Ramalinga Raju, IL&FS & Small Investors
Every one know what happen today in Indian business history, this is a day show that how small investor are not safe. Everyone in the India IT space has been closely following the satyam fiasco. Its been written about in most newspapers. But what has taken the IT space by storm today is the resignation letter that has Ramalinga Raju, Chairman of SATYAM Computer Services Ltd. (one of the top 5 INDIAN IT companies) admitting to forging revenue numbers and having an inflated balance sheet of over 5000 crores. This is as bad as news can get in these times for corporate India.
Raju resigned from the Satyam board today (Jan. 07th, 2009). He wrote a letter to the Satyam board admitting that the IT major's balance sheet has an inflated cash and bank balance of Rs 5,040 crore. The balance sheet has inflated accrued interest of Rs 376 crore in books is non-existent. Rs 1,230 crore was arranged to Satyam, which is not reflected in books. The Satyam scam is the biggest one after Harshad Mehta and Ketan Parekh.
Main things written in raju resignation later.
a) Inflated (non-existent) cash and bank balance of Rs 5,040 crore (as against Rs 5361 crore refglected in the books)
b) An accured interest of Rs 376 crore which is non-existent
c) An understated liability of Rs 1,230 crore on account of funds arranged by me
d) An over stated debtor position of Rs 490 crore (as against Rs 2651 reflected in the books)
This news has hammered the stock a lot, which touched a new 52-week low of 30.80. It has seen a drop of 77.51% to Rs 40.25, at close.
How can you expect auditors to be fair when they are paid by people who are to be audited. Dismiss all Senior functionaries who misrepresented accounts and penalise with punitive costs and damages.. Why should small investors pay for these fraudulent working group.
PWC was one of the auditors in this case... IL&FS sold 24.5 million shares yesterday @ 180 and today the fraud was out in open and the price was @ 30.80... So who lost? only the small investor.
Can somebody explain why IL&FS sold 24.5 million shares yesterday?
Guys small investor are not safe in stock market at this level, all in politicians running for making money in stock market.
Lets hope this doesn’t worsen the slowdown in India.
Read treading rules before investing.
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Wednesday, January 07, 2009 | 7 Comments
What is Net Asset Value (NAV)
Net Asset Value (NAV) is the actual value of one unit of a given scheme on any given business day. The NAV reflects the liquidation value of the fund's investments on that particular day after accounting for all expenses. It is calculated by deducting all liabilities (except unit capital) of the fund from the realisable value of all assets and dividing it by number of units outstanding.
The mutual fund company adds up all the stocks they own in the mutual fund, subtracts their expenses, and divides by the number of shares outstanding. This is the NAV.Many sites on the web show expense ratios for mutual funds. The lower the expenses, the more of your money you get to keep!
Asset Management (mutual Fund) Companies allocate units against the money invested by us. NAV is the value of 1 unit allocated. The NAV increases when the shares (stocks) held by the Asset Management company appreciate and vice-versa.
NAV is calculated on daily basis and can be described as the (total value of the assets under the scheme minus the expenses) divided by the total number of units allocated under the scheme.
NAV= all value of asset or stocks of a portfolio
For example, if a fund has assets of 50 Carore Rs and liabilities of Carore Rs, it would have a NAV of 40 Carore Rs.This number is important to investors, because it is from NAV that the price per unit of a fund is calculated. By dividing the NAV of a fund by the number of outstanding units, you are left with the price per unit. In our example, if the fund had 4 Carore shares outstanding, the price-per-share value would be 40 Carore divided by 4 Carore which equals 10 Rs.This pricing system for the trading of shares in a mutual fund differs significantly from that of common stock issued by a company listed on a stock exchange. In this instance, a company issues a finite number of shares through an initial public offering (IPO), and possibly subsequent additional offerings, which then trade in the secondary market.
In this market, stock prices are set by market forces of supply and demand. The pricing system for stocks is based solely on market sentiment.
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Tuesday, January 06, 2009 | 5 Comments