Case Study: Trading Silk Yarn and Sub-Brokership

Topics: Stock market, Stock, Shareholder Pages: 2 (628 words) Published: December 23, 2012
Case Study
S.L.Kirodia was engaged in the family business of trading in natural silk yarn in a large town of Eastern Uttar Pradesh. The town had lot of potential for silk yarn demand as they were plenty of weavers engaged in weaving sarees popularly known as “Banarsi Sarees’’. At the initial stage, the trading business of Kirodia’s father was not flourishing. However, after the death of his father, when S.L.Kirodia assumed the full-fledged responsibility of the business, he expanded it manifold with untiring efforts. With the result, he became number one trader of the city and earned a lot of money. He constructed his own five-storey house in prime business area of the city with a view that ground and first floors would be used for business purpose and the remaining floors would be used for residential purpose. Trading of silk yarn involves procuring of silk yarn from silk producing centres mostly at Banglore and adjoining areas and some part of Jammu & Kashmir. Besides silk yarn is imported mostly from China. Silk yarn is distributed directly to weavers who are mostly illiterate manual workers or to semi-wholesalers. The yarn is supplied on credit basis ranging from one week to two weeks with a provision that interest at the rate of 2 percent per month will be charged if the payment is delayed beyond the stipulated time. When Kirodia made huge profit in his trading business, he started investing a part of the profit in buying shares of different companies both from the primary market and the secondary market. Gradually, he along with his family members became shareholders of about 250 companies. Kirodia has three sons and when they were quite grown up he decided to step down from the trading business and entered the field of share-broking . In late 2004, he approached a share broker of National Stock Exchange(NSE) for the purpose with his friend and was successful in getting sub-brokership from the main broker located at Mumbai. He formed a firm known as...
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