1. Purpose of Stock Market
HERE WE GO………

2. IT’S EASY TO DREAM AS A RICH,
OFCOURSE EASY TO ATTAIN TOO….
Dhirubhai Ambhani
How a Person can Make Billions with the
help of Thousands In a span 40 odd years
Ended his journey with Rs.65,000 Crore
o Warren Buffet
His Salary at early days is $1,000 per month
,But he donated 85% of his wealth
Roughly around $ 31 billion

3. STORY GOES LIKE THIS
 Ever Wondered How they Become Rich ??
 If they could why can’t we ? ?
 Is it Possible

4. What They Done ???????
How They Done ?????
Any Magic #!!!!!!!
May be a Gimmick !!!!!!!!
Any have they Done it ……..
Not by Any Means ,,,,,,
By One Way that is None Other Than ……..

5. HERE WE GO
 Stock Market
Is all about Facts And Figures
 The Basic Ideology of stock market is to support
business Growth with Mutual Benefits.

6. THE STORY STARTED LIKE THIS …..
To Run a business Every body Needs Money,
The Money can be obtained by means of Banks,
Financial Institution,Capitalist,Venture Capitalist
( The Person who Funds A Business).
There Raises the need for an Intermediary or Regulatory
to Get things done

7. EXAMPLE
 Almost every large corporation started out as a small,
became financial giants.
 Reliance Started with the Investment of Rs.15,000, Similarly
Bharathi Airtel began With The investment of 5,00,000
 But now the Reliance Cumulative Assets is more than 2 lakh
crores and Airtel Assets is More Than Billion Dollar
 These small companies grow from tiny, hometown
enterprises To Large Corporate because
They raised capital by selling stock in themselves and
increased revenues

8. IN NUT SHELL
Business Reliance Industries Bharathi Airtel
Initial Investment Rs.15,000 Rs.5,00,000
Current Worth More than 5,00,000 More Than 2 billion
Crore
This is not possible by the Profit from Business.
There needs a Separate Tool to Grow beyond
Limitation

9. HOW IT HAPPENS, AN STORY TO KNOW
 After getting married, a young couple decided to
start a business. To Lead their Life.Both husband
and wife have always had a strong interest in
furniture, so they decide to open a store in their
hometown.
 After borrowing money from the bank, they name
their company “Super Star Furniture” and started
business.
 The first few years, the company makes little profit
because the earnings are invested to compensate
basic needs like tools ,Land , Machines ,Purchase
of More Materials.

10. SUPER STAR FURNITURE
 Ten years later, the business has grown rapidly. The
couple has managed to pay off the company’s
debt(loan) and profits are over Rs.20,00,000 per
year.
 Now the Couple desired to start the business in
Neighboring Cities .
 They searched for various options and finally
concluded that they need over one crore to start
new stores in neighboring cities
 Borrowing the amount for interest is not possible
because the limit for bank loan is over, so they
decide to sell stock in the company.

11. REVIEW
Bought Loan Started Super Star Furniture's
Repaid Loan in Installment
Bought Basic Things for
First 10 years Business Like Machine, Material,
Manufacturing Space( Land)etc.
At The End Of Profit is More than
10th Year Rs.20,00,000
Now they Want to Expand Stores to
Nearest Cities

12. SUPER STAR FURNITURE
 The company approaches an “underwriter”, such as ICICI
or Kotak Mahindra, who determines the value of the
business.
Let Us Calculate Book Value of
Super Star Furniture
2,50,00,000
Sales Value (for Ex)
25,00,000
Profit
2,75,00,000
Total Business Values

13. BOOK VALUE OF SUPER STAR FURNITURE
Book Value
={ (Value of the land + building + Materials +
Wealth of Super Star Furniture )etc. – (company’s
debt)} + Sales Volume
For Example Book Value For Super Star Furniture
= { 2,50,00,000 - 25,00,000} + 2,75,00,000
Total Book Value = 5,00,00,000
All the values are Imaginary Examples

14. BOOK VALUE OF SUPER STAR = RS.5 CRORE
 To expand the business the Young Couple need
Money to expand business.
 Currently they are the 100% owner of the company.
By Selling a part of ownership they can expand
the business by the amount they got

15. OWNERSHIP PARTITION
 Book Value = Rs.5 crore
 Couple decide to Sell 40% OF Their business to
start the new Branches
Level Couple Own Others Own Cash
Reserve
Available
For Owner
To Expand
Beginning Rs.5 crore Nil Nil
Stage
After 60% = Rs.3 Crore 40% = Rs.2 crore Rs.2 Crore
Decision

16. AND HERE THEY GO……
 Even Though the Couple Owns only 60 % they got Rs.2
crore to Expand the Business.
They will Invest Rs.2 crore for opening Store in the
Nearest Cities.
By investing So the Profit
Profit From Old Profit From New Total Profit
Store Store
25,00,000 20,00,000 45,00,000
Within a year the Profit Increases as Well as
Ownership Value Increases

17. EXPANDING…
Super Star Group Profit
Couple Will Have 24,00,000
Others 16,00,000
Total Value Of Total Business = Book Value of
Old Business + Book VALUE Of New
Business
= Rs.5 crore + Rs.4 Crore = Rs.9
cr(Assumption)
60% For the Couple = Rs.5.4 crore

18. WITHIN ONE YEAR THE VALUE
 For Couple the Value Increases From Rs.3 crore to
Rs.5.4 Crore
 Similarly for The Share Holders ,VALUE Increases
From Rs.2 Crore To Rs.4.6 crore
This is how the Wealth Grows and there raises the
Purpose of Stock Market To Regulate and
Administrate the Proceedings

19. “ We Have to Let our money
to work for us’’
FRIENDS THIS IS JUST AN EXAMPLE TO UNDERSTAND THE PURPOSE
OF STOCK MARKET
YOUR’S :-
V.SARAVANAN (MBA)