INTERGRATED ASSIGNMENT
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Transcript of INTERGRATED ASSIGNMENT
8/7/2019 INTERGRATED ASSIGNMENT
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INTERGRATEDASSIGNMENT
BY: SUHAIL JOSHUA
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INTRODUCTION:KETAN PAREKH
Ketan Parekh [KP] was a chartered accountant by
profession and used to manage a family
business(NH securities).
Australian media tycoon Kerry Packer merged with
KP to create new company called KPV Ventures, a
$250 million venture capital fund that invested
mainly in new economy companies.
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The 176-point Sensex crash on March 1, 2001
came as a major shock for the Government of India,
the stock markets and the investors alike.
on March 30, 2001, The first arrest in the scam was
of the noted bull, Ketan Parekh (KP).
. He was charged with defrauding Bank of India
(BoI) of about $30 million among other charges
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KETAN PAREKH·S K-10
Amitabh Bachchan Corporation Limited (ABCL)
Mukta Arts
Pritish Nandy Communications
HFCL Global Telesystems (Global)
Zee Telefilms
Crest Communications
PentaMedia Graphics Aftek Infosys
Tips
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THE STUDY THAT LED TO THE SCAM
Ketan Parekh scam was inherently caused of weakfinancial regulatory in India.
RBI was inspecting the account once in two years, whichcreated ample scope for violation of ruler.
K-10 stocks high volatile but SEBI was no examining it.
Lack of regulatory for co-operative.
Calcutta stock exchange helped ketan parekh to cover hisoperations from his rivals in Mumbai.
SEBI market intelligence was very poor for examine suchtype of crash.
Lack of implication of rules and regulation
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ROLE OF SEBI BEFORE THE SCAM
No dent on price manipulation.
Poor rate of conviction and very few cases of exemplarypenal action.
No due process for framing/changing regulation. Turning a blind eye on bullish market.
Implementation of existing disclosure norms inadequate.
Regulatory bias towards corporate sector and large
investor. Indication of extraneous pressures, including government.
No disclosure norms for merger/demerger/asset sell-offs.
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The SEBI has also imposed volatility margins on net outstanding sale positions of FIIs, financial institutions, banks and mutual funds.
. On March 8, 2001, the SEBI banned naked short sales. In simple words, it means that all short sales have to be covered by an equal amount of long purchases.
Cutting gross exposure limit for brokers to 10 times the base capital in the case of National Stock Exchange (NSE) and to 15 times in case of other stock exchanges.
SEBI has allowed banks to offer collateralized lending only through BSE and NSE. Launching of trade guarantee fund to guarantee all transactions
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PROFIT PLANNING FOR
COMMERCIAL BANKS
Commercial Bank were hit by this scam like Bank of
India, state bank, Punjab nation Bank, etc, Madhav
pura mercantile co-operative bank, Global trust
bank etc.
banks had mismanaged their assets and liability.
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ASSEST LIABILITY MANAGEMENT
Assets liability management ( ALM) is a toll that enables
Bank management to take business decision in a more
informed framework.
the manager what the current market risk profile of theBank.
Bank should manage their assets against their liability.
Bank should have assets liability ratio 1:1
bank have more liability against the assets, it is red flag
for the Bank than it indicate that Bank cannot able to pay
their liability and it is more risk for the Bank.
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A bank with mismatched assets and liabilities can be
badly hurt by unexpected interest rate changes.
Ketan Parekh had 12 lacs share of global which
costed around Rs.200 million. Ketan Parekh borrowed
from various companies and bank.
When the share price was high enough, he pledges
the share with banks as collateral for fund.
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. Ketan Parekh route was borrowing from a MMCB
branch at Mandvi (Mumbai), where different companies
owned by KP and his associates had accounts.
It was alleged that Madhur Capital, a company run byVinit Parikh, the son of MMCB Chairman Ramesh Parikh,
had acted on behalf of KP to borrow funds.
KP reportedly used his BoI accounts to discount 248 pay
orders worth about Rs 24 billion between January and March 2001. BoI's losses eventually amounted to well
above Rs 1.2 billion
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EFFECT OF KETAN PAREKH SCAM
AND THE STOCK MARKET
the Sensex lost over 700 points and more than 500 ofthe 1364 actively traded shares touched 52-week lows.
In the entire month of March 2001, a total wealth ofnearly Rs.1460000 million (approximately US$32
billion) was wiped out in market capitalization, more than Rs.45000 million a day.
Stock market fell176 points.
Small investor lost their life time saving. Investor lost
confidence on the security and exchange board ofIndia.
BSE president Annad Rathi resign from BSE.
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Ketan Parekh arrest followed by yet another panic run on the bourses and sensex fall by 147 points. K-10stocks were falling rapid.
The immediate fallout of market crash in Bombay was
so widespread that shock waves were also felt in Calcutta and other financial centers.
Many investors took out their investment from stock market. it was effected FDI and FII.
Ketan Parekh bought stock when share price were lowand he bought large stake of various companies. KetanParkeh K-10 stocks was very popular among the investor.
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Investors were investing in only k-10 rather than its
intrinsic value. Mutual fund like Alliance capital,
ICICI prudential fund and UTI also invest in K-10
stocks.
Ketan parekh K-10 stocks were highly volatile but
investor blindly invested K-10 stocks.K-10 stocks
were red flagged. So we can say that they carried high risk with them
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KVP VENTURES
KP venture merge with tycoon Kerry Australian
packer but both businesses was totally difference.
It was conglomerate types of merger.
Tycoon Kerry Australian Packer is a press holding
and media entertainment company and KP venture
was Security Company.
Both companies were of difference business so it was conglomerate types of merger.
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Merger Procedure
Analysis of Proposal by the Companies
Examination of object Clauses
Intimation to stock Exchanges
Determining Exchange Rations
Approval of the draft amalgamation proposal by the Respective Boards
Application to the National Company Law Tribunal (NCLT): Dispatch of notice to shareholders and creditors
Holding of Meetings of shareholders and creditors
Petition to the NCLT for confirmation and passing of NCLTorders
Filing the order with the Registrar
Transfer of Assets and Liabilities
Issue of shares and debentures
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ACCOUNTING PROCEDURE IN
MERGER
Pooling of Interests Method
Purchase Method
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Institutional Investor is any investor or investment fund
that is from or registered in a country outside of the
one in which it is currently investing.
Institutional investors include hedge funds, insurance
companies, pension funds and mutual funds.
FOREIGN INSTITUTIONAL
INVESTORS(FII)
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the influence of FII on movement of Indian stock exchange during the post liberalization period that is 2000 to 2009.
Market design in India for foreign institutional investors Foreign Institutional Investors means an institution established or incorporated outside India which proposes to make investment in India in
securities. A Working Group for Streamlining of the Procedures relating to
FIIs, constituted in April, 2003, inter alia, recommended streamlining of SEBI registration procedure, and suggested that dual approval process of SEBI and RBI be changed to a single approval process ofSEBI.
This recommendation was implemented in December 2003. India, the second fastest growing economy after China, has recently seen positive foreign institutional investor (FII) inflows driven by the sound fundamentals and growth opportunities.
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FIIs have been net sellers of equity since May 2008. In the seven months till November, they repatriated Rs.43,000 cores.
In the year 2008-09 there was a net disinvestment of Rs.73,000crores and FIIs· share in market capitalization dropped to 12 per cent from 15 per cent at the end of March 2008.
overall foreign share of the market (including subsidiaries, direct, and portfolio) is more than 25%.
The foreign institutional portfolio in India now stands at more than Rs 87,900 Cr, up 27%, against sensex's rise of 18%.
FII investment in this year has crosses $ 3 billion or Rs. 15491 crores
as per the latest data available from SEBI`s website. The total investment of FIIs has crossed $ 58 billion. The total
number of registered FIIs and sub-accounts are 1655 and 5103respectively.
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After the Keptan Parekh scam FII was shaking and lost their confidence in a Indian market .
Year 2000 FII investment increase by 52%, the same time market increase by 60% and when they withdraw their
53% investment in sep 2001 market was downed by 55%. FIIs investments declined from Rs. 10122 crore during 1999-
2000 to Rs. 9935 crore during 2000-01.
FII investment posted a year-on-year decline of 1.8 % in 2000-01, 11.87 % in 2001-02 and 69.29 % in 2002-03.
. Investments by FII posted a fall of 80 % in 2002-03 as compared with investments in the period of 1999-00. Investments by FIIs rebounded from depressed levels fromthe year 2003-04 and witnessed an unprecedented surge.
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The resumption in the net FII inflows to India from
August 2004 continued till end 2004-05. The
inflows of FIIs during the year 2004-05 was Rs.
45881 crore.
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THANK YOU