` MoneyMindz.com India's First Free Online Financial Advisors

December 18, 2016

MoneyMindz.com India's First Free Online Financial Advisors Initial Public offering (IPO)
MoneyMindz.com India’s First Free Online Financial Advisors

Process of offering the shares/stocks to the people of India is     known as IPO. A unique situation, in which owner of a firm, will offer the ownership to its shareholders.

Who Can Offer The IPO:

Any company cannot offer the IPO. Only some companies in India are following the requirements as per SEBI (Securities And Exchange Board Of India) and companies act can issue the IPO. Some of the conditions are as follows:

  • Good track record of the distributable profits for three years.
  • Company is having a net-worth of approx 1 Crores in the last 3 years.
  • Company and its associate must clear The SEBI guidelines.
  • You must have distributable profit for at-least three years.
  • Net tangible assets must be INR 3 Crores for the next three years
  • You must obtain grading of the IPO from one or more credit rating agencies.
  • Make sure that the paid up equity shares of the companies has been full paid.
  • Company must have a website
  • Post paid up capital of the firm must be at least INR 5 Crores.

Advantages of IPO in India:

Some of the advantages of the IPO in India are given below as follows:

  • Access to the evergreen capital markets in India.
  • Helps the small business founders and capitalists with the chance to take out early investment.
  • Helps the business house to have good public awareness.
  • Company gets recognized and can go for mergers and new acquisitions.
  • Encourages company to be transparent on various issues, by showing all information in the newspapers across India.
  • Helps the company, big/small to have good relationship with customers, suppliers and lenders, to enhance the credibility.
  • Assists companies to have very good/energetic incentive packages for the employees and the management.
  • Public can assess the growth and development of the individual.

DISADVANTAGES OF GOING PUBLIC WITH THE IPO (INITIAL PUBLIC OFFERING)
Some of the negative points, relating to the IPO are mentioned below as follows:

  • Launching an IPO is said to be very expensive.
  • Company will lose all critical information and hence lose control over its resources.
  • Working style of the firm and business tactics will come to the fore.
  • Shareholders will ask for a major share in the company business. Refusing to do it lead to takeovers.
  • The Company loses its flexibility and management will become weak.
  • Marketing strategy and cost will be very heavy on small and average enterprises.

How Initial Public Offering (IPO)Works:

IPO is a very challenging process and procedure is mentioned below as follow:

  • Companies hire an investment bank to do underwriting, a way of raising money, using debt or equity.
  • Underwriters acts as mediators between the public and companies.
  • Company and Investment bank will negotiate regarding security issues and other management related issues.
  • After finalizing the deal, investment bank set up registration statement, submitting the details to the Securities and Exchange Commission (SEC).
  • Registration details consist of company details like core policies, management, financial statements, vision, mission, core issues.
  • Securities and Exchange Commission takes some time to study documents and examine all the documents.
  • After the approval, a date is finalized in which, company will offer the stock to the public.
  • People get appointed like the underwriters, who get commission of 2.5% on underwritten amount.
  • Registers process the application form calculate amount and initiate allotment process.
  • An experienced member of the Stock Exchange is appointed as brokers for marketing purpose. They receive max brokerage charge of 1.5%.
  • Company appoint lawyers to make sure all regulations are complied with.
  • A draft prospectus is created giving info about the company, founders, partners, terms and conditions, modes of financing, profit and loss statements and others.
  • Senior Manager verifies claims and details are filed with SEBI.
  • Prospectus along with the copies of the agreement entered into with underwriter, lawyer, managers, registrars and brokers is filed with the register of companies, where the firm is located.
  • Application form and prospectus are circulated to CEO, MD, Board of Directors, Bankers, Underwriters, and Brokers as well.

Companies in India, big or small, would like to go in for the Initial Public Offering (IPO).

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MoneyMindz.com India's First Free Online Financial Advisors Stock Market Information
MoneyMindz.com India’s First Free Online Financial Advisors

You will not like to work in a company for your entire life. Trust me, after some years you will feel like controlling your finances by establishing your business. Nothing better than Stocks, will give you a clear picture of the business in India.

Stock : A unique kind of security / share of an organization that is held by a person or a group is known as the Stock.

Kinds of Stocks:

There are two kinds of stocks, that are available in India namely the

Common Stock: A unique kind of stock,that encourages the owner to vote at meeting of the shareholders, and receive the dividends is known as the Common Stock.

Preferred  Stock:  A unique kind of stock, encouraging the shareholder to a fixed amount of dividend, where payment takes over other share of the dividends is known as the Preferred Stock.

Major Things To Know Before You Go In For Stocks:

Some of the criterions to be followed before one goes ahead and purchases the stocks are as follows:

  • You must have a proper Pan Card.
  • You must be an Indian Citizen.
  • One must apply for a Demat Account.
  • You must check for the way stock prices are set.
  • One must buy shares when cost is low, and sell the share, at the time when cost is very high.
  • You must understand the bidding in stock market and check for the actual prices of shares.
  • Be careful relating to the trading scams/fraudulent activities.
  • Must do technical analysis like doing deep study of charts, bar graphs, index graphs and pie charts in a logical fashion.
  • Do not make huge investments.
  • Choose the correct stock market broker.
  • Select the share, that has profit in the coming years.

Most of the investors are sticking to the traditional companies offering good stocks/shares in the financial markets.

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MoneyMindz.com India's First Free Online Financial Advisors Trading account details

MoneyMindz.com India’s First Free Online Financial Advisors

Various types of account are present in India and trading account is said to be one of them. Account prepared to determine the gross profit/gross loss of a business enterprise is known as the trading account.

Need For Trading Account:

Trading account is fast creating waves in the ever changing financial market in India. Growth of small and big business has led to the increasing need for the trading accounts in India. Some of the major reasons would be as follows:

  • Gross Profit is major factor and must meet the expense of the company.
  • Helps in obtaining the amount of net sales of a company.
  • Gross profit from the net sales can be utilized from the trading accounts.
  • Percentage of gross profits on net sales could be easily ascertained from trading accounts.
  • Stock turnover ratio can be easily ascertained by trading account.

Major Advantages Of Trading Account:

Some of the advantages of trading accounts are as follows:

  • Shows relationship between gross profit and gross sales to measure profit.
  • Helps to show ratio between the goods sold and gross profits.
  • Helps to avoid direct expenses, and takes the expenses dealing with making products.
  • Helps you to analyse new platforms and understand your trade/markets.
  • Gives details about various trading activities in the markets.
  • Details about the over-stocking/under-stocking can be known in order to act in a rational manner.
  • Progress can be analysed relating to gross profit ration, year after year.
  • Excellent stock turnover ratio can be determined from trading account.

Disadvantages of Trading Account:

Trading account is the major factor of our economy and some of the negative points are:

  • You require huge brokerage charges in setting up the trading account.
  • Loss one incurs will be a huge one and difficult to come back.
  • Less control on your investment.
  • Less knowhow, resources and the lack of professional knowledge can hamper your investments.
  • Markets are very unpredictable and hence experienced traders will find themselves in troubled waters.

Hence I would recommend everybody to have the complete financial knowledge on their fingertips, before venturing into trading account.

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Managing large amount of money, by the large companies and government is known as finance. Various kinds of account are present in the financial market and Demat account is the major one.

What Is Demat Account?

A unique kind of deposit where in one can store and maintain investors details in an electronic format are known as the Demat Account.

India is having depositories like the NSDL (National Securities Depository Limited) and CSDL (Central Depository Services Limited) to have proper transfer of the securities.

Need For Demat Account:

Opening the Demat account is the major component of the online trading. After recession in 2009, Indian economy is having an upward movement to a great extent. Income of the people, standard of living of the people has increased considerably. Due to high salaries, people like to venture into the stock and share markets. Demat account is a unique form where in, investment can be handled by small investors in a logical manner.

How to Open A Demat Account:

In order to open a Demat Account, you must follow certain steps given below as follows:

  • You need to get in-touch with the registered Depository Participant.
  • Please fill up the account opening form.
  • Submit all the relevant documents with 4 passport size photographs.
  • Carry the original documents for verification.
  • One must pay some annual maintenance fees for maintaining the account.
  • You can open the Demat account with limited balance of the shares.
  • You need not have any balance in your account to open a Demat Account

Why Demat Account With Banks?

A good Demat account can be opened with various banks in India and features will be:

  • Low Fees.
  • Email Statement.
  • Accessing Demat Accounts through mobiles and internet.
  • Valuation of Account Statements.
  • Online Execution of Various Transactions.
  • Free charges for any transactions done.
  • Free alerts on your mobiles phone through SMS.

Various Documents Required For Opening A Demat Account:

Various documents are required to open a Demat account and they are:

Proof Of Identity:  Various documents are required for opening Demat Account. Documents like the PAN card, Passport, Driver’s License, Income Tax Returns, Mobile and telephone bills and the ID card where one works, whether government and private establishments are working must be produced.

Address Proof:  You would require various kinds of address like the Voter ID, Ration Card, Bank Passbooks/Statements, Xerox copies of electricity bills; House rental agreements must be deposited.

Components Of The Demat Accounts:

Some of the major components of Demat Accounts are as follows:

  • Investors
  • Depository
  • NSDL (National Securities Depository Ltd)
  • CDSIL (Central Depository Of Security India Limited)
  • Depository Participant
  • Issuing Company

Benefits of Demat Accounts in India:

Some of the benefits of Demat Accounts in India are given below as follows:

  • Easy and Convenient.
  • Transfer of Securities is very easy.
  • No stamp duty involved in the transfer of securities.
  • Zero restrictions on various transactions.
  • You will receive bonus share and it gets divided automatically.
  • Ideal for gold exchange traded fund, mutual fund, shares, and debentures as well.
  • Good for people to keep track of their investments.
  • Reduces the cost.
  • Interest on loans against Demat shares are lesser compared to physical shares.
  • Reduces the risk of the bad deliveries.

Disadvantages of Demat Accounts In India:

Some of the major disadvantages of the Demat Accounts in India are as follows:

  • You need to be expert in various financial products.
  • Trading in securities will become uncontrolled.
  • Investors will find the process too complicated, creating great fear of investment.
  • You need to be too sharp to monitor market fluctuations and make sure that trading does not affect investors.
  • Various rules/acts need to be adhered to in using Demat Accounts like the Depository Acts, Regulations Acts and others.

So, one can say that Demat Account are fast picking up in India and people are slowly getting interested in this form of account.

For More Information

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