Well.... This Article is not about building a Wealth. But this article is about Creating a Wealth or you can say its about generating a new wealth.
Creating a Wealth means Generating a new Wealth like Government prints its own money.
So u will ask than how can this possible?
How one can Create Wealth?...
Well... The Answer is "Taking Your Company Public"
yes...This is true.... Taking a Company public means creating a new wealth.
How?.... Here is the Logic behind it.......
Suppose today you have registered a new Company having a Capital of Rs. 1,00,000 (1 Lac) divided into 10,000 Shares of Rs. 10/- Face Value Each.
Now u start doing a business by this amount and after 10-15 years the Valueation of the company becomes Rs.10 Crore right?
SO now company's net worth is Rs. 10 Crore so now u can have 1 Crore shares of Rs.10/- face value each right?.... (10 Crores divided by 10 = 1 Crore Equity Capital)
so now company's Equity Capital is 1 Crore Shares of FaceValue Rs. 10/-
So 1,00,00,000 Shares multiplied by Rs.10/- = Rs. 10,00,00,000 (10 Croes).
Now your Company is eligible for going a public according to SEBI's Guidelines.
Now your Company's Share Capital is 1 Crore shares of Face Value of Rs.10/- each.
Now you Sell your 10% Company to public by IPO(Initil Public Offering / Public Issue ) route at a price of Rs.100 per share (Face Value of 1 share is Rs.10/-)
Now 10% of 1 Crore shares is 10 Lac shares (10,00,000). so u have sold 10 Lac (or 10% of the Company) to the public at a Share prize of Rs. 100/- per share. So you have raised Rs. 10 Crore (10 Lacs multiplied by Rs.100/- = Rs. 10 Crore) from the public for your Company by selling 10 lac shares (or 10% ownership of the Company).
Now 1 share having a face value of Rs. 10/- is trading at Rs.100/- on the Stock Exchange.
So now what will be the Worth of your Company?
Well, see... The Company has total 1 Crore shares having face value of Rs.10/- each and u have sold 10% of the total shares (10 Lac Shares) to the public at Rs. 100/- per share.
So if we count the value of your company by taking in to account Rs.100/- per share than the Net Worth of the company will be 1 Crore Shares multiplied by Rs.100/- = Rs. 100 Crores.
So Net Worth of the company after going public is now Rs. 100 Crore
Which was only Rs. 10 Crore before going to public.(before going to public 1 share was Rs.10/- only so 1 Crore Shares multiplied by Rs.10/- = Rs. 10 Crores only)
This new Net Worth of Company is known as Market Capitalisation
So after going to Public the Market Capitalisation of The Company becomes Rs. 100 Crore.
Out of which 90% company ownership is with you having net worth of Rs. 90 Crores (On Paper) and 10% ownership is with public having net worth of Rs.10 Crores (On Paper)
So now think in this way,...
New 100 Crore Rupees are added in to the economy after your company going to public right?
Now Government has not printed these new 100 Crore rupees.
These are just on paper valuations that counted as Net Worth....
So what actually is it?
Well.... This 100 Crore Rupees are newly created into the Economy.
This is known as Actual Creation of New Wealth....
Earning a this much amount of Wealth is not possible. The only way is you have to create it.
Now See, Forbes Magazine,
All the Top 1000 Billionaires of the world have actually Created Wealth.
Observe this phenomena into Forbes Magazine.
All of them have created a business and taken it to the publice and now their own stake in their own Corporation/Company is worth of billions of dollars.
All the World's Richest people are not Wealth Builders but Actually they r Wealth Creators.
The Value of Indian Economy is US $ 1 Trillion. most of the wealth is created by this way. They have just total the valuations of the all the listed companies of the stock market.
The Greatet US Economy of the World is around US $ 12 Trillion. All of this Wealth is Created and counted by this method........
