Presentation on “ Investors education Presentation on “ Investors education and redressal mechanism- A Study and redressal mechanism- A Study

on LSEon LSE

Presented ByPresented By

Lakhvir SinghLakhvir Singh

MBA 2AMBA 2A

Introduction of Stock ExchangeIntroduction of Stock Exchange

Stock Exchange, organized market for buying and selling financial instruments known as securities, which include bonds, shares, debenture, commercial paper, NSC etc.

Functions of stock ExchangeFunctions of stock Exchange

• To protect the interest of investor.• To encourage the people for invest their saving.• Mobilizing savings for investment• Raising capital for businesses• Barometer of the economy

Who gain from Stock ExchangeWho gain from Stock Exchange

• Investor• Broker• Company• Economy and Country

Stock Exchanges in IndiaStock Exchanges in India

Non-Regional Stock Exchanges – 2

BSE and NSE

Regional Stock Exchanges – 19

Out of 19 there are 8 stock exchanges have been granted permanent reorganization and rest of them have been valid for 5 years

Cont.Cont.

During the years 2008 to 2010 there are 4 stock Exchanges which are derecognized by SEBI;

• Magadh Stock Exchange• Hydrabad Stock Exchange• Manglore Stock Exchange• Saurasha Stock Exchange

Introduction of the LSEIntroduction of the LSE

The Ludhiana Stock Exchange Limited was established by Sh. S.P. Oswal of Vardhman Group and Sh. B.M. Munjal of Hero Group, leading industrial luminaries, to fulfill a vital need of having a Stock Exchange in the region of Punjab, Himachal Pradesh, Jammu & Kashmir and Union Territory of Chandigarh. LSE was actually introduced in 17 April 1981 but it was fully established in 1983.

Cont.Cont.

Vision of LSE –

“To maximize the satisfaction level of its customers.”

Mission of LSE -

“To provide DP services to its clients and facilitate its broker i.e. LSE SECURITIES LTD. & sub –brokers at LSE (These are like broker for LSE securities), for trading purposes.”

Work Profile of LSEWork Profile of LSE

Board of Directors

6 Shareholding Director

6 Public interestDirector

3 Trading MemberDirector

1 Executive Director

Board of Director of LSEBoard of Director of LSESr. No. Name of the Director Designation

1 Sh. Padam Prakash Kansal Chairman and Shareholder Director

2 Sh. Joginder Kumar Vice-Chairman and Shareholder Director

3 Sh. Sanjay Anand Trading Member Director

4 Sh. T.S. Thapar Trading Member Director

5 Sh. Sunil Gupta Trading Member Director

6 Dr. Ravinder Nath Sethi Shareholder Director

7 Sh. Ashok Kumar Shareholder Director

8 Sh. Satish Nagpal Shareholder Director

9 Sh. Varun Chabra Shareholder Director

10 Sh. Ashwani Kumar Public Interest Director

11 Dr. Raj Singh Public Interest Director

12 Sh. Ved Prakash Gaur Public Interest Director

13 Ms. Pooja M. Kohli Executive Director (Officiating)

ORGANIZATIONAL CHART OF LUDHIANA STOCK EXCHANGEORGANIZATIONAL CHART OF LUDHIANA STOCK EXCHANGE Board of Director

Chairman

CEO

Department

Legal Department

Secretarial Department

Tech & Maintaince Department

Listing Department

Membership Department

Account Department

Training & Education Department

Introduction of LSE Security Ltd.Introduction of LSE Security Ltd.

• LSE Securities Ltd., was incorporated in 07th January, 2000.

• LSE SECURITIES LIMITED (LSESL) is a subsidiary of the Ludhiana Stock Exchange Limited under the policy formulated by the Securities and Exchange Board of India (SEBI) for “Revival of Small Stock Exchanges”.

• LSESL is a Trading-cum-Clearing member in the capital market.

• Incorporation of LSE COMMODITIES TRADING SERVICES LTD., a subsidiary of LSE. Securities ltd

Objective of LSE Security LtdObjective of LSE Security Ltd..

The objective of the LSESL is to enhance business and investment opportunities for the investors and members of Ludhiana Stock Exchange at large, through innovative products by encompassing a variety of activities related to the capital market.

Features of LSE security Ltd.Features of LSE security Ltd.

• First 100% subsidiary of any Regional stock exchange.

• Provides D/P service of NSDL and CSDL.• Provides Platform for Trading in capital market.• More than 40000 clients

• The company has 295 sub-brokers

Work profile of the LSE Security Ltd.Work profile of the LSE Security Ltd.

Board of Directors

1 Chairman1 vice Chairman

3 From Broker Member

5 Public interestDirector

1 from LSE1 CEO cum

Director

Board of Director of LSE Security ltd.Board of Director of LSE Security ltd.

Sr. No. Name of the Director Designation

1 Sh. Anurag Arora Chairman

2 Sh. Vishal Goomber Vice-Chairman

3 Sh. Jatinder Garg Member Director

4 Sh. M.S. Sarna Member Director

5 Sh. Lalit Kishore Member Director

6 Sh. Susheel Bhakoo Public Representative Director

7 Sh. Vijay K. Bansal Public Representative Director

8 Dr. Prem Kumar Public Representative Director

9 Dr. Anil Angrish Public Representative Director

10 Sh. Pawan K. Garg Public Representative Director

11 Ms. Pooja M. Kohli LSE Representative Director

12 Mr. Rajesh K. Sharma CEO Cum Director

DEPARTMENT OF LUDHIANA STOCK EXCHANGEDEPARTMENT OF LUDHIANA STOCK EXCHANGE

Departments HOD

Depositary Department Mr. Viney Mahajan

KYC Department Ms. Sonia Makkar

Clearing Department Mr. Vipun Goyal

Margin Department Mr. Rajinder Pal Singh

Account 1 Department Mr. Ram Ji

Account 2 Department Mr. Ravinder Saini

Surveillance Department Ms. Paramjeet Kaur

IT Department Mr. Madhur Gupta

Personnel Department Ms. Pooja Sharma

Financial analysisFinancial analysis

Current Ratio = Current Assets/Current Liabilities

March 2009

March 2008

March 2007

March 2006

Current Asset 144212436 133627992

127256429 136653178

Current Liabilities

90056374 88057900 85510697 102615218

Current Ratio 1.60 1.52 1.49 1.33

Liquid Ratio=Liquid Assets/Current Liabilities

Liquid Assets= Current Assets – Inventory – Prepaid Expenses

March 2009

March 2008

March 2007 March 2006

Liquid Asset 143995929 133118958 127214660 136596413

Current Liabilities 90056374 88057900 85510697 102615218

Liquid Ratio 1.59 1.51 1.48 1.33

Absolute Liquid Ratio= Absolute Liquid Assets/Current LiabilitiesAbsolute Liquid Assets= Cash + Bank + Short Term Investments

March 2009 March 2008

March 2007 March 2006

Absolute Liquid Asset

113940009 106628810 110577976 108499165

Current Liabilities 90056374 88057900 85510697 102615218

1.26 1.21 1.18 1.05

Proprietary Ratio= (Shareholder Funds/Total Assets)*100

March 2009

March 2008

March 2007

March 2006

Shareholder Funds

175905155 171513006 169718351 169446708

Total Assets 265961529 259570906 255229047 272061926

Proprietary Ratio

66.14 66.07 66.50 62.28

Solvency Ratio= (Total Outside Liability/Total Assets)*100

March 2009

March 2009

March 2009

March 2009

Total Debt 90056374 88057900 85510696 102615218

Total Assets

265961529 259570906 255229047 272061926

Solvency Ratio

33.86 33.92 33.50 37.72

Fixed Assets to Net-worth Ratio= (Net Fixed Assets/Shareholder Funds)*100

March 09 March 08 March 07 March 06

Net Fixed Assets 89734809 92072811 92804243 94679869

Shareholder Funds

175905155 171513006 169718351 169446708

Ratio 51.01 53.68 54.68 55.87

ROSF= (Net Profit after tax/ Shareholder Funds)*100

March 2009 March 2008 March 2007 March 2006

EAT 6966926 3855982 7170142 4132544)

SH Fund 175905155 171513006 169718351 169446708

ROSF 3.96 2.25 4.22 (2.44)

Trend analysis of Net Profit

-150

-100

-50

0

50

100

150

200

250

300

2005-06 2006-07 2007-08 2008-09

Year

Per

cen

tag

e

percentage

Trend Analysis of Earning Per shareTrend Analysis of Earning Per share

6.8611.91

64.05

115.73

0

20

40

60

80

100

120

140

2005-06 2006-07 2007-08 2008-09

years

Per

cen

tag

e

E P S

Introduction of the ProjectIntroduction of the Project

Rights of the InvestorsRights of the Investors

• To receive the allotment /transfer of shares on time.

• To received the copy of annual report, balance sheet and the P & L A/c of company.

• To participate and vote in the general meeting.

• To received corporate benefit.

• To inspect the minute book of annual general meeting.

Responsibilities of InvestorsResponsibilities of Investors

• Verify the legitimacy of the investment.

• Assess the risk-return profile of the investment.

• To know the liquidity and safety aspects of the investment.

• Deal only through an authorized intermediate.

• Find out the cost and benefits associated with the investment.

Investors related services in LSEInvestors related services in LSE

• Investor grievance cell

• Investor Protection Fund

• Investor Service Centre

• Website www.lse.co.in

• Certification programme in capital market

Investor Grievance CommitteeInvestor Grievance Committee

• The board of director of LSE constitutes the investor grievance committee as the power conferred on its article of association and as recommended by SEBI to:

• Scrutinize

• Investigate and

• decide

• It consist of body of member nominated by the board of directors every year after the annual general meeting and the committee is required to have atleast two public representative.

Cont.Cont.

• Mainly the investors having grievance regarding two aspects :

Investor grievance against listed companies.

Investor grievance against broker member.

Investor grievance against listed companiesInvestor grievance against listed companies

• The investors complains regarding dispute’s with the company like dividend, bonus shares, non-receipt of dividend, non-receipts of balance sheet, information etc.

• The complaint can be send three places;i. Stock exchangeii. SEBIiii. Court

Procedure of complaintsProcedure of complaints

• Filled the complaint in concerned exchange.• Forward to concerned listed company.• Advice to resolve in 45 days.• Reminder to resolve in 30 days• Advice to appear company’s official Investor Grievance

committee.• Trading suspended.• Matter forward to SEBI.• SEBI imposes penalties one lakh per day from the delay it

will maximum up to one cores whichever is less.• Appeal to SAT (Securities Appellate Tribunal): if one of

the above authorities is not able to resolve the matter.

SAT (Securities Appellate Tribunal)SAT (Securities Appellate Tribunal)

• Securities appellate tribunal is made for resolving the every case related to securities. The board consists of 3 members, which includes 1 preceding officer and 2 will be member from central Govt.

• Qualification of the members: The judge will be the retired chief justice of supreme or high court.

• Functions of SAT: Mainly SAT do three functions these are given blow:

• Entertain appeals

• Conduct enquiry

• Investigation

Power of SATPower of SAT

• Can send summon to the parties.

• Discovery and production of documents related to the appeal.

• Receiving evidence of affidavits.

• Can Dismiss the appeal .

• Can give the order.

The CEO or MD of the company or Company secretary can represent before the SAT.

Investor grievance against broker memberInvestor grievance against broker member

Dispute against the broker members like:-

• Non receipt of share in time

• Non receipt of payment

• Non receipt of contract note

• Misuse of DIS

• Wrong trading

Procedure of complaintProcedure of complaint

• Filing the complaint in concerned exchange; • Exchange will forward the complaint to concerned member;• Request to give clarification wit in 7 days • Reminder & ex-party decision ( in case second party does not

present after two or three call.• Matter place before IGC.• Advice to appear before committee.• Both parties present their case.• Decision in merit (in the bases of available documents).• Appeal to board in 30 days.• Fail to implement decision will cause disciplinary action.

Title of the ProjectTitle of the Project

“Investors’ education and grievances redressal mechanism – A Study on LSE”

Objective of the ProjectObjective of the Project

• The research aims to study the level of awareness of investors of Ludhiana regarding their rights and responsibilities.

• To study different types of grievances faced by investor

• To determine the extent of information provided by the stock exchange for solving grievance of investor.

Research MethodologyResearch Methodology

Research Designs - The conceptual structure within the

research was descriptive in nature.data collection method -Primary and secondary source of data

was used for data collection.

Universe - all investors of Stock Exchanges.

Population - all investor of Ludhiana.

Sample Unit - included an investor of Ludhiana.

Sample Size - 100

• Sample Techniques - Convenience sampling techniques was used to get the questionnaire filled from investors of Ludhiana.

• Limitations of the study;

Time constraint

Biasness

DATA ANALYSIS AND INTERPRETATIONDATA ANALYSIS AND INTERPRETATION

Duration of activity of respondents in the stock exchange Duration of activity of respondents in the stock exchange

(N=100)(N=100)

Graph 4.1

1610

18

56

0

10

20

30

40

50

60

Lessthan 1year

1-3years

3-5years

Morethan 5years

Time

Per

cen

tag

e

Percentage

Instrument of investment (N=100)Instrument of investment (N=100)

GRAPH 4.2

Percentage

72

813

7

0

10

20

30

40

50

60

70

80

Equity Debenture Bond All

Instrument

Perc

enta

ge

Percentage

Awareness about their rights (N=100)Awareness about their rights (N=100)

Graph 4.3

Percentage

88

12

0102030405060708090

100

Yes No

Awareness

Per

cent

age

Percentage

Rights aware about (N=88)Rights aware about (N=88) Graph 4.4

0

5

10

15

20

25To

rece

ived

docu

men

tre

gard

ing

your

To d

eman

dce

rtific

ates

of

regi

stra

tion

of

To re

ceiv

ed th

ese

curit

ies

onal

lotm

ent/t

rans

fer

To re

ceiv

eco

rpor

ate

bene

fiti.e

. div

iden

d,

To p

artic

ipat

e an

dvo

te in

gen

eral

mee

ting

To re

ceiv

e an

nual

repo

rt

To a

pply

for

wind

ing

up o

f aco

mpa

ny

Knowledge About

Perc

enta

ge

Investors Education Programmes (N=100)Investors Education Programmes (N=100) Graph 4.5

Percentage

70

1812

0

10

20

30

40

50

60

70

80

Yes No Can’t say

Response

Per

cen

tag

e

Percentage

Mode of education regarding rights (N=100)Mode of education regarding rights (N=100) Graph 4.6

2326

13

38

0

5

10

15

20

25

30

35

40

T.V. Newspaper Magazine At stock exchange

mode

per

cen

tag

e

Problems faced by Investor (N=100)Problems faced by Investor (N=100)

Graph 4.7

44

56

0

10

20

30

40

50

60

Yes No

Response

Per

cen

tag

e

Types of Problem faced (N=44)Types of Problem faced (N=44)

Graph 4.8

Percenatege

16

26

20

33

5

0

5

10

15

20

25

30

35

Problem

Any action followed against the complaint (N=44)Any action followed against the complaint (N=44) Graph 4.9

82

18

0

10

20

30

40

50

60

70

80

90

Yes No

Response

Per

cen

tag

e

Filling of complaint with the departments (N=36)Filling of complaint with the departments (N=36)

Graph 4.10

0

10

20

30

40

50

60

Avenue

Per

cent

age

Support provided to the investor in their complaints (N=36)Support provided to the investor in their complaints (N=36)

Graph 4.11

39

61

0

10

20

30

40

50

60

70

Yes No

Response

Per

cen

tag

e

Satisfaction level of grievance settlement procedure (N=36)Satisfaction level of grievance settlement procedure (N=36)

Graph 4.12

Percentage

8%

22%

39%

25%

6%

Extremely Satisfied

Somewhat Satisfied

Neutral

Somewhat Dissatisfied

Extremely Dissatisfied

SUGGESTIONSUGGESTION

• Heavy penalties should be imposed against defaulter companies.

• At office of broker, address of investor grievance cell should be mentioned.

• Broker should educate their customer because they are one who actually influenced the decision of investors largely.

• Investor should form association and came together as group and not as invidual for enforcement of their right.

SUMMARY AND CONCLUSIONSUMMARY AND CONCLUSION

• Majority of the respondent have experienced in stock exchange is more than 5 years.

• Equity was the most favored instrument of investment. • Majority of respondent are aware of their rights.• Almost all the respondent are ready to attend educational

programmes, if organized.• Maximum number of respondent preferred T.V. as medium for

educating them regarding their rights.

Cont.Cont.

• Most of the respondents faced problem and most of them faced problem to delay in sending of dematerialization.

• Maximum number of respondent lodges their complaint with stock exchange.

• Majority of the respondents did not received support from various avenues.

• Most of the respondent’s satisfaction level from the grievance redressal procedure is neutral and it shows that the investors are not satisfied with redressal mechanism.