salaries at the month end. Also, not to forget, a lot of people are becoming aware of wholesale markets which weren’t the case earlier. After all, who wouldn’t want to save at this point of time when costs are skyrocketing and the pocket is getting tighter?’ True, then how does he manage to survive in such times? ‘Well, this is a residential area and also, there are not many such stores which offer so much at one go. There are also, not many malls around; the nearest being High Street Phoenix which again has much more of branded goods rather than economic items. So, considering the location I am making a lot of profit right now.’

Also, one doesn’t get discounts everyday nor does one always have the money to spend at a go. That doesn’t really spell death to the good old ‘General Store’.