INTERGRATED ASSIGNMENT

8/7/2019 INTERGRATED ASSIGNMENT

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INTERGRATEDASSIGNMENT

BY: SUHAIL JOSHUA



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.



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



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



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



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.



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



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.



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.



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.



. 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



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.



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.



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



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.



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



ACCOUNTING PROCEDURE IN

MERGER

Pooling of Interests Method

Purchase Method



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)



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.



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.



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.



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.



THANK YOU

INTERGRATED ASSIGNMENT

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