Scandal of millennium Centillions+ defalcated

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By Soumitra Bose/Mukesh Kumar Sinha

Its not Scandal of Millennium : MAKE IN INDIA; Sure (thanks to present Modi Government, its Chief Narendra DamodarDasBhai Modi), Any Way. But, Buy Not ‘Made In India’ by Indians But Buy ‘MADE IN INDIA’ by NON-Indians, un-Indians, not even, NRIs. Sort of Apartheid ? Yes, apparently. Communal as well? . Perhaps yes though not of religious fundamentalism kind.

Now, Scandal of Millennium : India has been steadily losing millions, billions, trillions, …quadrillion,quidutrillion…vigintillion (10 to the power 63)…centillion (10 to the power 303)…(Effect: India’s Economic Scenario is Bleak, Economy is tottering, abegging; Financial Health is rickety, Fiscal not in control etc) How? India’s National Capital Region Faridabad, immediate neighbor of New Delhi, has National Institute of Financial Management. Innocuous sounding, may be, but its not so at all. Its one of the main reasons (many assert, it is the reason) of the country’s present tottering Finance.

NIFW is the only (Union Finance Ministry-owned, Government of India directly patronized, supervised, authorized, inspected) organization that should make the countrymen  Finance-alert, Finance-aware, Finance-awakened, Finance-financed in all senses. They in turn are required to make themselves roll in finance and in effect should make the country, India, Super Power Financially. As is fully known, it is not so.

Why? India’s Finance/financial sectors/financial cauldrons were closed in Cold War. After Open Economy rolled in, gained momentum, achieved speed, India still was in the hang over of Closed Economy meaning license, quota, permit, ration, contract raj. (To a great extent, the temperament remains the same even today. If it would not be so, the country would be right on top today in every respect including Super Power Status, First World).

Financial management is two way process in which finance manager obtain funds andmoney at low cost and risk and use it in higher earning project at minimum risk. Expert says that it is science to earn maximum return at minimum risk and control. In financial management, following decision is taken technically.
Ist To Get Funds from Different Sources:- This decision is very helpful for development of company. You know that if you start even a small business, you need fund for paying capital and revenue expenditures. But you have to give its cost. You have also to take the risk of its repayment; it may possible that at the time of repayment, you have no money in your pocket. It is therisk of solvency. You also have to see who will control your business after taking fund. We explain our views to make understand to you.

→ If you choose share capital as the source of funds: Suppose, you have issued new shares and get fund as share capital, at that time, we can analyze its cost, risk and control with following ways:- (a) Cost – Cost of acquiring share capital is high than acquiring debt because its cost is dividend and dividend is not deducted out of profit as indirect expenses. It is division of net profit after tax. If we get debt, we pay interest before tax, it means we have to pay tax high, if we get share capital and pay dividend. Thus cost of this source of funds is high.

(b) Risk : Risk means probability of loss in future. But, you have chosen this source, you will find no risk because we do not repay to shareholders. We only repay balance amount at the time of winding up of company.

(c) Control : If company issues new share to new shareholders instead of existing shareholders for getting funds from new shareholders, it will reduce the control of existing shareholders.
If you choose bond or debenture or take loan:At that time, company’s cost will reduce but risk of repayment will increase. If company has no liquidity at the time of repayment company will be liquidated.
There are also many other sources but these sources have also some strength point and weak point. Before choosing best source deep analysis is needed.
Objectives of financial management : fix the target of finance manager. Under thescope of financial management, he has to achieve different objective of financial management.
We can make the list of these objectives:1. To Reduce the Misuse of Funds : It is the objective of financial management to reduce the misuse of funds. I can take my own example. I hate misusing of my hard earned money. Last month, I have bought DVD writer for starting business of CD and DVD of educational tutorials. But, after spending one month, DVD writer is being used for production or business purposes; I think this is misuse of my fund. If I deposited it in bank, I can earninterest on saving account on daily basis. Like me, company also misuses his funds in bad projects. We should learn from objective of financial management and reduce the misuse of even one rupee.

2. To Maximize the Profit in Long Run : If a businessman invests his money and wants to earn high profit, it means, it is taking high risk according to risk theory of financial management. This is not objective of financial management, but to maximize the profit in long run is real aim of financial management.
3. To Maximize the Wealth of Company : An investor only purchases shares, if he hopes that he will earn high profit on it, otherwise, he can deposit his money in saving account of bank. So, it is the objective of financial management to maximize the value of share. It can be possible by following way.
a) To Increase Dividend per share
b) To Increase Earning per share
c) To Analyze  the value of share in market
4. To Fulfill the Social Responsibility: Company uses the natural resources and earns money and funds. Suppose Xyz Company started a plant in F place and use water, land and machines, it earned 10 million dollars from that plant. According to my view, Xyz Company takes his all natural resources from society in the form of land, water, metal and minerals.God has made these things for whole society not a particular Xyz company. If Xyz Company has used these resources, then it is the duty of xyz Company to fulfill his responsibility toward society. This is the main objective of financial management. Company’s reputation can be calculated with how many employees are working in it. What facilities are given by company to his employees? If company only shows his balance sheet of dead plants, machinery and other assets but there is not provision of any social activity or donation, that company will not get any goodwill. Some companies are being operated on the basis of public deposits instead of share capital. Why? And answer is security and that company can give only the security who wants to benefit of society like a social worker.

 

Scope of financial management is vast and important to business. It is involve in all level of management and all fields of human activities. We can prove that without good financial management, no organization can be alive. Organization (duplicate name of selfish group of people) is helpful for people and wants welfare of public. But, it need fund, money and cash and for getting it, it uses techniques of financial management. So financial management makes his place everywhere. Never understand it as the name of book but it is practical science to support business to live respectful life in society.

We can divide financial management scope into three major parts:-

1. Financial Management in New Companies

A new company spends large amount on production and marketing but it should ignore proper use of its fund. Financial management’s gateway is new company and if new company ignores financial management study, it means it is ignoring cash,inventory, debtors and fixed assets management. Past study reveals that big organization or companies did not trade even one year and before one year they took their baggage and became liquidated. Why? Because, given debt was demanded from these companies by creditors. By answering no, court had liquidated them. So, if you are starting new company, become regular readers of financial management.

2. Financial Management in Old Companies

Old company can survive in long run, if it is capable to pay debt timely, to pay salary on time and to pay other daily expenses. Because old company has good reputation in financial market, so financial management’s some part like working capital management is very significant. Old company should try to increase growth rate by using new techniques of financial management.

3. Financial Management in NGO

In this material age, every work is becoming business. Only NGO are working not for profit aim. Its aim is not to earn money but here is also question of its existence. Like survive of company, NGO can live only and only after proper management of its cost and management of cost can be taught only in financial management. So, NGO are also under the scope of financial management. Every NGO wants to provide free services long time. Without, use the techniques of financial management, NGO starts misuse the scarce sources of public. After revealing this fact, public may reduce to donate to NGO, so NGO should be aware about financial management.
Now OFFICIAL : NIFM faculty officially have studied and worked in the best of institutions within India and around the world. Their involvement with public and private organizations internationally allows them to bring relevant management issues into the classroom and in their research. This creates an exceptional environment for developing a range of programmes that can build sound theory for analyzing complex financial management issues.

Apart from the regular faculty, NIFM has a wide-array of number of distinguished visiting faculties, reputed consultants and faculties on deputation from various services.

The Core Faculty of NIFM are well-known & highly respected in their respective academic fraternity. The Core group consists of five professors, one associate professor and one assistant professor in the area of Finance and Accounting, Economics, Information Technology and Human Resource Management. The diverse and multidisciplinary background of the core faculty group gives NIFM an edge among its peer Institutes.

Fact : At least 8 out of 15 members (rest 7 were not available for multi-colored reasons) of NIFT General Body unabashedly admitted that NIFTIst To Get Funds from Different Sources: This decision is very helpful for development of company. You know that if you start even a small business, you need fund for paying capital and revenue expenditures. But you have to give its cost. You have also to take the risk of its repayment; it may possible that at the time of repayment, you have no money in your pocket. It is therisk of solvency. You also have to see who will control your business after taking fund. We explain our views to make understand to you.
→ If you choose share capital as the source of funds: Suppose, you have issued new shares and get fund as share capital, at that time, we can analyze its cost, risk and control with following ways:-
(a) Cost : Cost of acquiring share capital is high than acquiring debt because its cost is dividend and dividend is not deducted out of profit as indirect expenses. It is division of net profit after tax. If we get debt, we pay interest before tax, it means we have to pay tax high, if we get share capital and pay dividend. Thus cost of this source of funds is high.
(b) Risk : Risk means probability of loss in future. But, you have chosen this source, you will find no risk because we do not repay to shareholders. We only repay balance amount at the time of winding up of company.
(c) Control : If company issues new share to new shareholders instead of existing shareholders for getting funds from new shareholders, it will reduce the control of existing shareholders.
→ If you choose bond or debenture or take loan: At that time, company’s cost will reduce but risk of repayment will increase. If company has no liquidity at the time of repayment company will be liquidated.
There are also many other sources but these sources have also some strength point and weak point. Before choosing best source deep analysis is needed.
Objectives of financial management fix the target of finance manager. Under thescope of financial management, he has to achieve different objective of financial management.
We can make the list of these objectives:
1. To Reduce the Misuse of Funds
It is the objective of financial management to reduce the misuse of funds. I can take my own example. I hate misusing of my hard earned money. Last month, I have bought DVD writer for starting business of CD and DVD of educational tutorials. But, after spending one month, DVD writer is being used for production or business purposes; I think this is misuse of my fund. If I deposited it in bank, I can earninterest on saving account on daily basis. Like me, company also misuses his funds in bad projects. We should learn from objective of financial management and reduce the misuse of even one rupee.
2. To Maximize the Profit in Long Run: If a businessman invests his money and wants to earn high profit, it means, it is taking high risk according to risk theory of financial management. This is not objective of financial management, but to maximize the profit in long run is real aim of financial management.
3. To Maximize the Wealth of Company :An investor only purchases shares, if he hopes that he will earn high profit on it, otherwise, he can deposit his money in saving account of bank. So, it is the objective of financial management to maximize the value of share. It can be possible by following way.
a) To Increase Dividend per share
b) To Increase Earning per share
c) To Analyze  the value of share in market
4. To Fulfill the Social Responsibility : Company uses the natural resources and earns money and funds. Suppose Xyz Company started a plant in F place and use water, land and machines, it earned 10 million dollars from that plant. According to my view, Xyz Company takes his all natural resources from society in the form of land, water, metal and minerals.God has made these things for whole society not a particular Xyz company. If Xyz Company has used these resources, then it is the duty of xyz Company to fulfill his responsibility toward society. This is the main objective of financial management. Company’s reputation can be calculated with how many employees are working in it. What facilities are given by company to his employees? If company only shows his balance sheet of dead plants, machinery and other assets but there is not provision of any social activity or donation, that company will not get any goodwill. Some companies are being operated on the basis of public deposits instead of share capital. Why? And answer is security and that company can give only the security who wants to benefit of society like a social worker.

Scope of financial management is vast and important to business. It is involve in all level of management and all fields of human activities. We can prove that without good financial management, no organization can be alive. Organization (duplicate name of selfish group of people) is helpful for people and wants welfare of public. But, it need fund, money and cash and for getting it, it uses techniques of financial management. So financial management makes his place everywhere. Never understand it as the name of book but it is practical science to support business to live respectful life in society.
Can divide financial management scope into three major parts: 1. Financial Management in New Companies. A new company spends large amount on production and marketing but it should ignore proper use of its fund. Financial management’s gateway is new company and if new company ignores financial management study, it means it is ignoring cash,inventory, debtors and fixed assets management. Past study reveals that big organization or companies did not trade even one year and before one year they took their baggage and became liquidated. Why? Because, given debt was demanded from these companies by creditors. By answering no, court had liquidated them. So, if you are starting new company, become regular readers of financial management.

2. Financial Management in Old Companies

Old company can survive in long run, if it is capable to pay debt timely, to pay salary on time and to pay other daily expenses. Because old company has good reputation in financial market, so financial management’s some part like working capital management is very significant. Old company should try to increase growth rate by using new techniques of financial management.

3. Financial Management in NGO

In this material age, every work is becoming business. Only NGO are working not for profit aim. Its aim is not to earn money but here is also question of its existence. Like survive of company, NGO can live only and only after proper management of its cost and management of cost can be taught only in financial management. So, NGO are also under the scope of financial management. Every NGO wants to provide free services long time. Without, use the techniques of financial management, NGO starts misuse the scarce sources of public. After revealing this fact, public may reduce to donate to NGO, so NGO should be aware about financial management.

 

THE SCANDAL : The NIFT has no connection with World’s Top 10 Lrgest Stock Exchanges. How and what then it is teaching to its pupils? The 10 are :

  1. New York Stock Exchange (NYSE)– Headquartered in New York City. Market Capitalization (2011, USD Billions) – 14,242; Trade Value (2011, USD Billions) – 20,161.

The largest stock exchange in the world by both market capitalization and trade value. NYSE is the premier listing venue for the world’s leading large- and medium-sized companies. Operated by NYSE Euronext, the holding company created by the combination of NYSE Group, Inc. and Euronext N.V., NYSE offers a broad and growin array of financial products and services in cash equities, futures, options, exchange-traded products (ETPs), bonds, market data, and commercial technology solutions. Featuring more than 8000 listed issues it includes 90% of the Dow Jones Industrial Average and 82% of the S&P 500 stock market indexes volume.

  1. NASDAQ OMX– Headquartered in New York City. Market Capitalization (2011, USD Billions) – 4,687; Trade Value (2011, USD Billions) – 13,552.

Second largest stock exchange in the world by market capitalization and trade value. The exchange is owned by NASDAQ OMX Group which also owns and operates 24 markets, 3 clearinghouses and 5 central securities depositories supporting equities, options, fixed invome, derivatives, commodities, futures and structured products. It is a home to approximately 3,400 listed companies and its main index is the NASDAQ Composite, which has been published since its inception. Stock market is also followed by S&P 500 index.

  1. Tokyo Stock Exchange– Headquartered in Tokyo. Market Capitalization (2011, USD Billions) – 3,325; Trade Value (2011, USD Billions) – 3,972.

Third largest stock exchange market in the world by aggregate market capitalization of its listed companies. It had 2,292 companies which are separated into the First Section for large companies, the Second Section for mid-sized companies, and the Mothers section for high growth startup companies. The main indices tracking Tokyo Stock Exchange are the Nikkei 225 index of companies selected by the Nihon Keizai Shimbun, the TOPIX index based on the share prices of First Section companies, and the J30 index of large industrial companies. 94 domestic and 10 foreign securities companies participate in TSE trading. The London Stock Exchange and the Tokyo Stock Exchange are developing jointly traded products and share technology.

  1. London Stock Exchange– Headquartered in London. Market Capitalization (2011, USD Billions) – 3,266; Trade Value (2011, USD Billions) – 2,871.

Located in London City, it is the oldest and fourth-largest stock exchange in the world. The Exchange was founded in 1801 and its current premises are situated in Paternoster Square close to St Paul’s Cathedral. It is the most international of all the world’s stock exchanges, with around 3,000 companies from over 70 countries admitted to trading on its markets. The London Stock Exchange runs several markets for listing, giving an opportunity for different sized companies to list. For the biggest companies exists the Premium Listed Main Market, while in terms of smaller SME’s the Stock Exchange operates the Alternative Investment Market and for international companies that fall outside the EU, it operates the Depository Receipt scheme as a way of listing and raising capital.

  1. Shanghai Stock Exchange– Headquartered in Shanghai. Market Capitalization (2011, USD Billions) – 2,357; Trade Value (2011, USD Billions) – 3,658.

It is the world’s 5th largest stock market by market capitalization and one of the two stock exchanges operating independently in the People’s Republic of China. Unlike the Hong Kong Stock Exchange, the SSE is not entirely open to foreign investors. The main reason is tight capital account controls by Chinese authorities. The securities listed at the SSE include the three main categories of stocks, bonds, and funds. Bonds traded on SSE include treasury bonds, corporate bonds, and convertible corporate bonds. The largest company in SSE is PetroChina (market value – 3,656.20 billion).

  1. Hong Kong Stock Exchange– Headquartered in Hong Kong. Market Capitalization (2011, USD Billions) – 2,258; Trade Value (2011, USD Billions) – 1,447.

It is the third largest stock exchange in Asia and the sixth largest in the world in terms of market capitalization. Hong Kong Stock Exchange (SEHK) has about 1,477 listed companies and it operates securities market and a derivatives market in Hong Kong and the clearing houses for those markets. The three largest stocks by market capitalisation in Hong Kong Stock Exchange are PetroChina, Industrial & Commercial Bank of China, and China Mobile.

  1. Toronto Stock Exchange– Headquartered in Toronto. Market Capitalization (2011, USD Billions) – 1,912; Trade Value (2011, USD Billions) – 1,542.

It is the largest stock exchange in Canada and the third largest in North America. Toronto Stock Exchange is owned by and operated as a subsidiary of the TMX Group for the trading of senior equities. A broad range of businesses from Canada, the United States, Europe, and other countries are represented on the exchange. The exchange lists conventional securities, exchange-traded funds, split share corporations, income trusts and investment funds. Toronto Stock Exchange is the leader in the mining and oil & gas sector, including such companies like Cameco Corporation, Canadian Natural Resources Ltd., EnCana Corporation, Husky Energy Inc., Imperial Oil Ltd., and others.

  1. BM&F Bovespa – Headquartered in Sao Paulo. Market Capitalization (2011, USD Billions) – 1,229; Trade Value (2011, USD Billions) – 931.

Founded in 1890, today BM&F Bovespa is the largest stock exchange in South America and 8th largest in the world by market capitalization. It is the most important Brazilian institution to intermediate equity market transactions and the only securities, commodities and futures exchange in Brazil. BM&F Bovespa acts as a driver for the Brazilian capital markets. There are about 381 listed companies at Bovespa and its benchmark indicator is the Indice Bovespa.

  1. Australian Securities Exchange– Headquartered in Sydney. Market Capitalization (2011, USD Billions) – 1,198; Trade Value (2011, USD Billions) – 1,197.

The Australian Securities Exchange is Australia’s primary securities exchange and it was created back in 2006 when the merger of Australian Stock Exchange and the Sydney Futures Exchange took place. Today Australian Securities Exchange is 9th largest stock exchange in the world by market capitalization and has an average daily turnover of 4,685 billion dollar. Products and services available for trading on ASX include shares, futures, exchange traded options, warrants, contracts for difference, exchange-traded funds, real estate investment trusts, listed investment companies and interest rate securities. The major market index is the S&P/ASX 200.

  1. Deutsche Börse– Headquartered in Frankfurt. Market Capitalization (2011, USD Billions) – 1,185; Trade Value (2011, USD Billions) – 1,758.

Deutsche Börse is one of the world’s leading exchange organisations providing investors, financial institutions and companies access to global capital markets. The exchange covers the entire process chain from securities and derivatives trading, clearing, settlement and custody, through to market data and the development and operation of electronic trading system. Deutsche Börse has an approximately 765 listed companies with a combined market capitalization of 1,185 trillion USD.

NIFT does not have any link with these globally important/famous/wave-making US Stock Exchanges :

  • American Stock Exchange(AMEX)
  • Boston Options Exchange(BOX)
  • Boston Stock Exchange
  • Chicago Board Options Exchange(CBOE)
  • Chicago Board of Trade(CBOT)
  • Chicago Climate Exchange(CCX; parent company of the Chicago Climate Futures Exchange, European Climate Exchange and Insurance Futures Exchange)
  • Chicago Mercantile Exchange(CME)
  • Chicago Stock Exchange(CHX)
  • Currenex(currency exchange)
  • ICE(IntercontinentalExchange)
  • ICE Futures US(formerly the New York Board of Trade)
  • International Securities Exchange
  • Iowa Electronic Markets
  • Kansas City Board of Trade
  • Minneapolis Grain Exchange(MGEX)
  • NASDAQ OMX
  • NASDAQ Stock Market
  • National Stock Exchange(NSX – formerly Cincinnati Stock Exchange)
  • New York Mercantile Exchange(NYMEX, aquired by CME Group Inc. (NYSE, NASDAQ: CME))
  • New York Stock Exchange(NYSE; merged with Euronext)
  • OneChicago(OCX; joint venture of CME, CBOT, and CBOE)
  • OTC Bulletin Board
  • Philadelphia Stock Exchange(PHLX)
  • Pink Sheets(formerly the National Quotation Bureau)
  • San Diego Stock Exchange
  • S. Futures Exchange(USFE)

US Electronic Exchanges

  • BATS Trading
  • Boston Equities Exchange
  • Bloomberg Tradebook(BTRD)
  • CBOE Stock Exchange(CBSX)
  • Direct Edge

NIFM sans these is a timeless well wherein India’s entire financial present/ financial future/ financial independence/financial management/ financial self sufficiency/ financial profits/financial jugglery/ financial articulation/ financial exaggerations/ financial artistry et al are drowned. India thus has no hope in Finance. Make in India thus will be India-pinching but extremely favorable for Westerners/Southerners/Easterners etc. India will be ga(s)ping helplessly at them. Get the hang of The Scandal of Millennium  now ? Shocking, right? Already, India’s established/aspiring makers are shedding tears (like India’s suicide-doing farmers) seeing ‘blank’ ahead for them. When Boeing starts making Boeing in India, what will happen to 1000s of unit owners in this country? What will happen to India’s PanchaTantra? Gone With The Wind? Yep, exactly so.

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