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PROJECT

ON
A STUDY ON IPO ISSUE DOCUMENTS AND THEIR

PAST LISTING PERFORMANCE.


PROJECT SUBMITTED TO ANNAMALAI UNIVERSITY,

IN PARTIAL FULFILMENT OF THE REQUIREMENTS

FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION

IN APPLIED MANAGEMENT

By

Name: - Dinesh Soni

Enrollment No: - 4740700464

Name of the Guide: - Mr. Praveen Mehta

DIRECTORATE OF DISTANCE EDUCATION

ANNAMALAI NAGAR

2008

Page No. 1
DECLARATION

I hereby declare that the project entitled “A STUDY ON IPO ISSUE

DOCUMENTS AND THEIR PAST LISTING PERFORMANCE. ”

submitted for the Degree of Master of Business Administration in Applied

Management is my original work and the project has not formed the basis for

the award of any degree, diploma, associate ship, fellowship or similar other

titles. It has not been submitted to any other university or Institution for the

award of any degree or diploma.

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ACKNOWLEDGEMENT

It is with real pleasure that, I record my indebtedness to my academic

Guide, Mr. Praveen Mehta for his counsel and guidance during the preparation

of this project.

I am grateful to Centre Head Mr. Praveen Mehta

I wish to record my sincere and special thanks to Mr. Amit Sharma,

My thanks are due to Mr. Manish Goyal and Mr. Bharat Kuldeep to

give me great and valuable support.

Page No. 3
CERTIFICATE

Certified that the project is a work done by Mr. Dinesh Soni during the period

of his study under my guidance, and that the project has not previously formed

the basis for the award of any degree, diploma, associates hip, fellowship or

similar other titles and that it is an independent work done by his.

Place: Name: Mr. Praveen Mehta

Date:

Page No. 4
TABLE OF CONTENT
Chapter Content Page No.

Acknowledgement III

List of Tables VII

List of Diagrams VIII

(1) Introduction 09-42


1.1 Initial public offering (IPO)
10-23
• What is IPO? 10-12

• Reasons for Listing 13-15

• IPO Market in india 16-17

• IPO Allotment Status 18-19

• IPO Procedure 20-23

1.2 Objectives and Role of IPO in india 24-25

1.3 Review of Literature 26-30


• Advantages & Drawbacks of IPO 26-29

• Example of Some Published Issue’s 30

1.4 Hypothesis 31-38


• Past/ Present/ Future of IPO 31-34

• What are the Critical Areas to Focus 35-38

Page No. 5
1.5 Limitations of the Study
39-40

1.6 Methodology 41-42


• Source of Data 41

• Other Source 42

(2) Significance of the study 43-54

2.1 Global IPO Market 44-51

2.2 Upcoming IPO in The Market 52-54

(3) Research and Analysis 55-71


3.1 Latest News in IPO Sector 56-58

3.2 Major Player of IPO in India


59-71

(4) Finding & Conclusion 72-74

(5) Bibliography 75-76

Page No. 6
Page No. 7
Table No. Title of the Table
Page No.

1.1. Middle East Activity Table


48

1.2. Industrial Distribution


50

1.3. No.IPO of NSE in India 58

Page No. 8
Table No. Title of the Diagram Page No.

1.1. Different Kind of Issue 11

1.2. How To Listing An IPO 13

1.3. IPO Process 15

1.4 . Book Building Process


23

1.5 . IPO Returns


40

1.6. Global IPO Activity 44

1.7. Global IPO Activity by Indust. 46

1.8. Top Ten IPO in US 51

Page No. 9
Chapter (1)

Page No. 10
Part-1.1

 INITIAL PUBLIC OFFERING (IPO)

Initial public offering (IPO), also referred

to simply as a "public offering", is when

a company issues common stock or

shares to the public for the first time.

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. In an IPO, the

issuer may obtain the assistance of an underwriting firm, which helps it

determine what type of security to issue (common or preferred), best offering

price and time to bring it to market.Initial Public Offering (IPO) in India means

the selling of the shares of a company, for the first time, to the public in the

country's capital markets. This is done by giving to the public, shares that are

either owned by the promoters of the company or by issuing new shares. During

an Initial Public Offer (IPO) the shares are given to the public at a discount on

the intrinsic value of the shares and this is the reason that the investors buy

shares during the Initial Public Offering (IPO) in order to make profits for them

selves. IPO in India is done through various methods like book building

method, fixed price method, or a mixture of both. The method of book building

has been introduced in the country in 1999 and it helps the company to find out

Page No. 11
the demand and price of its shares. A merchant banker is nominated as a book

runner by the Issuer of the IPO. The company that is issuing the Initial Public

Offering (IPO) decides the number of shares that it will issue and also fixes the

price band of the shares. All these information are mentioned in the company's

red herring prospectus. During the company's Initial Public Offering (IPO) in

India, an electronic book is opened for at least five days. During this period of

time, bidding takes place which means that people who are interested in buying

the shares of the

Company makes an offer within the fixed price band. Once the book building is

closed then the issuer as well as the book runner of the Initial Public Offering

(IPO) evaluate the offers and then determine a fixed price. The offers for shares

that fall below the fixed price are rejected. The successful bidders are then

allotted the shares

Page No. 12
IPO’s can be a risky investment. For the individual investor, it is tough to

predict what the stock or shares will do on its initial day of trading and in the

near future since there is often little historical data with which to analyze the

company. Also, most IPO’s are of companies going through a transitory growth

period, and they are therefore subject to additional uncertainty regarding their

future value

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REASONS FOR LISTING

When a company lists its shares on a public exchange, it will almost

invariably look to issue additional new shares in order to raise extra capital at

the same time. The money paid by investors for the newly-issued shares goes

directly to the company (in contrast to a later trade of shares on the exchange,

where the money passes between investors). An IPO, therefore, allows a

company to tap a wide pool of stock market investors to provide it with large

volumes of capital for future growth. The company is never required to repay

the capital, but instead the new shareholders have a right to future profits

distributed by the company and the right to a capital distribution in case of a

dissolution.

Page No. 14
The existing shareholders will see their shareholdings diluted as a proportion of

the company's shares. However, they hope that the capital investment will make

their shareholdings more valuable in absolute terms.

In addition, once a company is listed, it will be able to issue further shares via a

rights issue, thereby again providing itself with capital for expansion without

incurring any debt. This regular ability to raise large amounts of capital from

the general market, rather than having to seek and negotiate with individual

investors, is a key incentive for many companies seeking to list.

Major Reason for Listing IPO

 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.

Page No. 15
 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.

Page No. 16
IPO MARKET IN INDIA

The IPO Market in India has been developing since the liberalization of the

Indian economy. It has become one of the foremost methods of raising funds for

various developmental projects of different companies.

The IPO Market in India is on the boom as more and more companies are

issuing equity shares in the capital market. With the introduction of the open

market economy, in the 1990s, the IPO Market went through its share of policy

changes, reforms and restructurings. One of the most important developments

was the disassembling of the Controller of Capital Issues (CCI) and the

introduction of the free pricing mechanism.

This step helped in developing the IPO Market in India, as the companies were

permitted to price the issues. The Free pricing mechanism permitted the

companies to raise funds from the primary market at competitive price.

The Central Government felt the need for a governed environment pertaining to

the Capital market, as few corporate houses were using the abolition of the

Controller of Capital Issues (CCI) in a negative manner. The Securities

Exchange Board of India (SEBI) was established in the year 1992 to regulate

the capital market. SEBI was given the authority of monitoring and regulating

the activities of the bankers to an issue, portfolio managers, stockbrokers, and

other intermediaries related to the stock markets. The effects of the changes are

Page No. 17
evident from the trend of the resources of the primary capital market which

includes rights issues, public issues, private placements and overseas issues.

The IPO Market in India experienced a boom in its activities in the year 1994.

In the year 1995 the growth of the Indian IPO market was 32 %.

The growth was halted with the South East Asian crisis.

The markets picked up speed again with the introduction of the software stocks.

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IPO ALLOTMENT STATUS

Initial public offering is also popularly known as IPO, is the first time sale

of stocks, of a private company. A new company can launch IPO to raise capital

to initiate its business. Moreover, Initial Public Offering can also be launched to

raise money for expansion or other important operations of an existing

company. The sale of stock through such Initial Public Offering (IPO) is meant

for the individual and corporate investors. The aim of such issuance of Initial

Public Offering is to invest the accumulated corpus for, either opening -up of a

company or expansion of an existing company.

Thus, effectively, an Initial Public Offering pools investments and utilizes it in

building or expansion of the said company. The shares held by such investors

give them the rights of the company and to its future profits. The process which

involves determination of the issue size and type, offer price and best time of

introduction into the market is called "underwriting". The underwriting is

generally done by the investment bankers. These underwriting firms or

investment bankers are allotted some specified numbers of shares to sell, which

is called as IPO Allotment Status.

In other words, IPO Allotment Status can also be defined as the number of

stocks which an investment banker is permitted to sell to the general investor

before the share is being traded on an exchange. The excess shares are then

allotted to other investment bankers which are eligible to sell such shares. In

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India, the main governing body that determines such eligibility criteria and the

IPO Allotment Status is the Securities and Exchange Board of India (SEBI).

Page No. 20
IPO - PROCEDURE

IPO’s generally involve one or more investment banks as "underwriters."

The company offering its shares, called the "issuer," enters a contract with a

lead underwriter to sell its shares to the public. The underwriter then approaches

investors with offers to sell these shares.

The sale (that is, the allocation and pricing) of shares in an IPO may take

several forms. Common methods include:

• Best efforts contract

• Firm commitment contract

• All-or-none contract

• Bought deal

• Dutch auction

• Self distribution of stock

A large IPO is usually underwritten by a "syndicate" of investment banks led by

one or more major investment banks (lead underwriter). Upon selling the

shares, the underwriters keep a commission based on a percentage of the value

of the shares sold. Usually, the lead underwriters, i.e. the underwriters selling

the largest proportions of the IPO, take the highest commissions—up to 8% in

some cases.

Multinational IPOs may have as many as three syndicates to deal with differing

legal requirements in both the issuer's domestic market and other regions. For

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example, an issuer based in the E.U. may be represented by the main selling

syndicate in its domestic market, Europe, in addition to separate syndicates or

selling groups for US/Canada and for Asia. Usually, the lead underwriter in the

main selling group is also the lead bank in the other selling groups.

Because of the wide array of legal requirements, IPOs typically involve one or

more law firms with major practices in securities law, such as the Magic Circle

firms of London and the white shoe firms of New York City.

Usually, the offering will include the issuance of new shares, intended to raise

new capital, as well the secondary sale of existing shares. However, certain

regulatory restrictions and restrictions imposed by the lead underwriter are

often placed on the sale of existing shares.

Public offerings are primarily sold to institutional investors, but some shares are

also allocated to the underwriters' retail investors. A broker selling shares of a

public offering to his clients is paid through a sales credit instead of a

commission. The client pays no commission to purchase the shares of a public

offering; the purchase price simply includes the built-in sales credit.

The issuer usually allows the underwriters an option to increase the size of the

offering by up to 15% under certain circumstance known as the green shoe or

over allotment option.

The first sale of stock by a private company to the public. IPOs are often issued

by smaller, younger companies seeking the capital to expand, but can also be

done by large privately owned companies looking to become publicly traded. In

Page No. 22
an IPO, the issuer obtains the assistance of an underwriting firm, which helps it

determine what type of security to issue (common or preferred), the best

offering

MAJOR PROCESS OF AN IPO

 Eligibility Criteria:

• Net Tangible assets of Rs. 3.00 Crore in each of the preceding 3 years.

• Track record of Distributable profits at least 3 out of 5 preceding years.

• The Company has a Networth of Rs. 1.00 Crore in preceding 3 years.

• The proposed issue should not exceed 5 times of its Pre-issue

 The process of an IPO - Eligibility criteria: (Alternate route)

• Book building process and 50% of the offer to QIBs or

• 15% participation in project by F/Is or Schedule Banks;

• 10% of the Project cost from appraiser;

• 10% of the Issue to QIBs.

• Minimum post issue face capital of Rs.10 Crores or

• Market making for 2 years and Minimum number of allottees atleast

1000

Page No. 23
 Official Process of IPO

• Appointment of Brokers, Advertisers and Bankers

• Conducting Road shows and Press Conference

• Opening and closing of Subscription list

• Preparation of Basis of Allotment

• Allotment of shares

• Listing of shares

• price and the time to bring it to market

Page No. 24
Part 1.2

 OBJECTIVES AND ROLE OF IPO

 To get the knowledge of IPO.

 To analyze the returns of IPO’s which were issued in the 1st quarter of 2007.

 To know the return of those IPO’s for 1 month, 3 months, 6 months, and 1

year.

 To know the market rate of return for the same period.

 To know the procedure for calculating the Standard Deviation, calculating

Sharpe’s Ratio & the abnormal return.

 Spread awareness about this process.

 Find out the companies which like to adopt this technique.

 Find out the factors which influence the IPO Listing Process.

 What the companies are looking from Open New IPO’s in India?

 Analysis between Share Holder and IPO Companies

 Analysis of IPO’s post/present/future Prospects

 Analysis of Auction, Pricing, Issued Price and Reverse IPO’s.

Page No. 25
OBJECTS OF THE OFFERING NEW IPO

 Funds Requirement

 Funding Plan (Means of Finance)

 Appraisal

 Schedule of Implementation

 Funds Deployed

 Sources of Financing of Funds already deployed

 Details of Balance Fund Requirement

 Interim Use of Funds

 Basic Terms of Issue

 Basis for issue price

 Tax Benefits

Page No. 26
Part 1.3

ADVANTAGES & DRAWBACKS OF IPO

The Advantages of IPO are numerous. The companies are launching more

and more IPO’s to raise funds which are utilized for undertakings various

projects including expansion plans. The Advantages of IPO is the primary

factor for the immense growth of the same in the last few years. The IPO or the

initial public offering is a term used to describe the first sale of the shares to the

public by any company. 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.

Major Advantages of IPO

IPO has a number of advantages. IPO helps the company to create a publi

c 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

Page No. 27
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.

Page No. 28
Drawbacks of IPO’s

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. Such

expenses might cost hundreds of US dollars. 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 the SEC regulations 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

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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 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. The SEC regulations require notifications from the shareholders of

the company, meetings, and also approvals from them while making important

business decisions.

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.

Page No. 30
 EXAMPLE OF SOME PUBLISHED ISSUE’S

 Indian Bank IPO on the anvil-India Business-Business-The Times of India

 India is world's 8th largest IPO market- The Times of India

 India Inc's fund raising via IPO in 2008 dips to 3-yr low- The Economic

Time

 IPO market to boom in second half- The Economic Time

 India Inc raises over Rs 45,000 cr in IPOs, follow-ons in 2007- The Hindu

Page No. 31
Part 1.4

PAST/ PRESENT/ FUTURE OF IPO

India’s rapid economic growth, robust corporate profit stability, and a four-

year bull run on Bombay’s Stock Exchange (BSE), continue to fuel India’s

strong IPO markets. “Keen investor interest in India’s strong growth story has

been real acted in the attractive valuations and key price/earnings multiples

garnered by Indian companies,” says R. Balanchine, IPO Leader, Strategic

Growth Markets, Ernst & Young India. In 2006, India’s markets launched 78

IPO’s and raised US$7.23 billion. Currently, India’s exchanges rank eighth in

the world for numbers of IPO’s and value in 2006. Despite a May 2006 market

tumble that erased more than US$100 billion in value in the BSE and sparked

concerns that the four-year Indian stock rally was over, Indian IPO activity

quickly resumed its upward momentum. In 2006, India’s IPO market has been

fairly broad-based, although energy companies dominated with more than 50%

share of funds raised. In 2006, India’s largest IPO was petroleum rife nine

company, Reliance Petroleum, which raised US$1.8 billion, followed by the oil

production and exploration company, Cairn Energy, which raised US$1.3

billion. Real estate IPO’s also generated stellar returns for investors.

Page No. 32
In the United States, during the dot-com bubble of the late 1990s, many venture

capital driven companies were started, and seeking to cash in on the bull

market, quickly offered IPO’s. Usually, stock price spiraled upwards as soon as

a company went public. Investors sought to get in at the ground-level of the

next potential Microsoft and Netscape.

Initial founders could often become overnight millionaires, and due to generous

stock options, employees could make a great deal of money as well. The

majority of IPOs could be found on the NASDAQ stock exchange, which lists

companies related to computer and information technology. However, in spite

of the large amounts of financial resources made available to relatively young

and untested firms (often in multiple rounds of financing), the vast majority of

them rapidly entered cash crisis. Crisis was particularly likely in the case of

firms where the founding team liquidated a substantial portion of their stake in

the firm at or soon after the IPO (Mudambi and Treichel, 2005).

This phenomenon was not limited to the United States. In Japan, for example, a

similar situation occurred. Some companies were operated in a similar way in

that their only goal was to have an IPO. Some stock exchanges were set up for

those companies, such as Osaka Securities Exchange.

Perhaps the clearest bubbles in the history of hot IPO markets were in 1929,

when closed-end fund IPOs sold at enormous premiums to net asset value, and

in 1989, when closed-end country fund IPOs sold at enormous premiums to net

asset value. What makes these bubbles so clear is the ability to compare market

Page No. 33
prices for shares in the closed-end funds to the value of the shares in the funds'

portfolios. When market prices are multiples of the underlying value, bubbles

are likely to be occurring.

A Brief Note on Future of IPOs in India

The IPO industry in India has received a major boost in the current year

especially with the emergence of Reliance Power IPO on 15th January 2008.

Apart from Reliance Power, another IPO which brought in major capital is

Kishore Biyani-led Future Group's financial services arm. This IPO has been a

recipient of 17.36 crores equity shares as bidding as compared to 6,422,000

equity shares on offer. The public offerings of the IPO of Kishore Biyani-led

Future Group's financial services arm are estimated to rise around Rs. 490

crores future capital. The price range fixed for the Equity shares of this IPO

varies between Rs. 700 to Rs. 765. The subscription for the issue of this IPO

was opened from 11th January 2008 to 16th January 2008. Future of IPOs in

India is quite bright as the Future Capital Holdings in India are expected to rise

up to USD 124 million by the end of 2008. Future Capital, the financial services

arm of the diversified Future Group is expected to divest around 10.16 percent

of its capital which accounts for around 6.4 million shares in the IPO market. In

the year 2007, the IPO market in India has been estimated to raise USD 8.2

billion from 88 IPOs as compared to USD 4.7 billion in the previous year. It

contributed largely in the growth of stock market which rose by 47 percent.

Page No. 34
Assuming a major hike in the Indian IPOs, the government has confirmed the

opening of the Oil India IPO by March 2008. The IPO of Oil India Limited has

been reported to raise Rs.1500 crores and will hit the capital market in March

2008.

Page No. 35
 WHAT ARE THE CRITICAL AREAS TO
FOCUS

 Compliance with SEBI Guidelines

 90% subscription of the issue

 Underwriting Agreements

 Firm Allotments

 Listing approvals from the Stock Exchanges

 ROC approval for the prospectus

 Advertising and Road Shows

 Statutory advertisements

 In-time allotments and refunds

 Listing of the shares with the Exchanges

SEBI GUIDELINES

 Filing of prospectus:

Prospectus to be filed with SEBI through Merchant Banker At least 30 days <

filing with ROC SEBI may suggest changes < 30 days SEBI to consider only

after approval from St.Ex

• Issuer is obligated

• SEBI is not obligated

Page No. 36
 Application for Listing:

No IPO without application for listing

 Dematerialization of shares:

Agreement with Depository Present shares also to be in demat public may opt

either physical or demat shares

 “Qualified Institutional Buyer” shall mean:

• Public financial institution as defined in section 4A of the Companies Act,

1956; scheduled commercial banks;

• Mutual funds;

• Foreign institutional investor registered with SEBI;

• Multilateral and bilateral development financial institutions;

• Venture capital funds registered with SEBI;

• Foreign venture capital investors registered with SEBI;

• State industrial development corporations;

• Insurance companies registered with the Insurance Regulatory and

Development Authority (IRDA);

• Provident funds with minimum corpus of Rs. 25 crores;

• Pension funds with minimum corpus of Rs. 25 crores).

Page No. 37
 Exemption from Eligibility Norms:

• Banking Co. including Pvt. Banks Subject to licensing by RBI

• New Bank being set up on acquisition or take over of a bank

• An infrastructure Company, whose project is appraised by F/I, IL & FS and

IDFC

 IPO Grading:

• No IPO unless; (as on the date of filing the prospectus with ROC):

• Grading for IPO has been obtained from at least one agency

• Grading and the rationale have been included in the prospectus

• Grading expenses to be borne by the issuer

 Present shares to be fully paid-up:

• No IPO, if there are any shares partly paid up as on the date of IPO

• The Shares to be fully paid up or forfeited

 Price Band:

• Price Band to be 20%

• Max price can be 20% above the floor price

Page No. 38
• Board of directors may be authorized to fix the price

 Denomination of shares

• Denomination of the shares is not restricted

• In case the issue price is <Rs.500, the Face Value shall be Rs.10/-

• The Face Value may be less, where the issue price is Rs.500 or more

• Full disclosure of the face value in offer document

 Guidelines on issue of advertisement:

• Advertisement shall be truthful, fair and clear

• Shall not contain untrue or misleading or misleading statement

• Disclose all relevant facts

• Clear, concise and

• Understandable language

• Avoid technical, legal, complex terms

• No advertisement in Crawlers

• Reference to the red-herring prospectus

• No slogans, captions or one liners

• Shall include risk factors

• Risk factors to be given in the same font size

Page No. 39
• The print size shall not be less than point size 7

Part 1.5
More often than not, the pricing of any IPO is what influences the

decision of any investor. The rating agencies, in this case, will not talk about

``what price'' and ``what time'' aspects of the offer. Given that the decision to

invest or avoid investments in any IPO is most often a function of the pricing,

the lack of this aspect in the present IPO grading system could make the whole

process an unfinished task. Also, rating agencies (experienced in debt rating)

could face trouble with rating the equities, which, unlike debt rating, is more

dynamic and cannot be standardized. Further, IPO grading mechanism is a

globally-unique initiative; it could increase the cost of raising capital in India

and urge companies to seek capital overseas.

Markets, in the short term, can be price-driven and not purely motivated by

company fundamentals. That is to say that, at times, even good companies at a

higher price could be a bad investment choice, while the not-as-good ones

could be a steal at lower prices.

Page No. 40
Despite having disclaimers, a higher graded IPO may well tempt small

investors into falsely believing that a high premium would come about on

listing.

Similarly, investors may get deluded by a low-graded IPO, which could become

a `missed opportunity' in the future. The purpose of introducing grading, thus,

might get defeated if it leads to a false sense of buoyancy or alarm among

investors.

Till such time the utility of the IPO grading system is unraveled, it is advisable

for investors to use the grades only as an additional input to make an informed

decision. Investors need to be convinced about the business potential, pricing

and valuations of an IPO, together with the grading, to make a final choice.

Page No. 41
Part 1.6

 SOURCE OF DATA

Data’s are the useful information or any forms of document designed in a

systematic and standardize manner which are used for some further

proceedings. One of the important tools for conducting marketing research is

the availability of necessary and useful data. Some time the data are available

readily in one form or the other and some time the data are collected afresh. The

sources of Data fall under two categories, Primary Source and Secondary

Sources.

Primary Data- the primary data was collected through the following

activities:

Filled the IPO Industry related questionnaire to managers of a select group of

companies And Paper Conversation

Secondary Data- the secondary data was collected through the following:

Online Research material of the Various Financial Institution directly or

indirectly involved with IPO, Secondary Data used in External Source of

Information Like internet, magazine, paper cutting.

Page No. 42
 OTHER SOURCE

 Information Sources

Information has been sourced from namely, books, newspapers, trade

journals, and white papers, industry portals, government agencies, trade

associations, monitoring industry news and developments, and through

access to access to more than 3000 paid databases.

 Analysis Method

The analysis methods include the following: Ratio Analysis, Historical

Trend Analysis, Linear Regression Analysis using software tools,

Judgmental Forecasting and Cause and Effect Analysis etc.

Page No. 43
Chapter (2)

Page No. 44
Part 2.1

 GLOBAL IPO MARKET

Accelerated globalization of capital continues to drive the record-setting

world IPO markets of 2006–2007. Around the world, companies, investors, and

stock exchanges think and act much more globally, often looking outside

domestic markets for

high growth

opportunities. In the

past 18 months, key

IPO trends refl ect the

effects of globalization:

flourishing stock

markets awash in liquidity, vibrant growth in the emerging markets, escalating

rivalry between the world’s stock exchanges, the rise of more world-class

financial centers, the boom in large listings on local exchanges, and the

proliferation of capital-raising options, especially private equity’s emergence as

a key player behind so many large IPO’s. In 2007, globalizing capital and a

surge in IPO ready companies worldwide are broadening the horizons of the

world’s financial markets

Page No. 45
GREATER CHINA

KEY TRENDS:

• Greater China’s IPO markets launched mega–IPOs in 2006, with larger

(but no longer super-sized) IPO’s in 2007.

• HKSE led world exchanges in fundraising in 2006, and showcasing its

world-class liquidity and corporate governance standards.

• As global resources migrate to China, foreign investors grow more

comfortable investing locally, especially in state-owned enterprises.

• A dual-listing trend and budding rivalry emerges for the Hong Kong and

Shanghai stock exchanges.

• Many large Chinese companies offer shares to US institutional investors

under Rule 144A.

Driven by yet another year of rapid economic growth and robust secondary

markets in 2006, Greater China’s IPO market soared to an all-time high, with

US$56.6 billion raised in 175 offerings. With conspicuous success, the Hong

Kong Stock Exchange (HKSE) hosted privatizations of China’s two largest

state-owned banks — including the world’s largest IPO ever, the Industrial and

Commercial Bank of China (ICBC) with US$21.9 billion raised, and the second

largest offering, Bank of China (BOC) which raised US$11 billion. The ICBC

issuance was also the first time in China that shares were dual-listed.

Page No. 46
INDIA

KEY TRENDS:

• The strength of India’s economy, stock market, corporate profits, energy

sector, and private equity fuel IPO’s in 2006 and 2007.

• Indian exchanges hosted several billion-dollar IPO’s in 2006, all prime

examples of the rise in localization.

• Cross border activity and the role of foreign capital continue to grow.

• Enabling relatively easy access to global institutional capital, Qualified

Institutional Placements (QIPs) gain immediate popularity.

• The private equity rush into India has lead to a potential for many IPO

exits.

Page No. 47
EUROPE

KEY TRENDS:

• Europe’s IPO markets rose to an all-time high in 2006, and remain high-fl

years in

• 2007 bolstered by beefy deals, cross-border listings in London, and private

equity.

• As the region’s high-growth story, Russia drives European IPO activity.

• London has become the top listings destination for cross-border issuers

seeking relatively quick and easy capital.

• Europe’s junior exchanges, including London’s AIM, the Eurocent’s

AlterNet, and Deutsche Brose’s Entry Standard, are thriving with small-

cap activity.

• The ballooning growth in European private equity is leading to more IPO

exits, and sizeable public-to-private transactions.

Europe’s steady economic expansion, attractive stock prices relative to US

peers, low interest rates, and vigorous secondary stock markets galvanized its

IPO markets in 2006 and 2007. For the second year in a row, Europe’s

exchanges attracted the most cross-border listings, especially Russian

companies listing in London. Another key source of capital in Europe has been

the large private equity firms.

Page No. 48
MIDDLE EAST

KEY TRENDS:

• After three years of record growth, most Middle East markets endured

erratic performance in 2006, but seem to be steadier in 2007.

• Factors leading to Middle East volatility include excess liquidity, irrational

retail speculation and lack of market depth.

• The Middle East IPO pipeline is expected to expand, with large-scale

privatizations and infrastructural projects in the works.

Page No. 49
CIS/RUSSIA

KEY TRENDS:

• Russian IPO markets fl ourish in 2006 and 2007, particularly in the

commodities and fi nancial services sectors.

• Larger Russian companies seek credibility and deeper liquidity by listing

in London.

• Russian companies face uncertainty ahead with 2008 presidential elections,

commodity prices, and corporate governance issues.

• A GDR in London combined with a US Rule 144A offering is the most

popular form of listing.

• As the private equity market remains undeveloped, IPOs are by far the

most popular Russian exit strategy, with the best valuations.

• Kazakhstan launches large IPOs in resources and banking sectors with

several major banks expected to go public in 2007.

Page No. 50
AUSTRALIA

KEY TRENDS:

• Rising commodity prices and demand from Asia fuel thriving resources

and energy sectors.

• A recent surge in private equity will lead to many IPO exits in next 12–24

months.

As Australian stock markets rise for the fourth year in a row, Australia’s stable

economy, record corporate profi ts and booming resources sector have led to an

extraordinarily active IPO market. In 2006, Australia launched 173 IPOs,

raising US$4.2 billion, with many listings in the resources and energy sector.

The largest Australian IPO of 2006 was explosives maker Dyno Nobel worth

US$800 million.

Page No. 51
UNITED STATES
KEY TRENDS:

• Robust US markets garner the highest number of IPOs in 2006 and

maintain momentum with a pipeline of high-quality deals in 2007.

• Most global companies list at home, rather than in the US, as local markets

grow more liquid and better regulated.

In the past 18 months, the vitality of the US stock market has whet investor

appetite for risk, and spurred US-domiciled IPO numbers to record heights.

Although some market watchers blame US regulations for the rise in non-US

cross-border issuances, globalization of capital may be the primary force behind

the trend as it has lead to stronger, more liquid, competitive markets worldwide.

For a truly global company, a US listing is still seen as the “gold standard” with

access to the deepest pool of capital, a valuation premium, and

strategic advantages.

Part 2.2

Page No. 52
UPCOMING IPO IN THE MARKET

Upcoming Initial Public Offering (IPOs) in India at a glance:

Initial Public Offer (IPO) in India, means the first sale by a private company of

its shares to the public. Initial Public Offers (IPOs) in India, are usually issued

by small companies but at the same time big private companies also go public

by issuing their shares.

The Upcoming IPOs in India are being issued by those private companies that

want to sell their shares in the country's capital markets. Many companies are

planning to launch their IPOs in the financial year 2009-2009.

Various companies issuing upcoming IPOs in India as on 3rd


December, 2008 are:
• UTI Asset Management Company Ltd whose lead manager is Sbicap

Securities Ltd.

• Madhana Industries Ltd whose lead manager is Edelweiss Securities Ltd.

• Pipavav Shipyard Ltd whose lead manager is Citigroup Global Markets

India Pvt. Ltd.

• Mahindra Holidays & Resorts India Ltd whose lead manager is HSBC

Securities And Capital Markets India Pvt. Ltd.

• Gammon Infrastructure Projects Ltd whose lead manager is Sharekhan

Ltd.

Page No. 53
• Resurgere Mines & Minerals India Ltd whose lead manager is Motilal

Oswal Securities Ltd.

• National Hydroelectric Power Corporation Ltd whose lead manager is

Enam Securities Pvt. Ltd.

• Kiridyes and Chemicals Ltd whose lead manager is Centrum Capital Ltd.

• Neel Metal Products Ltd whose lead manager is ICICI Securities Ltd.

• Jhaveri Flexo India Ltd whose lead manager is SREI Capital Markets Ltd.

• Gokul Refoils And Solvent Ltd whose lead manager is Intensive Fiscal

Services Pvt. Ltd.

• Pride Hotels Ltd. whose lead manager is Edelweiss Securities Ltd.

• Oil India Ltd. whose lead manager is Citigroup Global Markets India Pvt,

Ltd.

• Man Infraconstruction Ltd. whose lead manager is Kotak Mahindra Capital

Company Ltd.

• Oswal Wollen Mills Ltd. whose lead manager is UTI Bank Ltd.

• TCG Lifesciences whose lead manager is Enam Securities Pvt. Ltd.

• Uma Precision Ltd. whose lead manager is Karvy Stock Broking Ltd.

• Future Ventures India Ltd. whose lead manager is Enam Securities Ltd.

• Alkali Metals Ltd. whose lead manager is Religare Securities Ltd.

• Multi Commodity Exchange India Ltd. whose lead manager is JM Morgan

Stanley Financial Services Pvt. Ltd.

• Cox & Kings (India) Ltd. whose lead manager is Enam Securities Ltd.

Page No. 54
• Jaiprakash Power Ventures Ltd whose lead manager is Enam Securities

Ltd.

• Aishwarya Telecom Ltd. whose lead manager is SREI Capital Markets Ltd.

• ACME Tele Power Ltd. whose lead manager is Kotak Securities Ltd.

• RNS Infrastructure Ltd. whose lead manager is ICICI Securities Ltd.

• Midvalley Entertainment Ltd. whose lead manager is Religare Securities

Ltd.

• Ramsarup Lohh Udyog Ltd. whose lead manager is Microsec Capital Ltd.

• Edserv Soft at 20% lower circuit, witnesses 45 bulk deals

• Bharat Oman Refineries defers IPO

• Edserv witnesses 188 bulk deals, India Max sells 4 lk shrs

• Edserv IPO: Will 50% allotment to QIBs affect stock ahead?

• See FY09, FY10 EPS at Rs 15/sh: Edserv Softsystems

• EdServ Softsystems ends with 129% premium

• EdServ Softsystems lists at issue price of Rs 60

• EdServ Softsystems to list on March 2

• Crisil finds weak corporate governance structure in IPO cos

• BSNL\'s IPO plans still on cards: Scindia

• ING Vysya pays Rs 4 lakh to settle IPO case

Chapter (3)
Page No. 55
Page No. 56
Part 3.1

LATEST NEWS IN IPO SECTOR

The IPO market in India has been growing at a massive pace for the past

few years. With the advent of some leading IPOs in India, the country has

become the largest IPO market across the globe so far. India has saved almost

USD 3.3 billion proceeds in the global IPO market from eight deals of late. As

has been estimated by Thomson Financial, the biggest contributor to these deals

has been the USD 3 billion IPO of Reliance Power. The second largest IPO in

India is Emaar MGF which is a USD 1.6 billion IPO. Emaar MGF has revised

the price range for the Equity shares. Initially it was Rs 540-630 per share

which now costs Rs 530-630 per share. A report by Thomson Financial states

that India has occupied 49.1 percent of the global IPO proceeds in the current

year 2008 as compared to 3.7 percent in the year 2007. The global IPO market

has deteriorated by 36.1 percent during the past one year.

 HCC defers plans to launch IPO of Lavasa Corporation

Construction major HCC's group company Lavasa Corporation, which is

developing an ambitious Rs 30,000-crore hill city project here, has deferred its

plan to launch an initial public offer due to global economic slowdown.

Page No. 57
 Bharat Oman Refineries defers plans to raise funds through IPO

The Bharat Petroleum Corporation-promoted Bharat Oman Refineries has

deferred its earlier plans to raise funds through an initial public offer, due to

adverse market conditions.

 ONGC mulls IPO for Rs 12,440 cr plant, gives 19% stake to GAIL

ONGC is planning an initial public offering of its subsidiary, which is building

Rs 12,440 crore petrochemical plant at Dahej in 2011, even as it agreed to give

state gas utility GAIL India a 19 per cent stake in the mega project.

 Tata Cap issue over subscribed 6 times; huge investor response

Public issue of Tata Group firm Tata Capital got subscribed over six times of

the offer, receiving bids worth over Rs 3,000 crore, driven by robust response

from all categories of investors.

 Governance’s weak in 50% of IPOs: Crisil


Corporate governance standards were ‘weak’ in almost 50% of the 29 initial

public offerings (IPOs) graded by Crisil since May 2007, the rating agency said

in a release on Thursday.

 Corporate governance may weigh more in future IPO gradings

Page No. 58
Ratings agencies are likely to increasingly look at corporate governance as a

key aspect of gradings in initial public offers (IPO) in the future.

 Government plans divestment in five PSUs via IPOs


Government is planning to list at least PSUs in the stock markets after a similar

effort last year had to be shelved at the last moment when the stock markets

tanked following the global financial meltdown.

Page No. 59
Part 3.2
MAJOR PLAYER OF IPO IN INDIA

Some of the leading IPOs in India include Reliance Power Limited IPO,

Tulsi Extrusions Limited IPO, Onmobile Global Limited IPO, EMAAR MGF

IPO, Future Capital Holdings Limited IPO and many more. All these IPOs have

opened their subscriptions in 2008. India has saved almost 3.3 billion proceeds

in the global IPO market through eight deals which has made it the largest IPO

market across the globe. Reliance Power IPO has been the biggest contributor

in this regard

The Initial Public Offering (IPO) is defined as the first set of stocks that are sold

out by a company to the public in order to seek an expansion of the capital. The

IPO is usually set up by the smaller or newly emerging companies but the large-

scale companies also go for it in order to become publicly traded. The issuer is

faced with important considerations like the security of the issue, price band

offered for the same and the time for sale. It is a risky affair for any individual

investor as he or she does not have any clue regarding the performance of the

shares on the first day of sale.

Page No. 60
Top Companies: An analysis
Reliance Power IPO has been issued by

Reliance Power Limited. Reliance Power IPO

was issued on 15th January, 2008 and closed on 18th January, 2008. Reliance

Power Limited Company is planning to generate capital worth Rs. 11, 700

crores through the IPO. This makes it the largest IPO in the country as on 17th

January, 2008. The price band of the equity shares of Reliance Power IPO has

been fixed at Rs. 405- 450 per equity share.

The total size of Reliance Power IPO is around 26 crores equity shares.

Reliance Power IPO will be listed on the National Stock Exchange (NSE) and

also on the Bombay Stock Exchange (BSE). The lead bankers of Reliance

Power IPO are Enam Securities, Kotak Mahindra Capital Co, ABN Amro

Rothschild, ICICI Securities, JP Morgan Chase & Co, UBS AG and Deutsche

Bank AG.

The main objective of Reliance Power IPO is that the proceeds from the issue

will be used to fund the power generation projects that the company plans to

carry out.

Page No. 61
BGR Energy System (India) Ltd. was incorporated in 1985.

BGR Energy System (India) Ltd. is engaged in the business of

producing and selling different kinds of equipments, services and systems for

power, refinery, gas & oil, and petrochemical industries .BGR Energy IPO was

issued on 5th December, 2007 and closed on 12th December, 2007. The total

size of BGR Energy IPO is 9,136,000 equity shares of Rs. 10 each. Out of the

total number of equity shares around 500,000 has been reserved for the

employees of the company and about 8,636,000 have been issued to the public.

The price band of BGR Energy IPO has been fixed between Rs. 425 and Rs.

480.

BGR Energy IPO was listed on the National Stock Exchange (NSE) and also on

the Bombay Stock Exchange (BSE). The registrar of BGR Energy IPO was

Intime Spectrum Registry Ltd. The lead managers of BGR Energy IPO were

CLSA India, SBI Capital Markets, UBS Securities India, and Kotak Mahindra

Capital. The minimum order quantity for BGR Energy IPO was fourteen shares.

The maximum amount for subscription in BGR Energy IPO for the retail

investor was Rs. 100,000.

Page No. 62
The Cinemax India IPO was launched in the

year 2006, for the purpose of expanding the

company and setting up theater screens in different locations.

The Cinemax India IPO was launched with the purpose of utilizing the funds

for meeting the requirements of the capital expenditure of establishing 19 new

theater screens throughout the country, at an estimated cost of Rs 110.69 crores.

The proceeds from the IPO would also be used for the general corporate

purposes which include acquisitions.Cinemax India has filed its red herring

prospectus with the Securities and Exchange Board of India (SEBI).

Some the places where the Cinemax India is planning to set up theaters are

Kolkata, Pune, Guwahati, Nasik, Panipat, Hyderabad, Ahmedabad, Siliguri,

Bangalore, Indore, Nagpur, Faridabad, Ghaziabad, Ludhiana and Mumbai.

Cinemax India is one of the leading exhibition theater chains in India. It is

operating in several locations throughout the country. All together in the year

2006 it had 33 screens in 10 different locations. Cinemax India is a part of the

Kanakia Group. In the year 2006, the total annual income was Rs 438.60

million and the net profit was Rs 67.64 million.

Page No. 63
ICICI Bank IPO was launched on June 18,

2007 a week after the opening of the DLF IPO.

ICICI Bank raised Rs. 10,000 crores from investors from its Initial Public

Offerings (IPO). ICICI Bank's domestic issue is part of a USD 5 billion capital

raising program. ICICI IPO offered discount rates to its retail investors. The

subscriptions of ICICI IPO closed on 22nd June 2007. One of the chief focuses

of ICICI IPO was to generate interest among the retail investors keeping in

view the prevailing market price of around Rs. 903. The ICICI Bank IPO has

reportedly crossed the expected subscription amount by 10.5 times. The public

offerings of the bank were subscribed by 11.5 times.

ICICI Bank has planned up to elevate another USD 2.5 billion from the issue of

American Depository Receipts. ICICI Bank has also decided to raise money by

selling off the shares of its investment company for insurance business. This

selling off of shares of the investment company of ICICI Bank will be cleared

by RBI and IRDA. In 2007, ICICI Bank has got the approval from the Foreign

Investment Promotion Board (FIPB) to sell up to 24 percent equity in the ICICI

investment company. The international investors will be endowed with 5

percent equity from ICICI Bank. The bank has also decided for a shifting of its

assets in other subsidiaries namely ICICI Prudential Life Insurance, ICICI

Lombard General Insurance and ICICI Prudential Asset Management.

Page No. 64
Indian Bank was established on 15th August

1907 as a part of the Swadeshi Movement in

India. Indian Bank IPO was issued in February 2007, almost 100 years after the

bank was established. The issue of Indian Bank IPO was opened on 5th

February, 2007 and closed on 9th February 2007. The size of the Initial Public

Offering (IPO) of Indian Bank was 85,950,000 equity shares. It was done

through 100 percent book building and had a face value of Rs.10. The retail

segment was given 23,206,500. The price range varied from Rs.77 to Rs.91 and

the tick size was Re.1. The minimum number of shares to be purchased was

kept at 75. The retail investors were given the maximum subscription amount of

Rs.100,000. The total size of Indian Bank IPO was estimated to be around

Rs.782 crores.

Objectives of Indian Bank IPO

• To fulfill the capital requirements for implementation of Base II standard.

• To provide capital adequacy for it's loan and investment portfolio section.

• To provide finance for developing business infrastructure.

Indian Bank has more than 22,000 employees. The Indian Bank has 1411

branches spread all across the country. Indian Bank offers diversified banking

services and has three subsidiary companies. The foreign branches of Indian

Bank are set up in Singapore and Colombo

Page No. 65
Kingfisher till date has not launched any IPO, but

has expressed its wish to launch one soon. This

IPO would be used to fund its aggressive

expansion plans in India. The accumulated corpus would be utilized to fund its

airline business and to payoff debt for its acquired liquor company Shaw

Wallace & Company.

The brand Kingfisher is being owned by the business conglomerate United

Breweries Group. The brand is being used for two business entities - Airlines

and Alcoholic Beverage. The Airlines operates under the name of "Kingfisher

Airlines" and the alcoholic beverage segment manufactures "Beer" and

"Mineral Water" under the same brand name. Till now the company has not

launched any IPO to fund its aggressive expansion plans, but plans to launch it

in near future to raise capital. Dr Vijay Mallya is the Chairman and CEO of

both the segments. The Chief of the United Breweries Holding Ltd (UBHL),

Mr Vijay Mallaya, said that the group would come up with an Initial Public

Offering in 2008 and would raise a total corpus of US$ 400 million. The Initial

Public Offering of the Kingfisher Airlines would target a corpus of US$ 200

million and the rest would be raised through the IPO of the liquor

business.Kingfisher Airline IPO, to be issued for the first time in the year 2008,

to finance the airline's expansion and funding of A380s air fleet.

Page No. 66
KNR Constructions Ltd. IPO has been issued by

the company in order to fulfill various objectives

such as to meet the company's requirement for working capital and to purchase

equipments.KNR Constructions Ltd. was incorporated in 1995 and the

company is engaged in the business of infrastructure project development. The

company provides services of construction, engineering and procurement for

various sectors like irrigation, highways & roads, and management of the

infrastructure of urban water. As on 30th June 2007, KNR Constructions Ltd.

had around twenty four projects in the various states of India that included

Assam, Tamil Nadu, Uttar Pradesh, Karnataka, Andhra Pradesh and Madhya

Pradesh.

The issue of KNR Constructions Ltd. IPO was opened on 24th January and

closed on 29th January, 2008. The total number of shares issued by KNR

Constructions Ltd for its KNR Constructions Ltd. IPO is 7,874,570 equity

shares at the face value of about Rs. 10 each. The company plans to raise

through KNR Constructions Ltd. IPO around Rs. 142 crores from the Indian

capital market. KNR Constructions Ltd. IPO has been listed on the National

Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The lead manager

of KNR Constructions Ltd. IPO is Axis Bank Limited. The registrar of KNR

Constructions Ltd. IPO is Intime Spectrum Registry Limited.

Page No. 67
Page No. 68
Manjushree Extrusions Ltd IPO was

issued on 31st January, 2008 and it closed on

6th February, 2008. The various objectives of issuing Manjushree Extrusions

Ltd IPO by the company were to use the proceeds to expand the operations of

the company and also to meet the requirement of the working capital.

The lead manager of Manjushree Extrusions Ltd IPO was Centrum Capital

Limited. The registrar of Manjushree Extrusions Ltd IPO was Alpha Systems

Private Limited and it was listed on the Bombay Stock Exchange (BSE). The

total size of the equity share of Manjushree Extrusions Ltd IPO was around Rs.

23.07 crores. The face value of per equity share of Manjushree Extrusions Ltd

IPO was Rs. 10. The maximum amount of subscription by the retail investor

was around Rs. 100,000 in Manjushree Extrusions Ltd IPO. Manjushree

Extrusions Ltd was incorporated on November 13th, 1987 and it is engaged in

the production of plastic packaging items like containers and jars. Manjushree

Extrusions Ltd manufactures products for multinational companies in various

sectors like food processing, pharmaceutical, agrochemicals and FMCG. The

net profit of Manjushree Extrusions Ltd came to Rs. 112.42 lacs in 2004- 2005.

In 2005- 2006 this figure stood at Rs. 137.11 lacs and in the following year,

2006-2007, this figure increased to Rs. 282.32 lacs.

Page No. 69
The Maruti IPO has set a price range of Rs. 125 per share

above the Floor price of Rs. 115. The subscription for Maruti

IPO opened on June 12, 2003 and closed on June 19, 2003. The

response to Maruti IPO was overwhelming within the subscription period,

which led to an over-subscription of the public offerings of Maruti by more than

ten times.

The government decided to shell out 85 percent shares of IPO to the non-

institutional investors and 15 percent shares to the non-institutional high net-

worth individuals. Consequently, government would get Rs.993 crores for 7.94

crores shares. But SEBI recommended that 60 percent can be given to the

institutional investors but at least 40 percent should be allotted for the retail

investors as well. The government has allotted 60 percent shares to the retail

investors and 40 percent shares to the institutional investors. The shares were

allotted to the individuals on a pro rata basis. The IPO of Maruti is claimed to

be one of the biggest capital market transactions in recent years in India and

also the largest Book Built IPO that has been implanted in India till date. Maruti

IPO received more than 300,000 applications which is a record in the history of

IPO in India. The majority of applicants to these comprise of the Indian retail

investors. They received the allotments on the basis of the price range already

fixed by the government. A huge number of institutional investors also paid a

lot of importance in investing in Maruti.

Page No. 70
The subscription of Power Grid Corporation of India

IPO was opened from 10th September 2007 to 13th

September 2007. The price range of Power Grid Corporation

of India IPO was between Rs. 44 and Rs. 52. The proceeds

from Power Grid Corporation IPO were submitted to the National Investment

Fund (NIF). Citigroup, Kotak and Enam were the lead managers for the Power

Grid Corporation IPO. Karvy Computershare private limited was the registrar

for the Power Grid Corporation IPO.

In the year 2006, Power Grid Corporation of India Limited (PGCIL) reported a

28 percent jump in the net profit which amounted to Rs 1,009 crores. The

company launched their IPO in 2007 and the subscription was opened from

10th September 2007 to 13th September 2007. The shares of the IPO of Power

Grid Corporation of India had a price range of Rs. 44 to Rs. 52 per share. The

funds raised from Power Grid Corporation IPO were submitted to the National

Investment Fund (NIF). The lead managers of the IPO of Power Grid

Corporation include Kotak, Citigroup and Enam. Power Grid Corporation of

India (PGCIL) raised a capital of Rs 6,000 crores through the IPO. The

proceeds from the IPO will be used to set up branches in almost 12 countries

across the globe. A unit will be set up in China in order to provide consultancy

services, accomplish several projects and operate transmission lines and grid

network..

Page No. 71
The Reliance Petroleum IPO was launched by

Reliance Petroleum Limited, the petrochemical

segment of the legendary Indian business

conglomerate, Reliance Industries Limited. The Mukesh Ambani led Reliance

Petroleum Limited plans to expand its present petrochemical business. The

price band for the Reliance Petroleum IPO was fixed between Rs 57 and Rs 62

per equity share and it raised Rs 6,000 crores.

The main purpose of launching the Reliance Petroleum IPO was to fund its

refinery project, which would be operational by the end of 2008. This refinery

project of Reliance Petroleum would be an export oriented oil refinery in the

special economic zone, annexed to its Jamnagar refinery in Gujarat. The said

refinery would have a capacity of 580,000 barrels of crude oil per day. Further,

it would also utilize a part of the accumulated fund for the setting-up of a

polypropylene plant which would have a production capacity of 900,000 tons

per annum. The Reliance Petroleum IPO was launched on 13th April 2006 and

the bidding was closed on 20th April. The price band for the Reliance

Petroleum IPO was fixed between Rs 57 and Rs 62 per equity share. This Initial

Public Offering of the Reliance Petroleum raised Rs 6,000 crores. The Reliance

Petroleum IPO issued 45 crores equity shares and raised Rs 2,790 crores at the

upper end of the price band. The Reliance Petroleum IPO was very popular

amongst retail investors, Petroleum IPO.

Page No. 72
Techpro Systems IPO will be issued by Techpro Systems

(TSL) which is engaged in taking up turnkey projects in

the systems of bulk material handling. The total size of the

issue of Techpro Systems IPO will be around Rs. 250 crores approximately.

Techpro Systems IPO will be launched by the company Techpro Systems (TSL)

and the total size of the issue will be worth about Rs. 250 crores approximately.

Techpro Systems (TSL) plans to enter the Indian capital market with its Techpro

Systems IPO which will be a book built issue.

Techpro Systems IPO will consist of 7,300,000 equity shares and it will

comprise of around 22.33% of the paid- up post issue capital of Techpro

Systems (TSL). The company has filed with SEBI its Draft Red Herring

Prospectus in order to issue Techpro Systems IPO. The lead arrangers of

Techpro Systems IPO are SBI and Kotak. Techpro Systems IPO is expected to

be issued in the last week of January, 2008. Techpro Systems IPO will ensure

that the company will have enough funds to take up developmental work and

also to expand its operations.

Techpro Systems (TSL) is engaged in undertaking projects of turnkey in

systems bulk material handling that includes handling raw material systems for

cement plants, power, and steel. Techpro Systems (TSL) manufactures various

equipments like feeders, crushers, and screens and it also sets up conveyor

systems.

Page No. 73
Chapter (4)

Page No. 74
MAJOR FINDINGS

• It can be observed that out of 24 companies, only 10 companies have given

positive returns on the date of listing.

• Out of 24 companies observed, 9 companies have given positive returns

for 1 month.

• As far as 3 months & 6 months returns are concerned, 15 companies have

given positive returns.

• Only 10 companies were able to perform positive returns at the end of 1

year.

• Market return indicates that, 11 companies had given positive return for 1

month.

• months Market rate of return was positive for 21 companies.

• Market return was positive for 6 months for all 24 companies.

• For 1 year, all 24 companies were able to give positive returns.

• Only 5 companies were able to give positive returns for all the periods.

• If date of listing is concerned then, ICRA Ltd offered highest rate of return

at 143.41%.

• Highest rate of return was offered by ICRA Ltd. For one month and 3

months at 184.27% and 214.22%.

• For 6 months and 1 year, Orbit Corporation Ltd. Gave highest return i.e.

464.41% and 289.41%.

Page No. 75
• S.D. was lowest for Oriental Trimex Limited at 2.14, 1.62, 2.55, 3.88 for

all the periods indicating that it is less riskier than other.

• S.D. was highest for Autoline Industries Limited at 56.7 indicating that it is

the riskiest than any other security for 1 month.

• For 3 months, Advanta India Limited has the highest S.D. at 93.44

• For 6 months, Orbit Corporation Limited was riskiest than any other scrip

at 131.39

• For 1 year, Orbit Corporation Limited had highest S.D. at 225.71%.

• Also, Orbit Corporation Limited has offered highest return for 6 month and

1 year.

Conclusion

IPO is used by a company to raise its funds. The extra amount obtained from

public may be invested in the development o f the company, although it costs a

little to a company but it gives a way to get more money for long term

investments.

Page No. 76
Chapter (5)

Page No. 77
 http://www.reliancemoney.com

 http://en.wikipedia.org

http://finance.indiamart.com/india_business_information/sebi_investors_kno

 whow.html

 http://www.hinduonnet.com/2003/03/26/stories/2003032604291800.htm

http://demataccount.com/2008/01/15/learning-basic-concepts-of-ipo-india/

 http://www.sebi.gov.in

Special Thanks to:-

 Wikipedia, the free encyclopedia.htm

 http://www.google.com

 http://www.economywatch.com/business-and-financial/IPO-industry

 http://www.fibre2fashion.com/IPO-article

 Grading of IPOs- The Hindu Business Line

 Biggest IPO in India’s -Capital market History Business management article

Business News Newswire

 Global_IPO_Trends_2007 -Report by Ernst & Young India -

 IPO, IPOs India News Market News - Economic Times

Page No. 78