DMS,GGV

1. PARTIES INVOLVED IN
THE NEW ISSUE
 Managers to the issue,
 Registrars to the issue,
 Underwriters,
 Bankers,
 Advertising agencies,
 Financial institutions and
 Govern-ment / statutory agencies.

2. Managers to the issue
Main duties are:
(a) Drafting of prospectus
(b) Preparing the budget of expenses related to the
issue
(c) Suggesting the appropriate timings of the public
issue
(d) Assisting, in marketing the public issue
successfully
(e) Advising the company in the appointment of
registrars to the
issue, underwriters, brokers, bankers to the
issue, advertising agents etc.
(f) Directing the various agencies involved in the

3. Conti…
 The merchant banking division' of the
financial institutions, subsidiary of commercial
banks, foreign banks, private sector banks and
private, agen-cies are available to act as lead
managers.

4. Registrars to the issue
 After the appointment of the lead managers
to the issue, in consultation with them, the
Registrar to the issue is appointed.
 Quotations containing the details of the
various functions they would be performing
and charges for them are called for selection.
Among them the most suitable one is
selected.
 It is always ensured that the registrar to the
issue has the necessary infrastructure like
computer, internet and telephone.

5. Conti…
The Registrars:
 Normally receive the share application from
various collection centres.
 Recommend the basis of allotment in
consultation with the Regional Stock Exchange
for approval.
 Arrange for the despatching of the share
certificates.
 Hand over the details of the share allocation
and other related registers to the company.
 Usually registrars to the issue retain the issuer
records at least for a period of six months.

6. Underwriters
 Underwriter is a person who gives an
assurance to the issuer to the effect that the
former would subscribe to the securities
offered in the event of non-subscription by
the person to whom they were offered.
 They do not buy and sell securities.
 They stand as back-up supporters and
underwriting is done for a commission.
 Underwriting provides an insurance against
the possibly of inadequate subscription.

7. Conti…
Can be of 2 types:
• Financial institutions and banks
• Brokers and approved investment companies
Some of the underwriters are financial
institutions, commercial banks, merchant
bankers, members of the stock exchange,
Export and Import Bank of India, State Bank
of India etc.
Before appointing an underwriter, the financial
strength of the prospective underwriter is
considered.

8. Conti…
The other aspects consid-ered are:
 Experience in the primary market
 Past underwriting performance and default
 Outstanding underwriting commitment
 The network of investor clientele of the
underwriter and
 His overall reputation.
If the underwriter fails to pay, the company is free
to allot the shares to others or take up proceeding
against the underwriter to claim damages for any
loss suffered by the company for his denial.

9. Bankers
 Having the responsibility of collection the
application money along with the application
form.
 The bankers to the issue generally charge
commission besides the brokerage, if any.
 Depending upon the size of the public issue
more than one banker to the issue is
appointed.

10. Advertising agencies
 Tentative programmes of each advertising
agency along with the estimated cost are called
for.
 After comparing the effectiveness and cost of
each programme with the other, a suitable
advertising agency is selected in consultation
with the lead managers to the issue.
 The advertising agencies take the responsibility
of giving publicity to the issue on the suitable
media.
 The media may be newspapers/magazines/
hoardings/press release or a combination of
all.

11. Financial institutions
 Financial institutions generally underwrite the
issue and lend term loans to the companies.
 Normally they go through the draft of
prospectus, Study the proposed programme for
public issue and approve them.
 IDBI, IFCI & ICICI, LlC, GIC and UTI are the some
of the financial institution that underwrite and
give financial assistance.

12. Govern-ment / statutory agencies
 SEBI
 Registrar of companies
 RBI
 Stock Exchanges where the issue is going to be
listed
 Industrial Licensing Authorities
 Pollution Control Authorities

13. COLLECTION CENTRES
 Generally there should be at least 30
mandatory collection centers inclusive of the
places where stock ex-changes are located.
 If the issue is not exceeding Rs 10cr (excluding
premium if any) the mandatory collec-tion
centers are the four metropolitan centres viz.
Mumbai, Delhi, Calcutta and Chennai and at all
such centres where stock exchanges are
located in the region in which the registered
office of the company is situated.

14. Northern Region
Exchange City
• Ludhiana Stock Exchange Ludhiana
• Delhi Stock Exchange Delhi
• Jaipur Stock Exchange Jaipur
• U. P. Stock Exchange Kanpur

15. Southern Region
Exchange City
• Hyderabad Stock Exchange Hyderabad
• Bangalore Stock Exchange Bangalore
• Mangalore Stock Exchange Mangalore
• Madras Stock Exchange Chennai
• Coimbatore Stock Exchange Coimbatore
• Cochin Stock Exchange Cochin

16. Eastern Region
Exchange City
• Calcutta Stock Exchange Calcutta
• Gauhati Stock Exchange Gauhati
• Magadh Stock Exchange Patna
• Bhubaneswar Stock Exchange Bhubaneswar

17. Western Region
Exchange City
• Bombay Stock Exchange Mumbai
• National Stock Exchange Mumbai
• OTCEI Stock Exchange Mumbai
• M.P. Stock Exchange Indore
• Pune Stock Exchange Pune
• Vadodara Stock Exchange Vadodara
• Ahmedabad Stock Exchange Ahmedabad
• Saurashtra Kutch Stock Exchange
Rajkot

18. Conti…
 The collection agents are permitted to collect
such application money in the form of
cheques, draft, stock invests and not in the
form of cash.
 The names and addresses of such agent should
be given in the offer documents.

19. PLACEMENT OF THE ISSUE
1. Prospectus.
2. Bought out deals/offer for sale
3. Private placement
4. Right issue
5. Book building.

20. 1. Prospectus.
 According to Companies (Amendment) Act
1985, application forms for shares of a
company should be accompanied by a
Memorandum (abridged prospectus).
 The draft prospectus has to be sent to the
Regional Stock Exchange where the shares of
the company are to be listed and also to all
other stock exchanges where the shares are
proposed to.be listed.

21. The salient features of the prospectus
1. General Information
a) Name and address of the registered office of the
company:The name(s) of the stock exchange(s)
where applications have been made for permission
to deal in and for official quotations of
shares/debentures.
b) Opening, closing and earliest closing dates of the
issue.
c) Name and address of lead managers.
d) Name and address of Trustees under Debenture
Trust Deed (in case of debenture issue).
e) Rating for debenture/preference shares, if
any, obtained from CRISIL or any other recognised
rating agency.

22. Conti…
2. Capital structure of the company
a) Issued, subscribed and paid up capital.
b) Size of the present issue giving separately
reservation for preferential allotment to
promoters and others.
c) Paid up capital -
a) After the present issue.
b) After conversion of debentures (if applicable).
d) Details regarding the promoters' contribution.

23. Conti…
3. Terms of the present issue
• Authority for the issue, terms of
payment, procedure and time Schedule for
allotment, issue of certificate and rights of the
instrument holders.
• How to apply - availability of forms, prospectus
and mode of payment.
• Special tax benefits to the company and
shareholders under the Income Tax Act if any.

24. Conti…
4. Particulars of the Issue
a) Object of the issue
b) Project cost
c) Means of financing

25. Conti…
5. Company, Management and Project
a) History, main objects and present business of
the company.
b) Subsidiary (ies) of the company, if any.
c) Promoters and their back ground.
d) Names, addresses and occupation of
managing directors and other directors
including nominee directors and whole-time
directors.
e) Location of the project.
f) Plant and machinery, technological process
etc.

26. Conti…
g) Collaboration, any performance guarantee or
assistance in marketing by the collaborators.
h) Infrastructure facilities for raw materials and
utilities like water, electricity etc.
I) Schedule of implementation of the project and
progress so far, giving details of land acquisition, civil
works, installation of plant and machinery, trial
production, consumer production etc.
j) The product
– Nature of the products-consumer/industrial and
end users.
– Approach to marketing and proposed marketing
set up.
– Export possibilities and export obligations, if
any.

27. Conti…
k) Future prospects - expected capacity utilisation
during the first three years from the date of
com-mencement of production and the expected
year when the company would be able to earn
cash profit and net profit.
l) Stock market data for shares, debentures of the
company (high, low price in each of the last 3
years and monthly high, low during the last six
months (where applicable).

28. Conti…
6. Particulars regarding the other listed companies
under the same management, which have made any
capital issues during the last three years.
7. Details of the outstanding litigations pertaining to
matters likely to affect the operations and finances
of the company including disputed tax liabilities of
any nature, any other default and criminal
prosecution launched against the company etc.
8. Management perception of risk factors like
sensitivity to foreign exchange rate
fluctuations, difficulty in the availability of raw
materials or in marketing of products, cost, time
over-run etc.

29. Conti…
9. Justification of the issue premium .The
justification for price is given, taking into account
the following parameters:
a) Performance of the company as reflected by
earnings per share and book value of shares
for the past five years.
b) Future projections in terms of EPS and book
value of shares in the next three years.
c) Stock market data.
d) Net asset value as per the latest audited
balance sheet.

30. Conti…
10. Financial Information
a) Financial performance of the company for last
five years should be given from the audited
annual accounts in tabular form.
b) Balance sheet data: equity capital, reserves
(revaluation reserve, the year of revaluation anti
its monetary effect on assets) and borrowings.
c) Profit and loss data: sales, gross profit, net
profit, dividend paid if any.
d) Any change in the accounting policy" during the
last three years and its effect on the profit and
reserves of the company.

31. Conti…
11. Statutory and other information
a) Minimum subscription
b) Details of the fee payable to
Advisers, Registrar, Managers, Trustees of the
debenture holders and underwriters.
c) Details regarding the previous issues if any.

32. 2. Bought out deals/offer for sale

33. 3. Private placement

34. THE SESSION Conti…
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