Financial Instruments:

EQUITY: Equity is defined as a stock or any other security representing an ownership interest. Equity share is the equally divided capital of a company. Total capital contribution for a company comprises of investments through equity share holdings by small and big investors. The investors who have a stake in a company are referred to as shareholders. The equity shares are therefore documents issued by a company and floated in the open market for purchase by shareholders which entitles them to be one of the owners of the company. PREFERENCE SHARES: Generally, Preference shareholders do not carry any voting rights. They are paid dividend at fixed rate before paying dividend to equity shareholders. They have preference for payment of return of capital at the time of winding up of the company, before the payment to the equity shareholder. EXAMPLE: 5000 Preference were allotted to members of Hantapara Tea Co., Ltd., upon its merger with the Duncan Industries. Futura Poly has Preferential issue and allotment of 19,89,000 9 % Non Cumulative Redeemable Preference shares of Rs. 100/- each at Rs. 100/- per share Remi Metals Gujarat Ltd has informed BSE that the Company had allotted 3,00,00,000 Optionally Convertible Preference shares (OCP's) of Rs. 10/- each on March 31, 2009. TYPES: CUMULATIVE PREFERENCE SHARE: Cumulative preference shares are those shares on which the amount of dividend if not paid in any year, due to loss or inadequate profits, then such unpaid dividend will accumulate and will be paid in the subsequent years before any dividend is paid to the equity share holders. Preference shares are always deemed to be cumulative unless any express provision. NON-CUMULATIVE PREFERENCE SHARES: Non-cumulative preference shares are those shares on which arrear of dividend do not accumulate. Therefore if divided is not paid on these shares in any year, the right receive the dividend lapses and as such, the arrear of dividend is not paid out of the profits of the subsequent years. Pantaloon has issued 10, 00,000 Non-Cumulative Preference Shares Rs. 10/- each aggregating Rs. 1, 00, 00,000/- on Private Placement basis in 1997.

CONVERTIBLE PREFERENCE SHARES: In 1995, Dion global Solution issued 52,50,000-5% Convertible Preference shares of Rs 10 each to the public.

BONDS: A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used by companies, municipalities, states and U.S. and foreign governments to finance a variety of projects and activities. Bonds are commonly referred to as fixed-income securities and are one of the three main asset classes, along with stocks and cash equivalents. EXAMPLE: In the United States, the holder may be liable for imputed income (sometimes called phantom income), even though these bonds don't pay periodic interest. Because of this, zero coupon bonds subject to U.S. taxation should generally be held in tax-deferred retirement accounts, to avoid paying taxes on future income. Alternatively, when purchasing a zero coupon bond issued by a U.S. state or local government entity, the imputed interest is free of U.S. federal taxes, and in most cases, state and local taxes, too. In India, the tax on income from deep discount bonds can arise in two ways: interest or capital gains. It is also law that interest has to be shown on accrual basis for deep discount bonds issued after February 2002. This is as per CBDT circular No 2 of 2002 dated 15th February 2002. TYPES: ZERO COUPON BOND In such a bond, no coupons are paid. The bond is instead issued at a discount to its face value, at which it will be redeemed. There are no intermittent payments of interest. When such a bond is issued for a very long tenor, the issue price is at a steep discount to the redemption value. Such a zero coupon bond is also called a deep discount bond. The effective interest earned by the buyer is the difference between the face value and the discounted price at which the bond is bought. There are also instances of zero coupon bonds being issued at par, and redeemed with interest at a premium. The essential feature of this type of bonds is the absence of intermittent cash flows. TREASURY STRIPS In the United States, government dealer firms buy coupon paying treasury bonds, and create out of each cash flow of such a bond, a separate zero coupon bond. FLOATING RATE BONDS:

Instead of a pre-determined rate at which coupons are paid, it is possible to structure bonds, where the rate of interest is re-set periodically, based on a benchmark rate. Such bonds whose coupon rate is not fixed, but reset with reference to a benchmark rate, are called floating rate bonds. CONVERTIBLE BOND: A convertible bond provides the investor the option to convert the value of the outstanding bond into equity of the borrowing firm, on pre-specified terms. Exercising this option leads to redemption of the bond prior to maturity, and its replacement with equity. At the time of the bond s issue, the indenture clearly specifies the conversion ratio and the conversion price. The conversion ratio refers to the number of equity shares, which will be issued in exchange for the bond that is being converted. The conversion price is the resulting price when the conversion ratio is applied to the value of the bond, at the time of conversion. Bonds can be fully converted, such that they are fully redeemed on the date of conversion. Bonds can also be issued as partially convertible, when a part of the bond is redeemed and equity shares are issued in the pre-specified conversion ratio, and the nonconvertible portion continues to remain as a bond.

DEBENTURE : A debenture is defined as a type of debt instrument that is not secured by physical asset or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer. Both corporations and governments frequently issue this type of bond in order to secure capital. Like other types of bonds, debentures are documented in an indenture. EXAMPLE: Tata Power Co Ltd has launched an issue of perpetual debentures to raise Rs 1,500 crores. CONVERTIBLE DEBENTURES: Debentures which are convertible bonds or bonds that can be converted into equity shares of the issuing company after a predetermined period of time. "Convertibility" is a feature that corporations may add to the bonds they issue to make them more attractive to buyers. In other words, it is a special feature that a corporate bond may carry. As a result of the advantage a buyer gets from the ability to convert; convertible bonds typically have lower interest rates than non-convertible corporate bonds. EXAMPLE: JSW Steel Ltd has informed BSE about preferential allotment of 1 (one) Fully and Compulsorily Convertible Debenture of face value of Rs. 48,007,197,458 to JFE Steel Corporation, Japan.

TYPES: VANILLA CONVERTIBLE BONDS:

Vanilla convertible bonds are bonds which may be converted at the option of the owner into the shares of the issuer, usually at a pre-determined rate. They may or may not be redeemable by the issuer prior to the final maturity date, subject to certain share price performance conditions. EXCHANGEABLES: Exchangeables (XB) are bonds which may be exchanged into shares other than those of the issuer. Strictly speaking, they are not convertibles, but they share certain common evaluation characteristics. MANDATORY CONVERTIBLES: Mandatory convertibles are short duration securities generally with yields higher than found on the underlying common shares that are mandatorily convertible upon maturity into a fixed number of common shares. If it is intended to provide a minimum value for the convertible at maturity, convertibility may be into a sufficient number of shares based on the stock price at maturity to provide that minimum redemption value. MANDATORY EXCHANGEABLES: Mandatory exchangeables are short duration securities generally with yields higher than found on the underlying common shares that are mandatorily exchangeable upon maturity into a fixed number of common shares. Likewise, if it is intended to provide a minimum value for the convertible at maturity, exchange may be into a sufficient number of shares (based on the stock price at maturity) to provide that minimum redemption value. Such exchangeables may be said to be "redeemed into equity", and care should be taken when reading the offering documentation, lest "redemption" and "conversion" are confused. CONTINGENT CONVERTIBLES Contingent convertibles (co-co) only allow the investor to convert into stock if the price of the stock is a certain percentage above the conversion price. For example, a contingent convertible with a $10 stock price at issue, 30% conversion premium and a contingent conversion trigger of 120%, can be converted (at $13) only if the stock trades above $15.60 ($13 x 120%) over a specified period, often 20 out of 30 days before the end of the quarter.

MUTUAL FUND: A mutual fund is a professionally managed type of collective investment that pools money from many investors to buy stocks, bonds, short-term money market instruments, and/or other securities. EXAMPLE: UTI Mutual Fund (UTI MF) has today entered into a customised arrangement with the Repatriates Co-op. Finance & Development Bank Ltd. (REPCO Bank) for providing the members of Self Help Groups associated with REPCO Foundation for Micro Credit, an investment opportunity through a MicroPension initiative under UTI-Retirement Benefit Pension Fund. The Micro-Pension initiative facilitated by UTI Mutual Fund and REPCO Bank aims to provide the much needed social security cover for the low

income group during their old age. Under the initiative, members of the Self Help Groups associated with REPCO Foundation for micro credit, will contribute minimum amount of Rs.100 every month towards UTI-Retirement Benefit Pension Fund up to the age of 55 years so as to enable them to receive pension in the form of periodical income/cashflow after they reach the age of 58 years. TYPES: OPEN-END FUNDS Open-end mutual funds must be willing to buy back their shares from their investors at the end of every business day at the net asset value computed that day. Most open-end funds also sell shares to the public every business day; these shares are also priced at net asset value. A professional investment manager oversees the portfolio, buying and selling securities as appropriate. The total investment in the fund will vary based on share purchases, redemptions and fluctuation in market valuation. EXAMPLES: T. Rowe Price Fidelity Investments' Magellan The Vanguard Group's S&P 500 PIMCO Total Return WorldCommodity Fund CLOSED-END FUNDS Closed-end funds generally issue shares to the public only once, when they are created through an initial public offering. Their shares are then listed for trading on a stock exchange. Investors who no longer wish to invest in the fund cannot sell their shares back to the fund (as they can with an open-end fund). Instead, they must sell their shares to another investor in the market; the price they receive may be significantly different from net asset value. It may be at a "premium" to net asset value (meaning that it is higher than net asset value) or, more commonly, at a "discount" to net asset value (meaning that it is lower than net asset value). A professional investment manager oversees the portfolio, buying and selling securities as appropriate. EXAMPLES: Adams Express Company (NYSE:ADX) Foreign & Colonial Investment Trust plc (LSE:FRCL) Witan Investment Trust plc (LSE:WTAN) Tri-Continental Corporation (NYSE:TY) Gabelli Equity Trust (NYSE:GAB) General American Investors Company, Inc. (NYSE:GAM) UNIT INVESTMENT TRUSTS Unit investment trusts or UITs issue shares to the public only once, when they are created. Investors can redeem shares directly with the fund (as with an open-end fund) or they may also be able to sell their

shares in the market. Unit investment trusts do not have a professional investment manager. Their portfolio of securities is established at the creation of the UIT and does not change. UITs generally have a limited life span, established at creation. EXCHANGE-TRADED FUND A relatively recent innovation, the exchange-traded fund or ETF is often structured as an open-end investment company, though ETFs may also be structured as unit investment trusts, partnerships, investments trust, grantor trusts or bonds (as an exchange-traded note). ETFs combine characteristics of both closed-end funds and open-end funds. Like closed-end funds, ETFs are traded throughout the day on a stock exchange at a price determined by the market. However, as with open-end funds, investors normally receive a price that is close to net asset value. To keep the market price close to net asset value, ETFs issue and redeem large blocks of their shares with institutional investors. Most ETFs are index funds.

CERTIFICATE OF DEPOSIT: A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate and can be issued in any denomination. CDs are generally issued by commercial banks and are insured by the FDIC. The term of a CD generally ranges from one month to five years. CDs are similar to savings accounts in that they are insured and thus virtually risk-free; they are "money in the bank" (CDs are insured by the Federal Deposit Insurance Corporation (FDIC) for banks or by the National Credit Union Administration (NCUA) for credit unions). They are different from savings accounts in that the CD has a specific, fixed term (often three months, six months, or one to five years), and, usually, a fixed interest rate. It is intended that the CD be held until maturity, at which time the money may be withdrawn together with the accrued interest.

TYPES: CALLABLE CDS A callable CD is similar to a traditional CD, except that the bank reserves the right to "call" the investment. After the initial non-callable period, the bank can buy (call) back the CD. Callable CDs pay a premium interest rate. Banks manage their interest rate risk by selling callable CDs. On the call date, the banks determine if it is cheaper to replace the investment or leave it outstanding. This is similar to refinancing a mortgage. BROKERED CDS Many brokerage firms known as "deposit brokers" offer CDs. These brokerage firms can sometimes negotiate a higher rate of interest for a CD by promising to bring a certain number of deposits to the institution.

Unlike traditional bank CDs, brokered CDs are sometimes held by a group of unrelated investors. Instead of owning the entire CD, each investor owns a piece. If several investors own the CD, the deposit broker may not list each person's name in the title but the account records should reflect that the broker is merely acting as an agent (e.g., "XYZ Brokerage as Custodian for Customers"). This ensures that each portion of the CD qualifies for up to $100,000 of FDIC coverage. In some cases, the deposit broker may advertise that the CD does not have a prepayment penalty for early withdrawal. In those cases, the deposit broker will instead try to resell the CD if the investor wants to redeem it before maturity. If interest rates have fallen since the CD was purchased, and demand is high, he/she may be able to sell the CD for a profit. But if interest rates have risen, there may be less demand for such lower-yielding CD, which means that he/she may have to sell the CD at a discount and lose some of the investor s original deposit. Deposit brokers do not have to go through any licensing or certification procedures, and no state or federal agency licenses, examines, or approves them. In the event of bank failure, FDIC insurance applies but may be more difficult to realize. Direct deposit CDs are often allowed to mature at the original rate by the acquiring bank, but brokered accounts usually stop paying interest immediately. Brokered depositors may not be timely notified. Further, the FDIC will pay claims on direct deposits within 7 10 days, brokered CD claims may take 30 60 days. Additionally, the FDIC may require that brokered depositors prove they do not hold simultaneous direct and brokered deposits which exceed FDIC limits. BUMP-UP CDS A Bump Up CD allows the account holder the option to increase the interest rate once during the term of the CD. Upon request, the bank will bump up the interest rate on the certificate of deposit to a higher rate being offered by the issuing bank on that CD (or a comparable term CD). The rate change does not change the original maturity date of the CD. LIQUID CDS This type of CD is generally a fixed rate certificate of deposit, which allows you to withdraw a portion of the original deposit during the term without paying a penalty. There will be some limits on when you can take the money out, the amount that can be withdrawn and how many separate withdrawals you can make from the CD. STEP-UP CD OR STEP-DOWN CDS These can also be called a flex CD and can be confused with a Bump Up CD. Certificates of deposit with a step up or down feature have a fixed interest rate for a period of time, usually one year and then the interest rate automatically rises up to a predetermined rate or is lowered to a predetermined rate.

VARIABLE-RATE CD

Unlike traditional CDs that pay a fixed rate of interest, a variable rate CD or index based CD is tied to the outcome of a market index. The interest you earn at maturity is based on the percentage gain (or loss) to the final Index value. ADD-ON CDS These are fixed or variable rate CDs to which you can make additional deposits. There can be restrictions, such as a minimum deposit that can be made to the account. ZERO-COUPON CD These certificates of deposit are issued at a substantial discount from the face amount of the CD. Typically the maturity terms are much longer, 15 to 20 years, which results in the discounted price. Zero coupon CDs do not pay interest until the maturity date.

TREASURY BILL (T-BILL) A short-term debt obligation backed by the U.S. government with a maturity of less than one year. Tbills are sold in denominations of $1,000 up to a maximum purchase of $5 million and commonly have maturities of one month (four weeks), three months (13 weeks) or six months (26 weeks). T-bills are issued through a competitive bidding process at a discount from par, which means that rather than paying fixed interest payments like conventional bonds, the appreciation of the bond provides the return to the holder.

TREASURY BONDS (T-BONDS, OR THE LONG BOND) T-Bonds have the longest maturity, from twenty years to thirty years. They have a coupon payment every six months like T-Notes, and are commonly issued with maturity of thirty years. The secondary market is highly liquid, so the yield on the most recent T-Bond offering was commonly used as a proxy for long-term interest rates in general.[citation needed] This role has largely been taken over by the 10year note, as the size and frequency of long-term bond issues declined significantly in the 1990s and early 2000s.

OPTION: In finance, an option is a derivative financial instrument that specifies a contract between two parties for a future transaction on an asset at a reference price. The buyer of the option gains the right, but not the obligation, to engage in that transaction, while the seller incurs the corresponding obligation to fulfill the transaction. The price of an option derives from the difference between the reference price and the value of the underlying asset (commonly a stock, a bond, a currency or a futures contract) plus a

premium based on the time remaining until the expiration of the option. Other types of options exist, and options can in principle be created for any type of valuable asset. An option which conveys the right to buy something is called a call; an option which conveys the right to sell is called a put. The reference price at which the underlying may be traded is called the strike price or exercise price. The process of activating an option and thereby trading the underlying at the agreedupon price is referred to as exercising it. Most options have an expiration date. If the option is not exercised by the expiration date, it becomes void and worthless.

In return for granting the option, called writing the option, the originator of the option collects a payment, the premium, from the buyer. The writer of an option must make good on delivering (or receiving) the underlying asset or its cash equivalent, if the option is exercised. An option can usually be sold by its original buyer to another party. Many options are created in standardized form and traded on an anonymous options exchange among the general public, while other over-the-counter options are customized ad hoc to the desires of the buyer, usually by an investment bank. EUROPEAN OPTION : an option that may only be exercised on expiration. AMERICAN OPTION: an option that may be exercised on any trading day on or before expiry. BERMUDAN OPTION an option that may be exercised only on specified dates on or before expiration. BARRIER OPTION any option with the general characteristic that the underlying security's price must pass a certain level or "barrier" before it can be exercised. EXOTIC OPTION Any of a broad category of options that may include complex financial structures. VANILLA OPTION Any option that is not exotic.

COMMERCIAL PAPER: It s an unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories and meeting short-term liabilities. Maturities on commercial paper

rarely range any longer than 270 days. The debt is usually issued at a discount, reflecting prevailing market interest rates. In the global money market, commercial paper is an unsecured promissory note with a fixed maturity of 1 to 270 days. Commercial Paper is a money-market security issued (sold) by large banks and corporations to get money to meet short term debt obligations (for example, payroll), and is only backed by an issuing bank or corporation's promise to pay the face amount on the maturity date specified on the note. Since it is not backed by collateral, only firms with excellent credit ratings from a recognized rating agency will be able to sell their commercial paper at a reasonable price. Commercial paper is usually sold at a discount from face value, and carries higher interest repayment rates than bonds. Typically, the longer the maturity on a note, the higher the interest rate the issuing institution must pay. Interest rates fluctuate with market conditions, but are typically lower than banks' rates.

FUTURES: A financial contract obligating the buyer to purchase an asset (or the seller to sell an asset), such as a physical commodity or a financial instrument, at a predetermined future date and price. Futures contracts detail the quality and quantity of the underlying asset; they are standardized to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash. The futures markets are characterized by the ability to use very high leverage relative to stock markets. Futures can be used either to hedge or to speculate on the price movement of the underlying asset. For example, a producer of corn could use futures to lock in a certain price and reduce risk (hedge). On the other hand, anybody could speculate on the price movement of corn by going long or short using futures. Commodity market in India deals mainly in futures.

FORWARD: In finance, a forward contract or simply a forward is a non-standardized contract between two parties to buy or sell an asset at a specified future time at a price agreed today. This is in contrast to a spot contract, which is an agreement to buy or sell an asset today. It costs nothing to enter a forward contract. The party agreeing to buy the underlying asset in the future assumes a long position, and the party agreeing to sell the asset in the future assumes a short position. The price agreed upon is called the delivery price, which is equal to the forward price at the time the contract is entered into.

SWAPS:

In finance, a swap is a derivative in which counterparties exchange certain benefits of one party's financial instrument for those of the other party's financial instrument. The benefits in question depend on the type of financial instruments involved. For example, in the case of a swap involving two bonds, the benefits in question can be the periodic interest (or coupon) payments associated with the bonds. Specifically, the two counterparties agree to exchange one stream of cash flows against another stream. These streams are called the legs of the swap. The swap agreement defines the dates when the cash flows are to be paid and the way they are calculated. Usually at the time when the contract is initiated at least one of these series of cash flows is determined by a random or uncertain variable such as an interest rate, foreign exchange rate, equity price or commodity price. The cash flows are calculated over a notional principal amount, which is usually not exchanged between counterparties. Consequently, swaps can be in cash or collateral. INTEREST RATE SWAPS: A is currently paying floating, but wants to pay fixed. B is currently paying fixed but wants to pay floating. By entering into an interest rate swap, the net result is that each party can 'swap' their existing obligation for their desired obligation. Normally the parties do not swap payments directly, but rather, each sets up a separate swap with a financial intermediary such as a bank. In return for matching the two parties together, the bank takes a spread from the swap payments. PLAIN VANILLA SWAP: The most common type of swap is a plain Vanilla interest rate swap. It is the exchange of a fixed rate loan to a floating rate loan. The life of the swap can range from 2 years to over 15 years. The reason for this exchange is to take benefit from comparative advantage. Some companies may have comparative advantage in fixed rate markets while other companies have a comparative advantage in floating rate markets. When companies want to borrow they look for cheap borrowing i.e. from the market where they have comparative advantage. However this may lead to a company borrowing fixed when it wants floating or borrowing floating when it wants fixed. This is where a swap comes in. A swap has the effect of transforming a fixed rate loan into a floating rate loan or vice versa. EXAMPLE: Party B makes periodic interest payments to party A based on a variable interest rate of LIBOR +70 basis points. Party A in return makes periodic interest payments based on a fixed rate of 8.65%. The payments are calculated over the notional amount. The first rate is called variable, because it is reset at the beginning of each interest calculation period to the then current reference rate, such as LIBOR. In reality, the actual rate received by A and B is slightly lower due to a bank taking a spread. CURRENCY SWAPS A currency swap involves exchanging principal and fixed rate interest payments on a loan in one currency for principal and fixed rate interest payments on an equal loan in another currency. Just like interest rate swaps, the currency swaps also are motivated by comparative advantage. Currency swaps

entail swapping both principal and interest between the parties, with the cashflows in one direction being in a different currency than those in the opposite direction. EXAMPLE: 13 Asian nations to create multilateral currency swap deal in May, 2009. COMMODITY SWAPS A commodity swap is an agreement whereby a floating (or market or spot) price is exchanged for a fixed price over a specified period. The vast majority of commodity swaps involve crude oil. EQUITY SWAP An equity swap is a special type of total return swap, where the underlying asset is a stock, a basket of stocks, or a stock index. Compared to actually owning the stock, in this case you do not have to pay anything up front, but you do not have any voting or other rights that stock holders do. EXAMPLE: ONGC, Cairn in equity swap deal for oil blocks. CREDIT DEFAULT SWAP A credit default swap (CDS) is a swap contract in which the buyer of the CDS makes a series of payments to the seller and, in exchange, receives a payoff if a credit instrument - typically a bond or loan - goes into default (fails to pay). Less commonly, the credit event that triggers the payoff can be a company undergoing restructuring, bankruptcy or even just having its credit rating downgraded. CDS contracts have been compared with insurance, because the buyer pays a premium and, in return, receive a sum of money if one of the events specified in the contract occur. Unlike an actual insurance contract the buyer is allowed to profit from the contract and may also cover an asset to which the buyer has no direct exposure. EXAMPLE: In Greece, credit-default swaps were tied to the nation s debt. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company or country fail to adhere to its debt agreements. COLLATERAL DEBT OBLIGATION A Collateralized Debt Obligation (CDO) is a credit derivative that creates fixed income securities with widely different risk characteristics from a pool of risky assets. The coupon and principal payments of these securities are linked to the performance of the underlying pool. EXAMPLE: According to the SEC, JPMorgan in 2007 structured a collateralized debt obligation, Squared CDO 20071, mainly with credit default swaps tied to other CDO securities whose value was tied to the nation's housing market.

PREFERENCE SHARES: Capital stock which provides a specific dividend that is paid before any dividends are paid to common stock holders, and which takes precedence over common stock in the event of a liquidation. Like common stock, preference shares represent partial ownership in a company, although preferred stock shareholders do not enjoy any of the voting rights of common stockholders. Also unlike common stock, preference shares pay a fixed dividend that does not fluctuate, although the company does not have to pay this dividend if it lacks the financial ability to do so. The main benefit to owning preference shares are that the investor has a greater claim on the company's assets than common stockholders. Preferred shareholders always receive their dividends first and, in the event the company goes bankrupt, preferred shareholders are paid off before common stockholders. In general, there are four different types of preferred stock: cumulative preferred stock, non-cumulative preferred stock, participating preferred stock, and convertible preferred stock. also called preferred stock.

EXAMPLE: Shareholders at the Annual General Meeting held on 27th July 2009 had authorized the Board of Directors to offer and issue 2,00,00,000 (Two crores) Redeemable, cumulative, Non-convertible, Preference Shares of Rs. 10/ each at a coupon rate to be fixed by the Board in one or more tranches for cash at par or premium on private placement basis to promoters and their group , associates and /or to any other financial institution/banks/companies subject to certain conditions. In pursuance of the same, 2,00,00,000 shares out of the Unclassified and Unissued shares of Rs 10 each were classified by the Board at their meeting held on 29th October 2009, as Redeemable, Cumulative, Non convertible Preference shares of Rs 10/- each. Accordingly, during the year under review, the Board issued to M/s Tata Capital Ltd, on the basis of a Subscription Agreement, 2,00,00,000 12% Non Convertible Redeemable, Cumulative Preference Shares of Rs 10/- each on private placement basis and the allotment was completed on 9th December 2009.

WARRANTS: In finance, a warrant is a security that entitles the holder to buy the underlying stock of the issuing company at a fixed exercise price until the expiry date. Warrants and options are similar in that the two contractual financial instruments allow the holder special rights to buy securities. Both are discretionary and have expiration dates. The word warrant simply means to "endow with the right", which is only slightly different to the meaning of an option. Warrants are frequently attached to bonds or preferred stock as a sweetener, allowing the issuer to pay lower interest rates or dividends. They can be used to enhance the yield of the bond, and make them more attractive to potential buyers. Warrants can also be used in private equity deals. Frequently, these warrants are detachable, and can be sold independently of the bond or stock.

In the case of warrants issued with preferred stocks, stockholders may need to detach and sell the warrant before they can receive dividend payments. Thus, it is sometimes beneficial to detach and sell a warrant as soon as possible so the investor can earn dividends. EXAMPLE: In March 2011,Jain Irrigation on Friday announced it would issue 61,00,000 equity warrants to its promoters and their entities for Rs 139.17 crores. TYPES: EQUITY WARRANTS: Equity warrants can be call and put warrants. CALLABLE WARRANTS: Callable warrants give the Company the right to force the warrant holder to exercise the warrants into their predetermined number of shares at a predetermined price (or using a predetermined price formula) after certain contractual conditions are met Putable warrants: Putable warrants give the warrant holder the right to force the Company to issue the underlying securities at a predetermined price after certain contractual conditions are met COVERED WARRANTS: A covered warrants is a warrant that has some underlying backing, for example the issuer will purchase the stock beforehand or will use other instruments to cover the option. BASKET WARRANTS: As with a regular equity index, warrants can be classified at, for example, an industry level. Thus, it mirrors the performance of the industry. INDEX WARRANTS: Index warrants use an index as the underlying asset. Your risk is dispersed using index call and index put warrants just like with regular equity indexes. It should be noted that they are priced using index points. That is, you deal with cash, not directly with shares.

WEDDING WARRANTS: Wedding warrants are attached to the host debentures and can be exercised only if the host debentures are surrendered.

DETACHABLE WARRANTS: Detachable warrants are a type of warrant where the warrant portion of the security can be detached from the debenture and traded separately.

NAKED WARRANTS: Naked Warrants are issued without an accompanying bond, and like traditional warrants, are traded on the stock exchange. REIT: REIT stands for real estate investment trust and is sometimes called "real estate stock." Essentially, REITs are corporations that own and manage a portfolio of real estate properties and mortgages. Anyone can buy shares in a publicly traded REIT.They give the advantage of ilquidity and diversity. They offer the benefits of real estate ownership without the headaches or expense of being a landlord. EXAMPLE: Sabana Shari ah Compliant Industrial Real Estate Investment Trust (Sabana REIT) is a Singapore-based REIT with a mandate to invest in income-producing industrial real estate and real estate-related assets in Singapore and Asia with compliance to Shari ah investment principles.

STOCK REPURCHASE : Stock repurchase (or share buyback) is the reacquisition by a company of its own stock. In some countries, including the U.S. and the UK, a corporation can repurchase its own stock by distributing cash to existing shareholders in exchange for a fraction of the company's outstanding equity; that is, cash is exchanged for a reduction in the number of shares outstanding. The company either retires the repurchased shares or keeps them as treasury stock, available for re-issuance. EXAMPLE: Reliance Infrastructure announces Rs 1000 cr share buyback in March 2011.

NATIONAL SAVINGS CERTIFICATE : National Savings Certificates (NSC) are certificates issued by Department of post, Government of India and are available at all post office counters in the country. This scheme is specially designed for Government employees, Businessmen and other salaried classes who are IT assesses. It is a long term safe savings option for the investor. Trust and HUF cannot invest. The scheme combines growth in money with reductions in tax liability as per the provisions of the Income Tax Act, 1961. The duration of a NSC scheme is 6 years. HEDGE FUND: Hedge fund is a fund that can take both long and short positions, use arbitrage, buy and sell undervalued securities, trade options or bonds, and invest in almost any opportunity in any market where it foresees impressive gains at reduced risk. Hedge fund strategies vary enormously -- many

hedge against downturns in the markets -- especially important today with volatility and anticipation of corrections in overheated stock markets. The primary aim of most hedge funds is to reduce volatility and risk while attempting to preserve capital and deliver positive returns under all market conditions. EXAMPLE: Hudson Fairfax Group (HFG) is an investment partnership focused on India s aerospace, defense, homeland security and other strategic sectors. ADR An American Depositary Receipt (ADR) is a negotiable security that represents the underlying securities of a non-U.S. company that trades in the U.S. financial markets. Individual shares of the securities of the foreign company represented by an ADR are called American Depositary Shares (ADS).The stock of many non-U.S. companies trade on U.S. stock exchanges through the use of ADRs. ADRs are denominated, and pay dividends, in U.S. dollars, and may be traded like shares of stock of U.S.-domiciled companies. EXAMPLE: Deutsche Bank announced in July,2011 that it will be providing depositary bank services for the unsponsored American Depositary Receipt (ADR) program for the ordinary shares of Glencore International plc.

GDR A negotiable certificate held in the bank of one country representing a specific number of shares of a stock traded on an exchange of another country. American Depositary Receipts make it easier for individuals to invest in foreign companies, due to the widespread availability of price information, lower transaction costs, and timely dividend distributions. also called European Depositary Receipt. EXAMPLE; Tata Steel, India's largest steelmaker by capacity, has started the process for an overseas sale of shares to raise up to $1 billion, in order to reduce debt incurred in 2007 to acquire Corus. JPMorgan, Citi, Standard Chartered, RBS, Kotak and HSBC are among the banks advising Tata Steel on the GDR issue. IDR An Indian Depository Receipt is an instrument denominated in Indian Rupees in the form of a depository receipt created by a Domestic Depository (custodian of securities registered with the Securities and Exchange Board of India) against the underlying equity of issuing company to enable foreign companies to raise funds from the Indian securities Markets.The foreign company IDRs will deposit shares to an Indian depository. The depository would issue receipts to investors in India against these shares. The benefit of the underlying shares (like bonus, dividends etc) would accrue to the depository receipt holders in India.

EXAMPLE: Standard Chartered plc is the first foreign company to have publicly elicited interest in making an IDR issue in India.

REFERENCES: http://www.investorwords.com/3775/preference_shares.html#ixzz1SVjeAaw2 http://en.wikipedia.org http://www.financialexpress.com http://www.economictimes.com http://www.investopedia.com