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Presentation on disclosure in IPO offer document--Case Study of Bharti Infra and V Mart Retail_March 18, 2013....Prepared by Shanmukh Dave

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PPT_disclosure in an IPO offer document_Case Study

  1. 1. Mumbai Education Trust (MET) The MET League of Colleges A Report on Critical Disclosure in Offer Document Case Studies of Bharti Infratel Limited and Presented by: V Mart Retail Limited Nitin Agarwal (61) Amit Chauhan(63) Shanmukh Dave (65) Laxmi Dodeja (69) Rupesh Gajare (71) Veena Jirafe (77) Yashashree Kokate (79) Bonnie Lobo (81) March 2013
  2. 2. Content 1. Objective & Our Approach to study 2. What is IPO and its purpose 3. IPO process - What process to be followed for floating an IPO of the company 4. Disclosures in Offer Document – what are the Guidelines of SEBI 5. Case Studies – analysis of 2 case studies 6. Recommendation and Conclusion – opportunities our opinion of these 2 case studies Questions & Answers - Discussion
  3. 3. Objective & our approach to study ● To make aware the intending investors about the procedure what has to be followed in the issue of securities for public subscription. ● To provide them the guidelines which are to be followed by companies in an IPO. ● To know the key terms and various stages in an IPO process. ● About the various parties involved along with the company for making an IPO. ● to look into the aspects of different companies which have come for an IPO recently along with their respective strengths and weakness. ● To know how the share are valued and the different methods of pricing them in an IPO. ● To know the various parties involved in an IPO and their respective formalities to be completed. ● To know the factors which can lead to success or failure of an IPO
  4. 4. What is an IPO and its purpose? Initial Public Offering, IPO, 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 Purpose ● Raising funds to finance capex programs like expansion, diversification, modernization ● Financing of increased working capital requirements ● Debt refinancing ● Financing acquisitions like a manufacturing unit, brand acquisition ● Exit route for existing investors
  5. 5. an IPO Governing Laws ● Before 1992, Public issues were governed by Chief Controller of Capital Issues (CCCI). ● In 1992, CCCI has been abolished and SEBI has been formed. ● Now IPO is governed by Followings: 1. The Companies Act 1956 2. SEBI (Disclosure & Investor Protection) Guidelines, 2000 3. Securities Contracts (Regulation) Act, 1956 4. Listing norms/Guidelines of NSE/BSE
  6. 6. Different Kinds of Issues Issues Public Rights Initial Public Offering Fresh Issue Offer For Sale Preferential Further Public Offering Fresh Issue Offer For Sale
  7. 7. IPO Process Flow chart of floating an IPO Listing and trading Pre-IPO Structuring Kick Off Meeting Due Diligence and Documentation Filing with SEBI and SE Final Phase Preparatory Phase of Issue Closing and Allotment RoC filing of final Prospectus Marketing Phase of Issue Pre-Marketing SEBI Approval & RoC Filing Roadshows & Price Band Discovery Book building and Pricing
  8. 8. Latest IPOs issued since September 2012 * AS on date: Thursday, March 14, 2013 CARE is most expensive 5 IPOs has negative gain as on date
  9. 9. Year wise amount raised through IPOs * AS on date: Jan 31, 2013 IPOs of worth Rs. 238 crore has been floated in the first month of year 2013. In last 5 years, maximum amount of IPOs has been floated in years 2010. In year 2011 least amount of IPOs has been floated.
  10. 10. Year wise amount raised through IPOs * AS on date: Jan 31, 2013 310 nos. of IPOs issued since 2007, out of which 15 IPOs failed. In year 2007, maximum nos. of Issues has been floated and only 4 nos. of IPOs has failed. In year 2007, 104 nos. of Issues raised approx. Rs. 34,000 Crore, compared to year 2010, only 68 issues offered an amount of worth Rs. 36,000 Crore.
  11. 11. Content of Offer document COMPANY BASED INFORMATION ISSUE RELATED INFORMATION • Industry Overview • Objects of the issue • Business Overview & Strategies • Basis of issue price • Risk factors • Terms of issue • Promoter and Group company disclosures • Issue process • Capital Structure • IPO Grading • Management & Managerial Persons FINANCIAL INFORMATION OTHER INFORMATION • Financial performance statement for last five years • Government Approvals (recast as per SEBI (ICDR) Regulations, 2009 • Management discussion and analysis of the Financial Statements • Statement of tax benefits • Legal & Litigations • Related Party Transactions • Legal and Secretarial matters
  12. 12. Critical Disclosure
  13. 13. Issue Details 1. Company Introduction 9. Dividend Policy 2. Risk factors 10. Financial Details 3. Capital Structure 11. Litigations 4. Object of issue 12. Government Approvals 5. Basis of issue price 13. IPO Grading 6. Promoter’s Contribution 14. Eligibility for the Issue 7. Lock-in requirement 15. Allotment of shares 8. Management
  14. 14. Case Study Company 1: Bharti Infratel Limited And Company 2: V-Mart Retail Limited
  15. 15. Issue Details Bharti Infratel Limited V Mart Retail Limited Issue Size Dec 11, 2012 - Dec 14, 2012 100% Book Built Issue IPO 188,900,000 Equity Shares of Rs. 10 Rs. 4,155.80 Crore Feb 01, 2013 - Feb 05, 2013 100% Book Built Issue IPO 4,496,000 Equity Shares of Rs. 10 Rs. 94.42 Crore Face Value Rs. 10 Per Equity Share Rs. 10 Per Equity Share Issue Price Rs. 210 - Rs. 240 Per Equity Share 50 Shares Rs. 195 - Rs. 215 Per Equity Share 66 Shares Issue Open Issue Type Issue Size Market Lot Minimum Order 50 Shares Quantity Listing At BSE, NSE 66 Shares BSE, NSE
  16. 16. Disclosure 1: Company Introduction
  17. 17. Company Introduction SEBI Requirements In case the issuer company has not come out with any issue in the past ten years or more, a brief statement about the history and corporate structure of the issuer company, the main objects of the issuer company and major events in the past. Bharti Infratel Limited V Mart Retail Limited ● Incorporated in 2006 ● Incorporated in 2002, ● provider of tower and related infrastructure. ● medium-sized hypermarket format retail chain based in New Delhi. ● telecom tower infrastructure providers ● multi-brand family store offers apparels, general merchandise and kirana bazar. ● The business is to acquire, build, own and operate tower and related infrastructure ● In India, Infratel has over 34,000+ towers, across 18 states ● more than 62 stores across 53 cities ● concept of "value retailing"
  18. 18. Disclosure 2: Risk Factors
  19. 19. Risk Factors SEBI Requirements Risk factors and management perception of those risk factors, if any are required to appear on the first inner page and shall continue to other subsequent pages, if required, of the offer document. 1. Forward-looking Statements and Market Data, if any (to be disclosed on voluntary basis). 2. Risk Factors ● Risks envisaged by Management. ● Proposals, if any, to address the risks. ● Notes to the risk factors.
  20. 20. Risk Factors – Bharti Infratel Internal Risk (37 Internal risks) External Risks (6 external risks) • Legal proceedings - 1275 Cases outstanding - 68 • Political instability or changes in the Criminal cases Indian central government • decrease in demand for tower infrastructure in India • Inability to raise foreign capital may be constrained by Indian law. • Heavily dependent on growth of their key customers. • retrospective tax law changes by the Indian government affecting Bharti Infratel or the Group. • Unable to collect termination fees from the telecommunications service providers • Increasing competition in the tower industry • Licences and permits required in the tower business
  21. 21. Risk Factors – V Mart Retail Internal Risk External Risks (6 external risks) • Does not have definite agreement with vendors • The retail sector is subject to extensive foreign exchange regulations • Availed unsecured land – can be recalled anytime • Some of lease agreements may have certain irregularities • Natural calamities could have a negative impact on the Indian economy and cause Company's business to suffer. • strategy to expand into new geographic areas exposes them to certain risks. • Multiplicity of legislations, taxes and levies • Negative cash flows in certain years • Company will not receive any proceeds from the Offer for Sale by the Selling Shareholder.
  22. 22. Disclosure 3: Capital Structure
  23. 23. Capital Structure – Bharti Infratel Limited Descriptions A B Authorized share capital 3,500,000,000 Equity Shares Aggregate value at Issue Price (Rs.) 35,000,000,000 Issued, subscribed and paid-up capital before the issue 1,742,408,730 Equity Shares C Aggregate value at face value (Rs.) 17,424,087,300 Present issue in terms of the Red Herring Prospectus Issue of 188,900,000 Equity Shares 1,462,341,120 32,299,286,855 Offer for Sale of 42,665,888 Equity Shares E 41,723,064,500 Of which: Fresh Issue of 146,234,112 Equity Shares D 1,889,000,000 426,658,880 9,423,777,644 Securities premium account Before the Issue After the Issue Issued, subscribed and paid-up capital after the issue 35,968,912,700 66,805,858,435.88 1,888,642,842 Equity Shares 18,886,428,420
  24. 24. Capital Structure – V-Mart Retail Limited Particulars Nominal Value (Rs.) A Authorised Capital 20,000,000 Equity Shares Aggregate value at Issue Price (Rs.) - - - 151,980,000 - - - Fresh Issue of 2,761,000 Equity Shares 27,610,000 579,810,000 Offer for Sale of 1,735,000 Equity Shares 17,350,000 364,350,000 Total Issue of 4,496,000 Equity Shares B 200,000,000 44,960,000 944,160,000 - - 179,590,000 - 392,360,000 1,291,560,000 - Issued, Subscribed and Paid Up Share Capital before the Issue 15,197,778 Equity Shares C Present Issue in terms of the Prospectus Which comprises D Issued, Subscribed and Paid Up Equity Share Capital after the Issue 17,958,778 Equity Shares E Securities Premium Account Before the Issue After the Issue
  25. 25. Disclosure 4: Object of Issue Why this IPO? Where my money will be invested? What I will get?
  26. 26. Object of Issue SEBI Requirements • The object of raising funds through the issue -- whether for fixed asset creation and/ or for working capital or any other purpose • Activities proposed fall within the main objects -- listed in the MoA or any other Charter or Instruments.
  27. 27. Object of Issue Bharti Infratel Limited V Mart Retail Limited a) Installation of 4,813 new towers; a) To open 60 new stores; b) Upgradation and replacement on existing towers; b) Expansion of distribution centres; c) Green initiatives at tower sites; c) Working capital requirements; d) General corporate purposes d) General Corporate Purposes; e) To meet the Issue expenses. ….Apart from this, that listing will enhance their corporate image and brand name. V Mart Basic objects is for Working Capital Requirements…..
  28. 28. Issue Proceeds and Net Proceeds Amount (Rs. in Million) P  articulars Bharti Infratel V Mart Retail Gross Proceeds from the Issue 41,723.10 579.81 (Less) Issue related expenses 852.9 73.16 (Less) Offer for Sale portion 9,423.80 -- Net proceeds of the Fresh Issue (“Net Proceeds”) 31,446.40 506.65 Bharti Infratel is allotting Rs. 9,423 Million offer for sale - exit/entry for shareholders – to be checked????
  29. 29. Utilisation of the Net Proceeds Bharti Infratel P  articulars Installation of 4,813 new towers Upgradation and replacement on existing towers Green initiatives at tower sites General corporate purposes Total Net Proceeds Amount (Rs. in Million) 10,865.60 12,140.80 6,393.60 2,046.40 31,446.40 • Only 35% for expansion (i. e. Rs. 10,865 Million) • Rest for enhancement of existing facilities • Green Initiatives – practice is not much developed in India – difficult to measure the effect
  30. 30. Utilisation of the Net Proceeds V Mart Retail Particulars To open 60 new stores Expansion of distribution centres Working Capital General Corporate Purpose Total Total Estimated Cost (Rs. in million) 697.04 43.87 100.00 840.91 V-Mart planned opening of 60 stores – avg. 12 stores in last 5 years --- seems unrealistic
  31. 31. Deployment of Net Proceeds Bharti Infratel Amount (Rs. in Million) A  ctivity Total FY 2014 FY 2015 FY 2016 Installation of 4,813 new towers 10,866 5,071 4,253 1,541 Upgradation and replacement on existing towers 12,141 5,049 5,307 1,785 Green initiatives at tower sites 6,394 2,991 2,768 634 General corporate purposes 2,046 1,023 1,023 - • Installation planned for next 3 years – difficult to achieve – considering the fact of land acquired process….
  32. 32. Deployment of Net Proceeds Amount (Rs. in Million) V Mart Retail Particulars To open 60 new stores Expansion of distribution centres Working Capital General Corporate Purpose Total Estimated Cost Estimated Amount to be utilized Amount deployed Balance Amount 697.04 2013 119.92 2014 285.53 2015 291.59 44.62 652.42 43.87 9.09 17.18 17.6 0.49 43.38 100.00 840.91 100 229.01 302.71 - 45.11 100.00 795.8 Particulars Net Proceeds from the Fresh Issue Pre-IPO Placement Internal accruals Total 309.19 Amount in Rs. million 506.65 262.50 71.76 840.91 • Maximum amount invested in 2015. • Amount already deployed through internal accruals – “aggressive approach”
  33. 33. Disclosure 5: Basis of Price How the price is determined? “Qualitative” & “Quantitative”
  34. 34. Basis of Issue Price SEBI Requirements The basis for issue price/floor price/price band shall be disclosed and justified on the basis of the following information, which shall be also disclosed separately: ● Earnings Per Share, ● Comparison of all the accounting ratios of the issuer company ● The face value of shares
  35. 35. Basis of Issue Price Bharti Infratel Limited V-Mart Retail Limited ● Determined by the Company in ● Determined by Company and the consultation with the JCBRLMs, Selling Shareholder in consultation BRLMs and CBRLMs with the BRLM ● “Book building process” ● “Book building process” ● The Issue Price is 22 times ● The Issue Price is 21 times ● The Cap Price is 24 times and ● The Cap Price is 21.5 times and ● The Floor Price is 21 times ● The Floor Price is 19.5 times
  36. 36. Qualitative Factors - Bharti Infratel ● A leading telecommunications infrastructure operator ● Extensive presence ● Long term contracts with the leading wireless telecommunications service providers ● Well-developed processes, systems and IT infrastructure ● Strong financial position and access to capital - Relationship with the Bharti group ● Indus’ relationship with three wireless service providers – 45% ● Experienced management team – Managed by Bharti Group
  37. 37. Qualitative Factors - V Mart Retail ● Advantage in Tier-II and Tier-III cities ● Competitive lease rentals ● Strong and diversified procurement network ● Efficient supply chain management ● Pleasant ambience and a modern shopping environment ● One stop family shop - large & Customized variety of products ● Inverted hierarchy model – employees at bottom are “decision makers”
  38. 38. Quantities Factors - Ratio Earning Per Share
  39. 39. Quantities Factors – Debt Equity Ratio Return on Net Worth (RoNW)
  40. 40. Quantities Factors – Debt Equity Ratio
  41. 41. Disclosure 6: Promoter’s Contribution How much the Owner is Contributing?
  42. 42. Promoter’s Contribution SEBI Requirements Type of Issue Public Issue by Unlisted Companies Offers for Sale Public Issues by Listed Companies Promoter's Contribution not less than 20% of the post issue Composite Issues at the option of the promoter(s) be either 20% of the proposed public issue or 20% of the post-issue capital. not less than 20% of the post issue either to the extent of 20% of the proposed issue or ensure postissue shareholding to the extent of 20% of the post-issue capital
  43. 43. Promoter’s Contribution Bharti Infratel • 7% less • Public – 10% Pre-Issue Post-Issue V Mart Retail • 15% less • Public – 25% Pre-Issue Post-Issue
  44. 44. Disclosure 7: Lock-in requirements
  45. 45. Lock-in period SEBI Requirements Type Lock-in period Minimum Specified Promoters contribution in 3 years Public Issue Excess Promoter's Contribution Pre-Issue share capital of an unlisted company Securities issued on firm allotment basis 1 year 1 year 1 year
  46. 46. Lock-in period Bharti Infratel Date of Transaction Nature of Transaction No. of Equity Shares November 30, 2006 Allotment 50,000 pursuant to subscription to the MoA August 21, 2008 Bonus issue 379,534,800 Total 379,584,800 10 Issue/acquisition price per Equity Share (Rs) 10 Percentage of post-Issue paidup capital (%) Negligible 10 - 20.00 20.00 Face Value (in Rs) V Mart Retail Date of allotment / acquisition Lalit Agarwal Hemant Agarwal Madan Agarwal Madan Gopal Agarwal (HUF) Lalit M. Agarwal (HUF) Hemant Agarwal HUF Total No. of Equity shares locked in 1,016,180 268,400 410,463 729,173 894,093 296,790 3,615,099 Percentage of post-Issue paid up capital (%) 5.66 1.49 2.29 4.06 4.98 1.65 20.13
  47. 47. Disclosure 8: Management Who is managing the Company?
  48. 48. Management SEBI Requirements ● Name, age, qualifications, Director Identification Number, experience, address, occupation and date of expiration of the current term of office of manager, managing director, and other directors (including nominee directors, whole-time directors), giving their directorships in other companies.
  49. 49. Management Bharti Infratel Limited ● Under the Articles of Association - not less than three Directors. ● The Board comprises of ten Directors. Sr. No. Name 1. Rakesh Bharti Mittal 2. Akhil Kumar Gupta Designation Chairman, non-independent and non-executive Director Vice Chairman and Managing Director 3. 4. 5. Sarvjit Singh Dhillon Sanjay Nayar Narayanan Kumar Non-independent and non- executive Director Non-independent and non- executive Director Independent and non- executive Director 6. 7. 8. Vinod Dhall Jitender Balakrishnan Bharat Sumant Raut Independent and non- executive Director Independent and non- executive Director Independent and non- executive director 9. Leena Srivastava Independent and non- executive Director 10. Murray Philip King Non-independent and non- executive Director
  50. 50. Management V-Mart Retail Limited ● Articles of Association - not less than three directors and not more than twelve directors. ● Company currently has six Directors on its Board, of which three are Executive Directors and three are Non–Executive Directors. 1. Madan Agarwal; Whole Time Director 2. Lalit Agarwal, Chairman and Managing Director 3. Hemant Agarwal; Whole Time Director 4. Krishan Kumar Gupta, Director (Non-Executive, Independent) 5. Aakash Moondhra, Director, (Non-Executive, Independent) 6. Kamal Kumar Gupta, Director, (Non-Executive, Independent)
  51. 51. Disclosure 9: Dividend Policy How much cash dividend company is giving?
  52. 52. Dividend SEBI Requirements ● Dividend policy of the Company ● Rate of Dividend and Amount of Dividend paid for the last five financial years ● Regulatory framework in the Country of Incorporation/share listed concerning Dividends ● Details of Arrangement with the Depositories for payment of Dividend to the IDR holders ● Information about changes, if any, in dividends announced and dividends paid and time gap between the dividends announced and dividends paid. ● Information about Dividend Yield. ● Taxation aspects of dividend distribution.
  53. 53. Dividend Bharti Infratel Face value per Equity Share: Rs. 10 Dividend declared per Equity Share: Rs. 2.5 Rate of dividend: 25% V Mart Retail Particulars Equity Share Capital Face value of the Equity Shares (in Rs.) Amount of Dividend Dividend Tax Rate of Dividend (%) Fiscal 2008 55.60 10.00 Fiscal 2009 68.53 10.00 Fiscal 2010 68.53 10.00 Fiscal 2011 73.41 10.00 Fiscal 2012 73.41 10.00 Nil Nil Nil Nil Nil Nil Nil Nil Nil 2.94 0.49 4.00% 2.94 0.49 4.00%
  54. 54. Disclosure 10: Financial Details How company is doing financially?
  55. 55. Financial Details SEBI Requirements: Stand-alone and consolidated financial statements of the issuer company in respect of the last completed accounting year: (indicating changes in accounting policies, if any) • profit or loss and assets and liabilities. • limited review of the profit or loss and assets and liabilities as at a date not earlier than six months prior to the date of the opening of the issue. • Accounting and other ratios
  56. 56. Assets of the Firm Bharti Infratel ● 2009, Increase in the Fixed Assets – Investment in Tangible assets ● 2007 – 2008 more current assets investments in mutual funds ● 2008-2009 increase in the short term loan and advances - loans to its subsidiaries. V Mart Retail ● Purchased tangible assets and taken Long term loans and advances to meet its expansion plans. ● Increasing trend indicates that the company is efficiently & effectively using its funds to meet the debts over the years.
  57. 57. Liability of the Firm Bharti Infratel ● Noncurrent liabilities were more because of the Long Term Borrowings - They were paid off over subsequent years ● year 2008 – 2009 the other current liabilities were more however in the subsequent years the companies have meet its liabilities. V Mart Retail ● Noncurrent Liabilities are long term Loan -company has paid off in subsequent years. ● Current Liabilities have an increasing trend -- taken short term borrowings, the trade payables are not paid off and the other current liabilities are not meet.
  58. 58. Net Worth of the Firm Bharti Infratel ● Company is growing -- has a sound position to meet its financial obligation. V Mart Retail ● Consistent increase in the net worth - the company is in good financial health. ● Shareholder equity is in the good state over the years
  59. 59. Reserves and Surplus Bharti Infratel The Total of Reserves and Surplus has an increasing trend V Mart Retail ● We can see company has maintained net profits during the year of recession ● Mar - Nov the reserves and surplus has significantly gone up - Good positions to pay out dividends to its shareholders
  60. 60. Income Statement Bharti Infratel ● Increase in Sale from 2008 – 2009. ● In the subsequent years the change in Income is proportionate with the change in Expenses. V Mart Retail ● The change in income is proportionate with the change in expense over a period of years.
  61. 61. Cash Flow - Bharti Infratel
  62. 62. Cash Flow - V Mart Retail
  63. 63. Disclosure 11: Litigation Cases and Crimes company involved in?
  64. 64. Litigation SEBI Requirements ● Litigation against the issuer company or against any other company whose outcome could have a materially adverse effect of the position of the issuer company ● Litigation in which the promoters are involved ● Litigation against the directors ● Proceeding initiated for economic offences against the issuer company, promoters, companies and firms promoted by the promoter or its directors ● Outstanding litigations pertaining to matters likely to affect operation and finances
  65. 65. Litigation Bharti Infratel Nature of the cases/ No. of claims cases outstanding Public Interest 82 Litigation and Writ Petitions Regulatory 109 Proceedings Tax 42 Property 106 Environment 36 Labour 34 Consumer 6 Stamp Duty 716 Arbitration 3 Others 141 Total 1,275 V Mart Retail Litigation Litigation Total by our against company our company Civil Cases 1 3 4 Criminal cases 9 9 Tax Cases 7 5 12 Financial Implications 7.37 31.27 38.64 (Rs.in mil) Potential Litigation 2 6 8 Financial Implications 10.17 0.67 10.84 (Rs. in mil)
  66. 66. Contingent Liability Bharti Infratel P  articulars Amount (Rs.Million) Guarantees issued by banks and financial institutions on behalf of Bharti Infratel, BIVL 87 and Bharti Infratel’s 42% equity interest in Indus Claims against Bharti Infratel, BIVL and Bharti Infratel’s 42% equity interest in Indus 4,224.30 not acknowledged as debt (excluding cases where the possibility of any outflow in settlement is remote) V Mart Retail Year (Rs. in Million) Description 2008 2009 2010 2011 2012 Nov. 30, 2012 (Rs. in Mil) Demand raised by the sales tax Authorities Claims against the Company not acknowledged as debts - 9.05 0.03 0.04 21.06 12.00 2.41 2.95 - Service tax on rent Demand raised by electricity board Demand raised by income tax authority Total 0.62 0.65 3.03 27.04 0.14 0.14 3.03 12.12 3.03 2.76 0.31 18.10 3.03 2.47 0.31 8.22
  67. 67. Litigation Review ● Bharti Infratel IPO – complain for “Rejection of offer document” ● BIL has virtually no assets under its name - most of the schemes are pending before courts -- may not get approvals ● Transfer of towers from Group Company Bharti Airtel to Bharti Infratel Ventures Ltd has not reached finality - Objection for merger ● The passive infrastructure assets were transferred without any consideration ● PIL is filed against Bharti Infratel on radiation norms – no to use public money – assurance for radiation-norms compliant. ● V Mart Retail Limited – has contingent Liability – may cause financial implication – reduction in the Month on Nov 12.
  68. 68. Disclosure 12: Government Approvals What approvals required?
  69. 69. Government Approvals SEBI Requirements 1. Government Approvals/ Licensing Arrangements 2. Investment approvals (FIPB/ RBI, etc.). 3. All government and other approvals. 4. Technical approvals. 5. Letter of intent/ industrial license and declaration of the Central Government/ RBI about non-responsibility for financial soundness or correctness of statements.
  70. 70. Government Approvals - Bharti Infratel Limited 1. Certificate of incorporation dated November 30, 2006 2. Certificate of commencement of business dated April 10, 2007 3. Tax Related Approvals and Other Registration • Permanent Account Number - AADC B0274F • Service Tax Code – AADCB0274FST001 • Tax Deduction Account Number – DELB09347C • Approval from local authorities, 4. Council, Gram Panchayat and Industrial Development Corporation 5. Permission from pollution control board wherever applicable for operation of DG sets. Few permissions and objection are pending
  71. 71. Government Approvals – V Mart Retail Limited ● Tax related approvals/licenses/registration ● Registration under The Employees‟ Provident Fund and Miscellaneous Provisions Act, 1952 (the “EPF Act”) ● Registrations under the Employees State Insurance Act, 1948 (the “ESI Act”) ● Registration under state shops and establishments acts ● Registration under Food Safety and Standards Act, 2006 (the “FSS Act”) ● Factory license under Factories Act, 1948 (the “Factories Act”) ● Certificate under Legal Metrology Act, 2009 (the “LMA”) ● License to trade from the local municipal authorities.
  72. 72. Disclosure 13: IPO Grading
  73. 73. IPO Grading SEBI Requirements ● Mandatory for IPO (atleast one) ● Disclosures of all the grades obtained ● Descriptions furnished by credit agency(ies)
  74. 74. IPO Rating & IPO Grading No. 1 2 3 4 5 IPO Rating Provided by Financial institutions & independent brokers. Provide investors of various financial products reliable and consistent assessment IPO Grading Provided by SEBI approved rating agencies Provide investors an independent, reliable and consistent assessment of the fundamentals of IPO Issuer Companies Used for other financial products like Grading is a term that is used most mutual funds, bonds besides IPOs often in respect to IPOs Rating between 1 – 100 1–5 Capital Market, Money Control, S P CRISIL, CARE and ICRA Tulsian's IPO recommendations etc
  75. 75. IPO Grading Bharti Infratel Limited V Mart Retail Limited IPO Grading 4/5 3/5 Institution CRISIL CARE
  76. 76. Disclosure 14: Eligibility for the Issue
  77. 77. Eligibility Requirement SEBI Requirement Bharti Infratel Limited V Mart Retail Limited Net tangible assets of at least Rs 3 crore (Rs. 30 mil) for three full years 2012 – 147,366 mil 2011 – 143,480 mil 2010 – 140,282 mil 2012 – 543 mil 2011 – 437 mil 2010 – 373 mil Distributable profits of atleast 15 crore (Rs. 150 Mil) in at least three years 2012 – 9,856 mil 2011 – 6,770 mil 2010 – 3,023 mil 2012 – 230.29 mil 2011 – 144.97 mil 2010 – 76.50 mil Avg: 150 mil Net worth of at least Rs 1 crore (Rs. 10 mil) in three years 2012 – 147,431 mil 2011 – 143,513 mil 2010 – 140,361 mil 2012 – 546 mil 2011 – 439 mil 2010 – 375 mil If change in name, at least 50 per cent of revenue for preceding one year should be from the new activity The Company has not The Company has not changed its name in the changed its name in last fiscal year the last fiscal year The issue size should not exceed five times the pre-issue net worth not expected to exceed five times the pre-Issue net worth of Company not expected to exceed five times the pre-Issue net worth of Company
  78. 78. Disclosure 15: Allotment of Shares How much share I will get???
  79. 79. Allotment of Shares SEBI Requirements 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 1. Qualified Institutional Buyer (QIB) – at lease 50% of the Net Issue being allotted. However upto 5% of the Net QIB Portion shall be available for allocation proportionately to Mutual Funds only 2. Non Institutional Bidders – Not less than 15% of the Net Issue or the Net Issue less allocation to QIBs and Retail Individual Bidders 3. Retail Individual Bidders – Not less than 35% of the Net Issue or the Net Issue less allocation to QIB and Non- institutional Bidders.
  80. 80. Allotment of Shares
  81. 81. Allotment of Shares Bharti Infratel No. of Equity Shares V Mart Retail % No. of Equity Shares % Total 188,900,000 4,496,000 Qualified Institutional Bidders Non-Institutional Bidders Retail Individual Bidders 94,450,000 50% 2,248,000 50% Not less than 28,335,000 Not less than 66,115,000 15% Not less than 674,400 15% 35% Not less than 1,573,600 35%
  82. 82. Conclusion What we learned?
  83. 83. Conclusion… ● The draft offer document is required to contain all disclosures as per SEBI guidelines --- required for Good Investment Decision ● Studying the Optimistic future earnings outlook --- reading the projected accounting figures carefully. ● Prima facie, Bharti Infratel Limited and V-Mart Retail Limited comply with SEBI guidelines ● To conclude, Bharti Infratel Limited is advisable for Long term gain – V Mart Retail is advisable for short term gain.
  84. 84. Questions and Answers: Discussion Have you understood? Get your doubt cleared?