The document provides an overview of the process and guidelines for an Initial Public Offering (IPO) by Nureca Limited, an Indian healthcare company. It discusses the key steps in the IPO process including compliance with SEBI guidelines, drafting the prospectus, receiving necessary approvals, opening subscription, allotment of shares, and post-issue compliance. It also outlines the eligibility norms, alternative routes, and terms involved in the IPO process as well as the various parties that assist the company such as merchant bankers, registrars, bankers and underwriters.

1. An Exhaustive
Report on IPO
process
mended on
Nureca
By – Nishchay Saxena

2. For the given assignment, I have chosen Nureca Limited
a) The procedures which has to be followed in the issue of securities for
public subscription by Nureca Limited
A Company proposing to raise resources by a public issue should first select the
type of securities i.e. share and /or debentures to be issued by it. The decision
regarding the issue of shares to be made at par or premium should be decided
keeping in view the SEBI guidelines.
As in this case Nureca is looking to raise 100 crores at a face value of ₹10 per
share
The whole process of issue of shares can be divided into two parts:
 Pre issue activities
 Post issue activities
All activities beginning with the planning of capital issues, till the opening of the
subscription list are pre issue activities, while all activities subsequent to the
opening of the subscription list may be called post issue activities.
The various steps involved in public issue of shares are enumerated below:
1. Compliance With The SEBI Guidelines
Before making any issue of capital, Nureca has to ensure that the proposed issue
Registerig
with SEBI
Red Herring
Prospectus
Pricing of
Securities
Open Offer
Completion
of IPO
Select an
Investment
Bank

3. complies with the provision of the SEBI guideline for disclosure and investor
protection with regards to Pricing of issue, promoters, Contribution, lock in
period, reservation, etc.
2. Holding of General Meeting
If it is required by the Articles of Association, that consent of shareholder is to
be obtained, then meeting of the shareholder will be called and as is the case the
meeting was called in July 2020
3 Intimation To Stock Exchange
Nureca has to intimate the stock exchange and a copy of the Memorandum and
Articles of Association of the company is to be sent to the Stock Exchanges
where the shares are to be listed, for approval.
4. Appointment
A Company, which issues shares, has to appoint one or more Merchant
Bankers, who act as Lead Managers to the public issue. The company may, also
appoint Registrars, underwriter, brokers etc
5. Drafting of Prospectus
Apart from the notice of offer to issue shares to public prospectus should also
disclose:
 Justification of Premium, if called.
 Net Asset value (NAV )
 High and Low price of the shares of the company for the last two years.
 Highlights of the issue, as well as the "Risk Factors".
6. Approval of Prospectus
The draft prospectus along with the application form for issue of shares should
application has been made seeking permission for shares to be draft in] of the
company to ensure that it contains all disclosures and information as required by
various statutes, rules, notifications, etc.
7. Approval of Board of Directors
After, all the said processes Nureca now has to get an approval from the
concerned parties / agencies have approved the draft prospectus and the
application form, the board of directors of the company should approve the final
draft, before filing with the Registrar of companies.
8. Registration of Prospectus With Roc
Before the prospectus is issued to the public it must be filed with the Registrar
of companies, duly signed thereon by every director or proposed director of the
company.

4. The prospectus must be registered with ROC within 3 months of vetting by SEBI.
9. Application to Stock Exchange to List Shares
Before filing prospectus with the Registrar of companies, the company should
submit on application to the Stock Exchange (s) for enlistment of securities
offered to the public by the said issue. The fact that an application has / have
been made to the stock exchange must be stated in the prospectus.
10. Printing and Distribution of Prospectus and Application Forms
After Receipt of Acknowledgement card from the SEBI and the intimation from
Registrar of Companies regarding registration of prospectus, the company should
take steps to issue the prospectus within 90 days of it's registration with ROC
For this compliance, requisite steps for printing and distribution amongst Banker,
Underwriter public etc. should be made.
11. Announcement and Advertisement
Announcement regarding the proposed issue should be made at least ten (10)
days before the subscription list opens.
No advertisement should include Brand Names for the issue except the normal
commercial name of the company or commercial brand names of the company
or commercial brand names of it's products already in use.
12. Subscription List
As stipulated by SEBI guidelines the subscription list for public issue is to be
kept open for atleast 3 working days and for a total period of not exceeding 10
working days, which is to be disclosed in prospectus as well.
13. Separate Bank Account
A Separate Bank account is opened for the purpose of collecting the proceeds of
the issue.
Further, the date of opening and closing of the subscription list should be
intimated to all the collecting and controlling branches of the bank with whom
the company has entered into an agreement for the collection of application
forms.
14. Minimum Subscription
As per the SEBI guidelines, if the company does not receive 90% of the issue
amount from the public subscription including development from underwriters
within 120 days from the date of the issue, the amount of subscription received is
required to be refunded to the applications. In case of disputed development also,
subscription is required to be refunded if 90% of the issued amount plus accepted.
In this case of Nureca the minimum shares were 35 in a lot

5. 15. Allotment of Shares
A return of allotment in Form no .--- 2 of the companies (central government's)
General Rules and Form, 1956 should be filed with Registrar of companies
within 30 days of the date of allotment along with the fees payable, as
prescribed in schedule X of the Act.
In case, the issue is over-subscribed, the basis of allotment has to be decided in
consultation with the stock exchange authorities as per the guidelines laid down
by the stock exchanges.
16. Over Subscription
The Over-subscribed amount should after the finalization of allotment, be
refunded to the applicants within 10 weeks of the closure of subscription list. If
the money is not so refunded, the company is liable to refund the money with
interest as specified from the expiry of the 8 days after 10 weeks of the closure
of subscription list.
17.Compliance Report
As stipulated by SEBI guidelines within 45 days of the closure of issue, a report
in the prescribed form along with a compliance certificate from statutory
auditor/ practicing charted accountant or by a company secretary in practice is
to be forwarded to SEBI by the lead managers.
18. Issuance of Share Certificates
As per section 113, the company should deliver the share certificate within 3
months after the allotment of shares.
b) All the guidelines which has to be followed by company in an IPO
The guidelines which Nureca has to follow in the said IPO –
Eligibility norms for making an IPO
There are three different routes available to an unlisted company for making its
initial public offer in India:
Profitability Route – Entry Norm 1
Under the profitability route, the following SEBI guidelines for IPO have to
be followed:
 The minimum net worth of the issuer must be more than INR 1 Crore in
each previous three years.

6.  The minimum net tangible assets of the issuer must be more than INR 3
Crores each, and not more than 50% of these assets must be held in the
form of monetary assets in the previous three years.
 The minimum average operating profit (before tax) of the company must
be more than INR 15 Crores in at least three out of five previous years.
 The issue size must not be more than five times the pre-issue net worth.
 If the company has changed its name, then a minimum of 50% of the
revenue in the previous year must be received from activities done under
the new name.
 Additionally, to provide ease of doing business and allow companies to
easily make their public offer, SEBI has introduced two alternative routes
for companies who are unable to fulfil the requirements under the
profitability route. The following routes also allow a company to access
the primary market for its public offer:
QIB Route – Entry Norm II
 Companies that require a large capital base for their operations but are
unable to fulfil the conditions laid down under the profitability route can
choose the QIB route to make their public offer.
 Under the QIB Route, s company can access the public interest via the
book-building procedure.
 Under this process, 75% of the company’s net offer to the public must be
allotted compulsorily to the Qualified Institutional Buyers (QIBs).
 If the company is unable to achieve the minimum subscription of QIB, it
becomes liable to refund the subscription fee.
Appraisal Route – Entry Norm III
 Under the appraisal route, the project or the public offer is appraised and
participated to the extent of 15% by Financial Institutions or Scheduled
Commercial Bank, of which, a minimum of 10% comes from the
appraisers.
 The appraisal route comes with the condition that the minimum post-issue
face value capital must be INR 10 crores or a mandatory market-making
must be there for at least two years.
 All the above-mentioned entry norms also include the requirement of at
least 1000 prospective allottees in the issuer company’s public issue
c) All the key terms and various stages in an IPO process

7. Ans -Lets discuss each one of them one by one –
Key Terms in an IPO Process –
Abridged Prospectus
A condensed version of the IPO prospectus that contains all the salient features
of the main prospectus. Under the Companies Act of 1956, every IPO application
form should be accompanied by the abridged prospectus.
Draft Red Herring Prospectus (DRHP)
The draft prospectus submitted by the company to Securities Exchange Board of
India (SEBI) at least 21 days before the IPO. SEBI reviews the prospectus and
requests changes during these 21 days. The general public can also submit their
comments to SEBI during this period.
Red Herring Prospectus
The final prospectus filed by the company with the Registrar of Companies
(ROC) before launching the IPO. It contains all the information that investors
need about the company and the IPO, including the company’s business
description, management credentials, operating details, future strategy, IPO price
band, the intended use of the proceeds, and the IPO calendar. The prospectus is
also known as the offer document.
Price Band
The price range within which investors can bid for IPO shares. It is set jointly by
the company and the underwriter and is different for each investor category, viz.
qualified institutional buyers (QIBs), retail investors, and high net-worth
individuals (HNIs).
It is generally the lowest for retail investors (i.e. private individuals). If the price
band has been fixed at Rs.100-110 per share, you cannot bid below Rs.100 or
above Rs.110.
Book Building Process
The process of deciding the issue price for an IPO based on the prices bid by
investors. The issue price will be closer to the upper end of the price band if
investors have shown strong interest in the IPO and bid high. Otherwise, it will
be closer to the lower end of the band.
For example, if the price band for an IPO is Rs.100-110 per share, the issue price
would be set closer to Rs.110 if investors have bid high. If investors have bid low,
the issue price would be set closer to Rs.100.

8. Offer Date
This is the first date when you can apply for shares in an IPO. It is also known as
the opening date of an IPO.
Lot size
The minimum number of shares you can bid for in an IPO. If you want to bid for
more shares, it has to be in multiples of the lots size. For example, if the lot size
for an IPO is 1500 shares, you have to bid for at least these many. If you want to
bid for more, it should be in multiples of 1500, such as 3000 and 4,500.
Minimum Subscription
This is the minimum percentage of IPO shares that retail investors need to
subscribe to for an IPO to go through. At present, the minimum subscription is
90%. The company has to refund the entire subscription amount if this 90%
threshold is not met.
Floor Price
The minimum price per share that you can bid when applying for an IPO is called
the Floor Price. In case of IPOs with a price band, this is the lower limit of the
price band.
Issue Price
The price at which shares are allotted to investors once the book building process
is over. The issue price is different for each investor category and is generally the
lowest for retail investors. It is also called offer price at times.
Cut-off Price
This is the lowest issue price at which shares are allotted in an IPO. It is generally
reserved for retail investors. If your bidding price is higher than the cut-off price,
the difference will be refunded to you.
Oversubscribed
An IPO is oversubscribed if investors have bid for more shares than offered by
the company.
Underwriter
An investment bank works closely with the issuing company to manage the IPO.
They’re called underwriters. Among their many jobs are deciding the offer price,
marketing the IPO, and distributing the shares to investors. The underwriter
receives an underwriting fee in return for its services.

9. Listing Date
This is the date on which IPO shares start trading on the stock exchange. You can
sell the shares you received in the IPO and buy the company’s shares if you don’t
receive them in the IPO.
ASBA:
An abbreviation for Application Supported by Blocked Amount. It is basically
facility for the benefits of the investors provided by banks. Initially, retail investor
or any investor used to pay the amount for the subscription regardless being any
confirmation on the allocation, and incase the damand is being rejected by issuer
due to oversubscription the amount used to be refunded but the interest rate by
the bank for the time period for which the amount is deposited to issuer cannot
be availed by the consumer.
Various Stages –
1. Pre-IPO Transformation Stage
The pre-IPO transformation stage is a restructuring phase when a private
company sets the groundwork for becoming publicly-traded. Since the main focus
of public companies is to maximize shareholder value, the company should
acquire management that has experience doing that. Furthermore, companies
should reexamine their organizational processes and policies.
2. IPO Transaction Stage
The IPO transaction stage usually takes place right before the shares are sold.
This phase involves achieving goals that should enhance the initial valuation of
the firm. The critical part of this step is maximizing investor confidence and
credibility to ensure the issue will be successful.
3. Post-IPO Transaction Stage
The post-IPO transaction stage involves the execution of the promises and
business strategies the company committed to in the preceding steps. The
company should not strive to meet expectations, but rather, beat them.
d) Various parties involved along with the Company for making an IPO
The various parties which gets engaged with company for making an IPO
Merchant Banker
The merchant banker is a financial intermediary in the IPO issue process. Its
functions can be divided into two categories:-

10. 1. Pre-Issue – This includes compliance with the mandatory requirements of
SEBI and other regulatory authorities. Completion of formalities for listing the
shares on the stock exchange. The merchant banker is also responsible for the
appointment of various agencies involved in the issue process.
2. Post-Issue – This includes management of escrow accounts, determining the
final price at which the shares will be issued, allotting shares to all applicants,
ensuring refund to all unsuccessful applicants, and issuing allotment letters. It
also oversees all agencies and ensures that they adhere to the set processes.
Merchant Bankers are also called Book Running Lead Managers or BRLMs in
case of public issues that are book built. Examples of the world’s largest merchant
banks include J.P. Morgan, Goldman Sachs, and Citigroup.
Registrars to the Issue
The Registrars are responsible to finalize the basis of the allotment in the IPO.
They create a final list of applications that are valid and eligible and delete the
invalid ones.
Further, they ensure that the Demat accounts of the applicants are credited with
the allotted shares and rejected applicants receive their refunds.
Bankers to the Issue
Bankers to the issue are financial intermediaries who are responsible for banking-
related processes like -
 Acceptance of application and application amount
 Transfer of funds to the promoters of the company
 Managing refunds for rejected applications
 Payment of dividend
In the IPO process, the bankers play a critical role by enabling the movement of
funds and making clear funds status available to the registrars to finalize the basis
of allotment.
Underwriters
Underwriters are intermediaries who agree to purchase the shares issued by the
company if some shares of the company don’t get sold. They work with the
issuing body, determine the price of the securities, purchase them from the issuer,
and sell them through their network.
IPO Grading Agencies

11. SEBI has mandated all IPOs to be graded to provide more information to
investors. This can help them make informed decisions and assess equity IPO
issues. The Credit Agency that grades these IPOs is registered with SEBI.
To look into the aspect of different Companies which have come for an IPO
recently along with their respective strengths and weakness.
Nureca Ltd
Nureca is the country's first digital healthcare and wellness company to sell its
products through its website and a network of online partners. It has tied up with
India's first omnichannel electronics retailer, Croma from Tata to sell its
healthcare and wellness products through their stores across the country.
Valuation Of Nureca Limited IPO
As mentioned above, there are no direct listed peers for Nureca Limited. We will,
therefore, resort to the formula given by Benjamin Graham in his famous book,
The Intelligent Investor, to calculate the valuation of the company.
 FY20 Profit = Rs. 6.39 crores
GrowthRate = 5%
Value = 6.39 * (8.5 + (2*5)) = 62.07 * 18.5 = Rs. 118.22 crores
Mrs Bectors Food Specialities Ltd–
Mrs. Bectors Food Specialities Limited was incorporated as Quaker Cremica
foods private limitedx on September 15, 1995, as a private limited companyThe
Company is one of the leading companies in the premium and mid-premium
• Strong Portfoilo of Products
• Consistent focus on Innovation and
Quality
• Asset Light Business Model
Strengths
• Dependence on third party
manufacturers
• Excessive Dependence on channel
partners like distributors
• Occurrence of negative cash flow
Weakness

12. biscuits.
Indigo Paints IPO
Indigo Paints started its journey in the year 2000 by Hemant Jalan who is the
Managing Director of the company. He initiated a plant of cement paint in
Rajasthan in Jodhpur and gradually went under expansion mode by covering most
segments related to water-based paints such as Primers, Distempers, Exterior
Emulsions, and Interior Emulsion. Soon, it expanded across different cities in
India.
Strength
Leading brand in Biscuit &
Bakery business
Established presence in
retail & institutional bakery
business
Weakness
Inability to anticipate,
respond & meet the
consumer's tastes,
preferences
Negative publicity of
products

13. To know the factor which can lead to success or failure of an IPO
The factors that can contribute to the success of an IPO are-
1. Defining an attractive ‘equity story’. Identifying and highlighting the
company’s strengths and opportunities, as well as the mitigating factors to the
risks or threats facing the company’s business model.
2. Design an adequate price discovery process,
Weakness Strength
Critical Drivers
Optimizing
Offering Size
Surrounding
with the
right
companion
Define the
principles
Right Market
Timing
Adequate
Price
Attractive
Equity Story

14. to determine the right price of the shares, i.e. the price at which investors are
willing to buy and the issuer to sell the shares.
3. Adjusting the offering size and structure to ensure the achievement of the
company’s goals and the execution of its business plan.
At the same time it is important to provide shares with sufficient liquidity once
they start trading in the market.
4. Choosing the right market timing.
Deciding on the best window of opportunity taking into account market trends,
potential threats, and competing transactions, and of course, the issuer’s own
strategy and needs.
5. Defining the principles on which to build the company’s shareholder base.
This is the only occasion on which the company can choose who it wants as a
partner in its capital. For this same reason, it will have to decide on how to allocate
the offer’s shares.
6. Surround itself with the adequate travel companions, including legal and
accounting firms that help in the preparation of the financial statements and the
Prospectus. It is essential to also to secure the support of a committed and
experienced syndicate of banks.
7. Finally, the company must always keep in mind that the IPO is not an end
in itself, but the start of a new life as a publicly listed company.
Once it goes public, the company’s success will be measured based on its ability
to meet its commitment with investors, both regarding the execution of its
business plan, and in the treatment of minority shareholders.
Key Reasons for Failure -
Unattractive Equity – Due to vague strengths and incompetency and increase
in mitigating factors may lead to failed IPO.
Inadequate pricing of the shares – Any imbalance would lead to collision of
IPO and will cause harm to the shares.
Introducing IPO in market turbulence- Any turbulences in market sentiments
or global factors which pushed market to recession stage will do no good to the
company.