INTRODUCTION This report, as the title ―Public issue” suggests, is an attempt to bring forth the importance of the process

of Issue of an Initial Public Offer (IPO). When a Company issues an IPO, it means it is going public. The issue of an IPO introduces a great degree of transparency in a Company‘s operations. All the relevant and updated information pertaining to the company is laid down before the investors so that they may make an investment decision. Again, there are set procedures, rules, regulations and laws to be followed in laying down this information before the investors. A document called the „Prospectus‟ must be prepared. The Prospectus captures all the necessary information that is to be made available to the investors. Apart from the Prospectus, there are various other company documents that need to be verified and summarized in order to present them before the investors. Many Intermediaries are appointed for the purpose of managing the public issue of an IPO of a company. They play a vital role by coordinating the activities of the company, the Regulatory Bodies and Investors. The following are the responsibilities: Company, to manage the entire process of issue of its IPO, and to present the Company‘s information before the investors in a concise and unambiguous form. Investors, to give them all the relevant and updated information on the Company, while at the same time protecting their interests Regulatory Bodies such as the Securities and Exchange Board of India, to adhere to all secretarial and legal work. In order to fulfill all their responsibilities well, they must work diligently. The process through which they verify and summarize the Company‘s information is thus called the process of Due Diligence. These Intermediaries must issue ―Due Diligence Certificates‖ at various points during the issue process, saying that the company documents have all been verified and are correct. This report will take the reader through the entire process of the Issue of an IPO and will lay special emphasis on the dynamic role played by them. This report aims at highlighting the key points about an IPO issue by separating the concrete points regarding an issue from the frills, and focusing on these concrete points.

Objectives of the Project To study and analysis the Indian initial public offering (IPO) market and Role of its regulatory aspect. To study and understand the concept of and procedure, problem, benefits, involved in Initial Public Offers (IPO‘s). To understand the role of intermediaries in managing Initial Public Offers. To know various services offered by religare securities. To study risks faced by investor in primary market.

Scope of the Project The following report is an attempt to analyses thoroughly, the behavior and dynamics of Initial Public Offerings market in India. In other words, it‘s a detailed study on the Primary and secondary Market in India. A long with study on IPO process and its regulatory aspect. This study takes into account Public Offerings made by major companies in various sectors, in a period ranging of last few year. The sectors taken into consideration area) Industrials b) Consumer goods & retail c) Technology , media & Telecommunication d) Real Estate & infrastructure e) Banking, financial Services & insurance f) Healthcare & life sciences

g) Power and Energy The study analyses the behavior of public offerings of companies within each sector and also attempts to make a comparative analysis among the sectors, with the purpose of gauging investor preference. Over subscription and under subscription analysis determines the investor preference at the time of issue.

Primary data has been collected by: Consulting the officials ―associate Vice President – Investment Banking‖ in Religare Capital Markets Limited in Hyderabad. . and furnished by. information secured from web sites. Books related to Financial Management. Also. IPO prospectus and all the necessary documents required for. observations and through newspapers. the companies for managing the issue of IPO‘s and IPO process have been used as primary data. magazines and the daily experience. Secondary data It includes. Web sites were used as the vital information source.Research Methodology Sources of Study · The data for the project has been collected from both primary and secondary sources.

The scope of the study is very vast. To understand the overall India IPO market. the period of 45 days is not enough. . this study is confined to a few companies only. The data followed in project is partly based on Secondary information and it can‘t be held true as 100% correct.Limitations of the project Although Initial Public Offers are issued by many companies. Therefore an attempt is made to cover as much as possible. This study will be limited to the information willingly shared by the authorities and of RSL. These are companies that fall within limited company. so finding cannot be generalized for all times. It is very difficult to cover and focus on all the areas.


what are its pros and cons. mainly because of India being a developing country and lot of growth in various sectors which leads a country to ultimate success. IPO has been one of the most important generators of funds for the small companies making them big and given a new vision in past and it is still continuing its work and also for many coming years. This report talks about how IPO helps in raising fund for the companies going public. And when we talk about country‘s growth which is dependent on the kind of work and how much importance to which sector is given. . And it also tells us how we can more or less judge a good IPO. and also it gives us detailed idea why companies go public.Review of Literature IPO – INITIAL PUBLIC OFFERING is the hottest topic in the current industry. what are primary and secondary markets and also the important terms related to IPO. And industries which have massive outflow of workman a big portfolio then its very difficult for any company to work with limited finance and this is where IPO plays an important role. And when we say or talk about industries growth which leads the economy of country has to be balanced and given proper finance so as to reach the levels to fulfill the needs of the society. It gives us idea of how IPO is driven in the market and what are various factors taken into consideration before going for an IPO. How and what are the steps taken by the companies before going for any IPO and also the role of (SEBI) Securities and Exchange Board of India the BSE and NSE .

Of the thousands of IPOs (initial public offerings) and offers for sale made between 1994 and 1996.3 billion worth of proceeds from eight deals.1% of global IPO proceeds at the moment. Realty firms picked up around . It was the real estate sector which took the maximum advantage of the bullish stock market trends in 2007. tightened the prerequisites for an IPO. but when it did. and towards the end of the decade. Back then.7% same time last year. The rest just frittered the money away. Significant. INVESTORS are still wary of equities in the 1990s. The phenomenon spawned the term siliconaire. CURRENT POSITION OF INDIAN IPO MARKET India is being lauded as the savior of the ailing global IPO market with $3. less than a hundred were from companies with track record. According to the industry body Assocham. only a few managed to complete planned projects and deliver value to investors. introduced book-building. This makes India the largest IPO market in the world so far this year. compared to just 3. to blame are the excesses in the primary market in the 1990s. given those global IPOs declined 36. India accounts for 49. real estate players raised the maximum amount of funds from the capital market through IPOs last year. The Securities and Exchange Board of India (SEBI) was late to wake up to the excesses. Even in this shortlist.INDUSTRY PROFILE INDIAN IPO MARKET HISTORY The term initial public offering (IPO) slipped into everyday speech during the tech bull market of the late 1990s. which described the dotcom entrepreneurs in their early 20s and 30s who suddenly found themselves living large on the proceeds from their internet companies' IPOs. The primary market of the mid-1990s was merely used as a channel to move public funds into private hands. it seemed you couldn't go a day without hearing about a dozen new dotcom millionaires in Silicon Valley who were cashing in on their latest IPO. it improved the disclosure framework.1% over the last one year.

This process of selling the new stock issues to prospective investors in the primary market is called underwriting. with government expecting to raise INR 500 B by end of 2010. about Rs.994 crore 2007-08 Rs 52.039 crore 2003-04 Rs 17.432 crore 2005-06 Rs 23. The primary market does not involve the stock exchanges. PRIMARY MARKET AND SECONDARY MARKET When shares are bought in an IPO it is termed primary market. it is called as buying from the secondary market. the companies will raise money with ease in early in 2010. When an investor buys shares from another investor at an agreed prevailing market price.42.119 crore raised in the primary market in the period starting from January 1.7% of the total funds generated through IPOs. A company that plans an IPO contacts an investment banker who will in turn called on securities dealers to help sell the new stock issue. Of the Rs.807 crore 2004-05 Rs 21. 2007 to mid-December. but we expect 2010 will be exciting performance for both primary and secondary markets. With more than 60 firms already in process for approval from SEBI to raise approximate INR 400B.591 crore was raised by the realty firms. The divestment programme is expected to gain the momentum in 2010.253 crore Secondary markets out performed primary markets in 2009.14. With the handy increase in liquidity in market and stabilization in secondary markets. .676 crore 2006-07 Rs 24. Financial Year Amount raised through IPO 2002-03 Rs 1. 2010 will see the IPOs of BSNL and RITES and FPO of SAIL.34. we expect the number of draft offer document filed with SEBI will match the levels of 2007.

In India. the secondary and primary markets are governed by the Security and Exchange Board of India (SEBI).The secondary market involves the stock exchanges and it is regulated by a regulatory authority. .

and to regulate the securities market and for matters connected there with or incidental thereto” The mission of SEBI is to make India as one of the best securities market of the world and SEBI as one of the most respected regulator in the world. 1992 in accordance with the provisions of the Securities and Exchange Board of India Act. . The PREAMBLE of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as “….to protect the interests of investors in securities and to promote the development of..ADVANTAGES AND DISADVANTAGES OF AN IPO ADVANTAGES Increased capital Liquidity Increased Prestige Valuation Increased wealth DISADVANTAGES Time and Expense Disclosure Decision based upon stock price Regulatory Review Falling Stock Price Securities and Exchange Board of India The Securities and Exchange Board of India was established on April 12. 1992.

• Regulating substantial acquisition of shares and takeover of companies. fully automated screen-based trading system with national reach. NSE was set up by leading institutions to provide a modern. FUNCTIONS The regulation of the capital markets is primarily the responsibility of the Securities and Exchange Board of India (SEBI). • Prohibiting insider trading in securities. and promotes the development of Securities Market and it also regulates the securities market. which is located in Mumbai. including mutual funds is a responsibility of SEBI. A market Index is a convenient and effective product because of the following reasons: It is used in derivative instruments like index futures and index options. practices and procedures. safety and market integrity. It can be used for passive fund management as in case of Index Funds. speed & efficiency. Registering and regulating the working of collective investment schemes. with the imposition of monetary penalties. The Organization The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges. which recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to investors from all . SEBI is responsible for prohibiting fraudulent and unfair trade practices relating to securities markets. Another significant event is the approval of trading in stock indices (like Nifty & Sensex) in 2000. It has set up facilities that serve as a model for the securities industry in terms of systems. The National Stock Exchange (NSE) is India's leading stock exchange covering various cities and towns across the country. The Exchange has brought about unparalleled transparency.OBJECTIVE SEBI protect the interests of investors in securities. on erring market intermediaries. Some of the major functions of SEBI are: SEBI is expected to regulate the business in stock exchanges and any other securities markets.

NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000.500. Market Segments and Products NSE provides a trading platform for of all types of securities for investors under one roof – Equity. Stock Options and Currency Futures. Mutual Funds (MFs) units. Based on the recommendations. pursuant to the BSE Scheme. Capital Market (CM) segment. Wholesale Debt Market (WDM) segment. SENSEX. Popularly known as "BSE".000. Corporate Debt. Exchange Traded Funds (ETFs). The Exchange provides trading 5 in 4 different segments viz. 2005 notified by .000 crore in the year 2007. the Exchange is now a demutualised and corporatized entity incorporated under the provisions of the Companies Act.the graph shows from a mare turnover of above 1. On its recognition as a stock exchange under the Securities Contracts (Regulation) Act. Commercial Paper (CPs). Stock Futures. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. it was established as "The Native Share & Stock Brokers Association" in 1875. Bombay Stock Exchange Limited (the Exchange) is the oldest stock exchange in Asia with a rich heritage. 1956.000 crore in the year 2000 how it has decreased and increased to more than 3. Index Options.across the country on an equal footing. T-Bills. Futures & Options (F&O) segment and the Currency Derivatives Segment (trading on which commenced on August 29. is tracked worldwide. 2008) Graph depicting the turnover in NSE The above graph depicts the turnover of NSE from 2000 to 2007. Certificate of Deposits (CDs). Warrants. Central and State Government Securities. Earlier an Association of Persons (AOP). 1956 in April 1993.The Exchange's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized and its index.. It is the first stock exchange in the country to obtain permanent recognition in 1956 from the Government of India under the Securities Contracts (Regulation) Act. constant increase in turnover itself proves the growth and attractiveness of this market. 1956. Derivatives like Index Futures.

During the year 2004-2005. The selection of companies has primarily been done on the basis of current market capitalization of the listed scripts on the exchange.Bombay Stock Exchange Limited received its Certificate of Incorporation on 8th August. The graph easily shows that the turnover of BSE has increased in leaps and bounds over the given period. under the Scheme. Besides market capitalization. The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. the market activity of the companies as reflected by the volumes of turnover and certain fundamental factors were considered for the final selection of the 200 companies. 2005 and Certificate of Commencement of Business on 12th August. Choice of Base Year: The financial year 1989-90 has been chosen as the base year for the price stability exhibited during that year and due to its proximity to the current period.the Securities and Exchange Board of India (SEBI). The systems and processes of the Exchange are designed to safeguard market integrity and enhance transparency in operations. 2005. the trading volumes on the Exchange showed robust growth. The Exchange has succeeded the business and operations of BSE ongoing concern basis and its recognition as an Exchange has been continued by SEBI. 2005. The 'Due Date' for taking over the business and operations of the BSE. Graph depicting the turnover of BSE: The above graph shows the turnover in BSE from the year 2000 to the year 2007. Coverage: The equity shares of 200 selected companies from the specified and non specified lists of this Exchange have been considered for inclusion in the sample for `BSE-200'. . by the Exchange was fixed for 19th August.

Harrison & Co. To make a mark in the global arena. Harrison & Co. Harrison PLC ("RHH"). REL operates from seven domestic regional offices. The Company is a member of the National Stock Exchange (NSE) and OTCEI. The primary focus of Religare Securities Ltd. . Dubai and Singapore). (RFSL). Advisory on Mutual Fund Investments and Portfolio Management Services. With the addition of RHH the REL group now operates out of multiple Global locations. (the UK. Depository Participant Service. Ex-CMD of Ranbaxy Laboratories Ltd. (RSL) is a wholly owned subsidiary of RELIGARE Financial Services Ltd. which encompasses fundamentals as well as technical knowledge. Pursuant to expansion of REL's business. Besides the reach of RELIGARE. a Company promoted by the late Dr.Parvinder Singh. was incorporated in London in the Year 1803 and is believed to be one of the oldest firms of stockbrokers in the City of London. the USA. HISTORY AND BACKGROUND RELIGARE Securities Ltd. RELIGARE is a pioneer in the concept of partnership to reach multiple locations in order to effectively service its large base of individual clients. the company has grown from largely an equity trading company into a diversified financial services company.837* business locations all over India.COMPANY PROFILE RELIGARE SECURITIES LTD. South Africa. Brazil. in 2008 which was subsequently re-named as Religare Hichens. 43 sub-regional offices. REL acquired UK-based Hichens. The growing list of financial institutions with whom RSL is empanelled as approved Broker is a reflection of the high levels of services maintained by the Company. The bouquet of services offered by RELIGARE includes Broking (Stocks and Commodities). other than India. and has a presence in 498* cities and towns controlling 1. the clients of the company greatly benefit by its strong research capability. Hichens. RELIGARE was founded with the vision of providing integrated financial care driven by the relationship of trust. is to cater to services in Capital Market Operations to Institutional Investors.

Traditionally. . For the world. Symbol The Religare name is paired with the symbol of a four-leaf clover. The first leaf of the clover represents Hope. The second leaf of the clover represents Trust. it is considered good fortune to find a four-leaf clover as there is only one four-leaf clover for every 10. not in the binding. The ability to place one‘s own faith in another. Care. It is the beginning of every step and the foundation on which a person reaches for the stars.RELIGARE ENTERPRISE LIMITED Religare Finvest Religare ltd Securities Ltd Religare Wealth Mgt Services Ltds Religare capital Markets Ltd Religare finance Ltd Religare Commodities Ltd Religare Insurance Broking Ltd Religare Venture Capital Pvt Ltd Religare Realty Ltd ABOUT RELIGARE SECURITIES LIMITED BRND IDENTITY Name Religare is a Latin word that translates as 'to bind together'. To have A relationship as partners in a team. To accomplish a given goal with the balance that brings satisfaction. to all. each leaf of the clover has a special meaning. but in the bond that is built. Of new possibilities. The aspirations to succeed.000 three-leaf clovers found. It is a symbol of Hope. This name has been chosen to reflect the integrated nature of the financial services the company offers. Good Fortune. The dream of becoming. it is the symbol of Religare. For us. Trust.

Care. Hope.The third leaf of the clover represents Care. From it springs true warmth of service and the ability to adapt to evolving environments with consideration to all. four-leaf clover to visually symbolize the values that bind together and form the core of the Religare vision. The secret ingredient that is the cement in every relationship. Good Fortune. · INDIA · DUBAI · QATAR · HONG KONG · MALAYSIA · SINGAPORE · TOKYO · INDONESIA · BRAZIL · NEW YORK . The truth of feeling that underlines sincerity and the triumph of diligence in every aspect. Trust. The fourth and final leaf of the clover represents Good Fortune. Signifying that rare ability to meld opportunity and planning with circumstance to generate those often looked for remunerative moments of success. THE RELIGARE EDGE Diverse offerings Dynamic Management Team State-of-the art technology Vast Distribution and Reach Robust Brand Recognition Synergistic partnerships Innovative Initiative RELIGARE GLOBAL NETWORK Religare operate across multiple locations & countries. All elements perfectly combine in the emblematic and rare.

100000 INITIAL PUBLIC OFFERING AN OVERVIEW OF INITIAL PUBLIC OFFER An IPO or an Initial Public Offer is a company's first sale of equity shares to the general public. those of young.000 INDIAN DEPOSITORY RECEIPTS (including Anchor investor portion of 36. Securities offered in an IPO are often.Standard Chartered PLC Symbol – Series STAN EQ Issue Period May 25. An Initial Public Offering (IPO) can be a good investment avenue for equity investors. This paves way for listing and trading of the issuer‘s securities. Shares offered in an IPO are often. Investors purchasing. a fresh crop is expected soon. those of newly setup companies seeking outside equity capital and a public market for their shares. 2010 Post issue Modification Period May 29.000 IDRs) Issue Type 100% Book Building Price Range Rs 100 to Rs 115 Tick Size Re. 2010 Issue Size 240. but not always. but not always. 1/Market Lot 200 IDRs Minimum Order Quantity 200 IDRs Maximum Subscription Amount for Retail Investor Rs.000. It is important to understand IPO‘s and decide whether to invest in them or not. small companies seeking outside equity capital and a public market for their stock. A company's first sale of stock to the public. IPO's by investment companies (closed end funds) usually contain underwriting fees which represent a .000. Why does a company go for an IPO Initial Public Offering (IPO) is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. 2010 to May 28. While the IPO market is dry these days. stock in IPOs generally must be prepared to accept very large risks for the possibility of large gains.

. book building method or a combination of both. · A Book should remain open for a minimum of 5 days. Infect the organization and facilities of the market are also utilized for selling concerns to the public as going concerns through the conversion of existing proprietary enterprises or private companies in to public companies Corporate may raise capital in the primary market by way of an initial public offer. · Investors place their order with a syndicate member who inputs the orders into the 'electronic book'. · The Issuer also appoints syndicate members with whom orders can be placed by the investors. · Bids cannot be entered less than the floor price. Such facilities are of crucial importance in the context of the dichotonomy of funds available for capital uses form those in whose hands they accumulate. and those by whom they are applied for capital uses from those in whose hands they accumulate. · The Issuer specifies the number of securities to be issued and the price band for orders. an issuer company can issue securities in the following manner: a) 100% of the net offer to the public through the book building route. rights issue or private placement. However it should not be conceived as exclusively serving the purpose of raising finance for new capital expenditure. · Bids can be revised by the bidder before the issue closes. b) 75% of the net offer to the public through the book building process c) 25% through the fixed price portion. The basic purpose of an IPO is to facilitate transfer of resources from savers to entrepreneurs seeking to establish new enterprise or to diversify/expand existing ones. In case the issuer chooses to issue securities through the book building route then as per SEBI guidelines. This process is called 'bidding' and is similar to open auction. PROCESS OF AN IPO The Process: · The Issuer who is planning an IPO nominates a lead merchant banker as a 'book runner'.load to buyers. This Initial Public Offering can be made through the fixed price method. and those by whom they are applied to productive uses. An Initial Public Offer (IPO) is the selling of securities to the public in the primary market.

Pricing is critical and the most important process in IPO. In other words. the bidding period shall be extended for a further period of three days.· On the close of the book building period the 'book runner evaluates the bids on the basis of the evaluation criteria which may include Price Aggression Investor quality Earliness of bids. In case the price band is revised. The spread between the floor and the cap of the price band shall not be more than 20%. Thus. the number of shares is fixed. subject to the total bidding period not exceeding thirteen days. by issuing press release and also indicating the change on the relevant website and the terminals of the syndicate members. · Allocation of securities is made to the successful bidders. How does the company fix the price band? The red herring prospectus may contain either the floor price for the securities or a price band within which the investors can bid. The price band can have a revision and such a revision in the price band shall be widely disseminated by informing the stock exchanges. · Book Building is a good concept and represents a capital market which is in the process of maturing. · The book runner and the company conclude the final price at which it is willing to issue the stock and allocation of securities. etc. Pricing involves lot of research and calculations. Pricing is done in such a way those investors are benefited and also the company‘s objective is achieved that is its aim for an IPO is achieved. the issue size gets frozen based on the price per share discovered through the book building process. pricing is the most important factor in IPO process generally there are two methods of IPO pricing Fixed Pricing Book building Process PROCEDURE . it means that the cap should not be more than 120% of the floor price. · Generally.

an issuer based in the E. the allocation and pricing) of shares in an IPO may take several forms. IPOs typically involve one or more law firms with major practices in securities law.The sale (that is. the lead underwriter in the main selling group is also the lead bank in the other selling groups. the underwriters selling the largest proportions of the IPO. The client pays no commission to purchase the shares of a public offering. such as the Magic Circle firms of London and the white shoe firms of New York City. . but some shares are also allocated to the underwriters' retail investors. Public offerings are primarily sold to institutional investors. 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. as well the secondary sale of existing shares. the purchase price simply includes the built-in sales credit. Fixed Pricing An issuer company is allowed to freely price the issue. The basis of issue price is disclosed in the offer document where the issuer discloses in detail about the qualitative and quantitative factors justifying the issue price. Usually.U. intended to raise new capital. For example. take the highest commissions—up to 8% in some cases. i. Common methods include: Dutch auction Firm commitment Best efforts Bought deal 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). the underwriters keep a commission based on a percentage of the value of the shares sold. the offering will include the issuance of new shares. Usually. However. certain regulatory restrictions and restrictions imposed by the lead underwriter are often placed on the sale of existing shares. the lead underwriters. Because of the wide array of legal requirements. in addition to separate syndicates or selling groups for US/Canada and for Asia. Europe.e. Upon selling the shares. A broker selling shares of a public offering to his clients is paid through a sales credit instead of a commission. may be represented by the main selling syndicate in its domestic market. Usually.

It is a mechanism where. Book building Process Book building Process as Mentioned in the SEBI Book Building is basically a capital issuance process used in Initial Public Offer (IPO) which aids price and demand discovery.Fixed price does not allow an opportunity to the issuer or the merchant banker to do any discretionary allotment. It is a process used for marketing a public offer of equity shares of a company. Demand for the securities offered is known only after the closure of the issue Demand for the securities offered can be known everyday as the book is built. Guidelines for Book Building Rules governing book building is covered in Chapter XI of the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000. which are above or equal to the floor price. during the period for which the book for the IPO is open. The process aims at tapping both wholesale and retail investors. The offer/issue price is then determined after the bid closing date based on certain evaluation criteria. Difference between shares offered through book building and offer of shares through normal public issue: Feature Fixed Price process Book Building process Pricing Price at which the securities are offered/ allotted is known in advance to the investor. bids are collected from investors at various prices. which is possible only in a book building issue. Only an indicative price range is known. Payment only after allocation. EXAMPLE OF BOOK BUILDING SEBI (DIP) Guidelines Given for Book Building An issuer company proposing to issue capital through book building Shall comply with the following: . Price at which securities will be offered/ allotted is not known in advance to the investor. So there is one factor that we should remember which drives book building issue more. Payment if made at the time of subscription wherein refund is given after allocation.

(ix) The Book Runner on receipt of the offers shall maintain a record of the names and number of securities ordered and the price at which the institutional buyer or underwriter is willing to subscribe to securities under the placement portion. (iii) The issue of securities through book-building process shall be Separately identified / indicated as 'placement portion category'. as per these Guidelines. (b) The requirement of minimum 25% of the securities to be offered to the public shall also be applicable. (vi) The draft prospectus containing all the information except the information regarding the price at which the securities are offered shall be filed with the Board. (viii) (a) The copy of the draft prospectus filed with the Board may be circulated by the Book Runner to the institutional buyers who are eligible for firm allotment and to the intermediaries eligible to act as underwriters inviting offers for subscribing to the securities. (b) The draft prospectus to be circulated shall indicate the price band within which the securities are being offered for subscription.2 In an issue of securities to the public through a prospectus the option For 75% book building shall be available to the issuer company subject To the following: (I) The option of book-building shall be available to all body corporate Which are otherwise eligible to make an issue of capital to the public? (ii) (a) The book-building facility shall be available as an alternative to.A) 75% Book Building Process 11. (v) In case the book-building option is availed of. (vii) One of the lead merchant bankers to the issue shall be nominated by the issuer company as a Book Runner and his name shall be mentioned in the prospectus. underwriting shall be mandatory to the extent of the net offer to the public. (iv) (a) The securities available to the public shall be separately identified as 'net offer to the public'. (x) The underwriter(s) shall maintain a record of the orders received by him for subscribing to the issue out of the placement portion. and to The extent of the percentage of the issue which can be reserved for firm Allotment. . (b) The issuer company shall have an option of either reserving the Securities for firm allotment or issuing the securities through book building Process. in the Prospectus.

3. (iii) Book Building shall be for the portion other than the promoters Contribution and the allocation made to: (a) ‗Permanent employees of the issuer company and in the case of a new Company the permanent employees of the promoting companies'. 198 (c) persons who. or b. have business association. on the date of filing of the draft offer document with the Board.Duration of the issue Subscription list for public issues shall be kept open for at least 3 working days and not more than 10 working days. In case of Book built issues. the minimum and maximum period for which bidding will be open is 3–7 working days extendable by 3 days in case of a revision in the price band. make an issue of securities to the public through a Prospectus in the following manner: a. with the issuer making an initial public offering.3 196(An issuer company may. (b) ‗Shareholders of the promoting companies in the case of a new Company and shareholders of group companies in the case of an Existing company‘ either on a ‗competitive basis‘ or on a ‗firm allotment Bases.) 11. as depositors.75% of the net offer to the public through book building process and 25% at the price determined through book building.100% of the net offer to the public through book building process. bondholders and Subscribers to services. The public issue made by an infrastructure company. B) 195(Offer to Public through Book Building Process) 11. provided that allotment to such persons shall not exceed 5% of the issue .1 (I) 197(Deleted) (ii) Reservation or firm allotment to the extent of percentage specified in These Guidelines shall not be made to categories other than the Categories mentioned in sub-clause (iii) below. subject to the requirements specified in This chapter. may be kept open for a maximum period of 21 working days and Rights issues shall be kept open for at least 30 days and not more than 60 days.

in any manner. for any complaint pertaining to the issue" shall be made in the prospectus.) 200 (V) The Lead Merchant Banker shall act as the Lead Book Runner. In case the book built issues are made pursuant to the requirement of mandatory allocation of 60% to QIB‘s . directors and employees. their promoters. the respective figures are 30% for RII‘s and 10% for NII‘s.) (iv) The issuer company shall appoint an eligible Merchant Banker(s) as book runner(s) and their name(s) shall be mentioned in the draft prospectus. 199 ((iv) (a) The issuer company shall enter into an agreement with one or more of the Stock Exchange(s) which have the requisite system of online offer of securities. (iv) (b) The company may apply for listing of its securities on an exchange other than the exchange through which it offers its securities to public through the on-line system. Eligible for reservation In a book built issue allocation to Retail Individual Investors (RII‘s). syndicate members. the rights. may be mentioned on the front cover page of the prospectus. . The agreement shall specify inter-alia. The agreement may also provide for a dispute resolution mechanism between the company and the stock exchange.) 201 ((v) (a) In case the issuer company appoints more than one 202(merchant banker(s)). directors and employees and for the group/associate companies of issue management team and syndicate members and their promoters. This is a transitory provision pending harmonization of the QIB allocation. after the "risk factors‖. the other Merchant Banker(s). duties. the names of all such (merchant bankers(s)) who have submitted the due diligence certificate to SEBI.Provided further that no reservation shall be made for the issue management team.) 203 ((v) (b) The lead book runner/issuer may designate. subject to the following. A disclosure to the effect that " the investors may contact any of such (merchant bankers(s)). responsibilities and obligations of the company and stock exchange(s) inter se. Non Institutional Investors (NII‘s) and Qualified Institutional Buyers (QIB‘s) is in the ratio of 35: 15: 50 respectively.

Submit a written request as per prescribed format (Letter1. Foreign Institutional Investors (including non resident Indians and overseas corporate bodies). NSE decided to offer this infrastructure for conducting online IPOs through the Book Building process. Shareholders of the promoting companies in the case of a new company and shareholders of group companies in the case of an existing company. BRLM) for usage of electronic facilities and software of NSE . Reservation on Competitive Basis is when allotment of shares is made in proportion to the shares applied for by the concerned reserved categories. Book Building at NSE The NSE has set up nation-wide network for trading whereby members can trade remotely from their offices located all over the country. There are no objective conditions stipulated as per the DIP Guidelines. NSE operates a fully automated screen based bidding system called NEAT IPO that enables trading members to enter bids directly from their offices through a sophisticated telecommunication network. Letter2. The Merchant Bankers are free to set their criteria and mention the same in the Red Herring Prospectus. It provides a fair. Reservation on competitive basis can be made in a public issue to the Employees of the company. Indian Mutual Funds. The NSE trading network spans various cities and towns across India. efficient & transparent method for collecting bids using latest electronic trading systems Costs involved in the issue are far less than those in a normal IPO Procedures Issuers Issuers desirous of using NSE's online IPO system are required to comply with the following procedures: 1. Indian and Multilateral development Institutions and Scheduled Banks. The discretion is left to the Merchant Bankers who first disclose the parameters of judgment in the Red Herring Prospectus. Book Building through the NSE system offers several advantages: The NSE system offers a nationwide bidding facility in securities.The allotment to the Qualified Institutional Buyers (QIB‘s) is on a discretionary basis.

effective August 1st 2006. VSATs and Campus LANS · The software is operated through book-runners of the issue and by the syndicate member brokers. Give details regarding Book Running Lead Manager. Eligible trading members have to give in the prescribed format details of the user IDs that they would like to use. Members have to submit a onetime undertaking to the Exchange. · In order to maintain transparency. BSE's Book Building System · BSE offers the book building services through the Book Building software that runs on the BSE Private network. Co Book Running Lead Managers and Syndicate Members. .2. Trading Members The Book Running Lead Manager will give the list of trading members who are eligible to participate in the Book Building process to the Exchange. Pay the requisite charges to NSE. the software gives visual graphs displaying price v/s quantity on the terminals. Listing Rules for New Companies on BSE /IPO Rules The following eligibility criteria have been prescribed for the companies seeking permission to get list on the stock exchange. Through this book. · This system is one of the largest electronic book building networks anywhere spanning over 350 Indian cities through over 7000 Trader Work Stations via eased lines. · Bids are placed electronically through syndicate members and the information is collected on line real-time until the bid date ends. 3. the syndicate member brokers on behalf of themselves or their clients' place orders. The companies are classified into two categories: large cap and Small cap. Subscribers Subscribers can approach any of the approved trading members for submitting bids in the NEAT IPO system. On line transaction registration slip are generated automatically after entering the bids in to the system which acts as proof of the registration of each Bid option.

3 crore in each of the preceding three 12 month period. A company may or may not want to raise the full amount of authorized capital. The minimum income/turnover of the company shall be Rs. The minimum market capitalization of the company shall be Rs. . 3 crore. Part payment facility may be available for the investors who want to subscribe to an issue. A due diligence study may be conducted by an independent team of chartered Accountant or merchant banker (Investment Banker) appointed by BSE. It‘s always less than or equal to authorized capital. 10 crore and The minimum market capitalization of the company shall be Rs. The minimum issue size shall be Rs. The minimum number of the public shareholder after the issue shall be 1000. A) In case of large cap companies The minimum post-issue paid up capital of the applicant company shall be Rs. Postissue paid-up capital is the value of subscriptions (including promoter‘s holding) paid at the end of issue date. Market capitalization is the product of number of shares outstanding (including promoter‘s holding) and the market price. 25 crore Authorized capital is the amount for which a company has got the authorization from the regulatory body to raise through the issue. the cost of which will be borne by the company. In an IPO before the first day of listing the market price is the issue price.A company is treated as a large cap company if the issue size is greater than or equal to Rs 10 crore and market capitalization of not less then Rs 25 crore. 3 crore. The requirement of a due diligence study may be waived if a financial institution or a scheduled commercial bank has appraised the project in the preceding 12 months. 3 crore. B) In respect of small cap companies The minimum post issue paid up capital of the company shall be Rs. The minimum issue size shall be Rs. This will be less than issue size if the total subscriptions are less than the offered shares or when there is part payment facility available for the issue. 5 crore. Issue size is the amount that a company want to raise funds through the issue.

statutory advertisements and memorandum containing salient features of the Prospectus. Prospectus. shall be in default in compliance of the listing agreement. the issuer company should have a post issue net worth (equity capital + free reserve excluding revaluation reserve) of Rs 20 crore. Listing Fees (BSE) Particular Amount (Rs) Initial Listing fees 7500 Annual listing fees companies with paid capital Of Rs 1 crore 4200 Above 1 corer upto 5 crore 8400 Above 5 corer upto 10 crore 14000 Above 10 corer upto 20 crore 28000 Above 20 corer upto 50 crore 42000 Above 50 crore 70000 Role of Lead manager In the pre-issue process. The above eligibility criteria would be in additions of the companies prescribed under SEBI guidelines. C) For all companies In respect of the requirement of paid up capital and market capitalization.In addition to this. Printers. the securities of the issuer would not be listed on BSE. the Lead Manager (LM) takes up the due diligence of company‘s operations/ management/ business plans/ legal etc.. Advertising Agency and Bankers . promoters and / or group companies. the issuers shall be required to include in the disclaimer clause forming a part of the offer document that in the event of market capitalization requirement of BSE not being met. Appointment of other intermediaries viz. The book running lead manager (BRLMs) shall ensure compliance with stipulated requirements and completion of prescribed formalities with the Stock Exchanges. Registrar(s). RoC and SEBI including finalisation of Prospectus and RoC filing. Other activities of the LM include drafting and design of Offer documents. The applicant.

dispatch security certificates and refund orders completed and securities listed. Role of banker to the issue Bankers to the the Offer is also included in the pre-issue processes. as the name suggests. The post Offer activities for the Offer will involve essential follow-up steps. Role of registrar The Registrar finalizes the list of eligible allottees after deleting the invalid applications and ensures that the corporate action for crediting of shares to the demat accounts of the applicants is done and the dispatch of refund orders to those applicable are sent. with the various agencies connected with the work such as the Registrar(s) to the Offer and Banker to the Offer and the bank handling refund business. The merchant banker shall be responsible for ensuring that these agencies fulfill their functions and enable it to discharge this responsibility through suitable agreements with the Company. processing of the applications and other matters till the basis of allotment is finalized. intimation of allocation and dispatch of refunds to bidders etc are performed by the LM. based on the correct figures. coordinate non-institutional allocation. The Lead manager coordinates with the Registrar to ensure follow up so that that the flow of applications from collecting bank branches. The Lead Merchant Banker shall ensure that Bankers to the Issue are appointed in all the mandatory collection centers as specified in DIP Guidelines. The post issue activities including management of escrow accounts. The lead manager also draws up the various marketing strategies for the issue. which include the finalization of trading and dealing of instruments and dispatch of certificates and demat of delivery of shares. carries out all the activities of ensuring that the funds are collected and transferred to the Escrow accounts. Merchant Banking Issue Management Services – to act as Book Running Lead Manager/Lead Project appraisal Corporate Advisory Services underwriting of equity issues . The lead manager also ensures follow-up with bankers to the issue to get quick estimates of collection and advising the issuer about closure of the issue.

Venture Capital Venture Capital is the money and resources made available to startup firms and small businesses with exceptional growth potential. a BRLM can underwrite more than 20 times its Net Worth at any point of time. Underwriter Lead Merchant Banker shall ensure that the underwriters appointed or proposed to be appointed are capable of discharging their obligations under the Issue. Acquisition includes obtaining supplies or services by contract or purchase order with appropriated or non appropriated funds. However. facilitating mergers and other corporate reorganizations.Banker to the Issue/Paying Banker Refund Banker Monitoring Agency Debenture Trustee Investment Banking Investment Bank is a financial intermediary that performs a variety of services which includes underwriting. whichever is less. for the use of Federal agencies through purchase or lease. . Private Equity Private equities are equity securities of unlisted companies. Private equities are generally illiquid and thought of as a long-term investment. Private equity is also far less liquid than publicly traded stock. acting as an intermediary between an issuer of securities and the investing public. Private equity investments are not subject to the same high level of government regulation as stock offerings to the general public. Acquisition Acquisition is the process through which one company takes over the controlling interest of another company. Clause 5. and also acting as a broker for institutional clients. Most venture capital money comes from an organized group of wealthy investors.3 requires the Lead Merchant Banker to underwrite a minimum of 5% of the total underwriting commitment of Rs. 25 Lakh.5. under no situation.

6B. .100000 ) Retail individual bidders Individuals (including NRIs and HUFs) applying for an amount up to Rs. Scientific institutions and trusts. It may go for an public offer if it is again in requirement of funds for new projects. including unaccepted grades. in the prospectus and abridged prospectus. IPO Grading 1 An unlisted company making an IPO of equity shares or any other security which may be converted into or exchanged with equity shares at a later date may opt to obtain grading for such an IPO from one or more credit rating agencies. Of which.Non institutional bidders. it shall disclose all grades so obtained by it.1. corporate bodies. 16 IPOs have listed and 4 IPOs are yet to be listed. resident Indian Individuals HUF (in the name of Karta) and NRIs (Applying for an amount exceeding Rs. . for expansion or for dilution of holding of shares. FPO FPO means following public offer when a company goes for an public offer after going for an IPO it is known as Following Public Offer(FPO). 5 IPOs have received investment from Anchor Investors.2 Where an issuer opts to obtain IPO grading under clause 5. Companies.100000. and 11 IPOs have not received investment from Anchor Investors. there were 20 IPOs. · Of the 16 IPOs that have listed. India‟s Largest IPOs in 2009 · During 2009.

Thus the objective of studying is achieved. As per sector wise comparison in year 2008 and 2009 out of 7 areas only 3 sectors (Education. Media & Technology) gives better response. Conclusion IPO is used by a company to raise its funds. and Telecom.Major Findings An IPO can be a risky investment. although it costs a little to a company but it gives a way to get more money for long term investments. NSE. Legal compliance has to be maintained. IPO‘s are playing major role in the field of investment. regulations and formalities. The extra amount obtained from public may be invested in the development o f the company. Pricing Process. The relevant and updated information on the Company has to be captured precisely in the Prospectus. 11 IPOs have not received investment from Anchor Investors. Out of 16 companies. Factors and financial parameters to watch before investing in an IPO. For the individual investor. Moreover. . the Company‘s potential should not be understated in or lost in the Prospectus because of the weight of such rules. The issue of an IPO by a Company involves a number of stages. 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. IPO process and its regulatory aspect. In IPO process Intermediary (SEBI. energy & power and TMT) give positive return. It can be observed that out of 16 companies. The decision by the Investors on whether to invest in a Company is influenced significantly by the information contained in the Prospectus. As per sectors wise comparison out of 7 areas only 3 sector (Energy & power. In this project all the aspects of IPO have been studied like IPO norms. Industrial. only 5 companies have given positive returns on the date of listing. each calling for a great deal of verification. The Regulatory Bodies are also involved and there are set procedures that must be followed. BSE) play a vital role in issue of IPO book building.

So higher the risk the more the returns rewarded for www.moneycontrol.nseindia. it is always rewarded with the higher returns.theinvestor.2009 . On the other hand it can be said that the higher the risk higher the returns earned. but can‘t make it happen as it Books & Journals: NSE fact book 2009 Raising http://www. bseindia.‖ BIBLIOGRAPHY Websites: www. So we can say that the though risky if investment is done then it can give higher returns as well. Primary market is more volatile than the secondary market because all the companies are listed for the first time in the market so nothing can be said about its www.htm http://www. ―GET THE MONEY YOU NEED TO GROW YOUR BUSINESS. SHERMAN NSE Certification BSE Certification SEBI Guidelines.SUGGESTIONS The investment in IPO can prove too risky because the investor does not know anything about the company because it is listed first time in the market so its performance cannot be measure. AUTHOR ANDREW J .economywatch. If higher risk is www. second edition 2005.August . ―We can fairly predict the www.bseindia. business-standard.

Kotak Mahindra Capital Co. Mr Vijay Mallaya. 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. 700 crores through the IPO. 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. but plans to launch it in near future to raise capital. The price band of the equity shares of Reliance Power IPO has been fixed at Rs. The Chief of the United Breweries Holding Ltd (UBHL). Kingfisher Airline IPO. but has expressed its wish to launch one soon. Dr Vijay Mallya is the Chairman and CEO of both the segments. 11. The lead bankers of Reliance Power IPO are Enam Securities. 2008 and closed on 18th January. The brand is being used for two business entities – Airlines and Alcoholic Beverage. 405. 2008. This IPO would be used to fund its aggressive expansion plans in India. The brand Kingfisher is being owned by the business conglomerate United Breweries Group. The accumulated corpus would be utilized to fund its airline business and to payoff debt for its acquired liquor company Shaw Wallace & Company. Till now the company has not launched any IPO to fund its aggressive expansion plans. Reliance Power IPO was issued on 15th January. to finance the airline's expansion and funding of A380s air fleet. ABN Amro Rothschild. said that the group would come up with an Initial Public Offering in 2008 and would raise a total corpus of US$ 400 million. This makes it the largest IPO in the country as on 17th January. Reliance Power IPO will be listed on the National Stock Exchange (NSE) and also on the Bombay Stock Exchange (BSE). to be issued for the first time in the year 2008.450 per equity share. Reliance Power Limited Company is planning to generate capital worth Rs. The total size of Reliance Power IPO is around 26 crores equity shares. 2008. - . The Airlines operates under the name of "Kingfisher Airlines" and the alcoholic beverage segment manufactures "Beer" and "Mineral Water" under the same brand name.ANNEXURE Top Companies: An analysis Reliance Power IPO has been issued by Reliance Power Limited. Kingfisher till date has not launched any IPO. JP Morgan Chase & Co. UBS AG and Deutsche Bank AG. ICICI Securities.

The government decided to shell out 85 percent shares of IPO to the noninstitutional investors and 15 percent shares to the non-institutional high networth individuals. 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 majority of applicants to these comprise of the Indian retail investors.993 crores for 7. 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. 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.The Maruti IPO has set a price range of Rs. Maruti IPO received more than 300. The government has allotted 60 percent shares to the retail investors and 40 percent shares to the institutional investors. The subscription for Maruti IPO opened on June 12. The shares were allotted to the individuals on a pro rata basis. which led to an over-subscription of the public offerings of Maruti by more than ten times. .000 applications which is a record in the history of IPO in India. 2003 and closed on June 19. government would get Rs. 115. 2003. The response to Maruti IPO was overwhelming within the subscription period. 125 per share above the Floor price of Rs.94 crores shares. Consequently.

it is said to be a broken IPO. Clearing Price The price at which all shares of an IPO can be sold to investors in a Dutch Auction. B Board of Directors The composition of the Board of Directors is particularly critical for an IPO. Typically. bond calendars and municipal calendars. Sometimes referred to as the ―market clearing price‖. -74F First Day Close The closing price at the end of the first day of trading reflects not only how well the lead manager priced and placed the deal. Float . C Calendar This refers to upcoming IPOs and secondary offerings. but what the near-term trading is likely to be. Brokerage houses have equity calendars.IPO GLOSSARY A Allocation This is the amount of stock in an initial public offering (IPO) granted by the underwriter to an investor. Aftermarket Trading in the IPO subsequent to its offering is called the aftermarket. some expect investors to purchase two or three times their IPO allocation in the aftermarket. a board is composed of inside and outside directors. Broken IPOs If an IPO trades below its IPO price in the aftermarket. Aftermarket Orders Underwriters look favorably on investors who buy IPOs in the days after the IPO first goes public. While underwriters cannot solicit aftermarket orders.

Once the stock starts trading. I Initial Public Offering This is the event of a company first selling its shares to the public. which was the first to have this option.When a company is publicly traded. IPO Price Individual investors often ask why the price at which an IPO starts trading is different from its offer price. The term comes from the Green Shoe Company. G Green Shoe A typical underwriting agreement allows the underwriters to buy up to an additional 15% of shares at the offering price for a period of several weeks after the offering. HH ot Issue When there is significantly more demand than supply for an IPO it is said to be a hot issue. the price is determined by actual supply and demand and can be higher or lower. Insiders Management. the underwriter is allowed to issue a research report M-N . Following the IPO. a distinction is made between the total number of shares outstanding and the number of shares in circulation. The float consists of the company's shares held by the general public. referred to as the float. IPO Research Prior to the offering. This option is also called the overallotment and is exercised when the IPO is oversubscribed and trading above its offer price. the underwriters involved in the IPO are prohibited from issuing research or recommendations for forty days. directors and significant stockholders are regarded as insiders because they are privy to information about the operations of a company not known to the general public. This occurs because the offer price is set by the underwriters before the stock starts trading.

U-V Underwriter This is a brokerage firm that raises money for companies using public equity and debt markets. presentation of historical financial statements. Proceeds Companies go public to raise money. It is set by the lead manager. PPreliminary Prospectus This is the offering document printed by the company containing a description of the business. It is done only by accredited investors. It gets its name from the printed red disclaimer on the left side of the prospectus. . explanation of recent financial results. The money raised is referred to as proceeds. R Red Herring This is the term of art for the preliminary prospectus. In the case of some foreign IPOs. O Offering Price This is the price at which the IPO is first sold to the public. discussion of strategy. the pricing occurs over the weekend. Venture Capital Funding acquired during the pre-IPO process of raising money for companies. It is defined as the product of the company's stock price per share and the total number of shares outstanding Market Value The market value of a company is determined by multiplying the number of shares outstanding by the current price of the stock. management and their backgrounds and ownership. usually after the close of stock market trading the night before the shares are distributed to IPO buyers.The total market value of a firm. Underwriters are financial intermediaries that buy stock or bonds from an issuer and then sell these securities to the public. Oversubscribed When a deal has more orders than there are shares available it is said to be oversubscribed.

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