Primary & Secondary Market

Primary market 

The primary market s that part of the capital markets that deals with the issue of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is typically done through a syndicate of securities dealers. The process of selling new issues to investors is called underwriting. In the case of a new stock issue, this sale is a public offering. Dealers earn a commission that is built into the price of the security offering, though it can be found in the prospectus. A primary market creates long term instruments through which corporate entities borrow from capital market.

Features of primary markets are:

• ·         This is the market for new long term equity capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM).
• ·         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 the investors.
• ·         Primary issues are used by companies for the purpose of setting up new business or for expanding or modernizing the existing business.
• ·         The primary market performs the crucial function of facilitating capital formation in the economy.
• ·         The new issue market does not include certain other sources of new long term external finance, such as loans from financial institutions. Borrowers in the new issue market may be raising capital for converting private capital into public capital; this is known as "going public."

Secondary market

The secondary market, also known as the aftermarket, is the financial market where previously issued securities and financial instruments such as stock, bonds, options, and futures are bought and sold. The term "secondary market" is also used to refer to the market for any used goods or assets, or an alternative use for an existing product or asset where the customer base is the second market (for example, corn has been traditionally used primarily for food production and feed stock, but a "second" or "third" market has developed for use in ethanol production). Stock exchange and over the counter markets.

With primary issuance of securities or financial instruments, or the primary market, investors purchase these securities directly from issuers such as corporations issuing shares in an IPO or private placement, or directly from the federal government in the case of treasuries. After the initial issuance, investors can purchase from other investors in the secondary market.

The secondary market for a variety of assets can vary from loans to stocks, from fragmented to centralized, and from liquid to very liquid. The major stock exchanges are the most visible example of liquid secondary markets - in this case, for stocks of publicly traded companies. Exchanges such as the New York Stock Exchange, Nasdaq and the American Stock Exchange provide a centralized, liquid secondary market for the investors who own stocks that trade on those exchanges. Most bonds and structured products trade “over the counter,” or by phoning the bond desk of one’s broker-dealer. Loans sometimes trade online using a Loan Exchange.

Securities Market

Securities market is an economic institute,which, within takes place the sale and purchase transactions of securities between subjects of the economy, on the base of demand and supply. Also we can say that securities market is a system of interconnection between all participants (professional and nonprofessional) that provides effective conditions: to buy and sell securities, and also
i)   to attract new capital by means of issuance new security (securitization of debt),
ii)  to transfer real asset into financial asset,
iii) to invest money for short or long term periods with the aim of deriving profit.
iv) commercial function (to derive profit from operation on this market)
v) price determination (demand and supply balancing, the continuous process of prices movements
     guarantees to state correct price for each security so the market corrects mispriced securities)
vi) informative function (market provides all participants with market information about participants and  
     traded instruments)
vii) regulation function (securities market creates the rules of trade, contention regulation, priorities
      determination)
Specific functions of the securities market
i)  Transfer of ownership (securities markets transfer existing stocks and bonds from owners who no longer
    desire to maintain their investments to buyers who wish to increase those specific investments. There is no
    net change in the number of securities in existence, for there is only a transfer of ownership. The role of
    securities market is to facilitate this transfer of ownership. This transfer of securities is extremely important,
    for securities holders know that a secondary market exists in which they may sell their securities holdings.
   The ease with which securities may be sold and converted into cash increases the willingness of people to
    hold stocks and bonds and thus increases the ability of firms to issue securities)
ii)  Insurance (hedging) of operations though securities market (options, futures, etc.)

New Issue Market

1. INTRODUCTION :- 

                It refers to the set-up which helps the industry to raise the funds by issuing different types of securities. These securities are issued directly to the investors (both individuals as well as institutional) through the mechanism called primary market or new issue market. The securities take birth in this market.

2. FUNCTIONS :-

                The main function of new issue market is to facilitate transfer resources from savers to the users. It plays an important role in mobilizing the funds from the savers and transferring them to the borrowers. The main function of new issue market can be divided into three service functions:

i) Origination : It refers to the work of investigation, analysis and processing of new project proposals. Origination starts before an issue is actually floated in the market. It includes a careful study of the technical, economic and financial viability to ensure the soundness of the project and provides advisory services.

ii) Underwriting : It is an agreement whereby the underwriter promises to subscribe to a specified number of shares or debentures in the event of public not subscribing to the issue. Thus it is a guarantee for the marketability of shares. Underwriters may be institutional and non-institutional.

iii) Distribution : It is the function of sale of securities to ultimate investors. Brokers and agents who maintain regular and direct contract with the ultimate investors, perform this service.

3. METHODS OF FLOATING NEW ISSUES :-

                The various methods which are used in the floating of securities in the new issue market are: Public issues Offer for sale Placement Right issues

a) Public issues or Initial public offering (IPO) The issuing company directly offers to the general public/institutions a fixed number of securities at a stated price or price band through a document called prospectus. This is the most common method followed by companies to raise capital through issue of the securities.

b) Offer of sale It consists in outright sale of securities through the intermediary of issue houses or share brokers. It consists of two stages: the first stage is a direct sale by the issuing company to the issue house and brokers at an agreed price. In the second stage, the intermediaries resell the above securities to the ultimate investors. The issue houses purchase the securities at a negotiated price and resell at a higher price. The difference in the purchase and sale price is called turn or spread.

c) Right Issue When a listed company proposes to issue securities to its existing shareholders, whose names appear in the register of members on record date, in the proportion to their existing holding, through an offer document, such issues are called ‘Right Issue’. This mode of raising capital is the best suited when the dilution of controlling interest is not intended.

d) Private placement It involves sale of securities to a limited number of sophisticated investors such as financial institutions, mutual funds, venture capital funds, banks, and so on. It refers to sale of equity or equity related instruments of an unlisted company or sale of debentures of a listed or unlisted company.

e) Preferential Issue An issue of equity by a listed company to selected investors at a price which may or may not be related to the prevailing market price is referred to as preferential allotment in the Indian capital market. In India preferential allotment is given mainly to promoters or friendly investors to ward off the threat of takeover.

f) E-IPO The companies are now allowed to issue capital to the public through the on-line system of the stock exchanges. For making such on-line issues, the companies should comply with the provisions contained in Chapter 11A of SEBI( Disclosure and Investor Protection) Guidelines, 2000.

g) Green Shoe Option It denotes ‘an option of allocating shares in excess of the shares included in the public issue’. SEBI guidelines allow the issuing company to accept over subscriptions, subject to a ceiling, say 15% of the offer made to public. It is extensively used in international IPOs to stabilized the post-listing price of new issued shares.

h) Pricing of Issues The companies eligible to make public issue can freely price their equity shares or any security convertible at a later date into equity shares as per SEBI guidelines 2000. The issuer can fix-up issue price in consultation of with merchant banker, subject to giving disclosures of the parameters which have considered while deciding the issue price.

i) Fixed Price Process The price which has been fixed by the company for its securities before issue is brought to the market. The price at which the securities are offered/allotted is known in advance to the investor. Demand for the securities offered is known only after the closure of the issue. Payment is made at the time of subscription whereas refund is given after allotment.

j) Book-Building/Price Band It is a process used for marketing a public offer of equity shares of a company. Book building is a process wherein the issue price of a security is determined by the demand and supply forces in the capital market The Price at which securities will be allotted is not known in advance to the investor. Only an indicative price range is known. (Also called price band and it should not be more than 20% of the floor price).

k) Lock-in Period Lock-in indicates the freeze on transfer of shares. SEBI (Disclosure and Investor Protection) Guidelines, 2000 have stipulated lock-in requirements as to specified percentage of shares subscribed by promoters with a view to avoid unscrupulous floating of securities and to ensure the promoters involved in the issue continue have controlling a interest in the company, which can be subjected to legal compliances.

l) Offer Documents An offer document means ‘prospectus’ in case of public issue or an offer for sale and ‘letter of offer’ in case of right issue, which is required to be filed with the Registrar of Companies (ROC) and Stock Exchanges. An offer document covers all the relevant information to help an investor in making wise investment decisions.

m) Kinds of Offer Documents Draft Prospectus Draft Letter of Offer Prospectus Abridged Prospectus Shelf Prospectus Information Memorandum Red-Herring Prospectus

n) Listing of Securities Listing means admission of the securities to dealings on a recognized stock exchange. The securities may be of any public limited company, central or state government, quasi governmental and other financial institutions/corporations, municipalities etc.

Capital Market In India

The Role of Capital Market in The Economic Development of Anation : -

*INTRODUCTION :~ Capital market is the market for leading and borrowing of medium and long term funds.~ The demand for long-term funds comes from industry, trade, agriculture and government (central and state).~ The supply for funds comes from individual savers, corporate savings, banks, insurance companies, specialized financial institutions and government.~ Capital market has three different categories:-i) Government securities market:^ It is also called Gilt-edged market.^ It deals in interest bearing and dated government securities.^ This market is regulated by the RBI. ii) Corporate Debt Market This market deals in :^ Binds floated by public sector units, nationalized banks and financial institutions.^ Debentures floated by corporates.iii) The Equity Market:^ Corporate raise preference / equity share capital in this market.^ These shares can be sold / purchased and thus provide liquidity to markets.*SIGNIFICANCE:~ A sound and efficient capital market is extremely vital for the economic development of a nation.~ So, the significance of capital market has increased.~ The following points clearly bring out the role and significance of capital market in India. i)CAPITAL FORMATION:~ Capital market encourages capital formation as it ensures speedy economic development. The process of capital formation includes collection of saving effective mobilization of these savings for productive investment.~ Thus three distinctive inter-related activities i.e. collection of savings, mobilization of savings and investment lead to capital formation in the country.~ The volume of capital formation depend s on the efficiency and intensity with which these activities are carried on. ii) ECONOMIC GROWTH:~ Capital market plays a vital role in the growth and development of an economy by channelizing funds in developmental and productive investments.~ The financial intermediaries channel funds into those investments that are more important for economic development.iii) INDUSTRIAL DEVELOPMENT:~ Capital market promotes industrial development and motivates industrial entrepreneurship.~ It provides cheap, adequate and diversified funds for industrial purposes such as expansion, modernization, technological up gradation, establishment of new units, etc.~ It also provides services like provision of underwriting facilities, participation in equity capital, credit-rating, consultancy services, etc.vi) MODERNISATION AND REHABILITATION OF INDUSTRIES:~ Capital markets also contribute towards modernization and rehabilitation of industries.

 ~ Developmental financial institutions like IDBI, IFCI, ICICI, etc provide finance to industries to adopt modern techniques and new upgraded machinery.~ They also participate in the equity capital of industries. v) RIVIVAL OF SICK UNITS:~ Commercial and financial institutions provide adequate funds to viable sick unit to overcome their industrial sickness.~ Bank and FIs may also write off a part of the loan or re-schedule the loan to offer payment flexibility to weak units.vi) TECHNICAL ASSISTANCE:~ The financial intermediaries in the capital market stimulate industrial entrepreneurship by providing technical and advisory services like preparation of feasibility reports, identifying growth potential, and training entrepreneurs in project management.~ This promotes industrial investment and leads to economic development.vii) DEVELOPMENT OF BACKWARD AREAS:~ Capital markets provide funds for projects in backward area and facilitate their economic development.~ Long-term funds are also provided for development projects in backward / rural areas.

viii) EMPLOYMENT GENERATION:~ Capital markets provide Direct Employment in capital market related activities like stock markets, banks and financial institutions.~ Indirect Employment is provided in all the sectors of the economy through various funds disbursed for developmental projects. ix) FOREIGN CAPITAL:~ Capital markets make it possible to generate foreign capital by enabling Indian firms to raise capital from overseas market through bonds and other securities.~ Such foreign exchange funds have a great impact on the economic development of the nation.~ Moreover, foreign direct investments (FDIs) also bring in foreign capital as well as foreign technology that leads to greater economic development. x) DEVELOPMENT OF STOCK MARKETS:~ Capital markets lead to development of stock markets by encouraging investors to invest in shares and debentures and to trade in stocks.~ FIIs are also allowed to deal in Indian stock exchange. xi) FINANCIAL INSTITUTIONS:~ Financial institutions play a major role in capital markets.

~ They provide medium / long term loan to industrial and other sectors and also undertake project feasibility studies and surveys.~ They refinance commercial banks and rediscount their bills of exchange.~ They provide merchant banking services.~ They subscribe to equity capital of the firms.xii) INVESTMENT OPPORTUNITY:~ Capital markets provide various alternative sources of investment to the people.~ People can invest in shares and debentures of public companies and earn good returns. xiii) INVESTMENT IN INDUSTRIAL SECURITIES:~ Secondary market in securities encourage investors to invest in industrial securities by providing facilities for continuous, regular and ready buying and selling of these securities.~ This facilitates industries to raise substantial funds from various sectors of the economy.xiv) RELIABLE GUIDE TO PERFORMANCE:~ Capital market serves as a reliable guide to the performance of corporate institutions.

~ It values companies accurately and thus promotes efficiency.~ This leads to efficient resource allocation and economic development.*CONCLUSION:~ Thus we can say that capital markets play a crucial role in the economic development of a nation.~ A sound and efficient capital market is one of the most instrumental factors in the development of a nation

Indian Financial System

1. Indian Financial System,

2. Financial System Existence of a well organized financial system Promotes the well being and standard of living of the people of a country Money and monetary assets Mobilize the saving Promotes investment

3. Financial System Financial System of any country consists of financial markets, financial intermediation and financial instruments or financial products Suppliers of funds (Mainly households) Flow of financial services Incomes , and financial claims Seekers of funds (Mainly business firms and government) Flow of funds (savings)

4. Indian Financial System Non- Organized Organized Money lenders Local bankers Traders Landlords Pawn brokers Chit Funds Regulators Financial Institutions Financial Markets Financial services

5. Evolution of Financial System Barter Money Lender Nidhi's/Chit Funds Indigenous Banking Cooperative Movement Societies Banks Joint-Stock Banks

6. Consolidation Commercial Banks Nationalization Investment Banks Development Financial Institutions Investment/Insurance Companies Stock Exchanges Market Operations Specialized Financial Institutions Merchant Banking Universal Banking

7. Financial System Savers Lenders Households Foreign Sectors Investors Borrowers Corporate Sector Govt. Sector Un-organized Sector Economy Interrelation--Financial system & Economy

8. Organized Indian Financial System Money Market Instrument Capital Market Instrument Forex Market Capital Market Money Market Credit Market Primary Market Financial Instruments Financial Markets Financial Intermediaries Secondary Market Regulators

9. Financial Markets Mechanism which allows people to trade Affected by forces of supply and demand Process used In Finance, Financial markets facilitates

10. Why Capital Markets Exist Capital markets facilitate the transfer of capital ( i.e. financial) assets from one owner to another. They provide liquidity. Liquidity refers to how easily an asset can be transferred without loss of value. A side benefit of capital markets is that the transaction price provides a measure of the value of the asset.

11. Role of Capital Markets Mobilization of Savings & acceleration of Capital Formation Promotion of Industrial Growth Raising of long term Capital Ready & Continuous Markets Proper Channelization of Funds Provision of a variety of Services

12. Indian Capital Market - Historical perspective Stock Market was for a privileged few Archaic systems - Out cry method Lack of Transparency - High tones costs No use of Technology Outdated banking system Volumes - less than Rs. 300 cr per day No settlement guarantee mechanism - High risks

13. Indian Capital markets - Chronology 1994-Equity Trading commences on NSE 1995-All Trading goes Electronic 1996- Depository comes in to existence 1999- FIIs Participation- Globalization 2000- over 80% trades in Demat form 2001- Major Stocks move to Rolling Sett 2003- T+2 settlements in all stocks 2003 - Demutualisation of Exchanges

14. Capital Markets - Reforms Each scam has brought in reforms - 1992 / 2001 Screen based Trading through NSE Capital adequacy norms stipulated Dematerialization of Shares - risks of fraudulent paper eliminated Entry of Foreign Investors Investor awareness programs Rolling settlements Inter-action between banking and exchanges

15. Reforms / Initiatives post 2000 Corporatisation of exchange memberships Banning of Badla / ALBM Introduction of Derivative products - Index / Stock Futures & Options Reforms/Changes in the margining system STP - electronic contracts Margin Lending Securities Lending

16. MARKET STRUCTURE (JULY 31, 2005) 22 Stock Exchanges, Over 10000 Electronic Terminals at over 400 locations all over India. 9108 Stock Brokers and 14582 Sub brokers 9644 Listed Companies 2 Depositories and 483 Depository Participants 128 Merchant Bankers, 59 Underwriters 34 Debenture Trustees, 96 Portfolio Managers 83 Registrars & Transfer Agents, 59 Bankers to Issue 4 Credit Rating Agencies

17. Indian Capital Market Market Instruments Intermediaries Primary Secondary Equity Debt Hybrid Regulator Brokers Investment Bankers Stock Exchanges Underwriters SEBI Players Corporate Intermediaries CRA Banks/FI FDI /FII Individual

18. Stock Exchanges in INDIA Mangalore Stock Exchange Hyderabad Stock Exchange Uttar Pradesh Stock Exchange Coimbatore Stock Exchange Cochin Stock Exchange Bangalore Stock Exchange Saurashtra Kutch Stock Exchange Pune Stock Exchange National Stock Exchange OTC Exchange of India Calcutta Stock Exchange Inter-connected Stock Exchange (NEW) Madras Stock Exchange Bombay Stock Exchange Madhya Pradesh Stock Exchange Vadodara Stock Exchange The Ahmedabad Stock Exchange Magadh Stock Exchange Gauhati Stock Exchange Bhubaneswar Stock Exchange Jaipur Stock Exchange Delhi Stock Exchange Assoc Ludhiana Stock Exchange

19. The role of the stock exchange Raising capital for businesses Mobilizing savings for investment Facilitate company growth Redistribution of wealth

20. The role of the stock exchange Corporate governance Creates investment opportunities for small investors Government raises capital for development projects Barometer of the economy

21. Growth Pattern of the Indian Stock Market Sl.No. As on 31st December 1946 1961 1971 1975 1980 1985 1991 1995 1 No. of Stock Exchanges 7 7 8 8 9 14 20 22 2 No. of Listed Cos. 1125 1203 1599 1552 2265 4344 6229 8593 3 No. of Stock Issues of Listed Cos. 1506 2111 2838 3230 3697 6174 8967 11784 4 Capital of Listed Cos. (Cr. Rs.) 270 753 1812 2614 3973 9723 32041 59583 5 Market value of Capital of Listed Cos. (Cr. Rs.) 971 1292 2675 3273 6750 25302 110279 478121 6 Capital per Listed Cos. (4/2) (Lakh Rs.) 24 63 113 168 175 224 514 693 7 Market Value of Capital per Listed Cos. (Lakh Rs.) (5/2) 86 107 167 211 298 582 1770 5564 8 Appreciated value of Capital per Listed Cos. (Lak Rs.) 358 170 148 126 170 260 344 803

22. Capital Market Instruments ADR / GDR Equity Debt Equity Shares Preference Shares Debentures Zero coupon bonds Deep Discount Bonds Hybrid

23. Factors contributing to growth of Indian Capital Market Establishment of Development banks & Industrial financial institution. Legislative measures Growing public confidence Increasing awareness of investment opportunities

24. Factors contributing to growth of Indian Capital Market Growth of underwriting business Setting up of SEBI Mutual Funds Credit Rating Agencies

25. Indian Capital Market deficiencies Lack of transparency Physical settlement Variety of manipulative practices Institutional deficiencies Insider trading

26. Money Market Market for short-term money and financial assets that are near substitutes for money. Short-Term means generally period upto one year and near substitutes to money is used to denote any financial asset which can be quickly converted into money with minimum transaction cost

27. Money Market It is a place for Large Institutions and government to manage their short-term cash needs It is a subsection of the Fixed Income Market It specializes in very short-term debt securities They are also called as Cash Investments

28. Defects of Money Market Lack of Integration Lack of Rational Interest Rates structure Absence of an organized bill market Shortage of funds in the Money Market Seasonal Stringency of funds and fluctuations in Interest rates Inadequate banking facilities

29. Money Market Instruments Treasury Bills Commercial Paper Certificate of Deposit Money Market Mutual Funds Repo Market

30. Segment Issuer Instruments Government Central Government Zero Coupon Bonds, Coupon Bearing Bonds, Capital Index Bonds, Treasury Bills. Public Sector Government Agencies / Statutory Bodies Govt. Guaranteed Bonds, Debentures Public Sector Units PSU Bonds, Debenture, Commercial Paper Private Corporate Debentures, Bonds, Commercial Paper, Floating Rate Bonds, Zero Coupon Bonds, Inter-Corporate Deposits Banks Certificate of Deposits, Bonds Financial Institutions Certificate of Deposits, Bonds

31. Financial Regulators

32. Financial Regulators Securities and Exchange Board of India (SEBI) Reserve Bank of India Ministry of Finance

33. Security Exchange Board of India (SEBI) Securities and Exchange Board of India (SEBI) was first established in the year 1988 Its a non-statutory body for regulating the securities market It became an autonomous body in 1992

34. Functions Of SEBI Regulates Capital Market. Checks Trading of securities. Checks the malpractices in securities market.

35. Functions Of SEBI It enhances investor's knowledge on market by providing education. It regulates the stockbrokers and sub-brokers. To promote Research and Investigation

36. Objectives of SEBI It tries to develop the securities market. Promotes Investors Interest. Makes rules and regulations for the securities market.

37. The Recent Initiatives Undertaken Sole Control on Brokers For Underwriters For Share Prices For Mutual Funds

38. Reserve Bank of India Established on April 1, 1935 in accordance with the provisions of the RBI Act, 1934. The Central Office of the Reserve Bank has been in Mumbai. It acts as the apex monetary authority of the country.

39. Functions Of RBI Monetary Authority: Formulation and Implementation of monetary policies. Maintaining price stability and ensuring adequate flow of credit to the Productive sectors. Issuer of currency: Issues and exchanges or destroys currency and coins. Provide the public adequate quantity of supplies of currency notes and coins.

40. Regulator and supervisor of the financial system: Prescribes broad parameters of banking operations Maintain public confidence, protect depositors' interest and provide cost-effective banking services. Authority On Foreign Exchange: Manages the Foreign Exchange Management Act, 1999. Facilitate external trade, payment, promote orderly development and maintenance of foreign exchange market. Functions Of RBI

41. Developmental role: Performs a wide range of promotional functions to support national objectives. Related Functions: Banker to the Government: performs merchant banking function for the central and the state governments. Maintains banking accounts of all scheduled banks. Functions Of RBI

42. Monetary Measures (a) Bank Rate: The Bank Rate was kept unchanged at 6.0 per cent. (b) Reverse Repo Rate: The Repo rate is around 7 per cent and Reverse repo rate is around 6.10 per cent. (c) Cash Reserve Ratio: The cash reserve ratio (CRR) of scheduled banks is currently at 5.0 per cent.

43. Reforms in the Financial System Pre-reforms period Steps taken Objectives Conclusion

44. Pre-Reforms Period The period from the mid 1960s to the early 1990s. Characterized by: Administered interest rates Industrial licensing and controls Dominant public sector Limited competition High capital-output ratio

45. Pre-Reforms Period Banks and financial institutions acted as a deposit agencies. Price discovery process was prevented. Government failed to generate resources for investment and public services. Till 90s it was closed, highly regulated, and segmented system.

46. Steps Taken Economic reforms initiated in June 1991. The committee appointed under the chairmanship of M Narasimham. He submitted report with all the recommendations Government liberalized the various sectors in the economy. Reform of the public sector and tax system.

47. Objectives Reorientation of the economy Macro economic stability To Increase competitive efficiency in the operations To remove structural rigidities and inefficiencies To attain a balance between the goals of financial stability & integrated & efficient markets

48. Recommendations Reduce the level of state ownership in banking Lift restrictions on foreign ownership of banks Spur the development of the corporate-bond market Strengthen legal protections

49. Recommendations Deregulate the insurance industry Drop proposed limits on pension reforms Increase consumer ownership of mutual-fund products Introduce a gold deposit scheme

50. Recommendations Speed up the development of electronic payments. Separate the RBI's regulatory and central-bank functions Lift the remaining capital account controls Phase out statutory priority lending and restrictions on asset allocation

51. Conclusion The financial system is fairly integrated, stable, efficient. Weaknesses need to be addressed. The reforms have been more capital centric in nature. Foreign capital flows and foreign exchange reserves have increased but absorption of foreign capital is low.

52. Thank you

Total Quality Management (TQM)

Total Quality Management / TQM is an integrative philosophy of management for continuously improving the quality of products and processes.

TQM is based on the premise that the quality of products and processes is the responsibility of everyone involved with the creation or consumption of the products or services which are offered by an organization, requiring the involvement of management, workforce, suppliers, and customers, to meet or exceed customer expectations.

Cua, McKone, and Schroeder (2001) identified nine common TQM practices:

Cross-functional product design

Process management

Supplier quality management

Customer involvement

Information and feedback

Committed leadership

Strategic planning

Cross-functional training

Employee involvement

Total Quality Management is formally defined in BS 7850-1, paragraph 3.1, as management philosophy and company practices that aim to harness the human and material resources of an organization in the most effective way to achieve the objectives of the organization.

Total quality management can be summarized as a management system for a customer-focused organization that involves all employees in continual improvement. It uses strategy, data, effective communications and involvement of all level employees to integrate the quality discipline into the culture and activities of the organization.

•Customer-focused. The customer ultimately determines the level of quality. No matter what an organization does to foster quality improvement—training employees, integrating quality into the design process, upgrading computers or software, or buying new measuring tools—the customer determines whether the efforts were worthwhile or not.

•Total employee involvement. All employees participate in working toward common goals. Total employee commitment can only be obtained after fear has been driven from the workplace, when empowerment has occurred, and management has provided the proper environment. High-performance work systems integrate continuous improvement efforts with normal business operations. Self-managed work teams are one form of empowerment.

•Process-centered. A fundamental part of TQM is a focus on process thinking. A process is a series of steps that take inputs from suppliers (internal or external) and transforms them into outputs that are delivered to customers (again, either internal or external). The steps required to carry out the process are defined, and performance measures are continuously monitored in order to detect unexpected variations in the process.

•Integrated system. Although an organization may consist of many different functional specialties often organized into vertically structured departments, it is the horizontal processes interconnecting these functions that are the focus of TQM. ◦Micro-processes add up to larger processes, and all processes aggregate into the business processes required for defining and implementing strategy. Everyone must understand the vision, mission, and guiding principles as well as the quality policies, objectives, and critical processes of the organization. Business performance must be monitored and communicated continuously. ◦An integrated business system may be modeled after the Baldrige National Quality Program criteria and/or incorporate the ISO 9000 standards. Every organization has a unique work culture, and it is virtually impossible to achieve excellence in its products and services unless a good quality culture has been fostered where everyone works for the quality. Thus, an integrated system connects business improvement elements in an attempt to continually improve and exceed the expectations of customers, employees, and all other stakeholders.

•Strategic and systematic approach. A critical part of the management of quality is the strategic and systematic approach to achieving an organization’s vision, mission, and goals. This process, called strategic planning or strategic management, includes the formulation of a strategic plan that integrates quality as a core component.

•Continual improvement. A major thrust of TQM is continual process improvement. Continual improvement drives an organization to be both analytic and creative in finding ways to become more competitive and more effective at meeting stakeholder requirement and expectations.

• Fact-based decision making. In order to know how well an organization is performing, data on performance measures are necessary. TQM requires that an organization continually collect and analyze data in order to improve decision making accuracy, achieve consensus, and allow prediction based on past history.

•Communications. During times of organizational change, as well as part of day-to-day operation, effective communications plays a large part in maintaining morale and in motivating employees at all levels. Communications involve strategies, method, and timeliness.

These elements are considered so essential to TQM that many organizations define them, in some format, as a set of core values and principles on which the organization is to operate.

Check out Implementing Total Quality Management to learn how each of these essential Primary Elements come together to form the foundation of a successful TQM implementation.

ISO 9001

ISO 9001:2008 Quality management systems — Requirements is a document of approximately 30 pages which is available from the national standards organization in each country. It is supplemented by two other standards: ISO 9000:2005 Quality management systems — Fundamentals and vocabulary and ISO 9004:2009 Managing for the sustained success of an organization — A quality management approach. Only ISO 9001 is directly audited against for third party assessment purposes. The other two standards are supplementary and contain deeper information on how to sustain and improve quality management systems; they are therefore not used directly during third party assessment. Outline contents for ISO 9001 are as follows:

iv: Foreword

v to vii: Section 0 Intro

1 to 14: Requirements

Section 1: Scope

Section 2: Normative Reference

Section 3: Terms and definitions (specific to ISO 9001, not specified in ISO 9000)

Section 4: Quality Management System

Section 5: Management Responsibility

Section 6: Resource Management

Section 7: Product Realization

Section 8: Measurement, analysis and improvement

15 to 22: Tables of Correspondence between ISO 9001 and other standards

23: Bibliography

Before the certification body can issue or renew a certificate, the auditor must be satisfied that the company being assessed has implemented the requirements of sections 4 to 8. Sections 1 to 3 are not directly audited against, but because they provide context and definitions for the rest of the standard, their contents must be taken into account.

The standard specifies that the organization shall issue and maintain the following six documented procedures:

Control of Documents (4.2.3)

Control of Records (4.2.4)

Internal Audits (8.2.2)

Control of Nonconforming Product / Service (8.3)

Corrective Action (8.5.2)

Preventive Action (8.5.3)

In addition to these procedures, ISO 9001:2008 requires the organization to document any other procedures required for its effective operation. The standard also requires the organisation to issue and communicate a documented quality policy, a Quality Manual (which may or may not include the documented procedures) and numerous records, as specified throughout the standard.

===Numbering

4.2 Documentation requirements

5 Management responsibility

5.1 Management commitment

5.2 Customer focus

5.3 Quality policy

5.4 Planning

5.5 Responsibility, authority and communication

5.6 Management review

6 Resource management

6.1 Provision of resources

6.2 Human resources

6.3 Infrastructure

6.4 Work environment

7 Product realization

7.1 Planning of product realization

7.2 Customer-related processes

7.3 Design and development

7.4 Purchasing

7.5 Production and service provision

7.6 Control of monitoring and measuring equipment

8 Measurement, analysis and improvement

8.1 General

8.2 Monitoring and measurement

8.3 Control of nonconforming product

8.4 Analysis of data

8.5 Improvement

Cipla Ltd Announces Firm Offer To Cipla Medpro South Africa Ltd To Acquire 100% Equity Stake

Cipla Ltd announced that its Board of Directors at its meeting held February 27, 2013,have decided to make and have made a firm offer to the Board of Directors of Cipla Medpro South Africa Ltd to acquire (either through itself or through its nominated subsidiary) 100% of the ordinary shares of Medpro at a price of ZAR 10.00 per share, and to settle all outstanding share options therein. Based on Medpro’s current shares and share options outstanding, the total consideration payable by Cipla or its nominated subsidiary would be approximately $512 million. The Board of Directors of Medpro have recommended to its shareholders to vote in favour of the offer. Also, the independent expert appointed by the Independent board of Medpro is of the opinion the offer is fair and reasonable to the Medpro shareholders. 

Money Market In India

                     

 The Indian money market is "a market for short-term and Long term funds with maturity ranging from overnight to one year and includes financial instruments that are deemed to be close substitutes of money." It is diversified and has evolved through many stages, from the conventional platform of treasury bills and call money to commercial paper, certificates of deposit, repos, FRAs and IRS more recently.

The Indian money market consists of diverse sub-markets, each dealing in a particular type of short-term credit. The money market fulfills the borrowing and investment requirements of providers and users of short-term funds, and balances the demand for and supply of short-term funds by providing an equilibrium mechanism. It also serves as a focal point for the Central Bank's intervention in the market.

The Indian money market consists of the unorganized sector: moneylenders, indigenous bankers, chit funds; organized sector: Reserve Bank of India, private banks, public sector banks, development banks and other Non Banking Financial Companies(NBFCs) such as Life Insurance Corporation of India (LIC), Unit Trust of India (UTI), the International Finance Corporation, IDBI, and the co-operative sector.

·                  Call money market :-

·                                            The call money market deals in short term finance repayable on demand, with a maturity period varying from one day to 14 days. S.K. Muranjan commented that call loans in India are provided to the bill market, rendered between banks, and given for the purpose of dealing in the bullion market and stock exchanges. Commercial banks, both Indian and foreign, co-operative banks, Discount and Finance House of India Ltd.(DFHI), Securities trading corporation of India (STCI) participate as both lenders and borrowers and Life Insurance Corporation of India (LIC), Unit Trust of India(UTI), National Bank for Agriculture and Rural Development (NABARD)can participate only as lenders. The interest rate paid on call money loans, known as the call rate, is highly volatile. It is the most sensitive section of the money market and the changes in the demand for and supply of call loans are promptly reflected in call rates. There are now two call rates in India: the Interbank call rate ‘and the lending rate of DFHI. The ceilings on the call rate and inter-bank term money rate were dropped, with effect from May 1, 1989. The Indian call money market has been transformed into a pure inter-bank market during 2006–07.  The major call money markets are in Mumbai, Kolkata, Delhi, Chennai, Ahmadabad.

         Treasury bill market  :-

                             Treasury bills are instrument of short-term borrowing by the Government of India, issued as promissory notes under discount. The interest received on them is the discount which is the difference between the price at which they are issued and their redemption value. They have assured yield and negligible risk of default. Under one classification, treasury bills are categorized as ad hoc, tap and auction bills and under another classification it is classified on the maturity period like 91-days TBs, 182-days TBs, 364-days TBs and two types of 14-days TBs. In the recent times (2002–03, 2003–04), the Reserve Bank of India has been issuing only 91-day and 364-day treasury bills. the auction format of 91-day treasury bill has

changed from uniform price to multiple price to encourage more responsible bidding from the market players. the bills are two kinds- Adhoc and regular. the adhoc bills are issued for investment by the state governments, semi government departments and foreign central banks for temporary investment. they are not sold to banks and general public. The treasury bills sold to the public and banks are called regular treasury bills. they are freely marketable. commercial bank buy entire quantity of such bills issued on tender . they are bought and sold on discount basis.

         Ready forward contract (Repos) :-

                                   Repo is an abbreviation for Repurchase agreement, which involves a simultaneous "sale and purchase" agreement. When banks have any shortage of funds, they can borrow it from Reserve Bank of India or from other banks. The rate at which the RBI lends money to commercial banks is called repo rate, a short term for repurchase agreement. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from RBI becomes more expensive.

·                Money market mutual funds :-

·                           Money market mutual funds invest money in specifically, high-quality and very short maturity-based money market instruments. The RBI has approved the establishment of very few such funds in India. In 1997, only one MMMF was in operation, and that too with very small amount of capital.

         Reserve Bank of India :-

                      The influence of the Reserve Bank of India's power over the Indian money market is confined almost exclusively to the organised banking structure.It is also considered to be the biggest regulator in the markets. There are certain rates and data which are released at regular intervals which have a huge impact on all the financial markets in INDIA. The unorganized sector, which consists mostly of indigenous bankers and non-banking financial companies, although occupying an important position in the money market have not been properly integrated with the rest of the money market

Indian Trademark Law

Indian trademark law statutorily protects trademarks as per the Trademark Act, 1999 and also under the common law remedy of passing off. Statutory protection of trademark is administered by the Controller General of Patents, Designs and Trade Marks, a government agency which reports to the Department of Industrial Policy and Promotion (DIPP), under the Ministry of Commerce and Industry.

The law of trademark deals with the mechanism of registration, protection of trademark and prevention of fraudulent trademark. The law also provides for the rights acquired by registration of trademark, modes of transfer and assignment of the rights, nature of infringements, penalties for such infringement and remedies available to the owner in case of such infringement.

The law of trademark in India before 1940 was based on the common law principles of passing off and equity as followed in England before the enactment of the first Registration Act, 1875. The first statutory law related to trademark in India was the Trade Marks Act, 1940 which had similar provision like the UK Trade Marks Act, 1938. In 1958, the Trade and Merchandise Marks Act, 1958 was enacted which consolidated the provisions related to trademarks contained in other statutes like, the Indian Penal Code, Criminal Procedure Code and the Sea Customs Act.  The Trade and Merchandise Marks Act, 1958 was repealed by the Trade Marks Act, 1999 and is the current governing law related to registered trademarks.  The 1999 Act was enacted to comply with the provisions of the TRIPS. Though some aspects of the unregistered trademarks have been enacted into the 1999 Act, but they are primarily governed by the common law rules based on the principles evolved out of the judgments of the Courts.  Where the law is ambiguous, the principles evolved and interpretation made by the Courts in England have been applied in India taking into consideration the context of our legal procedure, laws and realities of India. 

According to Section 2 (zb) of the Trade Marks Act, 1999, “trade mark means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colors ” A mark can include a device, brand, heading, label, ticket, name, signature, word, letter, numeral, shape of goods, packaging or combination of colors or any such combinations.

Suzlon Loses Top Spot in India Wind Market Installations

Suzlon Energy Ltd. ceded its position as India’s top wind-turbine supplier in the year ended March 31 for the first time in at least a decade, according to figures from an industry group.

Wind World (India) Ltd., formerly known as Enercon (India) Ltd., took the top spot after installing 454 megawatts of turbine capacity last fiscal year, according to data from the Indian Wind Turbine Manufacturers’ Association. Suzlon trailed with 415 megawatts of installations, while ReGen Powertech Pvt. was third with 273 megawatts.

“The rankings offered a number of surprises as new market entrants pushed aside incumbents,” said Shantanu Jaiswal, a New Delhi-based wind analyst for Bloomberg New Energy Finance.

General Electric Co.’s installations surged more than sixfold to 122 megawatts, the biggest jump among the companies surveyed, according to the IWTMA data. The company’s gain in orders may indicate a shift in customer preferences as GE sells turbines alone in contrast to competitors who include land acquisition and permitting as part of supply deals.

GE won orders from developers such as Greenko Group Plc that are separating project development from turbine orders to improve returns.

Suzlon, which committed India’s biggest convertible bond default in October, reported difficulties in carrying out orders due to a lack of working capital in the past three quarters. The company completed a 95 billion-rupee ($1.8 billion) debt reorganization plan last month that will allow it to execute $7 billion of orders, Group Chief Financial Officer Kirti Vagadia said in an April 23 statement.

‘Regaining Leadership’

The company’s performance last year was hampered by its debt problems and by the suspension of two government incentives, Suzlon said in an e-mailed response to questions today.

“We are confident of regaining market leadership in our home market - that we helped unlock and shape from the start,” the company said. Suzlon shares rose as much as 1.5 percent to 14.57 rupees in Mumbai today and traded at 14.48 rupees as of 11:16 a.m. local time.

Vestas Wind Systems A/S, which tied with GE as the world’s biggest turbine maker, posted an 87 percent drop in installations to 34 megawatts, IWTMA figures showed. The Danish manufacturer, one of the first to enter the Indian market more than 25 years ago, focused on bigger, more profitable markets elsewhere, Jaiswal said.

In total, India wind installations dropped 47 percent on year to 1.7 gigawatts of wind capacity after the expiry of government incentives, according to IWTMA figures.

Globally, a record 48.4 gigawatts of new wind capacity was added in 2012, according to BNEF. A tax incentive drove a record 13.6 gigawatts of installations in the U.S., where GE commissioned 96 percent of its turbines and Vestas sold 40 percent. The U.S. was Vestas’ biggest market.

CCI to probe Cipla, 4 others for anti-competitive practices

NEW DELHI: Fair trade regulator Competition Commission is probing allegation of anti-competitive practices against five entities related to pharmaceutical industry, including drug maker Cipla.

The complaint has been filed against the five entities for allegedly engaging in anti-competition practices in granting stockist licence for medicines in Himachal Pradesh.

The Competition Commission of India (CCI) is probing the allegation against Macleods Pharmaceutical, FDC Ltd, Cipla, Himachal Pradesh Society of Chemist & Druggist Alliance and its President.

the Commission is of the opinion that there exists a prima facie, case to direct the Director General to cause an investigation into the matter," CCI said in an order dated April 11.

CCI observed that the Himachal Pradesh Society of Chemist & Druggist Alliance "appears to be controlling and regulating the appointment of stockist-ship of each and every pharmaceutical company in the state of Himachal Pradesh".

"The evidence placed on record...shows that no one can be appointed as the stockist of any pharmaceutical company in Himachal Pradesh without the NOC (No objection Certificate) of Himachal Pradesh Society of Chemist & Druggist Alliance," CCI noted.

A stockist is a retailer or distributor who has stocks of a certain type of item for sale.

As per a complaint by filed by one Rohit Medical Store, the Society compelled the pharmaceutical firms to grant stockist-ship in the state to those persons who had obtained NOC from it.

The complaint alleged that it was not being granted stockist-ship of Macleods Pharmaceutical, FDC and Cipla due to the condition imposed to obtain NOC from the Society.

In its submissions to CCI the complainant has placed on record a CD wherein the President of the Society in a conversation with employees of Macleods was emphasising that NOC was a must.

Besides, the complainant also submitted a letter showing that NOC was being demanded for appointing him as stockist.

CCI has noted that the conduct of the Society which made it compulsory for the complainant to obtain NOC before appointment as stockist of Macleods and FDC appeared to be in violation of the Competition Act.

"...the said conduct of Himachal Pradesh Society of Chemist & Druggist Alliance, "appears to have restricted the supplies of medicines of Macleods Pharmaceutical and FDC Ltd in the State of Himachal Pradesh," CCI added.

The regulator has asked the Director General to submit his report within a period of 60 days from the communication of this order.

US tax agency IRS knew of targeting conservative groups critical of Barack Obama

WASHINGTON: Senior officials at the US tax agency knew agents were targeting conservative political groups as early as 2011, according to a draft of an inspector general's report that seemingly contradicts public statements by the commissioner of the Internal Revenue Service.

The IRS apologized Friday for what it acknowledged was "inappropriate" targeting of conservative political groups during the 2012 election to see if they were violating their tax-exempt status. The agency blamed low-level employees, saying no high-level officials were aware.

But on June 29, 2011, Lois G. Lerner, who heads the IRS division that oversees tax-exempt organizations, learned at a meeting that groups were being targeted, according to the watchdog's report. At the meeting, she was told that groups with "Tea Party," "Patriot" or "9/12 Project" in their names were being flagged for additional and often burdensome scrutiny, the report says.

"Tea party" and "Patriot" are favorite terms of the small-government conservative movement that has emerged in recent years and is highly critical of President Barack Obama. The "9/12 Project" is a group started by conservative TV personality Glenn Beck.

The revelation that the IRS targeted those groups is becoming a new headache for the Obama administration, which is already confronting a highly polarized, partisan atmosphere in Washington.

Lerner instructed agents to change the criteria for flagging groups "immediately," the report says.

The Treasury Department's inspector general for tax administration is expected to release the results of a nearly yearlong investigation in the coming week.

Among the other revelations, on Aug. 4, 2011, staffers in the IRS' Rulings and Agreements office "held a meeting with chief counsel so that everyone would have the latest information on the issue."

On Jan. 25, 2012, the criteria for flagging suspect groups was changed to, "political action type organizations involved in limiting/expanding Government, educating on the Constitution and Bill of Rights, social economic reform/movement," the report says.

While this was happening, several committees in Congress were writing IRS Commissioner Douglas Shulman to express concern because tea party groups were complaining of IRS harassment.

In Shulman's responses, he did not acknowledge targeting of tea party groups. At a congressional hearing March 22, 2012, Shulman was adamant in his denials.

The portion of the draft report reviewed by the Associated Press does not say whether Shulman or anyone else in the Obama administration outside the IRS was informed of the targeting. It is standard procedure for agency heads to consult with staff before responding to congressional inquiries, but it is unclear how much information Shulman sought.

The IRS has not said when Shulman found out that Tea Party groups were targeted.

G7 smooths divisions over growth, deficit reduction

AYLESBURY: The Group of Seven advanced economies on Saturday appeared to smooth over US-European differences on how to balance deep austerity measures with ways to support fragile growth. G7 finance ministers and central bankers also pledged their commitment to tackling tax evasion during two days of talks in the English countryside, British finance minister George Osborne said.

The United States has put pressure on European nations to scale back their spending cuts amid fears they may harm growth, but Osborne said the meeting in Aylesbury, northwest of London, revealed much common ground.

"This meeting confirmed there are more areas of agreement between us on fiscal policy than is commonly assumed," the chancellor of the exchequer told a press conference afterwards.

He said the G7 had "discussed the importance of having in place credible, country-specific, medium-term fiscal consolidation plans for ensuring sustainable public finances and sustainable growth".

French finance minister Pierre Moscovici appeared to echo Osborne's remarks.

"The consensus is gaining momentum in the way we balance support for growth and fiscal consolidation," he told reporters.

"There is still a real will to reduce the deficits but certainly there is a change of tone" among G7 members, Moscovici added.

The G7 is meanwhile committed to "nurturing" world economic recovery, said Osborne.

"Overall, our discussions over the past two days have reaffirmed that there are still many challenges to securing sustainable global recovery, and we can't take it for granted," he said.

"But we are committed as the advanced economies in playing our part in nurturing that recovery and ensuring a lasting recovery so that we have prosperity in all our countries."

The talks, also attended by top representatives from the European Union and International Monetary Fund, built on last month's wider Group of 20 meeting while looking ahead to next month's G8 summit in Northern Ireland.

The G7 comprises Britain, Canada, France, Germany, Italy, Japan and the United States. The G8 is the G7 plus Russia.