I understand that the new companies raise money from the Stock Market through IPO. But how does the company use this money to invest in the business?. If the stocks are held by people (promoters and investors), how does it get converted into cash to buy assets like machinery, building etc?
When investors buy stock in an IPO, they give the company money in exchange for the stock. The company now has cash. It uses that cash to buy equipment, hire employees, etc.
When an investor buys stock on the stock market, you're normally not buying an IPO. You're buying stock from another investor. In that case the company doesn't get the money: the person who sold you the stock gets it. That's different.