Crtical IPO Disclosures


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Disclosures required for IPO in company in Red herring prospectus as per SEBI's ICDR guidelines

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  • 1)Green Shoe option means an option of allocating shares in excess of the shares included in the public issue and operating a post-listing price stabilizing mechanism for a period not exceeding 30 days3)This is an arrangement wherein the issue would be over allotted to the extent of a maximum of 15% of the issue size4)stabilising agent would procure shares from the open market at the depressed prices, and sell them back to the issuer at the (higher) issue price.
  • sold 484 million shares of Facebook at $38 each. At the same time, they bought 421 million shares of Facebook from the company and its investors, at $37.582 each. The underwriter’s fee of 1.1% is the difference between those two numbers: if you buy at $37.582 and sell at $38, then you end up creaming off 1.1% of the total amount raised.
  • sold 484 million shares of Facebook at $38 each. At the same time, they bought 421 million shares of Facebook from the company and its investors, at $37.582 each. The underwriter’s fee of 1.1% is the difference between those two numbers: if you buy at $37.582 and sell at $38, then you end up creaming off 1.1% of the total amount raised.
  • IPO grade 1: Poor fundamentalsIPO grade 2: Below-average fundamentalsIPO grade 3: Average fundamentalsIPO grade 4: Above-average fundamentalsIPO grade 5: Strong fundamentals
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  • Crtical IPO Disclosures

    1. 1. Initial Public Offer (IPO)"offering" or "flotation” shares to the public for the first timeReason To Go For IPO to tap the public for funds Additional Capital resources for funding of projects/expansion plans. Liquidity for shareholders. Enhances corporate image thus providing visibility.
    2. 2. Key Terminologies Minimum Subscription Draft Offer Document Red Herring Prospectus Application Supported By Blocked Amount (ASBA)
    3. 3. Issue Open: Apr 24-26, 2012 May 16- May 18, 2012Issue Type: 100% Book Built 100% Book BuiltIssue Size: 16,666,667 11,739,415(Equity Shares of Rs. 10)Issue Size: Rs. 200.00 Crore Rs. 176.09 CroreIssue Price: Rs. 120 - Rs. 126 Rs. 146 - Rs. 155Market Lot: 45 Shares 40 SharesListing At: BSE, NSE BSE, NSE
    4. 4. (In Rs.) Number of Equity Shares Aggregate Value at Face Value Aggregate Value at Issue PriceA. AUTHORISED SHARE CAPITAL75,000,000 Equity Shares 750,000,000B. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL BEFORE THE ISSUE50,000,000 Equity Shares 500,000,000C. PRESENT ISSUE IN TERMS OF THIS PROSPECTUS16,666,667 Equity Shares 166,666,670 2,000,000,040D. EQUITY CAPITAL AFTER THE ISSUE66,666,667 Equity Shares 666,666,670E. SECURITIES PREMIUM ACCOUNTBefore the Issue Nil*After the Issue 1,833,333,370
    5. 5. (In Rs.) Number of Equity Shares Aggregate Value at Face Value Aggregate Value at Issue PriceA. AUTHORISED SHARE CAPITAL51,000,000 Equity Shares 5100000007,000,000 Preference Shares 70000000Total 580000000B. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL BEFORE THE ISSUE35,218,242 Equity Shares 352182420C. PRESENT ISSUE IN TERMS OF THIS PROSPECTUS11,739,415 Equity Shares 117394150 1760912250D. EQUITY CAPITAL AFTER THE ISSUE46,957,657 Equity Shares 469576570 7043648550E. SECURITIES PREMIUM ACCOUNTBefore the Issue 166542391After the Issue 1810060491
    6. 6. Basis Of Issue Price EPS pre-issue for the last three years P/E pre-issue average return on net worth in the last three years Net Asset Value per share Comparison with Industry and Peers
    7. 7. Qualitative Factors Long history and strong brand name Design, innovation and product range Experience in expanding retail store network In-house manufacturing Competitive advantage : diversified supplies base, centralised procurement; and experienced management
    8. 8. Quantitative Factors
    9. 9. Comparison with other listed companies
    10. 10. Qualitative Factors flagship brand, Mainland China Diversified business model Strategic locations Strong financial position and profitability Robust processes and scalable model
    11. 11. Quantitative FactorsNone of the listed companies in India are engaged exclusively in the fine diningrestaurant business
    12. 12. Disclosure :- Object of the issue FUNDS REQUIREMENT FUNDING PLAN
    13. 13. TBZ Specialty Restaurants To finance the establishment  Development of New Restaurants of new showrooms  Development of a food To finance incremental plaza working requirement  Repayment of portions of General Corporate Purposes term loan facilities  General corporate purposes
    14. 14. Issue Proceeds and Net proceeds Utilisation of the Net Proceeds
    15. 15. WORKING CAPITAL REQUIREMENT ( Rs in `million) (Rs in ` million) As at December 31, Particulars 2011 As at March 31, 2013I. Current Assets1. Inventories 5,078.28 7,000.642. Trade receivables 53.64 63.83. Cash and cash equivalents 192.01 127.64. Short-term loans and advances 61.16 191.45. Other current assets 44.53 -Total current assets (A) 5,429.62 7,383.45II. Current Liabilities (other than short term borrowings)1. Trade payables 1,141.02 -2. Other current liabilities 1,033.91 -3. Short-term provisions 193.14 -Total current liabilities other than short-termborrowings (B) 2,368.07 1,507.83III. Total Working Capital Requirements (A - B) 3,061.55 5,875.62IV. Funding Pattern1. Working capital funding from banks 1,908.23 2,490.072. Internal accruals 1,153.32 1,781.063. Part of the Net Proceeds - 1,604.49
    16. 16. Issue Proceeds and Net proceedsUtilisation of the Net Proceeds
    17. 17. Deployment of the Net Proceeds
    18. 18. Basis of Allotment Percentage of issue size and number of equity shares which are available for allotment to QIB’s, retail individual investors, and non institutional bidders For book building process • QIB- At least 50% of the Net Issue being allotted. However, up to 5% of the Net QIB Portion shall be available for allocation proportionately to Mutual Funds only • Non institutional bidders- Not less than 15% of the Net Issue or the Net Issue less allocation to QIBs and Retail Individual Bidders • Retail individual bidders- Not less than35% of the Net Issue or the Net Issue less allocation to QIBs and Non-Institutional Bidders
    19. 19. AllotmentRetail investors QIB 35% 50% Non Institutional Bidders 15%
    20. 20.  Public Issue of 16,666,667 Equity Shares • QIB-Not less than 8,333,333 Equity Shares (50% shall be allotted to QIB Bidders) • NIB- Not less than 2,777,778 or Issue less allocation to QIB Bidders and Retail Individual Bidders shall be available for allocation. (Not less than 15%) • Retail-Not less 5,555,556 Equity Shares or Issue less allocation to QIB Bidders and Non- Institutional Bidders shall be available for allocation. ( Not less than 35%)
    21. 21.  Public Issue of 11,739,415 Equity Shares • QIB-Not less than 5,869,707 Equity Shares (50% shall be allotted to QIB Bidders) • NIB- Not less than 1,760,912 or Issue less allocation to QIB Bidders and Retail Individual Bidders shall be available for allocation. (Not less than 15%) • Retail-Not less 4,108,796 Equity Shares or Issue less allocation to QIB Bidders and Non- Institutional Bidders shall be available for allocation. ( Not less than 35%)
    22. 22. Pricing Price Discovery Fixed Price Issue through Book building process•An issuer company is allowed to •Public Issue / Offer of securitiesfreely price the issue. through book building process is•Basis of issue disclosed after the designed to ascertain demand for theoffer document .( issuer discloses security at various prices within aqualitative and quantitative factors price-band to facilitate discovery ofto justify the issue price) the issue price.
    23. 23. Process Of Book Building Company plans an IPO via the Book-build route Appoints a Merchant Banker as book runner Issues a draft prospectus containing all mandatory company disclosures other than price Draft prospectus filed simultaneously with SEBIBook runner appoints syndicate members and registered intermediaries to garner subscription Price discovery begins through the bidding process At close of bidding, Book runner and company decide upon the allocation and allotment
    24. 24. 29Fixed Price V/S Book Building Offer / Allotment Price is  Only indicative Price Range is known by the investor in known to the Investor. advance.  Demand for the securities Demand for the securities offered can be known offered is known only after everyday as the book is built. the closure of the issue  Payment only after allocation Payment can be made at the time of subscription wherein refund is given after allocation 29
    25. 25. Pricing of the Issue Pricing of the Issue Speciality Restaurant Ltd. TBZ Price Band Price Band Rs. 146 to Rs. 155 per Equity Share Rs. 120 to Rs. 126 per Equity Share of face value of Rs. 10 each of face value of Rs. 10 each Book Running Lead Manager Book Running Lead Manager Kotak Mahindra Capital Company Limited IDFC Capital Limited Avendus Capital Private Limited
    26. 26. PROMOTERS’ CONTRIBUTIONTYPE OF ISSUE PROMOTER’S CONTRIBUTIONPublic Issue by Unlisted Companies Not less than 20% of the post issue capitalOffers for Sale Not less than 20% of the post issue capital Either to the extent of 20% of the proposedPublic Issues by Listed Companies issue or ensure post-issue shareholding to the extent of 20% of the post-issue capital At the option of the promoter(s) be either 20% of the proposed public issue or 20% of theComposite Issues post-issue capital.Issue of Convertible Security Not less than 20% of the post issue capital.
    27. 27. Securities Ineligible for Computation ofPromoters’ Contribution The promoters of any company making an issue of securities have acquired equity during the preceding three years – Not Eligible if  Shares issued for consideration other than cash  Shares resulting from bonus issue, out of revaluation reserves Securities acquired during preceding 1yr at a price lower than the price at which equity is being offered to public- Not Eligible  Accepted if difference is bought in by the Promoter• Shares had been acquired during the preceding one year at a price equal or higher than the offer price• It shall not apply to an unlisted government company In respect of companies formed by conversion of partnership
    28. 28. Exemption from Requirement ofPromoters’ Contribution Securities by a company which has been listed on a stock exchange for at least 3 years and has a track record of dividend payment for at least 3 immediately preceding years In case of companies where no identifiable promoter or promoter group exists.
    29. 29. Shareholding Pattern Speciality Restaurant Ltd. TBZ 93.20% 81% 100.00%90%80% 71% 61% 80.00%70%60% 60.00%50%40% 25% 40.00% 25% 19%30% 14% 5.40% 4% 20.00% 1.40%20%10% 0.00% 0% Pre Issue Post Issue Pre Issue Post Issue Promotors P/E Public Promotors P/E Public
    30. 30. LOCK-IN REQUIREMENTS LOCK-INTYPE PERIODMinimum Specified Promoters’ Contribution in PublicIssues 3 yearsExcess Promoters’ Contribution 1 yearPre-issue share capital of an unlisted company 1 yearSecurities issued on firm allotment basis 1 year
    31. 31. Lock-in RequirementsSpeciality Restaurant Ltd. TBZ
    32. 32. Networth 1800 1600 1400 1200 Axis Title 1000 800 600 400 200 0 2007 2008 2009 2010 2011 2012 ( 9 months) TBZ 2 61 515 685 1099 1606 Specialty 92 491 554 706 972 1126
    33. 33. Current RatiosYear TBZ Specialty Services2007 .93 2.172008 .92 1.892009 1.09 1.622010 1.07 1.882011 1.14 1.642012 ( 9 months) 1.23 1.41
    34. 34. Debt to Equity RatioYear TBZ Specialty2007 451 2.62008 21.3 .582009 3.4 .442010 2.8 .362011 1.9 .292012 ( 9 months) 1.3 .19
    35. 35. EPSYear TBZ Specialty Resturants2007 375 212008 375 29.72009 10.4 42.052010 16.95 74.52011 8.08 5.482012 ( 9 months) 11.4 4.9
    36. 36. P/E Ratio TBZ : 11 times at lower end & 12.47 times at upper end Specialty : 29.8 times at lower end 31.63 times at upper end
    37. 37. Minimum Subscription TBZ : 45 shares @ Rs 5670 Specialty : 40 shares @ Rs 6200
    38. 38. Green Shoe Option Meaning Time limit(30 days) Maximum Limit (15%) Reverse Green-Shoe Option
    39. 39. Process
    40. 40. Example of Green Shoe Option atWork
    41. 41. Outstanding Litigation Litigations against the issuer company or against any other company whose outcome could have a materially adverse effect of the position of the issuer company. Litigations in which the promoters are involved Litigations against the directors Proceedings initiated for economic offences against the issuer company, promoters, companies and firms promoted by the promoters or its directors Outstanding litigations pertaining to matters likely to affect operations and finances
    42. 42. Specialty Hotels Tribhuvandas Bhimji ZaveriNature of the No. of outstanding Aggregate Amount Nature of the No. of Aggregatelitigation litigations involved litigation outstanding Amount involved litigationsCivil Proceedings 3 165.8 Property 1 Unavailableand Notices proceedingsConsumer 2 2.00 Labour 1 UnavailableComplaints proceedingsIntellectual 7 1.60Property Related Tax Proceedings 4 54,22,704and NoticesTax Proceedings 32 20.32 Notices 24 1,17,93,443and notices Total 30 17,216,147Total 44 189.49
    43. 43. IPO Grading Mandatory for IPO(atleast one) Disclosure Expenses Incurred by unlisted Company Grades
    44. 44. Benefit for Investor Confidence Future Growth Disclaimer
    45. 45. IPO Rating IPO Grading1.Financial institutions & independent brokers 1.Provided by SEBI approved rating agencies 2. Ratings are decided to provide investors of various 2. IPO Grading is designed to provide investors anfinancial products reliable and consistent assessment. independent, reliable and consistent assessment of the fundamentals of IPO Issuer Companies3.Rating used for other other financial products like 3. Grading is a term that is used most often in respect to IPO’ funds, bonds besides IPOs4. Rating between 1-5 4. 1-1005. Money Control, S P Tulsians IPO recommendations 5.CRISIL, CARE and ICRA
    46. 46. Risk associated with the issue TBZ(internal risk) Speciality restaurant(internal risk) Two criminal cases pending.  General and industry-specific Decrease in value of gold and economic fluctuations could adversely affect their business, diamonds. financial condition, results of Our working capital loans on a operations and prospects. consolidated basis as at  Their inability to identify, open december31, 2011 were and operate new restaurant Rs.1,908.23 million, all of which locations profitably may was repayable on demand. adversely affect their business. The objects of the Issue for  Their use of imported foodstuffs which funds are being raised and equipment exposes them to have not been appraised by any the risk of the imposition or increase of tariffs, duties. bank or financial institution  Their agreement with Pepsi Foods Private Limited has expired.
    47. 47. Risk associated with the issueTBZ(external risk ) Speciality restaurant(external risk ) Change in policies(excise on  A slowdown in economic gold) growth in India could cause Any increases in interest rates their business to suffer. would have an adverse effect  Their ability to raise foreign on our results of operations. capital may be constrained by Indian law.
    48. 48. Management and other disclosure Board of Directors. Compensation of Managing Directors/ Whole time Directors. Shareholding of Directors, including details of qualification shares held by them. Change, if any, in the directors in last three years and reasons thereof, wherever applicable. Management Organization Structure. Details regarding Key Management Personnel.
    49. 49. Case study(TBZ) Changes in BOD in last 3 years Name Date of appointment Reason Kamlesh vikamsey August 26th,2010 Appointment Ajay mehta December 14th,2010 Appointment Sanjay asher December 14th,2010 Appointment Shareholding of Directors Name No. of equity shares held Shrikant zaveri 33,392,275 Binaisha zaveri 5,285,000 Raashi zaveri 4,572,500
    50. 50. Case study(speciality restaurants) Changes in BOD in last 3 years. Name of Director Number of Equity Shares held Anjan Chatterjee 16,529,905 Suchhanda Chatterjee 11,970,000 Indranil Ananda Chatterjee 19 Susim Mukul Datta Nil Tara Sankar Bhattacharya Nil Jyotin Mehta Nil Dushyant Rajnikant Mehta Nil Vishal Satinder Sood Nil
    51. 51. Shareholding of Directors.Name Date of Appointment/ Change/ Reason CessationPhiroz Savak Sadri August 18, 2009 ResignationDushyant Rajnikant Mehta August 18, 2009 AppointmentRavi Chandra Adusumalli December 17, 2009 ResignationVishal Satinder Sood December 17, 2009 AppointmentJayanta Chatterjee February 9, 2011 ResignationRajesh Dubey February 9, 2011 ResignationBiswajit Mukhopadhyay February 9, 2011 ResignationIndraneil Palit February 9, 2011 ResignationJyotin Mehta February 9, 2011 AppointmentTara Sankar Bhattacharya February 9, 2011 AppointmentSusim Mukul Datta February 9, 2011 Appointment
    52. 52. Response to the IPO Subscription Allocation price Return on Stock till Date
    53. 53. Bibliography