Submitted by

Harshit Manaktala (23)

Soundararajan.R (59)
Ananya Pratap Singh
Ragini Anand
Tushar
Division C Class BBA.LLB



September, 2013

Under the guidance of
Prof. Sandeep Bhatia
Faculty in-charge
Symbiosis Law School, NOIDA
Symbiosis International University, Pune.


C E R T I F I C A T E


The project entitled submitted to the Symbiosis Law School,
NOIDA for Financial Management and Corporate Governance as part of
internal assessment is based on my original work carried out under the guidance
of Prof. Sandeep from July to October. The research work has not been
submitted elsewhere for award of any degree. The material borrowed from other
sources and incorporated in the thesis has been duly acknowledged.

We understand that we our self could be held responsible and accountable for
plagiarism, if any, detected later on.


Signature of the candidate
Date: 29-09-2013






A C K N O W L E D G E M E N T S



We would like to express our special thanks of gratitude to Prof. Sandeep
Bhatia who gave me the golden opportunity to do this wonderful project on the
topic , in Finance Management and Corporate Governance
which also helped me in doing a lot of Research and We came to know about
so many new things.

Secondly We would also like to thank our friends who helped us a lot in
completing this project within the prescribed time.



Signature







I N D E X




















Introduction

Capital market is a market where buyers and sellers engage in trade of financial securities
like bonds, stocks, etc. The buying/selling is undertaken by participants such as individuals
and institutions. Capital markets help channelize surplus funds from savers to institutions
which then invest them into productive use. Generally, this market trades mostly in long-term
securities.

Capital market consists of primary markets and secondary markets. Primary markets deal
with trade of new issues of stocks and other securities, whereas secondary market deals with
the exchange of existing or previously-issued securities. Another important division in the
capital market is made on the basis of the nature of security traded, i.e. stock market and bond
market.
There are two types of capital markets
1. Primary market
The primary market is that part of the capital markets that deals with the issuance of new
securities. Companies, governments or public sector institutions can obtain
funding through the sale of a new stock or bond issue. This is typically done through a
syndicate of securities dealers. The process of selling new issues to investors is called
underwriting. In the case of a new stock issue, this sale is an initial public offering (IPO).
Dealers earn a commission that is built into the price of the security offering, though it can be
found in the prospectus.
Features of primary markets are:
1. This is the market for new long term equity capital. The primary market is the market
where the securities are sold for the first time. Therefore it is also called the new issue
market (NIM).
2. In a primary issue, the securities are issued by the company directly to investors.
3. The company receives the money and issues new security certificates to the investors.
4. Primary issues are used by companies for the purpose of setting up new business or
for expanding or modernizing the existing business.
5. The primary market performs the crucial function of facilitating capital formation in
the economy.
6. The new issue market does not include certain other sources of new long term
external finance, such as loans from financial institutions. Borrowers in the new issue
market may be raising capital for converting private capital into public capital; this is
known as going public.
7. The financial assets sold can only be redeemed by the original holder.
Methods of issuing securities in the primary market are:
Initial public offering;
Rights issue (for existing companies);
Preferential issue.
Initial public offering
2. Secondary market
The secondary market, also known as the aftermarket, is the financial market where
previously issued securities and financial instruments such as stock, bonds, options, and
futures are bought and sold. The term secondary market is also used to refer to the market
for any used goods or assets, or an alternative use for an existing product or asset where the
customer base is the second market (for example, corn has been traditionally used primarily
for food production and feedstock, but a second- or third- market has developed for use in
ethanol production). Another commonly referred to usage of secondary market term is to
refer to loans which are sold by a mortgage bank to investors such as Fannie Mae and Freddie
Mac.
With primary issuances of securities or financial instruments, or the primary market,
investors purchase these securities directly from issuers such as corporations issuing shares in
an IPO or private placement, or directly from the federal government in the case of treasuries.
After the initial issuance, investors can purchase from other investors in the secondary
market.
The secondary market for a variety of assets can vary from loans to stocks, from fragmented
to centralized, and from illiquid to very liquid. The major stock exchanges are the most
visible example of liquid secondary markets in this case, for stocks of publicly traded
companies. Exchanges such as the New York Stock Exchange, Nasdaq and the American
Stock Exchange provide a centralized, liquid secondary market for the investors who own
stocks that trade on those exchanges. Most bonds and structured products trade over the
counter, or by phoning the bond desk of ones broker-dealer. Loans sometimes trade online
using a Loan Exchange.
Features of secondary market are-
(1) It Creates Liquidity:
The most important feature of the secondary market is to create liquidity in securities.
Liquidity means immediate conversion of securities into cash. This job is performed by the
secondary market.
(2) It Comes after Primary Market:
Any new security cannot be sold for the first time in the secondary market. New securities are
first sold in the primary market and thereafter comes the turn of the secondary market.
(3) It has a Particular Place:
The secondary market has a particular place which is called Stock Exchange. However, it
must be noted that it is not essential that all the buying and selling of securities will be done
only through stock exchange.
Two individuals can buy or sell them mutually. This will also be called a transaction of the
secondary market. Generally, most of the transactions are made through the medium of stock
exchange.
(4) It Encourages New Investment:
The rates of shares and other securities often fluctuate in the share market. Many new
investors enter this market to exploit this situation. This leads to an increase in investment in
the industrial sector of the country.

ROLE AND IMPORTANCE OF CAPITAL MARKET IN INDIA

Capital market has a crucial significance to capital formation. For a speedy economic
development adequate capital formation is necessary. The significance of capital market in
economic development is explained below :-

1. Mobilisation Of Savings And Acceleration Of Capital Formation -
In developing countries like India the importance of capital market is self evident. In this
market, various types of securities help in mobilising savings from various sectors of
population. The twin features of reasonable return and liquidity in stock exchange are definite
incentives to the people to invest in securities. This accelerates the capital formation in the
country.
2. Raising Long - Term Capital -
The existence of a stock exchange enables companies to raise permanent capital. The
investors cannot commit their funds for a permanent period but companies require funds
permanently. The stock exchange resolves this dash of interests by offering an opportunity to
investors to buy or sell their securities, while permanent capital with the company remains
unaffected.
3. Promotion Of Industrial Growth -
The stock exchange is a central market through which resources are transferred to the
industrial sector of the economy. The existence of such an institution encourages people to
invest in productive channels. Thus it stimulates industrial growth and economic
development of the country by mobilising funds for investment in the corporate securities.
4. Ready And Continuous Market -
The stock exchange provides a central convenient place where buyers and sellers can easily
purchase and sell securities. Easy marketability makes investment in securities more liquid as
compared to other assets.
5. Technical Assistance -
An important shortage faced by entrepreneurs in developing countries is technical assistance.
By offering advisory services relating to preparation of feasibility reports, identifying growth
potential and training entrepreneurs in project management, the financial intermediaries in
capital market play an important role.
6. Reliable Guide To Performance -
The capital market serves as a reliable guide to the performance and financial position of
corporates, and thereby promotes efficiency.
7. Proper Channelization Of Funds -
The prevailing market price of a security and relative yield are the guiding factors for the
people to channelize their funds in a particular company. This ensures effective utilisation of
funds in the public interest.
8. Provision Of Variety Of Services -
The financial institutions functioning in the capital market provide a variety of services such
as grant of long term and medium term loans to entrepreneurs, provision of underwriting
facilities, assistance in promotion of companies, participation in equity capital, giving expert
advice etc.
9. Development Of Backward Areas -
Capital Markets provide funds for projects in backward areas. This facilitates economic
development of backward areas. Long term funds are also provided for development projects
in backward and rural areas.
10. Foreign Capital -
Capital markets makes possible to generate foreign capital. Indian firms are able to generate
capital funds from overseas markets by way of bonds and other securities. Government has
liberalised Foreign Direct Investment (FDI) in the country. This not only brings in foreign
capital but also foreign technology which is important for economic development of the
country.
11. Easy Liquidity -
With the help of secondary market investors can sell off their holdings and convert them into
liquid cash. Commercial banks also allow investors to withdraw their deposits, as and when
they are in need of funds.
12. Revival Of Sick Units -
The Commercial and Financial Institutions provide timely financial assistance to viable sick
units to overcome their industrial sickness. To help the weak units to overcome their financial
industrial sickness banks and FIs may write off a part of their loan.

STOCK ANALYSIS OF LEADING COMPANIES
Nestle India


Rate of return on investments
If I had purchased 100 shares of Nestle India at Rs. 4100 each, on 01-01-2012 and had sold
them for Rs. 4990 per share on 01-01-2013
1
, the rate of return on my investment would have
been-
Net proceeds/ cost price, i.e.
[(4990-4100) / 4100] X 100= 21.71%

Earning per share
Earning per share in 2012 = (Net Profit- Preference dividend)/ No. of shares in issue
i.e. EPS= (106793-0) / 964.16 (in lakhs)
= Rs. 110.76







1
As provided on moneycontrol.com

NTPC
Rate of return on investment
If I had purchased 100 shares of NTPC on 1-1-2012 for Rs. 160 each and sold them for Rs.
157 per share on 1-1-2013, the rate of return on my investment would have been
[(157-160) / 160] X 100 = -1.87 %

Earning per share
EPS in 2012 = 981466 / 82454.64 (in lakhs)
= Rs. 11.90


PVR
Rate of return on investment
If I had purchased 100 shares of PVR on 01-01-2012 for Rs. 132 per share and had sold them
for Rs. 285 on 01-01-2013, the rate of return on my investment would be
[(285-132) / 132] X 100 = 115.91%

Earning per share
EPS in 2012 = 2528/ 259.03 (in lakhs)
= Rs. 9.76


ONGC
Rate of return on investment
If I had purchased 100 shares of ONGC on 1-1-2012 for Rs. 259 and had sold them for Rs.
270 on 1-1-2013, the rate of return on my investment would have been
[(270-259) / 259] X 100 = 4.25%

Earning per share
EPS in 2012 = 2842891 / 85554.90 (in lakhs)
= Rs. 33.23


TVS MOTOR COMPANY
Rate of Return on Investment
If I had purchased 100 shares of Rs. 52.50 each on 1-1-2012 and had sold them for Rs. 42.50
on 1-1-2013, the rate of return on my investment would have been
[(42.50 52.50) / 52.50] X 100 = - 19.05%

Earning per share
EPS in 2012 = 19898 / 4750.87 (in lakhs)
= Rs. 4.19


Reliance Industries
Rate of return on investment
If I had purchased 100 shares of Reliance Industries for Rs. 713 each on 1-1-2012 and had sold them
for Rs. 845each on 1-1-2013, the rate of return on my investment would have been-
[(845-713) / 713] X 100 = 18.51%

Earning per share
EPS in 2012 = 2088600 / 29363.09 (in lakhs)
= Rs. 71.13












B I B L I O G R A P H Y


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