Old Stocks
Old stocks mean accumulation of goods and materials, which are manufactured previously. However, an old stock has different connotations in different fields of economic activity. In the production or manufacturing process accumulation or heaps of the old manufactured goods stored in a place or godown either for the use in the present or future or for recycling. In the stock markets, old stocks mean shares of the old listed companies in both banking and non-banking sectors; listed in the stock markets.
In the general activity, old stocks means storage of the goods, services, or ideas, which are obsolete, backdated, less or of no use in the present environment. Such stocks may be any thing i.e., food grains (wheat, pulse, rice, Maize) purchased earlier by the family or families, Old clothes, old utensils, auto/cycles and electronic items or its components, old Books ,magazines, newspapers etc. Collections of Ideas or beliefs in the family or society which are irrelevant in the present scenario are also called old stocks.
Types:
Depending upon the use of the materials, we can delineate Old stocks into two categories:
1) House Holds Old Stocks:
Old stocks of the goods and materials of household uses viz. Spices, Papads, Jam Jelly, Breads, Soaps, Toothpastes, Detergents, pencils, Books etc. are called household old stocks.
2) Commercial Old Stocks:
The old stocks or inventory of the raw materials used in any production or commercial process viz., Silk, cotton in the textile industry, Bauxite, Dolomite etc. in the Aluminium industry, Limestone, Pig iron, Coal etc. used in the Steel industry etc
Needs & Importance:
The old stocks have usefulness in many cases.
1) During Price Rises:
In any production processes especially in the energy sector, preservation of the raw materials like Coal, Gases, Petroleum products etc. is needed for the future use. As demand for the fuel & fuel by products is increasing day by day. Therefore any shortage of the fuel products in the future market can be temporarily met out by the organization from its own resources of old stocks. Also organization need not have to spend more due to the increased costs of the raw materials in the market; if they have enough old stocks of the raw materials.
2) For Recycling:
In many production processes, such as in the paper, glass and ceramics industries,
Old stocks of the papers, glasses, tiles etc. are used in the recycling process so that they can be made for further use.
3) During Natural Calamities and Internal Shortages:
Many times, due to the natural calamities such as flood, droughts etc., food grains and cash crops gets damaged which brings shortages of food grains as well as cash crops in the market. Also during the shortages of the proper irrigation facilities or ingredients (fertilizers, insecticides, pesticides, high variety seeds etc.), overall production of the farm products falls. In such circumstances, the old stocks of the food grains and cash crops may be used to overcome such shortages.
4) During Emergencies:
During external emergencies such as external aggression by the enemy, war, global
Unrest etc., old stocks of the essential items may be used by the government in any
Country to maintain equilibrium in the demand and supply of the goods.
5) For Newer Innovations:
Many times, stockpiles of the old techniques, raw materials etc. are used by the R& D department of any production unit for exploration or innovation of the new improvised techniques or products which proves to be more cost effective, durable
and time efficient.
6) For Miscellaneous Uses:
Many times, it becomes necessary for the family or the society to keep the stocks of the materials such as coals, woods, books, grains for the cattles etc. Such stocks proves useful during the adverse situations such as a family may use coal, candles, or woods Stocks for use as a fuel during the shortages or hike in the prices of the Gas cylinders & kerosene.
Old stocks prove to be useful in many instances too. Small investors many times get attracted to the old stocks (namely manufacturing companies, old Financial institutions) due to the impressive performance of these companies in the stock market over a period. However, stock markets are always volatile and the
good Past or present performance of any old stock is not an indicative of the similar performance of such item in the future. Also in any economy, when there is bumper crop production during a season or year, stocks of the such surplus food materials gets damaged due to the improper storage facilities, maintenances, less demands, poor distribution network within the country, Low profitability of the producers, high transportation costs etc.
Also many old stocks become irrelevant in the present or future. This may be due to the changes in the tastes, preferences of the consumers, and launch of the newer & better substitutes in the market, scientific revolutions, extinction of products etc.
Actually, products such as coal & petroleum are becoming extinct due to its shortages throughout the world .As such natural gas, Alcohol, bio diesel & non renewable energy sources such as solar, tidal, bio gas etc. are becoming reliable source of fuel, electricity etc.
In the USA and western countries, large cold storages or green houses are constructed for preservation of the fruits, vegetables and other food items for a long period.
Conclusion:
Old stocks no doubt play an important role in any economic activity. All the newer innovations in the products are in fact, based on the past performance of such products. Many times old stock goods proves more useful than the newer goods due to its better quality. Consumer durable goods such as old glasswares, utensils etc. proved more long lasting than the newer models of such items. Same tale is for the old stocks companies. Many of the old stocks companies listed in the share markets are in fact blue chips companies and such stocks provides better yields to the investors as well as the prospects for enhanced earnings to them in the future too. However, developing countries should pay more attention towards the better storage and up keeping facilities for the old stocks especially the perishable products such as potatoes, wheat, onions, tomatoes etc.
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