Per Capita Public Debt in Selected States (Average Debt 2001-2011)

Source: Santosh Kumar (2014) Gujarat Development Model: A Reality Check, Prometheus Publications, Kolkata

You can read the entire article at: https://multiview2000.wordpress.com/2014/03/30/gujarat-development-model/#_Toc383852623  

Demand For Luxury Goods..

Looking back to 2004, according to a Goldman Sachs Report, China represented 12% of global sales in the luxury items market (Bialobrzeski, P, 2007). Even in the recession period during 2009, Chinas experienced an increase of 16% in the sale of luxury items. It is projected by 2015 that China will account for 20% of all luxury item sales worldwide (Leibowitz, G, 2011). That translates into roughly 27 billion U.S. dollars (Atsom, Y., Dixit, V., Leibowitz, G., & Wu, C, 2011).

Moving forward in 2011, if we had to create a marketing hook specific to the Chinese market, we’d have to title it “The Sky is the Limit”. If we can consider the fact that we are dealing with the third or fourth largest group of millionaires in the world and quite possibly the fastest growing, it would help paint a picture as to how high the sky actually is for this luxury market in China. “Millionaire households jumped 31 percent in 2010 from the previous year to 1.11 million, the BCG Global Wealth Survey released yesterday showed (Balfour, F, 2011). It’s important to note that as sophistication level increases, meaning knowledge of luxury products, what they are, and where to purchase them, so does overall spending. It’s a natural coincidence. Vehicles to increase knowledge are trends such as increased travel overseas which grants them exposure to more products, less censorship of the internet to increase brand awareness, and increased purchasing which allows for more hands on experience, has drastically affected the sophistication of the luxury consumer.

(Source: Case Study on Demand For Luxury Goods, Ann Langlois Palm Beach Atlantic University
Eric J. Barberio Palm Beach Atlantic University)

Duties & Responsibilities of a Director / Independant Director as Per Companies Act, 2013

DUTIES OF DIRECTORS UNDER THE NEW INDIAN CA-2013

The duties and responsibilities of directors stipulated by the Indian Companies Act of 2013, can broadly be classified into the following two categories: ---

[i] The duties and liabilities which encourage and promote the sincerest investment of the best efforts of directors in the efficient and prudent corporate management, in providing elegant and swift resolutions of various business-related issues including those which are raised through "red flags", and in taking fully mature and wise decisions to avert unnecessary risks to the company.

[ii] Fiduciary duties which ensure and secure that the directors of companies always keep the interests of the company and its stakeholders, ahead and above their own personal interests.

The following duties and liabilities have been imposed on the directors of companies, by the Indian Companies Act of 2013, under its Section 166: ---

• A director of a company shall act in accordance with the Articles of Association (AOA) of the company.

• A director of the company shall act in good faith, in order to promote the objects of the company, for the benefits of the company as a whole, and in the best interests of the stakeholders of the company.

• A director of a company shall exercise his duties with due and reasonable care, skill and diligence and shall exercise independent judgment.

• A director of a company shall not involve in a situation in which he may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company.

• A director of a company shall not achieve or attempt to achieve any undue gain or advantage either to himself or to his relatives, partners, or associates and if such director is found guilty of making any undue gain, he shall be liable to pay an amount equal to that gain to the company.

• A director of a company shall not assign his office and any assignment so made shall be void.

• If a director of the company contravenes the provisions of this section such director shall be punishable with fine which shall not be less than one Lakh Rupees but which may extend to five Lac Rupees.

DUTIES OF INDEPENDENT DIRECTORS

The liability regime of the CA-2013 not only imposes the above-mentioned duties and responsibilities on the directors of Indian companies, but also advocates for independence and equitableness of the board of a company, especially a public limited company. Consequently, the roles, duties, and responsibilities of the Independent Directors have also been stipulated by the new Indian Companies Act of 2013. An Independent Director is that member of the board of a company, who does not possess any financial relationship with the company (except the sitting fees), nor can own shares in the company. The earlier Indian Companies Act of 1956 had no explicit provisions for the independent directors, and only the Old Clause 49 of the Listing Agreement of SEBI contained prescriptions for induction of independent directors to the listed companies.

The new Indian Companies Act of 2013 dictates that every listed company must contain at least one-third of the total magnitude of its directors, as the independent directors; and it also empowers the Government of India to include other categories of companies within the scope of this provision or requirement (Section 149 of the CA-2013). Public limited companies composited as per the former CA-1956, are granted a transition period of one year for making strict compliance with this mandatory provision. Again, the independent directors are not permitted to hold office for more than two consecutive terms of five-year periods.

In the new regime, the roles and duties of the independent directors attained significant expansion, and many new other areas have been prudently covered. Broadly, they are intelligently assigned the highly responsible role of the arbiters among various constituencies within the corporation. Hence, the new provisions for the independent directors of the limited companies are certainly very constructive for transparent and sound corporate governance, and are hugely beneficial to the company and its all shareholders. Some of the most significant functions, duties, and liabilities of the independent directors, are the following (as per the Schedule IV of the CA-2013): ---

• To assist in forwarding equitable and independent judgment to the board
• To secure and promote the interests of all stakeholders of the concerned company, particularly of the minority shareholders
• To conciliate and balance the conflicting interests of the stakeholders
• To attend actively and constructively most of the board and committee meetings
• To pay proper and adequate attention to Related Party Transactions (RPTs)
• To report concerns honestly and impartially about any unethical behavior, violation of the code of conduct, or any suspected fraud in the company

Procedure For Allotment of Rights Issue

COMPANIES ACT- 2013

 

PROCEDURE FOR ALLOTMENT OF RIGHT ISSUE OF SHARES:

a. Call a Board meeting by issue notice of meeting.

b. Approve right issue including “letter of offer”, which shall include right of renunciation also.(At Board Meeting).

c. Send offer letter to all existing members as on the date of offer.(Through registered post or speed post or through electronic mode to all the existing share -holders at least three days before the opening of the issue.)

d. Receive acceptance/ renunciations/rejection of rights from members to whom offer has been sent & also from persons in whose favour right renounced.

e. Call a Board meeting by issue of notice.

f. Approve allotment by passing of Board Resolution.

g. Issue of share certificates.

h. Authorize two directors and one more person for signature on Share Certificates.

i. Attach list of allottees in form PAS-3 mentioning Name, Address, occupation if any and number of securities allotted to each of the allottees and the list shall be certified by the signatory of the form pas-3.

j. Authorize a director to file E-form PAS 3(Return of Allotment) to ROC within 30 days of passing of Resolution.

k. Authorize a director to file E-form MGT 14 for issue of share certificate within 30 days of passing of Resolution.

l. File E-form MGT 14 for issue of share & PAS 3 to ROC for allotment.

m. Issue share certificate.

n. Make Allotment within 60 days of receiving of Application Money; otherwise it will treat as deposits as per deposits rules.

From: commerceduniya.com

Rights Issue - What is It?

Article published in Economic Times on 7/12/08, written by Shobhana Chadha available at http://economictimes.indiatimes.com/magazines/sunday-et/money-you/whats-a-rights-issue/articleshow/3803131.cms

By Shobhana Chadha, ET Bureau | Dec 07, 2008, 12.09 AM IST

Read more at:
http://economictimes.indiatimes.com/articleshow/3803131.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Shobhana Chadha

"A rights issue is a way by which a listed company can raise additional capital. However, instead of going to the public, the company gives its existing shareholders the right to subscribe to newly issued shares in proportion to their existing holdings.

For example, 1:4 rights issue means an existing investor can buy one extra share for every four shares already held by him/her. Usually the price at which the new shares are issued by way of rights issue is less than the prevailing market  ..

Why does a company go for it?

The basic idea is to raise fresh capital. A rights issue is not a common practice that a corporate organization resorts to. Ideally, such an issue occurs when a company needs funds for corporate expansion or a large takeover. At the same time, however, companies also use rights issue to prevent themselves from being conked out.

Since a rights issue results in higher equity base for the organization, it also provides it with better leveraging opportunities. The company becomes more comfortable when it comes to raising debt in the future as its debt-to-equity ratio reduces.

A rights issue affects two important elements of a company equity capital and market capitalization. In case of a rights issue, since additional equity is raised, the issuing company’s equity base rises to the extent of the issue. The effect on m-cap depends on the perception of the market.

In theory, every new issue has some kind of diluting effect and hence as a result of a fall in the market price in proportion to an increase in the number of shares, the market capitalization remains unaffected. However, if the market sentiment believes that the funds are being raised for an extremely positive purpose then price of the stock may just rise resulting in an increase in the market capitalization. If a shareholder does not want to exercise the right to buy additional shares then he/she can sell the right as the rights are usually tradable. Alternatively, investors can just let the rights issue lapse.

What should an investor be careful about in case of a rights issue?

An investor should be able to look beyond the discount offered. Rights issue are different from bonus issue as one is paying money to get additional shares and hence one should subscribe to it only if he/she is completely sure of the company’s performance.

Also, one must not take up the rights if the share price has fallen below the subscription price as it may be cheaper to buy the shares in the open market."

Union Government Spending - 2014 to 2016

"Government Spending in India increased to 3839.06 INR Billion in the third quarter of 2016 from 3490.59 INR Billion in the second quarter of 2016. Government Spending in India averaged 1832.51 INR Billion from 2004 until 2016, reaching an all time high of 3839.06 INR Billion in the third quarter of 2016" - Trading Economics Blog - tradingeconomics.com

Find out the Revenue of the Government of India and see if we are on the right track in terms of Fiscal health.

What is Systemic Risk in Finance?

In finance, systemic risk is the risk of collapse of an entire financial system or entire market, as opposed to risk associated with any one individual entity, group or component of a system, that can be contained therein without harming the entire system. It can be defined as "financial system instability, potentially catastrophic, caused or exacerbated by idiosyncratic events or conditions in financial intermediaries". It refers to the risks imposed by interlinkages and interdependencies in a system or market, where the failure of a single entity or cluster of entities can cause a cascading failure, which could potentially bankrupt or bring down the entire system or market. It is also sometimes erroneously referred to as "systematic risk".

Systemic risk has been associated with a bank run which has a cascading effect on other banks which are owed money by the first bank in trouble, causing a cascading failure. As depositors sense the ripple effects of default, and liquidity concerns cascade through money markets, a panic can spread through a market, with a sudden flight to quality, creating many sellers but few buyers for illiquid assets. These inter-linkages and the potential "clustering" of bank runs are the issues which policy makers consider when addressing the issue of protecting a system against systemic risk. Governments and market monitoring institutions (such as the U.S. Securities and Exchange Commission (SEC), or SEBI in India and central banks often try to put policies and rules in place with the justification of safeguarding the interests of the market as a whole, claiming that the trading participants in financial markets are entangled in a web of dependencies arising from their inter-linkage. In simple English, this means that some companies are viewed as too big and too interconnected to fail. Policy makers frequently claim that they are concerned about protecting the resiliency of the system, rather than any one individual in that system.

Systemic risk should not be confused with market or price risk as the latter is specific to the item being bought or sold and the effects of market risk are isolated to the entities dealing in that specific item. This kind of risk can be mitigated by hedging an investment by entering into a mirror trade.

Insurance is often easy to obtain against "systemic risks" because a party issuing that insurance can pocket the premiums, issue dividends to shareholders, enter insolvency proceedings if a catastrophic event ever takes place, and hide behind limited liability. Such insurance, however, is not effective for the insured entity.

One argument that was used by financial institutions to obtain special advantages in bankruptcy for derivative contracts was a claim that the market is both critical and fragile.

Systemic risk can also be defined as the likelihood and degree of negative consequences to the larger body. With respect to federal financial regulation, the systemic risk of a financial institution is the likelihood and the degree that the institution's activities will negatively affect the larger economy such that unusual and extreme federal intervention would be required to ameliorate the effects.

A general definition of systemic risk which is not limited by its mathematical approaches, model assumptions or focus on one institution, and which is also the first operationalizable definition of systemic risk encompassing the systemic character of financial, political, environmental, and many other risks, was put forth in 2010. 

Also, visit: 
http://www.systemic-risk-hub.org/