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  1. 1. SECTION I Investment The money one earns is partly spent and the rest saved for meeting future expenses. Instead of keeping the saving idle one may like to use saving in order to get return on it in the future. This is called investment. Investing is not about putting all your money into the "Next big thing," hoping to make a killing. Investing isn't gambling or speculation; it's about taking reasonable risks to reap steady rewards. Why should you invest? Simply put, you should invest so that your money grows and shields you against rising inflation. The rate of return on investments should be greater than the rate of inflation, leaving you with a nice surplus over a period of time. Whether your money is invested in stocks, bonds, mutual funds or certificates of deposit (CD), the end result is to create wealth for retirement, marriage, college fees, vacations, better standard of living or to just pass on the money to the next generation or maybe have some fun in your life and do things you had always dreamed of doing with a little extra cash in your pocket. Also, it's exciting to review your investment returns and to see how they are accumulating at a faster rate than your salary. When to Invest? The sooner one start investing the better. By investing into the market right away you allow your investments more time to grow, whereby the concept of compounding interest swells your income by accumulating your earnings and dividends. Considering the unpredictability of the markets, research and history indicates these three golden rules for all investors 1. Invest early 2. Invest regularly 3. Invest for long term and not short term
  2. 2. Types of Investment 1) Financial Instruments  Equities Equities are a type of security that represents the ownership in a company. Equities are traded (bought and sold) in stock markets. Alternatively, they can be purchased via the Initial Public Offering (IPO) route, i.e. directly from the company. Investing in equities is a good long-term investment option as the returns on equities over a long time horizon are generally higher than most other investment avenues. However, along with the possibility of greater returns comes greater risk.  Mutual funds Mutual funds are financial intermidiaries which collect the savings of investors and invest them in a large and well diversified portfolio of securities such as money market instruments, corporate and government bonds and equity shares of joint stock companies. Mutual funds are conceived as institution for providing small investors with avenues of investment in capital market.since small investors generally do not have adequte time knowledge experience and resources for directly accessing the capital market, they have to rely on an intermidiary which undertakes informed investment decisions and provides the consequential benefits of professional expertise. A mutual fund allows a group of people to pool their money together and have it professionally managed, in keeping with a predetermined investment objective. This investment avenue is popular because of its cost-efficiency, risk-diversification, professional management and sound regulation. You can invest as little as Rs. 1,000 per month in a mutual fund. There are various mutual funds to choose from and the risk and return possibilities vary accordingly.  Debt instruments Debt instruments represents a contract whereby one party lends money to another on predetermined terms with regards to rate and periodicity of interest, repayment of principal amount by the borrower to the lender.  Bonds: Bonds are fixed income instruments which are issued for the purpose of raising capital. The Central or State government and public sector organizations sell bonds. The bond is generally a promise to repay the principal amount with a fixed rate of interest on a specified date, called the maturity period.  Debentures: The term ‘debenture’is used for instruments issued by private corporate sector. Both private entities, such as companies, financial institutions, and the central or state
  3. 3. government and other government institutions use this instrument as a means of garnering funds. Bonds issued by the Government carry the lowest level of risk but could deliver fair returns.  Deposits Investing in bank or post-office deposits is a very common way of securing surplus funds. These instruments are at the low end of the risk-return spectrum.  Cash equivalents These are relatively safe and highly liquid investment options. Treasury bills and money market funds are cash equivalents. 2) 3) Non-financial Instruments  Real estate With the ever-increasing cost of land, real estate has come up as a profitable investment proposition.  Gold The 'yellow metal' is a preferred investment option, particularly when markets are volatile. Today, beyond physical gold, a number of products which derive their value from the price of gold are available for investment. These include gold futures and gold exchange traded funds.  Other Commodities Other than gold other commodities are also traded. Some of them are silver, crude oil, agricultural commodities and other base metals
  4. 4. SECTION II MARKET In economics, typically, the term market means the aggregate of possible buyers and sellers of a thing and the transactions between them. Financial markets are an important component of a financial system in an economy. Financial system aims at establishing regular, smooth, efficient and cost effective link between savers and investors so it helps encouraging both saving and investment. Financial systems facilitate expansion of financial market over space and time and promote efficient allocation of financial resources for socially desirable and economically productive purpose. The term "market" is sometimes used for what are more strictly exchanges, organizations that facilitate the trade in financial securities, e.g., a stock exchange or commodity exchange. Much trading of stocks takes place on an exchange; still, corporate actions (merger, spin-off) are outside an exchange, while any two companies or people, for whatever reason, may agree to sell stock from the one to the other without using an exchange. Types of Financial Market:- The financial markets can be divided into three parts  Money market  Capital market  Forex market FINANCIAL MARKETFINANCIAL MARKET MONEY MARKETMONEY MARKET FOREX MARKETFOREX MARKET CAPITAL MARKETCAPITAL MARKET
  5. 5. MONEY MARKET:- Money market is the market for short term financial assets which are near substitutes for money. Money markt instruments are liquid and can be turned over quickly at low transaction cost and without loss.The money market is a wholesale market. The volumes are very large and generally transactions are settled on daily bases. Trading in the money market is conducted over the telephone followed by written confirmation from both the borrowers and lenders. There are large numbers of participants in the money market : commercial banks, mutual funds, investment institutions, financial instutions and finally RBI. Money market performs the crucial role of providing an equilibrating mechanism to evenout short term liquidity and in the process, facilitating the conduct of monetary policy. Short term surpluses and deficits are evenedout. The money market is the major mechanism through which the reserve bank of india influences liquidity and the general level of interest rates. FOREX MARKET:- Eevey sovereign nation has its own currency. Theoretically the monetary unit of a country can be exchnged with any other currency of any other country. Most of the international financial transactions involve an exchange of one currency for another. The ratio in which they are exchanged, or prices in terms of each other are known as ‘exchange rate’. Countries when they trade with each other require money flows. Foreign exchange markets provides the mechanism for exchanging different monetary units for each other. Sometimes, nationals of one country may prefer to hold financial assets in a foregin or dominated in a foregin because-  Domestic currency may be subject to variable and high inflation, rendering it a poor store of value;  Foreign currency balance may reduce risks;  Foreign currency assets help hedge anticipated foreign currency liabilities. The efficiency of the internation financial system and its degree of integration with individual sovereign financial system depends to a large extent on how cheaply and quickly, foregin exchange transaction can be effected. CAPITAL MARKET:-
  6. 6. The capital markets consist of primary markets and secondary markets. Newly formed (issued) securities are bought or sold in primary markets. Secondary markets allow investors to sell securities that they hold or buy existing securities. Primary market:- The primary is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue to meet their requirements of investment and/or discharge some obligation. This is the market for new long term capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called New Issue Market (NIM). It facilitates direct conversion of savings into corporate investment or diversion of resources from the rest of the system to the corporate sector. Primary market deals in only new securities which acquire for the first time i.e. which were not available previously. They are offered to the investors for the first time. Features of primary market  In a primary issue, the securities are issued by the company directly to investors.  The company receives the money and issues new security certificates to the investors.  Primary issues are used by companies for the purpose of setting up new business or for expanding or modernizing the existing business.  The primary market performs the crucial function of facilitating capital formation in the economy.  The new issue market does not include certain other sources of new long term external finance, such as loans from financial institutions. Borrowers in the new issue market may CAPITAL MARKETCAPITAL MARKET PRIMARY MARKETPRIMARY MARKET SECONDARY MARKET SECONDARY MARKET
  7. 7. be raising capital for converting private capital into public capital; this is known as ‘going public’. Secondary Market:- The capital market apart from the primary market also includes the secondary market where “existing issues are traded”. These secondary market also referred to as stock markets predominantly deal in the stock or equity shares. They enable shareholders to sell their holdings readly thereby ensuring liquidity. Any trading of a share subsequent to its primary offering, is the secondry transection. The initial buyer (in the primary market) may reoffer the securities to an intrested buyer at a price which is mutually satisfectory. An active secondary market in fact promotes the growth of the primary market and aids capital formation. For the general investors, the secondary market provides an efficient platform for trading of a securities The indian security market, in the last decade, witnessed a significant transformation in the market design, to a paperless market characterised by a transparent screen-based trading system with complete restructuring of the trading, clearing and settelement infrastructure. The indian securities market has developed and grown voluminously on several counts such as the number of stock exchanges, intermediaries and institutional investors, the number of listed stock, market captilisation, trading volumes and turnover on stock exchanges. The two major stock exchange in india are BSE (Bombay Stock Exchange) and NSE (National Stock Exchange). Difference Between Primary Market And Secondary Market S.NO PRIMARY MARKET SECONDARY MARKET 1. Market for new securities. Market for existing securities. 2. No fixed geographical location. Located at a fixed place. 3. Results in raising fresh resources for the corporate sector. Facilitate transfer of securities from one corporate investor to another. 4. All companies enter primary market. Securities of only listed companies can be traded at stock exchanges.
  8. 8. 5. No tangible form or administrative setup. Recognised only by the service it renders. Has a definite administrative setup and a tangible form. 6. Subjected to outside control by SEBI, stock exchange and the companies act. Subjected to control both from within and outside. Relationship between Primary market and Secondary market  Securities traded at stock exchanges are those which have first been issued by the companies i.e. securities first pass through primary market and only thereafter enter the secondary market.  While issuing prospectus for fresh issue of capital, the companies stipulate in the prospectus that application has been made or will be made in due course for listing of shares with the stock exchanges.  Stock exchanges exercise significant control over the organisation of new issues to their regulatory framework as a precondition for listing of shares.  Stock exchanges provide liqudity to the securities which has pass through primary market.  A period of rising activity in stock exchanges is accompanied with higher activity in primary market resulting in large numder of seccessful issues a vice versa.  In a period of rising prices in stock exchanges premiums are high in primary market and oversubscription becomes a common phenomenon.
  9. 9. SECTION III INITIAL PUBLIC OFFER An initial public offer is the selling of securities to the public in the primary market. It is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. They are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded. A prospectus is issued to read about its risk before investing. IPO is a company's first sale of stock to the public. Investors purchasing stock in IPO’s generally must be prepared to accept very large risks for the possibility of large gains. Sometimes, just before the IPO is launched, existing shareholders get very liberal bonus issues as a reward for their faith in risking money when the project was new. Only those companies that have net worth of Rs25 crore can only issue IPO. Why does a company offer an IPO? One of the most common reasons companies offers IPO is to raise capital for the company. The main reason is because companies plan to use the money gathered from IPO to further expand their business or to increase their business operations. In general companies offer IPOs in order to raise money that they need for business expansion and new business opportunities. By offering shares to investors, a company stands to bring in a lot of money. They can use this money to grow their business. The more their business grows, in turn, the higher the share prices grow and the more money is generated by the investors purchasing shares. Unlike business loans, which need to be repaid with interest, IPOs do not have this disadvantage. It is investor who take the risk (although also a potential gain) buying shares. If the company looses money and they will not have to repay their investors, although investors, in general demand high accountability from a company they are buying stocks from.
  10. 10. Advantages of IPO The advantages of IPO are numerous. The companies are launching more and more IPOs to raise funds which are utilized for undertakings various projects including expansion plans. All types of companies with the idea of enhancing growth launch IPOs to generate funds to cater the requirements of capital for expansion, acquiring of capital instruments, undertaking new projects. IPO helps the company to create a public awareness about the company as these public offerings generate publicity by inducing their products to various investors.  The increase in the capital: - An IPO allows a company to raise funds for utilizing in various corporate operational purposes like acquisitions, mergers, working capital, research and development, expanding plant and equipment and marketing.  Liquidity: - The shares once traded have an assigned market value and can be resold. This is extremely helpful as the company provides the employees with stock incentive packages and the investors are provided with the option of trading their shares for a price.  Valuation: - The public trading of the shares determines a value for the company and sets a standard. This works in favor of the company as it is helpful in case the company is looking for acquisition or merger. It also provides the share holders of the company with the present value of the shares.  Increased wealth: - The founders of the companies have an affinity towards IPO as it can increase the wealth of the company, without dividing the authority as in case of partnership.  Low price: - Public issues provide an opportunity for picking up share at relatively low price. Newly formed companies usually offer their share for subscription at par value,
  11. 11. whereas existing companies price their new issues at level which are sometimes as much as 20 to 30 % lower than the market price of their existing shares. SECTION IV Intermediaries in Primary Market  Lead Manager/ Merchant Banker In the pre-issue process, the Lead Manager (LM) takes up the due diligence of company’s operations, management, business plans, legal etc. Other activities of the LM include drafting and design of Offer documents, Prospectus, statutory advertisements and memorandum containing salient features of the Prospectus. The BRLMs (book running lead managers) shall ensure compliance with stipulated requirements and completion of prescribed formalities with the Stock Exchanges, RoC and SEBI including finalization of Prospectus and RoC filing. Appointment of other intermediaries viz., Registrar(s), Printers, Advertising Agency and Bankers to the Offer is also included in the pre-issue processes. The LM also draws up the various marketing strategies for the issue. The post issue activities including management of escrow accounts, coordinate non-institutional allocation, intimation of allocation and dispatch of refunds to bidders etc are performed by the LM. The post Offer activities for the Offer will involve essential follow-up steps, which include the finalization of trading and dealing of instruments and dispatch of certificates and demat of delivery of shares, with the various agencies connected with the work such as the Registrar(s) to the Offer and Bankers to the Offer and the bank handling refund business. The merchant banker shall be responsible for ensuring that these agencies fulfill their functions and enable it to discharge this responsibility through suitable agreements with the Company.
  12. 12. Maximum number of lead manager The maximum number of lead manager to an issue depends on the size of the issue as detailed below: S. No Size Of Issue Maximum Number Of Lead Managers 1 Below Rs50 crore Two 2 From Rs50 crore to below Rs100 crore Three 3 From Rs100 crore to below Rs200 crore Four 4 From Rs200 crore to below Rs400 crore Five 5 Rs400 crore and above More than five with SEBI approval Responsibilities/ Obligations of Lead Manager/ Merchant Banker The LM has following responsibilities towards the issuing company, SEBI and his own profession:  Enter into a contract with the issuing company clearing specifying their mutual rights, obligation and liabilities relating to the issue.  Submit a copy of the above contract to SEBI at least one month before the opening of the issue for subscription. In case of more than one LM simultaneously submit a statement detailing their respective responsibilities.  Refuse acceptance of appointment as LM, if the issuing company is its associate.  Not to associate with a merchant banker who does not hold SEBI registration certificate.  Submit a Due Diligence Certificate to SEBI at least 2 weeks before the opening of the issue for subscription after verification of the contents of the prospectus.  Submit to SEBI various documents such as particulars of the issue, draft prospectus/ letter of offer and other literature to be circulated to the investors/ shareholders etc. at least 2 weeks before the date of filling them with the registrar of the companies and regional stock exchanges.  Ensure the modification and suggestion made by SEBI regarding above documents.  Submit complete particulars with SEBI within 15 days of the acquisition of securities of the company whose issue the merchant banker is managing.  Disclose to SEBI the following: a. Its responsibilities regarding the management of the issue.
  13. 13. b. Any change in the information previously furnished with SEBI having bearing on certificate of registration granted to it. c. Names and addresses of the company whose issue it has managed or has been associated with. d. Information regarding its activities as manager, underwriter, consultant or advisor to an issue.  Underwriters Sound origination services represent the first essential step, but, by it self, do not guarantee that issue will be successful, i.e., will get fully subscribe. In case the issue is not well received in the market, the plan of the company/ promoters receive a set back and all expenses incurred in origination get wasted. To insure success of an issue the company/ promoters get the issue underwritten. Underwriter guarantees that he would buy the portion of issue not subscribe by the public. Such service is called underwriting and is always rendered for a commission. Underwriting guarantees success of the issue and benefits of the issuing company. An underwriter to the issue could be a banker, broker, merchant or a financial institution. Suppose there is an issue is for Rs. 100crore and subscription are received only for Rs80 crore. It is then left to the underwriters to pick up the balance Rs20 crore. If underwriters don’t pay up, SEBI will cancel their licenses. Agreement between Underwriter and Client Company There has to be an agreement between underwriter and the issuing company. Among other relevant matters, the agreement specifically includes the following:  The period during which the agreement will remain in force  The amount of underwriting obligation  The maximum period within which the underwriter will have to subscribe to the offer after being intimated by or on behalf of the issuing company  The rate and amount of commission/ brokerage chargeable by the underwriter, within the limits imposed by the Companies Act.
  14. 14.  Any other details regarding the arrangements made by the underwriters for fulfilling the underwriting obligation.  Bankers to an Issue Bankers to an issue help functioning in primary market by engaging in activities of acceptance of applications for shares/ debentures along with application money from investors in respect of issue of securities and also refund of application money to the applicants whom securities could not be allotted. They perform this function for and on behalf of the company. Responsibilities/ Obligation of Bankers to an Issue Following are the major obligation of a banker to an issue:  An agreement with issuing company: Each banker to an issue has to enter into an agreement with the issuing company detailing the number and address of collection centers at which applications and application money are to be received, the fee for the services and other terms and conditions of the appointment.  Submission of daily Statement: Banker to an issue has to submit to the issuing company/ registrar to an issue a daily statement giving the details regarding the number of applications and the amount of money received from the investors.  Furnish information to SEBI: Bankers to an issue has to submit the following information to the SEBI: a. The detail of issues for which he has been engaged as a banker to an issue. b. The number of application and the details of application money received. c. The date wise detail when applications from investors were forwarded to the issuing company/ registrar to an issue. d. The date wise details of the amount of refund to the investors.  Inform SEBI about Disciplinary action by RBI: Banker to an issue is duty bound to inform SEBI about any RBI action taken against him regarding issue payment.  Maintain books and records: A banker to an issue has to maintain books of accounts, records and documents pertaining to all matters regarding which he may be required details to SEBI including name and addresses of the investors.  Follow the prescribed code of conduct:
  15. 15. a. Do not keep blank application forms bearing brokers stamp at the bank premises or at the entrance of the bank. b. Do not accept application after office hours or on bank holiday or after the date of the closure of issue. c. Do not act at any time in collusion with other agents in a manner detrimental to the interest of small investors. d. Abide by all acts, rules, regulations, notifications, directions, circular, instruction and guidelines issued by the government, RBI, Indian Bank Association and SEBI which are relevant to his operations as banker to an issue.  Broker to the Issue Brokers arrange procurement of subscription to the issue from the prospective investor. They keep regular contact with the investing public and render great help in broad basing the issue. The appointment of the broker is not compulsory. There is also no restriction on the number of brokers to be appointed by a company. Members of stock exchanges cannot act as managers or brokers to an issue nor can they make any preliminary arrangements for floatation of an issue unless:  Stock exchange of which they are members gives its approval  The issuing company abides by the prescribed listing requirements and also undertakes to get its securities listed on a recognized stock exchange. Registrar to an issue and share transfer agents:  Registrar to an issue: Registrar to an issue is also an intermediary market and performs the following function: a. Collect application from investors and keep a proper record of applications and moneys received from investors. b. Assist issuing companies in determining the basis of allotment of securities as per stock exchange guidelines and in consultation with stock exchange.
  16. 16. c. Assist in finalizing allotment of securities and processing and dispatching allotment letters d. Assist in processing and dispatching refund order, share and debenture certificate and other documents related to the capital issue e. They can also function as Depository Participants.  Share Transfer Agent: Share transfer agent performs the following functions: a. Maintain records of holder of securities of the company for and on behalf of the company b. Handle all matters related to transfer and redemption of securities of the company. c. They also function as Depository Participants.
  17. 17. SECTION V Types of Issue
  18. 18.  Fixed price An issuer company is allowed to freely price the issue. The basis of issue price is disclosed in the offer document where the issuer discloses in detail about the qualitative and quantitative factors justifying the issue price. The Issuer company can mention a price band of 20% (cap in the price band should not be more than 20% of the floor price) in the Draft offer documents filed with BOOK BUILDING BOOK BUILDING STOCK OPTIONSTOCK OPTION RIGHT ISSUERIGHT ISSUE PLACEMENT OF SECURITIES PLACEMENT OF SECURITIES OFFER FOR SALE OFFER FOR SALE FIXED PRICEFIXED PRICE TYPES OF ISSUE TYPES OF ISSUE
  19. 19. SEBI and actual price can be determined at a later date before filing of the final offer document with SEBI/ ROCs. In fixed price method the offer price of share is decided by the company in consultation with the lead manager much before the issue actually opens. The price at which securities will be allotted is known in advance to investors.  Offer for Sale Under this method the company does not directly offer its shares to the public, but through intermediaries, such as, issuing houses or firms of stock brokers. A prospectus with prescribed minimum contents is distributed to applicants on a non discriminatory basis. The issue is also underwritten to avoid the possibility of the issue largely remaining with the issue houses. Sale of securities, in this case is done in two stages. In the first stage, the issuing company makes an en bloc sale of securities to the issue house or stock brokers at an agreed fixed price. The second stage involves re-sale of these securities by issue houses or stock brokers to ultimate investors at a higher price.  Placement of Securities Under this method the securities are acquired by the issuing houses directly from the issuing company at an agreed price, and than these are placed only with their investor-clients, both individual and institutional investors at a higher price. The difference represents their remuneration out of which they bear various expenses relating to placement. And this case no underwriting is required as issue houses guarantee cent percent placement. However, sometimes, though rarely, issue houses may agree to arrange placement of shares for a fee. In this case they act only as an agent of the issuing company. Placing of unquoted securities is called private placing, an of newly quoted securities is called stock exchange placing.  Right Issue A fresh issue of shares by an existing company to which existing shareholders in proportion to the number of share already held by them is called right issue. Rules regarding right issue are:
  20. 20.  Only a company whose shares are already listed can make right issue.  The right issue is made by issuing circular to all existing shareholders.  Right issue is offered on pro rata basis.  Each existing shareholder has an option either to subscribe to it or renounce it in favour of his/ her nominee, or surrender the right.  If a company has to increase its subscribe capital after two years of its formation or after one year of its first issue of its shares, whichever is earlier, it has to raise it through a right issue, unless this requirement is dispensed with by a special resolution.  Stock Option Stock option or Employees Stock Option Scheme (ESOP) is a voluntary scheme of the part of the company to encourage employees’ participation in the company. The scheme also offers an incentive to employee to stay in the company. The scheme is particularly useful in case of companies whose business activity is dominantly based on the talent of the employees.  Book Building Method Book building is a method of issuing/offering shares to investors in which the price at which the shares are issued is discovered through a bidding process. In book built IPO the bidders (i.e., potential investors) have the flexibility to bid for shares at the price they are willingly to pay. Book building is a method of issue of shares based on float price/price band which is indicated before the opening of the bidding process. The issue price is fixed after the bid close date. Under book building scheme the issuer company does not directly issue shares to the public but invites bids from the merchant bankers to take a full responsibility for the issue. One of the lead merchant bankers to the issue is nominated by the issuer company as book runner at an agreed price. Under the book building method, share prices are determined on the basis of real demand for the shares at various price levels in the market. For discovering the price at which issue should be made, bids are invited from prospective investors from which level of demand at various price level are noted. These bids could be quoted at a difference of Rs1
  21. 21. In case the issuer chooses to issue securities through the book building route then as per SEBI guidelines, an issuer company can issue securities in the following manner: a. 100% of the net offer to the public through the book building route. b. 75% of the net offer to the public through the book building process and 25% through the fixed price portion. c. Under the 90% scheme, this percentage would be 90 and 10 respectively. Book Building Process  The Issuer who is planning an IPO nominates a lead merchant banker as a 'book runner'. The bank or financial institution which takes overall control of structuring, pricing and inviting other underwriters into a dept or equity issue.  Appointment of other intermediaries with consultation with book runner ♦ Underwriters
  22. 22. ♦ Registrar to an issue ♦ Bankers to an issue ♦ Printers ♦ Advertising agency  The Issuer specifies the number of securities to be issued and the price band for orders.  The Issuer also appoints syndicate members Syndicate member should be member of NSE or Over The Counter Exchange Of India (OTCEI)  Issues the Draft Prospectus with consultation of book runner (containing all mandatory disclosure other than price)  Draft Prospectus is filled with SEBI 21 days prior filling it with ROC and stock exchanges. SEBI may specifies changes, if any, in the Draft Offer Document and the issuer or the Lead Merchant banker shall carry out such changes in the draft offer document before filling the Offer Document with ROC/ stock exchanges.  “Red Herring Prospectus” is issued which does not have details of either price or number of shares being offered or amount of sale.  The investors approach syndicate members to get their demand registered indicating the number of shares demanded and the prices offered.  Investors have to submit the bid-cum-application form, containing the investors’ price and volume options, to syndicate member, who have an electronically linked platform across the country. The electronic system of BSE and NSE are used for the purpose.  Syndicate member inputs the bid into the 'electronic book', then it is uploaded on BSE and NSE system. This process is called 'bidding' and is similar to open auction.  Transfer of funds to Escrow accounts – a third party account which holds money safely while a sale is in progress.  A Book should remain open for a minimum of 5 days.  Bids cannot be entered less than the floor price.  Bids can be revised by the bidder before the issue closes.  On the close of the book building period the 'book runner evaluates the bids on the basis of the evaluation criteria which may include - o Price Aggression o Investor quality o Earliness of bids, etc.
  23. 23.  The book runner and the company conclude the final price (cutoff price) at which it is willing to issue the stock and allocation of securities.  Generally, the numbers of shares are fixed; the issue size gets frozen based on the price per share discovered through the book building process.  Allocation of securities is made to the successful bidders. After the closure of the issue, the bids received are aggregated under different categories i.e., firm allotment, Qualified Institutional Buyers (QIBs), Non Institutional Buyers (NIBs), Retail Investors.  Crediting Demat account  Refund to refuse applicant by BRLM.  The listing on stock exchanges is done within 7 days from the finalization of the issue. Ideally, it would be around 3 weeks after the closure of the book built issue. In case of fixed price issue, it would be around 37 days after closure of the issue.  Book Building is a good concept and represents a capital market which is in the process of maturing. Open and Close book building In book-built issues, it is mandatory to have an online display of the demand and bids during the bidding period. This is known as open book system. Under closed book building, the book is not made public and the bidders have to take a call on the price at which they intend to make a bid without having any information on the bids submitted by other bidders. Red Herring Prospectus:- The most important and time-consuming task facing the IPO team is the development of the prospectus, a business document that basically serves as a brochure for the company. The prospectus includes all financial data for a company for the past five years, information on the management team, and a description of a company's target market, competitors, and growth strategy. There is a lot of important information in the prospectus, and the underwriting team must make sure it is accurate. Every company intending to bring an IPO necessarily submits a document with SEBI. This is known as Red Herring Prospectus. It contains all the information and the factors which can influence the decision of an investor. Prospectus contains information relating to  Company’s name and address of its registered office
  24. 24.  Names and address of the company’s promoters, managing director, directors, company secretary, legal advisers, auditors, bankers, brokers etc.  The date of opening and closing subscription list  The name and address of underwriters, the amount underwritten and underwriting commission  Material details regarding the project, i.e., location, plant and machinery, technology, collaboration, infrastructure facilities etc.  Nature of product, marketing set-up, export potentials and obligations  Past performance and future prospects  Credit rating obtained from CRISIL or any other recognize rating agency  A statement that the company will make an application to specified stock exchange(s) for listing of securities; and soon The director, promoters and experts can be held liable, both under civil law and under criminal law, for any misrepresentation in the prospectus or any material omission. Price band The offer document may have a floor price for the securities or a price band within which the investors can bid. The spread between the floor and the cap of the price band can not be more than 20%. In other words, it means that the cap should not be more than 120% of the floor price. The company decides the price band in consultation with the investment bankers, and typically after undertaking a pre-marketing exercise with some leading QIBs. The price band can have a revision. SEBI requires that any revision in the price band has to be widely disseminated by informing the stock exchanges, by issuing press release and also indicating the change on the relevant website and the terminals of the syndicate members. When the price band is revised, the bidding period has to be extended for a further period of three days, subject to the total bidding period not exceeding thirteen days. Floor price Floor price is the minimum price at which bids can be made.
  25. 25. Cut-off price In Book building issue, the issuer is required to indicate either the price band or a floor price in the red herring prospectus. The actual discovered issue price can be any price in the price band or any price above the floor price. This issue price is called “Cut off price”. This is decided by the issuer and LM after considering the book and investors’ appetite for the stock. SEBI (DIP) guidelines permit only retail individual investors to have an option of applying at cut off price. Categories of Investors In any IPO there are three categories of investor to whom shares are offered for subscription. QIB (Qualified institutional buyers): Institutions like banks, mutual funds, FII. At least 50% of the shares are reserved for this category. NIB (Non institutional bidders): individual investors who apply for more than one lac rupees. Retail Investors: Individual investors who apply for less than one lac rupees. At least 25% is reserved for this category. The bids are first allotted to the different categories and the over-subscription (more shares applied for than the shares available) in each category is determined. Retail investors and high net worth individuals get allotments on a proportional basis. Assuming you are a retail investor and have applied for 200 shares in the issue, and the issue is over-subscribed five times in the retail category, you qualify to get 40 shares (200 shares/5). Sometimes, the over-subscription is huge or the issue is priced so high that you can't really bid for too many shares before the Rs50,000 limit is reached. In such cases, allotments are made on the basis of a lottery. Say a retail investor has applied for 5 shares in an issue, and the retail category has been over- subscribed 10 times, the investor is entitled to half a share. Since that isn't possible, it may then be decided that every 1 in 2 retail investors will get allotment. The investors are then selected by lottery and the issue allotted on a proportional basis among. That is why there is no way you can be sure of getting an allotment. In its recent amendments, SEBI has reduced the allocation of equity to Qualified Institutional Buyers (QIBs), which includes financial Institutions, banks and the newly added insurance
  26. 26. companies, and increased the share of retail investors. Prior to the amendments, QIB's could be allotted 'upto 60%' shares, which now stands reduced to 'upto 50%'. Also, another change was the definition of retail investors, which previously meant those investors who bid for less than 1,000 shares. However, the definition now stands changed to an investor who bids for shares less than worth Rs 50,000. Earlier norms… New norms… SHAPE * MERGEFORMAT Undersubscribed:- A situation in which the demand for an initial public offering of securities is less than the number of shares issued. Also known as an "underbooking". Oversubscribed:- A situation in which the demand for an initial public offering of securities exceeds the number of shares issued. Fully Subscribed:- A situation in which an underwriting firm has successfully sold to investors all of its available issues of a public offering of securities. When the issue is fully subscribed, the underwriter's risk of being undersubscribed (being unable to sell its allotment of the issue) is completely removed. Also referred to in slang terms as "pot is clean". Unsubscribed:-
  27. 27. Newly issued securities that have not seen much interest, or subscriptions, from investors ahead of the issue date or have not been offered by brokerages. If you wanted to own the newly issued shares, you'd only be able to purchase them as you would any other stock - through the secondary markets. SECTION VI SEBI’s Guidelines for IPO 1. IPOs of small companies Public issue of less than five crores has to be through OTCEI and separate guidelines apply for floating and listing of these issues. 2. Size of the Public Issue Issue of shares to general public cannot be less than 25% of the total issue, incase of information technology, media and telecommunication sectors this stipulation is reduced subject to the conditions that:  Offer to the public is not less than 10% of the securities issued.  A minimum number of 20 lakh securities is offered to the public and  Size of the net offer to the public is not less than Rs. 30 crores. 3. Promoter Contribution  Promoters should bring in their contribution including premium fully before the issue  Minimum Promoters contribution is 20-25% of the public issue.  Minimum Lock in period for promoters contribution is five years  Minimum lock in period for firm allotments is three years. 4. Collection centers for receiving applications  There should be at least 30 mandatory collection centers, which should include invariably the places where stock exchanges have been established.  For issues not exceeding Rs.10 crores (including premium, if any), the collection centers shall be situated at:-
  28. 28. The four metropolitan centers viz. Mumbai, Delhi, Calcutta, Chennai; and at all such centers where stock exchanges are located in the region in which the registered office of the company is situated. 5. Regarding allotment of shares  Net Offer to the General Public has to be at least 25% of the Total Issue Size for listing on a Stock exchange.  It is mandatory for a company to get its shares listed at the regional stock exchange where the registered office of the issuer is located.  In an Issue of more than Rs. 25 crores the issuer is allowed to place the whole issue by book- building  Minimum of 50% of the Net offer to the Public has to be reserved for Investors applying for less than 1000 shares.  There should be at least 5 investors for every 1 lakh of equity offered (not applicable to infrastructure companies).  Quoting of Permanent Account Number or GIR No. in application for allotment of securities is compulsory where monetary value of Investment is Rs.50,000/- or above.  Indian development financial institutions and Mutual Fund can be allotted securities upto 75% of the Issue Amount.  A Venture Capital Fund shall not be entitled to get its securities listed on any stock exchange till the expiry of 3 years from the date of issuance of securities.  Allotment to categories of FIIs and NRIs/OCBs is upto a maximum of 24%, which can be further extended to 30% by an application to the RBI - supported by a resolution passed in the General Meeting. 6. Timeframes for the Issue and Post- Issue formalities  The minimum period for which a public issue has to be kept open is 3 working days and the maximum for which it can be kept open is 10 working days. The minimum period for a rights issue is 15 working days and the maximum is 60 working days.  A public issue is effected if the issue is able to procure 90% of the Total issue size within 60 days from the date of earliest closure of the Public Issue. In case of over-subscription the company may have the right to retain the excess application money and allot shares more than the proposed issue, which is referred to as the ‘green-shoe’ option.
  29. 29.  A rights issue has to procure 90% subscription in 60 days of the opening of the issue.  Allotment has to be made within 30 days of the closure of the Public Issue and 42 days in case of a Rights issue.  All the listing formalities for a public Issue has to be completed within 70 days from the date of closure of the subscription list. 7. Dispatch of Refund Orders  Refund orders have to be dispatched within 30 days of the closure of the Public Issue.  Refunds of excess application money i.e. for un-allotted shares have to be made within 30 days of the closure of the Public Issue. 8. Other regulations pertaining to IPO  Underwriting is not mandatory but 90% subscription is mandatory for each issue of capital to public unless it is disinvestment in which case it is not applicable.  If the issue is undersubscribed then the collected amount should be returned back (not valid for disinvestment issues).  If the issue size is more than Rs. 500 crores voluntary disclosures should be made regarding the deployment of the funds and an adequate monitoring mechanism to be put in place to ensure compliance.  There should not be any outstanding warrants or financial instruments of any other nature, at the time of initial public offer.  In the event of the initial public offer being at a premium, and if the rights under warrants or other instruments have been exercised within the twelve months prior to such offer, the resultant shares will not be taken into account for reckoning the minimum promoter's contribution and further, the same will also be subject to lock-in.  Code of advertisement specified by SEBI should be adhered to.  Draft prospectus submitted to SEBI should also be submitted simultaneously to all stock exchanges where it is proposed to be listed. 9. Restrictions on other allotments  Firm allotments to mutual funds, FIIs and employees not subject to any lock-in period.  Within twelve months of the public/rights issue no bonus issue should be made.  Maximum percentage of shares, which can be distributed to employees cannot be more than 5% and maximum shares to be allotted to each employee cannot be more than 200.
  30. 30. 10. Relaxations to public issues by infrastructure companies. These relaxations would be applicable to Infrastructure Companies as defined under Section10(23G) of the Income Tax Act, 1961, provided their projects are appraised by any Developmental Financial Institution (DFI) or IDFC or IL&FS. The projects must also have a participation of at least 5% of the project cost (in debt and/or equity) by the appraising institution.  The infrastructure companies will be exempted from the requirement of making a minimum public offer of 25 per cent of its securities.  The requirement of 5 shareholders per Rs. 1 lakh of offer is also waived in case of offerings by infrastructure companies.  For public issues by infrastructure companies, minimum subscription of 90% would no longer be mandatory provided disclosure is made about the alternate source of funding which the company has considered, in the event of under subscription in the public issue.  Infrastructure companies are permitted to freely price the offerings in the domestic market provided that the promoter companies along with Equipment Suppliers and other strategic investors subscribe to 50% of the equity at the same or a higher price than what is being offered to the public. Adequate disclosures about the justification for the pricing will be required to be made in the offer documents.  The Infrastructure Companies would be allowed to keep their issues open for 21 days. The relaxation would give infrastructure companies sufficient time to mobilise funds for their issues.  Infrastructure Companies would not be required to create and maintain a Debenture Redemption Reserve (DRR) in case of Debenture Issues. Largest IPO in India The Largest IPO in India, as per records till January 2008, is the Reliance Power IPO. It was issued by the Reliance Power Limited Company. Reliance Power IPO was issued on 15th January, 2008 and closed on 18th January, 2008. The issue comprised of 26 crores of equity shares which were worth around US $3 billion. The company Reliance Power Limited had fixed the price band of Reliance Power IPO between Rs. 405 and Rs. 450 for each share. Majority of the bids for the Initial Public Offering (IPO) of Reliance Power came at the higher end of the price band that is Rs. 450 and this helped to make it the Largest IPO in India.
  31. 31. The response to Reliance Power IPO by the investors was excellent for the issue got subscribed fully within a minute of its opening on 15th January, 2008. By the time bidding closed for Reliance Power IPO on 18th January, 2008, it had been subscribed 52 times and had received a commitment of around Rs. 145,080 crores. This huge response to the issue of Reliance Power IPO made it the Largest IPO in India till then. The total proceeds from Reliance Power IPO are estimated to be around Rs. 11,700 crores. JM Financial, JP Morgan, Deutsche Equities, Enam Securities, Kotak Mahindra Capital, ABN AMRO, ICICI Securities and UBS are the lead managers of Reliance Power IPO. The company Reliance Power Limited plans to use the proceeds from the IPO to set up power plants all over India. Disadvantages of IPO It is true that IPO raises huge capital for the issuing company. But, in order to launch an Initial Public Offering (IPO), it is also necessary to make certain investments. Setting up an IPO does not always lead to an improvement in the economic performance of the company. A continuing expenditure has to be incurred after the setting up of an IPO by the parent company. A lot of expenses have to be incurred in the form of legal fees, printing costs and accounting fees, which are connected to the registering of an IPO. Apart from such enormous costs, there are other factors as well that should be taken into consideration by the company while introducing an IPO. Such factors include the rules and regulations involved to set up public offerings and this entire process on the other hand involve a number of complexities which sometime require the services of experts in relevant fields. Some companies hire experts to do the needful to ensure a hassle- free execution of the task. After the IPO is introduced, the expenses become a routine in every activity involved. Besides, the CEO of the company would have to spend a lot of time in handling it or sometimes he hires experts to do the same. All these aspects, if not handled with efficiency, prove to be some major drawbacks related to the launch of IPOs. The launch of IPO also brings about shareholders of the company. Shareholders have ownership in the company. The primary owners of the company or the people holding maximum authority in the company cannot take decisions all by themselves once an IPO has been launched and shareholders have been formed. The shareholders have an active participation in every decision
  32. 32. that is being taken even if they do not hold 50 percent share of the company. They have their individual demands to be met as they own a certain percentage of stakes in the company. A major risk with shareholders is that, they can sell off their stocks any time they want, in case they see the price band of the stakes of that company is going down. This will lead to a further drop of the value of shares in the market which in turn will decrease the overall value of the company. 7 Steps for companies for success of its IPO With IPO being the buzzword in the industry sector, following the seven steps would ensure a smooth climb up the IPO ladder when an Initial Public Offering (IPO) comes in for funding ambitious, gigantic projects. . However, going for an IPO is definitely not easy. An industry expert cautions, "The right recipe is to go step by step with each step dependent on the other. If you miss out one step the whole structure will crumble." Making an IPO involves immense research, planning and strategizing. One must bear in mind that here the ownership and management of the organization is not just focused on a particular person(s), but instead distributed and diluted on a larger scale and hence the stakes are automatically higher. So, an error even on a miniscule level can have drastic repercussions. 1. Choosing the Perfect Time Before even plunging into the intricacies of the pre-IPO arrangements, choosing the ideal time to go public is of core importance. The timing of going public is very crucial in the pre-IPO process. One should look into many aspects before the plunge—like looking into the prevailing market sentiment. In the 1980's and early 1990's when branding and marketing were non-existent, liquidity in the market, behavior of the secondary market and merchant bankers' advice were instrumental in deciding the right time for the IPO. 2. Choosing the Right Team
  33. 33. Forming the right team is essential before going for an IPO. Apart from the Chief Executive Officer (CEO) or the Chairman, the main members are the Chief Financial Officer (CFO), Chief Operating Officer (COO), the Company Secretary, the auditors, professional merchant bankers, and the Chief Information Officer (CIO) in the current age of information and legal advisors. It is very important for the board of directors involved in the venture to have a progressive outlook. Only an intelligent team can contribute to the success of the venture. Team building and the professional team that you bring in is very important. You should be very careful not only about land and equipment but also while deploying money and manpower. Apart from the CFO and the Company Secretary, choosing appropriate auditors makes a world of difference. Unlike other members of the team, the auditor has the additional job of assessing whether the entire accounting system is in order, is transparent and analyzing whether the numbers and projections as shown in the Excel sheet are realistic and practical. If you have a good auditor, half your battle is won. In fact, one should employ auditors at least one or two years before the IPO is launched. When the company goes public, it must make a note of disclosures about the company operations and past records. It can't afford to make any observations which are incorrect or not backed by strong evidence. You should have a team who can strategies and can plan the inflow and outflow of resources and money. 3. Definite Goals and Purposes A company should be focused and clear about the purpose of the IPO. Usually, the purpose behind making an IPO is to accumulate funds and finances for expansion and investments and above all woo the investors and consolidate as a brand. This requires a purely corporate structure. Currently, there are stringent SEBI guidelines to be followed before any company goes public. Keeping this in mind, the valuations which the company wishes to command will depend on the future goals and projects of the company, and the management team. Unless the management is fully sure of the ultimate goals, the company will not be able to come up with a high valuation for the proposed issue of shares. 4. Choosing the Right Merchant Bankers
  34. 34. The primary role of a merchant banker should be to act as a bridge between the organization and the investors. Firstly, the merchant banker should have a brand image in the market. A merchant banker should have the capability and the experience to handle a large-scale IPO. And they should be able to reach a larger mass of people because investors today are just not located in the metros but also in tier-II and tier-III cities." Simultaneously, they also chalk out the risk management strategies for the company since risks and ventures are two sides of the same coin. Hence a company should choose such a merchant banker who is just not professional but who understands the logistics and mechanics of the industry. Apart from being a link between the organization and the investors, a banker also has to generate interest and build up the confidence of the investors. 5. Capital Restructuring Companies should decide on the ways to deploy their capital, namely capital restructuring. Companies should be clear about the debt and equity ratio. This boils down to setting the ideal Debt-Equity Ratio (DER), which can vary from 1:1 to 2:2. "You have to work out your ratio according to the cash and the growth rate, so that they can accordingly structure their profits. In capital restructuring, you have to be sure of the DER maintained, what are the facilities you are planning to set up and what is the land value you are going to purchase. The way you are going to deploy your capital is also very important. You have to be very careful while deploying the resources and forecast the profit you will incur in three-four years' time." 6. Creating Investor Interest Confidence building and generating investor interest should be on the priority list for a company. A Company must project an image of transparency and good governance to the investors. Infosys should be the role model for all companies going in for an IPO. Many of the experts agree that IT giant Infosys is a role model because their balance sheet is very clear, they value their managers as assets and year after year they expand rapidly. A company is accountable to its investors, which is why when they go public they have to disclose company projections—past, present and future prospects. This is where the team of advisors, consultants and legal experts comes into the picture. IPO is all about building investors' confidence so we over perform to hike up investor confidence. If you raise the expectations and do not meet them, then investors will not excuse you for the next two-
  35. 35. three years. Infosys, for instance, follows this strategy and gets higher multiples because they understate their plans.The projections given to the public should be realistic. The excel sheet might project rosy details of growth, but if they do not live up to the expectations then public confidence is sure to plummet to the lowest level. 7. Media Campaigns A few years ago, marketing and media campaigns were considered a luxury, but today they are absolutely necessary. They contribute to the relative success of an IPO venture. The campaigns can be in the form of road shows and extensive investor meetings. They are required because the investors need to be made aware of the company and its past performances and any important projects undertaken/completed. During the campaigns, various facets related to company performance, the need to raise money and future plans are disclosed, information that investors seek. A successful media campaign ensures complete participation in the IPO by one and all. In fact, recently when a bigwig real estate company went public, a few crores went in media campaigns alone. However, there is no short cut to success. A step-by-step approach always pays in the end.
  36. 36. SECTION VII IPOs of 2008 S. No Company Issue Open Issue Close No. Of Bidding Centers Price Range Rs. Issue Price Rs. Issue Size (Lakh Shares) Listing At Date Of Listing At NSE 1 ALKALI METALS LIMITED IPO Oct 7, 2008 Oct 15, 2008 34 86/- to 103/- 103/- 25.5 NSE, BSE Nov 6, 2008 2 CHEMCEL BIOTECH LIMITED IPO Sep 9, 2008 Sep 12, 2008 16/- BSE 3 20 MICRONS LIMITED IPO Sep 08, 2008 Sep 11, 2008 58 Rs 50/- to Rs 55/- 55/- 43.50632 NSE, BSE Oct 6, 2008 4 RESURGERE MINES & MINERALS INDIA LIMITED IPO Aug 11, 2008 Aug 13, 2008 50 Rs 263/- to Rs 272/- 270/- 44.5 NSE, BSE Sep 1, 2008 5 AUSTRAL COKE & PROJECTS LTD IPO Aug 07, 2008 Aug 13, 2008 65 Rs 164/- to Rs 196/- 196/- 72.6 NSE, BSE Sep 4, 2008 6 NU TEK INDIA LIMITED IPO Jul 29, 2008 Aug 1, 2008 56 Rs 170/- to Rs 192/- 192/- 45 NSE, BSE Aug 27, 2008 7 VISHAL INFORMATION TECHNOLOGIES LTD IPO Jul 21, 2008 Jul 24, 2008 49 Rs 140/- to Rs 150/- 150/- 27.9 NSE, BSE Aug 11,2008 8 BIRLA COTSYN (INDIA) LIMITED IPO Jun 30, 2008 Jul 09, 2008 60 Rs 12/- to Rs14/- 14/- (.) No of Equity Shares NSE, BSE Jul 30, 2008
  37. 37. aggregating to Rs. 10,753 Lakhs excluding Promoter Contribution of Rs 3665 Lacs 9 KSK ENERGY VENTURES LIMITED IPO Jun 23, 2008 Jun 25, 2008 60 Rs 240/- to Rs 255/- 240/- 346.11 NSE, BSE Jul 14, 2008 10 SOMI CONVEYOR BELTINGS LIMITED IPO Jun 24, 2008 Jun 27, 2008 Rs 35/- BSE 11 LOTUS EYE CARE HOSPITAL LIMITED IPO Jun 12, 2008 Jun 20, 2008 48 Rs36/- to Rs38/- 38/- 100 NSE, BSE Jul 11, 2008 12 ARCHIDPLY INDUSTRIES LIMITED IPO Jun 11, 2008 Jun 17, 2008 56 Rs70/- to Rs80/- 74/- 66.1572 NSE, BSE Jul 4, 2008 13 FIRST WINNER INDUSTRIES LTD IPO Jun 09, 2008 Jun 17, 2008 48 Rs115/-to Rs125/- 125/- 55 NSE, BSE Jul 8, 2008 14 SEJAL ARCHITECTURAL GLASS LTD IPO Jun 09, 2008 Jun 12, 2008 58 Rs 105/- to Rs 115/- 115/- 91.94155 NSE, BSE Jul 1, 2008 15 AVON WEIGHING SYSTEMS LTD IPO Jun 09, 2008 Jun 12, 2008 Rs 10/- BSE 16 BAFNA PHARMACEUTICALS LTD IPO May 27, 2008 May 30, 2008 Rs 40/- BSE 17 NIRAJ CEMENT STRUCTURAL LTD IPO May 22, 2008 May 28, 2008 59 Rs 175/- to Rs 190/- 190/- 32.5 BSE 18 ANU'S LABORATORIES LIMITED IPO May 12, 2008 May 15, 2008 52 Rs 200/- to Rs 210/- 210/- 38.2 BSE 19 GOKUL REFOILS AND SOLVENT LIMITED IPO May 08, 2008 May 13, 2008 52 Rs 175/- to Rs 195/- 195/- 71.58392 NSE, BSE Jun 4, 2008
  38. 38. 20 AISHWARYA TELECOM LIMITED IPO Apr 15, 2008 Apr 17, 2008 64 Rs 32/- to Rs 35/- 35/- 40 NSE, BSE 21 TITAGARH WAGONS LIMITED IPO Mar 24, 2008 Mar 27, 2008 50 Rs 540/- to Rs 610/- 540/- 23.83768 NSE, BSE Apr 21, 2008 22 KIRI DYES AND CHEMICALS LTD IPO Mar 25, 2008 Apr 02, 2008 53 Rs 125/- to Rs 150/- 150/- 37.5 NSE, BSE Apr 22, 2008 23 SITA SHREE FOOD PRODUCTS LTD IPO Mar 11, 2008 Mar 14, 2008 48 Rs 27/- to Rs 30/- 30/- (.) Equity Shares aggregating Rs. 315 million NSE, BSE Apr 7, 2008 24 GAMMON INFRASTRUCTURE PROJECTS LTD IPO Mar 10, 2008 Mar 13, 2008 48 Rs 167/- to Rs 200/- 167/- 165.5 NSE, BSE Apr 3, 2008 25 RURAL ELECTRIFICATION CORPORATION LTD IPO Feb 19, 2008 Feb 22, 2008 57 Rs 90/- to Rs 105/- 105/- 1561.2 NSE, BSE Mar 12, 2008 26 V-GUARD INDUSTRIES LIMITED IPO Feb 18, 2008 Feb 21, 2008 60 Rs 80/- to Rs 85/- 82/- 80 NSE, BSE Mar 13, 2008 27 GSS AMERICA INFOTECH LTD IPO Feb 11, 2008 Feb 15, 2008 60 Rs 400/- to Rs 440/- 400/- 34.97495 NSE, BSE Mar 7, 2008 28 SVEC CONSTRUCTIONS LIMITED IPO Feb 04, 2008 Feb 13, 2008 50 Rs 80/- to Rs 90/- 40 NSE, BSE Issue withdrawn on 12th Feb 2008 29 EMAAR MGF LAND LIMITED IPO Feb 01, 2008 Feb 11, 2008 42 Rs 530/- to Rs 630/- 1025.70623 NSE, BSE Issue withdrawn on 8th Feb 2008 30 TULSI EXTRUSIONS LIMITED IPO Feb 01, 2008 Feb 05, 2008 63 Rs 80/- to Rs 85/- 85/- 57 NSE, BSE Feb 25, 2008 31 WOCKHARDT Jan 31, Feb 69 Rs 225/- 250.87097 NSE, Issue
  39. 39. HOSPITALS LIMITED IPO 2008 07, 2008 to Rs 260/- BSE withdrawn 32 MANJUSHREE EXTRUSION LIMITED FPO Jan 31, 2008 Feb 06, 2008 Rs 45/- BSE 33 IRB INFRASTRUCTURE DEVELOPERS LTD IPO Jan 31, 2008 Feb 05, 2008 58 Rs 185/- to Rs 220/- 185/- 510.57666 NSE, BSE Feb 25, 2008 34 SHRIRAM EPC LIMITED IPO Jan 29, 2008 Feb 01, 2008 48 Rs 290/- to Rs 330/- 300/- 50 NSE, BSE Feb 20,2008 35 BANG OVERSEAS LIMITED IPO Jan 28, 2008 Jan 31, 2008 56 Rs200/- to Rs207/- 207/- 35 NSE, BSE Feb 20, 2008 36 KNR CONSTRUCTIONS LIMITED IPO Jan 24, 2008 Jan 29, 2008 42 Rs170/- to Rs180/- 170 78.7457 NSE, BSE Feb 18, 2008 37 OnMobile Global Limited IPO Jan 24, 2008 Jan 29, 2008 48 Rs425/- to Rs450/- 440 109.00545 NSE, BSE Feb 19, 2008 38 CORDS CABLE INDUSTRIES LIMITED IPO Jan 21, 2008 Jan 24, 2008 57 Rs125/- to Rs135/- 135/- 30.85 NSE, BSE Feb 13, 2008 39 J. KUMAR INFRAPROJECTS LIMITED IPO Jan 18, 2008 Jan 23, 2008 49 Rs110/- to Rs120/- 110/- 65 NSE, BSE Feb 12, 2008 40 RELIANCE POWER LIMITED IPO Jan 15, 2008 Jan 18, 2008 128 Rs405/- to Rs450/- 450/- 2280 NSE, BSE Feb 11, 2008 41 FUTURE CAPITAL HOLDINGS LTD IPO Jan 11, 2008 Jan 16, 2008 59 Rs700/- to Rs 765/- 765/- 64.228 NSE, BSE Feb 1, 2008 IPO Rating / IPO Grading
  40. 40. IPO ratings and grading are among the few popular inputs investor's uses before applying in initial public offerings IPO. IPO Ratings are provided by various financial institutions & independent brokers. Few popular IPO Rating providers in India are Capital Market, Money Control, S P Tulsian's IPO recommendations etc. IPO Grading is provided by SEBI approved rating agencies including CRISIL, CARE and ICRA. IPO Grading is designed to provide investors an independent, reliable and consistent assessment of the fundamentals of new initial public offering. As IPO Grading is decided much earlier then the issue price or issue dates are finalize (usually on the IPO filing) and they just tell about the fundamentals of the company, investors should not consider them as 'Buy IPO' or 'Skip IPO' recommendations. S.NO COMPANY CRISIL / CARE / ICRA / FITCH IPO GRADING SCALE 1-5 1 ALKALI METALS LIMITED 2 2 CHEMCEL BIOTECH LIMITED 1 3 20 MICRONS LIMITED 3 4 RESURGERE MINES & MINERALS INDIA LIMITED 1 5 AUSTRAL COKE & PROJECTS LIMITED 2 6 NU TEK INDIA LIMITED 3 7 VISHAL INFORMATION TECHNOLOGIES LTD 3 8 BIRLA COTSYN (INDIA) LIMITED 3 9 KSK ENERGY VENTURES LIMITED 3 10 SOMI CONVEYOR BELTINGS 2