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Primary Market
https://www.youtube.com/watch?v=11dsrhWmvaQ
Meaning
• A Primary Market is a part of the Capital Market that deals with
issuing of new securities.
• It is also known as “New Issue Market”
• Companies, governments or public sector institutions can obtain
funds through sale of a new stock or bond issues through Primary
Market. This is done through an investment bank or finance
syndicate of security dealers
Features of the Primary Market
• This is the market for new long term equity capital
• The Primary Market is a market where the securities are sold for
the first time
• In a Primary issue, the securities are issued by the company
directly to investors
• The Company receives the money and issues new security
certificates to investors
• Primary issues are used by companies for the purpose of setting up
new business or for expanding or modernizing the existing
business
• The new issue market does not include certain other sources of new
long term external finance
• Borrowers in the new issue market may be raising capital for
converting private capital into public capital this is known as
public group
Primary Market Method of Issue
IPO
IPO is the first sale of stock by a company to the public
Parties Involved in IPO
Primary Criteria For IPO
CASE STUDY
Introduction
1. Chain of Hypermarket and Supermarket
2. Founded by Radhakishan Damani
Presence
As of 2016 has 118 stores in India spread across Maharashtra,
Gujarat, Andhra Pradesh, Telangana, Madhya Pradesh, Chhattisgarh,
Rajasthan, Karnataka
Objective of Issue
1. Repayment / Prepayment of loans & redemption of NCD’s availed
by the company
2. Expansion
SUMMARY OF FINANCIAL INFORMATION
Particulars For the year / period ended(in Rs Million)
31- 31- 31- 31- 31-
March- March- March- March- March-
2016 2015 2014 2013 2012
indices?
Indices in India and World
TYPES OF MARKET
• Automatic Route:
Under this route no Central Government permission is required.
• Government Route:
Under this route applications are considered by the Foreign
Investment Promotion Board (FIPB). The proposals involving
investments of more than USD 769.23 million are considered by
Cabinet committee on economic affairs.
Sectors where FDI is prohibited in India
• Lottery Business including Government/private lottery, online
lotteries, etc
• Gambling and Betting including casinos etc
• Chit funds
• Nidhi company
• Trading in Transferable Development Rights (TDRs)
• Real Estate Business or Construction of Farm Houses ‘Real estate
business’ shall not include development of townships, construction
of residential /commercial premises, roads or bridges and Real
Estate Investment Trusts (REITs) registered and regulated under
the SEBI (REITs) Regulations 2014
• Manufacturing of cigars, cheroots, cigarillos and cigarettes, of
tobacco or of tobacco substitutes
• Activities/sectors not open to private sector investment e.g.(I)
Atomic Energy and (II) Railway operation
Sectors Under Automatic Route
• Agriculture – 100%
• Mining of metal and non-metal ores – 100%
• Mining – Coal & Lignite – 100%
• Food Product Retail Trading – 100%
• Broadcasting Carriage Services (Teleports, DTH, Cable Networks,
Mobile TV, HITS) – 100%
• Broadcasting Content Service - Up-linking of Non-‘News & Current
Affairs’ TV Channels/ Down-linking of TV Channels – 100%
• Airports – Greenfield – 100%
• Airports – Brownfield – 100%
• Air Transport Service – Non-Scheduled – 100%
• Air Transport Service – Helicopter Services/ Seaplane Services – 100%
• Construction Development – 100%
• Industrial Parks – new and existing – 100%
• Trading – Wholesale – 100%
Sectors Under Automatic Route
• Credit Information Companies – 100%
• White Label ATM Operations – 100%
• Non-Banking Finance Companies – 100%
• Pharma – Greenfield – 100%
• Petroleum & Natural Gas - Exploration activities of oil and
natural gas fields – 100%
• Petroleum refining by PSUs – 49%
• Infrastructure Company in the Securities Market – 49%
• Commodity Exchanges – 49%
• Insurance – 49%
• Pension – 49%
• Power Exchanges – 49%
• Trading – B2B E-commerce – 100%
• Duty Free Shops – 100% (5.2.15.5)
• Asset Reconstruction Companies – 100%
Sectors Requiring Central Government Approval
• Mining and mineral separation of titanium bearing minerals and ores – Upto 100%
Defence – Beyond 49% & upto 100%
• Publishing/printing of scientific and technical magazines/specialty journals/ periodicals
– Upto 100%
• Publication of facsimile edition of foreign newspapers – Upto 100%
• Print Media - Publishing of newspaper and periodicals dealing with news and current affairs
– Upto 26%
• Air Transport Service - Scheduled, and Regional Air Transport Service – Beyond 49% &
Upto 100%
• Satellites – establishment and operation – Upto 100%
• Telecom Services – Beyond 49% & Upto 100%
• Trading – Single Brand Retail Trading (SBRT) – Beyond 49% & Upto 100%
• Pharma – Brownfield – Beyond 74% & Upto 100%
• Banking – Private Sector – Beyond 49% & Upto 74%
• Banking – Public Sector – Upto 20%
• Private Security Agencies – Beyond 49% & Upto 74%
• Broadcasting Content Service - FM Radio – Upto 49%
• Uplinking of ‘News & Current Affairs’ TV Channels – Upto 49%
• Trading - Multi Brand Retail Trading (MBRT) – Upto 51%
FII regulations
• FII can invest in the capital of an Indian company with individual
holding of an FII/FPI below 10% of the capital of the company and
the aggregate limit for FII/FPI investment to 24% of the capital of
the company. The aggregate FII/FPI investment, individually or in
conjunction with other kinds of foreign investment, will not exceed
sectoral/statutory cap.
• Only registered FIIs/FPIs and NRIs as per Schedules 2,2A and 3
respectively of Foreign Exchange Management (Transfer or Issue
of Security by a Person Resident Outside India) Regulations, 2000,
can invest/trade through a registered broker in the capital of Indian
Companies on recognized Indian Stock Exchanges.
Monitoring of Foreign Investments by RBI
• The Reserve Bank of India monitors the ceilings on FII/NRI/PIO
investments in Indian companies on a daily basis
• For effective monitoring of foreign investment ceiling limits, the
Reserve Bank has fixed cut-off points that are two percentage
points lower than the actual ceilings
• Once the aggregate net purchases of equity shares of the company
by FIIs/NRIs/PIOs reach the cut-off point, the Reserve
Bank cautions all designated bank branches so as not to purchase
any more equity shares of the respective company on behalf of
FIIs/NRIs/PIOs without prior approval of the Reserve Bank
• On reaching the aggregate ceiling limit, the Reserve Bank advises
all designated bank branches to stop purchases on behalf of their
FIIs/NRIs/PIOs clients
THANK YOU!