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ANAND RATHI SECURITIES LTD

Executive Summery
IPO stands for initial public offer. An IPO is the first sale of common stocks by a
corporation to the public. IPO was done through fixed price process. But in with the
introduction of Book Building process for IPO in 2000 has given a transparent system to the
investors.
I have undertaken the project at ANANDRATHI (AR). Anand Rathi (AR) is a leading
full service securities firm providing the entire gamut (scope) of financial services. AR
provides a breadth of financial and advisory services including wealth management,
investment banking, corporate advisory, brokerage & distribution of equities, commodities,
mutual funds and insurance, structured products - all of which are supported by powerful
research teams. AR has opened its branch in Belgaum in 2006.Since 2006 it has delivered fair
& impressive services. At present ARs customer database is more than 7000.these customers
are loyal & are availing regular services from AR. It has got more than 700 DEMAT account
holders.
The project deals with why AR is preferred & what client expect from AR.

This

study takes into account of book building process which is resent mechanism followed for
IPO. It is also aims at undertaking what makes AR different from other DPs.
The project deals with investment decisions of individual investors with regard to IPOs
(Initial Public Offering) at ANAND RATHI, BELGAUM

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESAERCH

ANAND RATHI SECURITIES LTD

TITLE OF THE POJECT


A study of investment decisions of individual investor with regard to IPOs at ANAND
RATHI Belgaum.

OBJECTIVE OF THE STUDY


To study the investor perception regarding investment in IPO
To study the service of ANAND RATHI.
To study the current IPO performance.
To find most considerable sector.

Scope of the study

The scope of the study is extended only to the existing customer of Anand Rathi and it
does not cover prospective customers.

The study will help the company to know the expectation of individuals from their
investment in IPOs.

The study will help the company to make strategies to improve their services to meet
investors expectation.

Benefits of the study


1) The study helps to understand the different investment decision of individual
2) The study helps to understand issue process of IPO.
3) It helps to understand whether services have been provided by trading houses at Belgaum
is satisfied or not.

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESAERCH

ANAND RATHI SECURITIES LTD

LIMITATIONS
Sample size was 100so, findings are based on these sample size.
During the survey, it was bit difficult to get the response of the clients due to market
volatility & some correction.
Existing IPO investor were take into consideration for survey.

METHODOLOGY
Methodology explain the methods used in collecting information to carry out the
project.
The steps taken are as follows
Define the research objective
The objective of my study is to understand Investor perception at ANAND
RATHI Belgaum.
Data collection Method.
To fulfill the objective of the study, I have taken in to consider which Primary

&

Secondary Data.
Primary Data.
To collect following data I have made use of following source.
a) Questionnaire survey & interaction with clients in the area of Belgaum to know
their perception & to fulfill the requirement of the objective.
b) Interaction with the Manager of ANAND RATHI, Belgaum Branch.
c) Interaction with the Staff of ANAND RATHI, Belgaum Branch.
Secondary Data.
Secondary data are collected from following source.
a) ANAND RATHI manual & internet.
b) www.bseindia.com
c) www.nseindia.com
d) Some magazines like Dalal street Fortune India etc.

KLESs INSTITUTE OF MANAGEMENT STUDIES & RESAERCH

ANAND RATHI SECURITIES LTD

Practical Approach
Through my in plant project, I have learn some of the practical aspects in the
organization.
a) Back office operation.
b) Front office operation.
c) Tele calling.
d) Handling clients query & client relations.

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Industry Overview
Earliest records of securities trading in India are available from the end of eighteenth
century. Before 1850 there was business conducted in Mumbai in the share of bank and the
securities of east India Company, which were consider as securities for buying, selling and
exchange. The share of commercial bank, mercantile bank and bank of Bombay were some of
the prominent shares traded. The business was conducted under a sprawling banyan tree in
front of the town hall, which is known in the horniman circle park.
In 1850, the companies act was passed and that heralded the commencement of join
stock companies in India.
It was the American civil war that helped Indians to established broking business. The
leading broker, Shri Premchand Roichand designed and developed a procedure to be followed
while dealing in shares.
In 1874 the dalal street became the prominent place for meeting of the brokers to
conduct there business. The broker organized an association on 9th july 1875 known as native
share and stock broker association to protect the character, status and internet of the native
brokers. That was the foundation of the stock exchange, Mumbai. The exchange was
established with 318 members. The stock exchange, Mumbai did not have to look back as it
started raiding high ladder of growth.
The stock exchange is a market place, like any other centralize market where buyers
and sellers can transacted business in securities at given point of a time in a convenient and
competitive manner at the fairest possible prizes.
In Jan 1899, Mr. Jamse M MacLen, MP inaugurated the brokers hall. After the first
world war the stock exchange was housed properly at an old building near the Town hall
in1928, the present premises where acquired surrounded by Dalal street, Mumbai samachar

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marg and hamam street. A new building a present location was constructed and was occupied
on 1st Dec 1930.

In 1950 the regulation of business in securities and stock exchange became an


exclusively central Government sub following adaptation of constitution of India. In 1956,
the security contract act was passed by the parliament of India. to regulate the securities
market, SEBI was initial established on Oct 12 1988 as an interim board under control of
ministry of finance, Government of India. In 1992, SEBI act was passed through which the
SEBI came into existence. Hence SEBI acquired statutory status on 30th Jan 1992 by passing
an ordinance, which was subsequently converted into an act passed by the parliament on
April 4th 1992. The main objective of SEBI is to protect the interest of investor, regulate and
promote the capital market by creating an environment, which would facilitate mobilization
of resources through epiciant allocation and to generate confidents among the investor. As
such SEBI is responsible for regulating stock exchanges and other intermediaries who may be
associated with capital market and the process of the public companies rising capital by
issuing instrument that will be traded on capital market. SEBI has been empowered by the
central government to develop and regulate capital markets in India and there by protect the
interest of investors.
In 1992, OTCI (Over the counter exchange of India) came in to existent where
equities of small companies are listed.
In 1994, NSE(national stock exchange) came in to existent which brought an and to
the open but cry system of trading securities which was in vogue for 150 years, and
introduced screen based treading system.
BSE (Bombay stock exchange) online treading system was launched on March 14 th
1995. Know the treading in securities is down using screen based treading method through
only authorized members of the exchange.
In screen based treading, investor place there buy and sale orders with brokers whose
enter the orders in the automated treading system. When buy and sale order matches, a trade
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is generated and tread details or given to respective brokers. After a tread as taken place, the
buyer as to pay money and seller has to deliver the securities

On the stock exchange hundred & thousands of trades take place every day. Buyers
and sellers are spread over a large geographical area. Due to these problems completing a
trade by paying cash to the seller & securities to buyer immediately on execution of trades on
an individually basis is virtually impossible. So the exchange allows trading to take place for
a specified period which is called trading cycle. A unique settlement number identifies each
trading cycle. Once the trading period is over, buyer broker pays money and seller broker
delivers securities to the CC/CH on a predefined day. This process is called as pay in. after
pay in securities are given to the buyer brokers and money is given to seller brokers by the
CC/CH. This process is called as pay out. This process pay in & pay out is called settlement.
Initially the trading cycle was of one fortnight, which was reduced to one week. The
transactions entered during this period, of a fortnight or one week, were used to be settled
either by payment for purchase or by delivery of shares certificates sold on notified days one
fortnight or one week of expiry of the trading. The settlement schedules are made known to
the members of the exchange in advance.
The weekly settlement period was reduced by daily settlement popularly known as
rolling settlement, in which each day is separate trading day. With effect from December
2001, t+% rolling settlement cycle was introduced for all equities where T is the trading day
and pay in & pay out for the settlement was done on the 5 th business day after the trade day.
For e.g. If T was Monday, the pay-in & pay-out were done o next Monday as Saturday &
Sunday are not counted as business days. T+5 cycles were further shortened to T+3
settlement cycle from April 1st 2002.

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Company Profile
Anand Rathi (AR) is a leading full service securities firm providing the
entire scope of financial services. The firm, founded in 1994 by Mr. Anand Rathi, today has a
pan India presence as well as an international presence through offices in Dubai and
Bangkok. AR provides a breadth of financial and advisory services including wealth
management, investment banking, corporate advisory, brokerage & distribution of equities,
commodities, mutual funds and insurance, structured products - all of which are supported by
powerful research teams.
The firm's philosophy is entirely client centric, with a clear focus on
providing long term value addition to clients, while maintaining the highest standards of
excellence, ethics and professionalism. The entire firm activities are divided across distinct
client groups: Individuals, Private Clients, Corporate and Institutions and was recently ranked
by Asia Money 2006 poll amongst South Asia's top 5 wealth managers for the ultra-rich.
In year 2007 Citigroup Venture Capital International joined the group as a
financial partner.
Milestones

1994:
Started activities in consulting and Institutional equity sales with staff of 15

1995:
Set up a research desk and empanelled with major institutional investors

1997:
Introduced investment banking businesses
Retail brokerage services launched

1999:
Lead managed first IPO and executed first M & A deal
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2001:
Initiated Wealth Management Services

2002:
Retail business expansion recommences with ownership model

2003:
Wealth Management assets cross Rs1500 crores
Insurance broking launched
Launch of Wealth Management services in Dubai
Retail Branch network exceeds 50

2004:
Commodities brokerage and real estate services introduced
Wealth Management assets cross Rs3000crores
Institutional equities business re launched and senior research team put in place
Retail Branch network expands across 100 locations within India

2005:
Real Estate Private Equity Fund Launched
Retail Branch network expands across 200 locations within India.

2006:
AR Middle East, WOS acquires membership of Dubai Gold & Commodity Exchange
(DGCX)
Ranked amongst South Asia's top 5 wealth managers for the ultra-rich by Asia Money
2006 poll
Ranked 6th in FY2006 for All India Broker Performance in equity distribution in the
High Net worth Individuals (HNI) Category
Ranked 9th in the Retail Category having more than 5% market share
Completes its presence in all States across the country with offices at 300+ locations
within India

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2007:
Citigroup Venture Capital International picks up 19.9% equity stake
Retail customer base crosses 100 thousand
Establishes presence in over 350 locations

MANAGEMENT TEAM OF THE COMPANY


Mr. AnandRathi
Group Chairman
Mr. Pradeep Gupta
Vice Chairman
Mr. Amit Rathi
Managing Director

FINANCIAL AND ADVISORY SERVICES

Wealth management

Investment banking

Corporate Advisory

Brokerage and Distribution of Equities, Commodities, Mutual Funds and Insurance

CLIENTS OR CUSTOMERS

Individuals

Private clients

Corporate and

Institutions

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AR Core Strengths
Breadth of Services
In line with its client-centric philosophy, the firm offers to its clients the entire
spectrum of financial services ranging from brokerage services in equities and commodities,
distribution of mutual funds, IPOs and insurance products, real estate, investment banking,
merger and acquisitions, corporate finance and corporate advisory.
Clients deal with a relationship manager who leverages and brings together the
product specialists from across the firm to create an optimum solution to the client needs.

Management Team
AR brings together a highly professional core management team that comprises of
individuals with extensive business as well as industry experience.

In-Depth Research
ARs research expertise is at the core of the value proposition that we offer to our
clients. Research teams across the firm continuously track various markets and products. The
aim is however common - to go far deeper than others, to deliver incisive insights and ideas
and be accountable for results.

Management Team
Firms senior Management comprises a diverse talent pool that brings together rich
experience from across industry as well as financial services.
The products/services of the Anand Rathi are as follows:
1. Individuals
(a) Private wealth management
Introduction:
Affluent individuals need sophisticated advice and strategic guidance to capitalize on
opportunities to preserve, grow and transfer their wealth. In addition, a desire exists within
wealthy families to simplify the management of multigenerational needs and lessen the

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profound emotional impact of wealth on family members. AR offers the most extensive
platform of customized servicing, individual strategies and products to help meet the
requirements of the affluent private investor. We provide comprehensive, integrated
investment strategies to address your wealth management needs. Working closely with
specialists across firm PWM offers an array of products & services, which includes AR's
highly rated research.

Philosophy:
The Anand Rathi tries and understands clients financial needs; to offer them personal
advice and expert analysis that they need to make their assets go the Extra mile. Firms ability
to think far ahead and formulate a long-term strategy, coupled with long hours of practice and
research are the key drivers, which make investors wealth work harder for them.
The company believes that the key to build wealth lies in allocating assets across
various markets, financial instruments and industry sectors. Keeping this in mind the firm
leverage its expertise in scientific asset allocation, to help maximize returns and minimize
risks.

Process:
The firm realizes the need to simplify the complexities of the investment strategies
and it achieves this by offering highly customized private wealth management. The firms
Personalized Relationship Managers along with the expert team of analysts and advisors will
assist to investors in analyzing all their investment needs and advice those on specialized
solutions created exclusively for them.
The firm has excellent research team, who constantly screens the market for investment
prospects. The team provides support in fine-tuning the investment strategy & suggests how
to capitalize on these opportunities.

Products:

Equity & Derivatives

Mutual Funds

Depository Services

Commodities

Insurance Broking
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IPOs

Research:
Its research expertise is at the core of the value proposition that they offer to its
clients. Research teams across the firm continuously track various markets and products. The
aim is however common - to go far deeper than others, to deliver incisive insights and ideas
and be accountable for results. AR research processes incorporate quantitative areas well as
qualitative analyses. This multi-pronged approach helps us to provide superior risk- adjusted
returns for our clients.
AR analysts provide objective and decisive research that is designed to enable clients to make
informed investment decisions.
The team covers entire spectrum of financial markets from equities, fixed income, and
commodities to currencies. They also cover the global markets, to give clients an unparalleled
macro-view of the investment opportunities across the globe
(b) Brokerage and distribution
Equity & Derivatives Brokerage:
AnandRathi provides end-to-end equity solutions to institutional and individual
investors. Consistent delivery of high quality advice on individual stocks, sector trends and
investment strategy has established us a competent and reliable research unit across the
country.
Clients can trade through us online on BSE and NSE for both equities and derivatives.
They are supported by dedicated sales & trading teams in its trading desks across the country.
Research and investment ideas can be accessed by clients either through their designated
dealers, email, web or SMS

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Service of Anand Rathi


Mutual Fund:
AR is one of India's top mutual fund distribution houses. Its success lies in the firm
philosophy of providing consistently superior, independent and unbiased advice to their
clients backed by in-depth research. The AR teams firmly believe in the importance of
selecting

appropriate

asset

allocations

based

on

the

client's

risk

profile.

Depository services
AR Depository Services provides to investors with a secure and convenient way for holding
their securities on both CDSL and NSDL.
The firms depository services include settlement, clearing and custody of securities,
registration of shares and dematerialization. It offers to the investors daily updated internet
access to their holding statement and transaction summary.
Commodities:
Commodities broking - A whole new opportunity to hedge business risk and an attractive
investment opportunity to deliver superior returns for investors.
The firms commodities broking services include online futures trading through NCDEX and
MCX and depository services through CDSL. Commodities broking is supported by a
dedicated research cell that provides both technical as well as fundamental research. Its
research covers a broad range of traded commodities including precious and base metals, Oils
and Oilseeds, agriculture-commodities such as wheat, chana, guar, guar gum and spices.
In addition to transaction execution, the firm provides customized advice on hedging
strategies, investment ideas and arbitrage opportunities to clients.
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Insurance broking:
As an insurance broker, AR provide to its clients comprehensive risk management
techniques, both within the business as well as on the personal front. Risk management
includes identification, measurement and assessment of the risk and handling of the risk, of
which insurance is an integral part. The firm deals with both life insurance and general
insurance products across all insurance companies.
ARs guiding philosophy is to manage the clients' entire risk set by providing the optimal
level of cover at the least possible cost. The entire sales process and product selection is
research oriented and customized to the client's needs. We lay strong emphasis on timely
claim settlement and post sales services.

Phone trading facilities


Dedicated telephone numbers for placing Instant Orders through Cell Phone or Landline
from 9:00 a.m. to 6:00 p.m.
immediate connectivity to the dealers.
Trusted professional advice of our dealers.
modify / Cancel your orders.
Quick information about Pending, Cancelled and the total number of orders placed.
Place After market Orders.
Information on Corporate Actions.
Live Rates through phone.
Daily Tips on your mobile phone.

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AR services:

Risk Management

Due diligence and research on policies available

Recommendation on a comprehensive insurance cover based on clients needs

Maintain proper records of client policies

Assist client in paying premiums

Continuous monitoring of client account

Assist client in claim negotiation and settlement

IPOs:
The firm is a leading primary market distributor across the country. Its strong performance in
IPOs has been a result of its vast experience in the Primary Market, a wide network of
branches across India, strong distribution capabilities and a dedicated research team the firm
has been consistently ranked among the top 10 distributors of IPOs on all major offerings. Its
IPO research team provides clients with in-depth overviews of forthcoming IPOs as well as
investment recommendations. Online filling of forms is also available.
(c) NRIs
Introduction:
AR is the perfect gateway to the wealth of investment opportunities in India for Non-Resident
Indians. With it will dedicated NRI desk in India and Relationship Managers investors own
country, investors get the best of both worlds - real understanding of their investment needs
as well on-the-ground expertise.
It provides the following services for NRIs.

Superior understanding of the Indian economy & markets


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Ability to structure and manage your tax and regulatory compliances

Dedicated relationship team

Unparalleled product range - Indian and Global

2. Institutions
(a) Institutional Equities
Introduction:
The Institutional sales and trading team provides cutting edge market information and
investment advice to clients, coupled with excellent execution capabilities. A highly
experienced and reputed team of equity analysts supports the sales team. There is an
extensive focus on research on companies, sectors and macro-economy. The institutional
equity team tracks nearly 250 large and mid-sized companies to give clients an unparalleled
breadth of ideas.
It also provide Investment Advisory Services for institutional clients in India and overseas for
investment in the Indian equity markets

(b) Managed Investment services


Portfolio management services
AR Portfolio Management Service is a discretionary investment service created to meet the
demand for more targeted investment styles and opportunities. It offers a range of specialized
investment strategies designed to capture opportunities across the market spectrum. The
range of products varies from the highly defensive, capital-protected to the most aggressive
strategies in the equities and derivatives markets.

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The firms investment process ensures that investors strategy and portfolio are built on solid
foundations. Together clients and their relationship manager select the strategy in line with
their individual goals. AR investment specialists then construct and manage clients portfolio
in accordance with the chosen investment strategy.
Real estate opportunity fund service
AR Real Estate Opportunities Fund is a private equity fund for high net-worth individuals,
corporate and institutions, to invest in equity-linked instruments in the Indian real estate and
infrastructure sectors.
As part of the structural reforms to further boost India's economic growth, the government
has recognized the need for institutional finance in the real estate sector. In early 2005, the
government has relaxed the FDI guidelines in real estate and also allowed the setting up of
real estate investment funds under SEBI guidelines. These developments are expected to
provide much needed capital to provide for the increasing demand for quality real estate in
major urban centers across the country.
To capture this opportunity, AR has brought together a team of specialists and advisors to
guide the fund's investments who bring together expertise in the areas of real estate
consulting, development, legal and financial structuring.
3. Corporate
(a) Institutional wealth management
Introduction:
Corporate and Institutional treasuries need ever more sophisticated advice that is backed by
serious and credible research. AR IWM provides its institutional clients integrated wealth
management solutions across global markets, which are backed by proprietary global
economic & investment research.

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(b) Investment banking and corporate Finance


Introduction:
Investment Banking:
AR Investment Banking provides comprehensive services to clients including raising money
in the equity capital markets to identifying strategic alliances, mergers and acquisition
opportunities and debt financing & restructuring advisory.
Corporate Finance:
The AR Corporate Finance team helps clients manage their debt-financing needs by profiling
business and cash-flow risks, defining the alternative sources of funding, building in multiple
variables such as currencies, fixed-floating, tenure, collateral etc. in a comprehensive manner
and

finally

negotiating

with

the

prospective

lenders

buyers.

The team has also built an impressive track-record in debt restructuring based on its superior
understanding

of

business

needs

and

relationships

with

key

lenders.

The Corporate Finance team has handled assignments in businesses like paper, hospitality,
telecom, textiles and sugar.
Services:
Investment Banking:
Merchant Banking:
A highly experienced equity capital markets team, a pan-India distribution presence and a
high level of quality and integrity in executing client's transactions has enabled us to provide
tangible value to the firms clients' businesses. The firm brings quality independent advice
and excellent execution capabilities to create landmark transactions for clients. The firms
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track record of successfully lead managed IPOs includes Tips Industries, Emami, HCL Info
systems and Provogue.

M&A, Private Equity:


The firms Mergers & Acquisition team works with clients in creating lasting stakeholder
value through advice on mergers, acquisitions, divestitures and private equity financing. The
team leverages on the firm's superior understanding of businesses and tax and regulatory
environments as well as a deep network of relationships across the professional and corporate
world.
The firm has been worked extensively with clients in industries like cement, sugar,
chemicals, power and textiles for mergers and acquisition deals, valuation and business
restructuring.
Corporate Finance:

Raising Cost-effective debt resources in Rupee and Foreign Currency for Projects,
Working Capital and Specific needs.

Financial Restructuring, CDR, OTS, Interest Cost Reduction, Long-term Corporate


Loans for Working Capital Margins.

Financial products and services in hedging of interest and currency risks.

Distribution Capacity

Strong pan- India distribution network, with presence at over 130 locations across
India.

Leading distributor of equity related products including IPOs & mutual fund

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Have been consistently amongst the top 8 brokers, in spite of not being a lead
manager.

50000 plus captive Institutional clients and HNIs

Strong after market support

(c) Corporate Advisory services


Introduction:
AnandRathi Advisors assists companies in realizing tangible improvements in various facets
of their businesses by providing a range of corporate advisory services that includes the entire
gamut from financial, organizational and operational restructuring, to profit improvement and
business turnaround strategies.
Highly qualified and thoroughly professional, its specialists, experts and associates assist to
clients in conceptualizing problems and devising effective solutions, whatever be clients
need.
Successful assignments undertaken for leading organizations in India as well as overseas bear
ample testimony to our wide-ranging capabilities, utilizing firms unparalleled business
know-how to give you the competitive edge. Services

Performance Improvement and Cost Reduction

Business Strategy and Re-engineering

Financial, Business & Organizational restructuring

Business Turn-around Strategies

Management Systems: MIS, Review & Control Mechanism

(D) Cross-Border Advisory


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Introduction
Dynamic Orbits is the international interface of Anand Rathi Group, interalia Dynamic Orbits
is engaged in building strategic alliances, outsourcing contracts, contract manufacturing
alliances, cross border joint ventures and cross border acquisitions.

MAJOR COMPETITORS
The major players in online trading other than Sharekhan are;
5paisa.com
Kotakstreet.com
IndiaBulls.com
ICICIdirect.com
HDFCsec.com
Motilal Oswal

5paisa:
Company profile:
India infoline was founded in 1995 and was positioned as a research firm.
In the year 2000 e-broking was started under the brand name of 5paisa.com. Apart from
offering online trading in stock market the company offers mutual funds online.
It also act as a distributor of various financial services ie GOI securities, Fixed deposits,
Insurance.

Kotakstreet:
Kotakstreet is the retail arm of Kotak securities. Kotak securities ltd is a joint venture
between Kotak mahindra bank and Goldman Sachs. Kotak Securities is a corporate member
of both the BSE and the NSE. It is also a depository participant with the National Securities
Depository Limited (NSDL) for trading and settlement of dematerialized shares.

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A Kotak security has the following areas of Business:
Institutional Stock Broking: It covers secondary market broking for foreign and Indian
institutional investors in Indian equities.
Private Client Services: This is a special investment division for high net-worth individuals,
non-resident Indian investors, trusts, corporate and banks. This service is also available at the
Group's offices in Dubai and London.

Retail distribution: Kotak Securities has a comprehensive retail distribution network,


consisting of approximately 7000 agents, 13 branches and over 20 franchisees across India.
This network is used for the distribution and placement of company fixed deposits, mutual
funds, Initial Public Offerings, secondary debt and equity and small savings schemes.

INDIA BULLS:
Company profile:
An India bull is a retail financial service company, present in 600 locations covering around
150 cities. It offers a full range of financial services and products ranging from Equities to
insurance. 450+ relationship managers who act as a personal financial advisors.

ICICI Direct:
Company profile:
ICICI Web Trade Ltd (IWTL) maintains ICICIdirect.com IWTL is an affiliate of ICICI Bank
Ltd and the website is owned by ICICI bank ltd.

HDFC Securities:
Company profile:

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HDFC Securities Ltd is promoted by HDFC Bank, HDFC and Chase Capital Partners and
their associates. Pioneers in setting up Dial-a-share services with a largest team of Telebrokers.

Motilal Oswal:
Company profile:
Motilal Oswal Securities Ltd is a brokering house promoted by Motilal Oswal financial
services. Their services include equities, derivatives, e-broking, portfolio management,
mutual funds, commodities, IPOs and depository services. The company was founded in
1987 as a small sub-broking unit, with just two people running the show. Focus on customerfirst-attitude, ethical and transparent business practices, respect for professionalism, researchbased value investing and implementation of cutting-edge technology have enabled us to
blossom into an almost two thousand-member team. The retail business unit provides equity
investment solutions to more than 1, 61,000 investors through 1017 outlets spanning 375
cities and 24 states.

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Introduction to Capital Market


Market exists to facilitate the purchase and sale of goods and services. The
financial markets exists to facilitate sale and purchase of financial instruments and comprises
of two major market, capital market and money market the distinction between capital market
and money market is that capital market mainly deals in medium and long-term
instruments(maturity more than a year) while the money market deals in short-term
instruments(maturity up to a year).
Capital market is, thus, important for raising funds for capital formation and
investments and forms a very vital link for economic development of any country. The capital
market provides a means for issuer to raise capital from investors (who has surplus money
available from savings for investment). Thus, the savings normally flow from household
sector to business or government sector, who normally invests more than they save.

Functions of capital market

To mobilize resources for investments

To facilitate efficient use of capital

To facilitate buying and selling of securities

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To facilitate the process of efficient price discovery

To facilitate settlement of transactions in accordance with predetermined time


schedules.

MAJOR ENTITES INVOLVED IN CAPITAL MARKET:

SEBI(Regulator)

Stock Exchanges

Clearing Corporation(CC)/Clearing Houses(CH)

Depositories and Depository Participants

Custodians

Stock Brokers and their Sub Brokers

Mutual Funds

Merchant Bankers

Credit Rating Agencies

Financial Institutions

Foreign Institution Investors

Non-Banking Institutions

Issuer/Registrar and Transfer Agents

Investors

Bombay Stock Exchange

National Stock Exchange

Depository Participants

Merchant Bankers

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Brokers

Underwriters and sub underwriters

Agents

SEGEMENTS OF CAPITAL MARKET:


Capital market consists of
1. primary market
2. secondary market

1. Primary Market:
A market were the issuers access their prospective investors directly for funds
required by them generally either for expansion or for meeting the working capital needs this
process is called disintermediation where the funds flow directly from investors to issuers.
Securities
COMPANY/ISSUER

INVESTORS
Funds

Primary market comprise of market for new issues of shares and debentures, where
investors apply directly to the issuer for allotment of shares/debentures and pay application
money to the issuer. Primary market is one where issuer contacts directly to the public at
large in search of capital. It also helps limited companies as well as Government companies
to issue their securities to the new/existing share holders by making public issue/rights issue.
Issuers issue capital by expanding their capital base and this enables them to finance their
growth plans or meet their working capital requirement etc. after the public issue, the
securities of the issuer are listed on a stock exchange(s) provided it complies with
requirements prescribed by the stock exchange(s).
Activities in the primary market:
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Appointment of merchant banker

Pricing of securities being issued

Communication/marketing of the issue

Information on credit risk.

Making public issues

Collection of money.

Minimum subscription

Listing on the stock exchange(s)

Allotment of securities in demat/physical mode

Record keeping

2. Secondary Market:
In the secondary market the investors buy/sell securities through stock
exchanges. Trading of securities on stock exchange results in exchange of money and
securities the investors.
Secondary market provides liquidity to the securities on the exchange(s) and this activity
commences subsequent to the original issue. For example, having subscribed securities of
a company, if one intends to sell the same, it will have to be done in secondary market.
Similarly one can buy the securities of a company from the secondary market.
A Stock Exchange is the single most impotent institution in the secondary market for
providing a platform to the investors for buying and selling of securities through its
members. In other words the Stock Exchange is place where already issued securities are
bought and sold by the investors. Thus secondary market activities is different from the
primary market in which issuer issue securities directly to the investors
Activities in the secondary market

Trading of securities

Risk management

Clearing and settlement of trades

Delivery of securities and funds

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INTRUDUCTION TO IPO
The first offering of the companies shares to the public. The shares offered may
be the existing one held privately, or the company may issue new shares to the public. A
formal public offer consist of an invitation to the public for subscription of the equity shares,
preference shares or debentures has to be made by a company highlighting the details such as
future prospectus, financial viability and analyze the risk factor so that an investor can take an
informed decision to make an investment for this purpose, the company issue a prospectus in
case of public issue and a letter of offer in case of right issue which is essentially made to its
existing share holders this document generally known as offer document. It has information
about business of the company, promoters and business collaboration, management the board
of directors, cost of the project and the means of finance, status of the project, business
prospectus and profitability, the size of the issue, listing, tax benefits if any and the names of
underwriters and the managers to the issue etc. According to companies act(section 68B)
every listed public company, making an initial offer of any security of Rs.10 crores and above
has to issue it only in dematerialized form
1. Application for allotment.
2. BOIDs for verification.
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3. Verification report.
4. Details of allotment to BOs.
5. Credits of securities.
6. Issuer sends intimation of allotment

Process Flowchart
2.
Issuer/ RTA

3.

CDSL

4.

5.

6.
BO
1.

TIME LIMITS TO PUBLIC ISSUE:

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Public offer: 10 to 15 days in advance to be advertised in paper Opening and closing dates
and earliest closing dates to be specified-at least three days to be kept open for subscription
and a maximum of 10 days.
Rights offer: offer open for minimum period of 30 days and maximum period of 60 days with
specific dates for closing of renunciations, spilt forms and other formalities.

LIMITS ON COSTS OF PUBLIC ISSUE:


Mandatory cost: are to be 11% to 15% of total issue. These include, fees to managers
to issue, merchant bankers, collecting bankers, underwriting commission, brokerage to
broker, fees to registrars, press announcements, listing fees, etc.

Other costs: should not to exceed 2% to 5% for equity issue, and 1% to 2% for
debentures issue in addition to mandatory costs.
The floatation of new issues is generally made by the following methods:
1. public issue through prospectus
2. private placement
3. offer sale
4. rights
Pre-issue formalities:
Project reports and validity and feasibility report

Letter of intent, industrial license or statement in lieu of it.

Arrangement for financing, arrangement with collaborations, FIs, bankers, auditors,


legal advisors, merchant banker, brokers, underwriters etc.

Formalities for satisfying the companies act, SEBI act, and SC act.

Requirement of section 60 of companies act.

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SEBI permits for issue of shares to public through prospectus.

Meeting the requirement for listing on stock exchanges.

Arrangement for issue by agreement for common share certificate form, draft
prospectus, printing stationery, registrar to the issue, banker, brokers etc.

SEBI Norms
Some of the norms prescribed for unlisted and listed companies are as under:
An unlisted company may make an initial public offering of equity shares or any other
security which may be converted into or exchanged with equity shares at a later date, only if
it meets all the following conditions:
1. The company has net tangible assets of at least Rs 3 crore in each of the preceding three
full years (of 12 months each), of which not more than 50 percent is held in monetary assets.

2. The company has a track record of distributable profits in terms of Section 205 of the
Companies Act, 1956, for at least three out of immediately preceding five years
3. The company has a net worth of at least Rs 1 crore in each of the preceding three full years
(of 12 months each)
4. In case the company has changed its name within the last one year, at least 50 percent of
the revenue for the preceding one full year is earned by the company from the activity
suggested by the new name; and
5. The aggregate of the proposed issue and all previous issues made in the same financial year
in terms of size does not exceed five times its pre-issue net worth as per the audited balance
sheet of the last financial year.

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A listed company shall be eligible to make a public issue of equity shares or any
other security which may be converted into or exchanged with equity shares at a later
date provided:
1. The aggregate of the proposed issue and all previous issues made in the same financial year
does not exceed five times its pre-issue net worth as per the audited balance sheet of the last
financial year.
2. In case there is a change in the name of the issuer company within the last year, the
revenue accounted for by the activity suggested by the new name is not less than 50 percent
of its total revenue in the preceding one full-year period.

IPO Grading Process:


The company requiring an IPO grading needs to first contact one of the grading agencies
and mandate it for the grading exercise. The agency would then follow the process outlined
below.

Obtain information required for the grading from the company.

Discuss with the company's management and visit the company's operating locations,
if required.

Prepare an analytical assessment report.

Present the analysis to a committee, comprising senior executives of the concerned


grading agency. This committee would discuss all relevant issues and assign a grade.

Communicate the grade to the company along with an assessment report outlining the
rationale for the grade assigned.
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Though this process will ideally require two to three weeks for completion, it may be
a good idea for companies to initiate the grading process about six to eight weeks before the
targeted IPO date to provide sufficient time for any contingencies. The cost of grading IPOs
shall be borne from investor protection funds administered by Stock Exchanges or from IEPF
administered by Ministry of Company Affairs.

Different kinds of issues


Primarily, issues can be classified as a Public, Rights or preferential Issues (also known as
private placements). While public and rights issues involve a detailed procedure, private
placements or preferential issues are relatively simpler.

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Public issues can be further classified into Initial Public offerings and further public
offerings. In a public offering, the issuer makes an offer for new investors to enter its
shareholding family. The issuer company makes detailed disclosures as per the DIP
guidelines in its offer document and offers it for subscription. The significant features are

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. This paves way for listing and trading of the issuers securities.

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A Further public offering (FPO) is when an already listed company makes either a
fresh issue of securities to the public or an offer for sale to the public, through an offer
document. An offer for sale in such scenario is allowed only if it is made to satisfy listing or
continuous listing obligations.
Rights Issue (RI) is when a listed company which proposes to issue fresh securities to
its existing shareholders as on a record date. The rights are normally offered in a particular
ratio to the number of securities held prior to the issue. This route is best suited for companies
who would like to raise capital without diluting stake of its existing shareholders unless they
do not intend to subscribe to their entitlements.
A private placement is an issue of shares or of convertible securities by a company to
a select group of persons under Section 81 of the Companies Act, 1956 which is neither a
rights issue nor a public issue.
This is a faster way for a company to raise equity capital. A private placement of
shares or of convertible securities by a listed company is generally known by name of
preferential allotment. A listed company going for preferential allotment has to comply with
the requirements contained in Chapter XIII of SEBI (DIP) Guidelines pertaining to
preferential allotment in SEBI (DIP) guidelines which interlaid include pricing, disclosures in
notice etc, in addition to the requirements specified in the Companies Act.
A Qualified Institutions Placement is a private placement of equity shares or securities
convertible in to equity shares by a listed company to Qualified Institutions Buyers only in
terms of provisions of Chapter XIIIA of SEBI (DIP) guidelines. The Chapter contains
provisions relating to pricing, disclosures, currency of instruments etc.
Eligibility norms for making Public Issues

SEBI has laid down eligibility norms for entities accessing the primary market
through public issues. There is no eligibility norm for a listed company making a rights issue
as it is an offer made to the existing shareholders who are expected to know their company.
There are no eligibility norms for a listed company making a preferential issue.
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However for Qualified Institutions placement (QIP), only those companies whose
shares are listed in NSE or BSE and those who are having a minimum public float as required
in terms of the Listing agreement, are eligible.
Category of entities which are exempted from the aforesaid eligibility norms
SEBI (DIP) guidelines have provided certain exemptions from the eligibility norms.
The following are eligible for exemption from entry norms.
(a) Private Sector Banks
(b) Public sector banks
(c) An infrastructure company whose project has been appraised by a PFI or IDFC or IL&FS
or a bank which was earlier a PFI and not less than 5% of the project cost is financed by any
of these institutions.
(d) Rights issue by a listed company

SEBIs Role in a Public Issue


Any company making a public issue or a listed company making a rights issue of
value of more than Rs 50 lakhs is required to file a draft offer document with SEBI for its
observations. The validity period of SEBIs observation letter is three months only i.e. the
company has to open its issue within three months period.
There is no requirement of filing any offer document / notice to SEBI in case of
preferential allotment and QIP. In QIP, Merchant Banker handling the issue has to file copy of
placement document with SEBI post allotment for record purpose.

For Public issue offer documents of which are submitted to SEBI, for its observations:
a. Recommends an issue

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SEBI does not recommend any issue nor does take any responsibility either for the
financial soundness of any scheme or the project for which the issue is proposed to be made
or for the correctness of the statements made or opinions expressed in the offer document.
b. SEBI approves the contents of the issue
It is to be distinctly understood that submission of offer document to SEBI should not
in any way be deemed or construed that the same has been cleared or approved by SEBI. The
Lead manager certifies that the disclosures made in the offer document are generally adequate
and are in conformity with SEBI guidelines for disclosures and investor protection in force
for the time being. This requirement is to facilitate investors to take an informed decision for
making investment in the proposed issue.
c. SEBI tag makes my money safe
The investors should make an informed decision purely by themselves based on the
contents disclosed in the offer documents. SEBI does not associate itself with any issue/issuer
and should in no way be construed as a guarantee for the funds that the investor proposes to
invest through the issue. However, the investors are generally advised to study all the
material facts pertaining to the issue including the risk factors before considering any
investment. They are strongly warned against any tips or news through unofficial means.
d. DIP guidelines
The primary issuances are governed by SEBI in terms of SEBI (Disclosures and
Investor protection) guidelines. SEBI framed its DIP guidelines in 1992. Many amendments
have been carried out in the same in line with the market dynamics and requirements. In
2000, SEBI issued Securities and Exchange Board of India (Disclosure and Investor
Protection) Guidelines, 2000 which is compilation of all circulars organized in chapter
forms. These guidelines and amendments thereon are issued by SEBI India under section 11
of the Securities and Exchange Board of India Act, 1992. SEBI (Disclosure and investor
protection) guidelines 2000 are in short called DIP guidelines. It provides a comprehensive
framework for issuances buy the companies.
e. A SEBI ensure compliance with DIP

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The Merchant Banker are the specialized intermediaries who are required to do due
diligence and ensure that all the requirements of DIP are complied with while submitting the
draft offer document to SEBI. Any non compliance on their part, attract penal action from
SEBI, in terms of SEBI (Merchant Bankers) Regulations. The draft offer document filed by
Merchant Banker is also placed on the website for public comments. Officials of SEBI at
various levels examine the compliance with DIP guidelines and ensure that all necessary
material information is disclosed in the draft offer documents.
Price of an issue
Indian primary market ushered in an era of free pricing in 1992. Following this, the
guidelines have provided that the issuer in consultation with Merchant Banker shall decide
the price. There is no price formula stipulated by SEBI. SEBI does not play any role in price
fixation. The company and merchant banker are however required to give full disclosures of
the parameters which they had considered while deciding the issue price. There are two types
of issues one where company and LM fix a price (called fixed price) and other, where the
company and LM stipulate a floor price or a price band and leave it to market forces to
determine the final price (price discovery through book building process).
a. Fixed Price offers
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. The Issuer company can mention a price band
of 20% (cap in the price band should not be more than 20% of the floor price) in the Draft
offer documents filed with SEBI and actual price can be determined at a later date before
filing of the final offer document with SEBI/ROCs.
b. Price discovery through book building process
Book Building means a process undertaken by which a demand for the securities
proposed to be issued by a body corporate is elicited and built up and the price for the
securities is assessed on the basis of the bids obtained for the quantum of securities offered
for subscription by the issuer. This method provides an opportunity to the market to discover
price for securities.

Book Building
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Book Building is basically a capital issuance process used in Initial Public
Offer (IPO) which aids price and demand discovery. It is a process used for marketing a
public offer of equity shares of a company. It is a mechanism where, during the period for
which the book for the IPO is open, bids are collected from investors at various prices, which
are above or equal to the floor price. 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.
The logic
Book building is a process of price discovery. Hence, the Red Herring prospectus
does not contain a price. Instead, the red herring prospectus contains either the floor price of
the securities offered through it or a price band along with the range within which the bids
can move. The applicants bid for the shares quoting the price and the quantity that they would
like to bid at. Only the retail investors have the option of bidding at cut-off. After the
bidding process is complete, the cut-off price is arrived at on the lines of Dutch auction. The
basis of Allotment is then finalized and letters allotment/refund is undertaken. The final
prospectus with all the details including the final issue price and the issue size is filed with
ROC, thus completing the issue process.
b. Price band
An above, the red herring prospectus may contain either the floor price for the
securities or a price band within which the investors can bid. The spread between the floor
and the cap of the price band shall not be more than 20%. In other words, it means that the
cap should not be more than 120% of the floor price. The price band can have a revision and
such a revision in the price band shall be widely disseminated by informing the stock
exchanges, by issuing press release and also indicating the change on the relevant website
and the terminals of the syndicate members. In case the price band is revised, the bidding
period shall be extended for a further period of three days, subject to the total bidding period
not exceeding thirteen days.

c. Deciding the price band


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It may be understood that the regulatory mechanism does not play a role in setting the
price for issues. It is up to the company to decide on the price or the price band, in
consultation with Merchant Bankers. The basis of issue price is disclosed in the offer
document. The issuer is required to disclose in detail about the qualitative and quantitative
factors justifying the issue price.
d. Firm allotment
A company making an issue to public can reserve some shares on allotment on firm
basis for some categories as specified in DIP guidelines. Allotment on firm basis indicates
that allotment to the investor

The Process:

The Issuer who is planning an IPO nominates a lead merchant banker as a 'book
runner'.

The Issuer specifies the number of securities to be issued and the price band for
orders.

The Issuer also appoints syndicate members with whom orders can be placed by the
investors.

Investors place their order with a syndicate member who inputs the orders into the
'electronic book'. This process is called 'bidding' and is similar to open auction.

A Book should remain open for a minimum of 5 days.

Bids cannot be entered less than the floor price.

Bids can be revised by the bidder before the issue closes.

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, etc.

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The book runner and the company conclude the final price at which it is willing to
issue the stock and allocation of securities.

Generally, the numbers of shares are fixed; the issue size gets frozen based on the
price per share discovered through the book building process.

Allocation of securities is made to the successful bidders.

Book Building is a good concept and represents a capital market which is in the
process of maturing.

In case the issuer chooses to issue securities through the book building route then as per SEBI
guidelines, an issuer company can issue securities in the following manner:

BIDDING PROCESS
The issue being made through the 100% book building process wherein up to 50%
of the net issue to the public shall be available for allocation on the proportionate basis to the
QIB bidders .further not less than 35% of the net issue to the public shall be available fro
allocation on proportionate basis to the retail individual bidder and not less than 15% of the
net issue of the public shall be available for allocation on a proportionate basis to non
institutional bidders, subject to valid bids being received at or above the issue price.
Bidders are required to submit their bids through the syndicate. However the bids
by QIBs shall be submitted only to the BRLMs or Syndicate members duly signed them in
this regard. In case QIB bidders, the bank in consultation with the e BRLMs may reject Bids
at the time of acceptance of the bid cum application form provided that the reason for
rejecting the same shall be provided to such bidder in writing. In case of bids under the non
institutional portion, bids under the retail portion and bids under employees reservation
portion, bids would not be rejected except on the technical grounds listed in this red herring
prospectus

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Investors should note that allotment to all successful bidders will only be in the
dematerialse form. Bidders will not have the option of getting allotment in physical form. The
equity shares, on allotment, shall be traded only in the dematerialized segment of the stock
exchange.

BID CUM APPLICATION FORM:


Bidders shall only use bid cum application form bearing the stamp of a member
of the syndicate for the purpose of making a bid in terms of this red herring prospectus. The
bidder shall have the option to make a maximum of three bids in the bid cum application
form and such option shall not be considered as a multiple bids. Upon the allocation of equity
shares, dispatch of the CAN, and filling of the prospectus with the Designated Stock
Exchanges, the Bid cum Application Form. Upon completion and submitting the Bid cum
Application Form to a member of Syndicate, the Bidder is deemed to have authorized us to
make the necessary changes in this prospectus and the Bid cum Application Form as would
be required for filling the prospectus with the Designated Stock Exchange and as would be
required by Designated Stock exchange such a filling without, prior or subsequent notice of
such changes to the bidder.

Who can bid?

Indian National Residents who are major.

Hindu Undivided Families in the name of the Karta

Companies, Corporate Bodies and Societies, registered under the applicable laws in
India.

Mutual Funds registered with SEBI.

Indian Financial Institutions, Commercial Banks, RRB, Co-operative Banks (subject


to RBI permission)

Ventures Capital Funds registered with SEBI.

Foreign Venture Capital Investors registered with SEBI

State Industrial Development Corporation


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Trusts registered under Society Registration Act

NRIs and FII are on repartition basis or non-repartition basis subject to applicable
laws.

Insurance companies registered with insurance regulator and development authority.

Multilateral and Bilateral Financial Institutions.

75% Book Building Process

The option of 75% Book Building is available to all body corporate that are otherwise
eligible to make an issue of capital to the public. The securities issued through the
book building process are indicated as 'placement portion category' and securities
available to public are identified as 'net offer to public'. In this option, underwriting is
mandatory to the extent of the net offer to the public. The issue price for the
placement portion and offers to public are required to be same.

100% Book Building Process

In the 100% of the net offer to the public, entire issue is made through Book Building
process the number of bidding centers, in case of 75% book building process should
not be less than the number of mandatory collection centers specified by SEBI. In
case of 100% book building process, the bidding centers should be at all the places
where the recognized stock exchanges are situated

Book Building at NSE


The NSE has set up nation wide network trading where by number of members
can trade remotely from their offices located all over the country. The NSE trading network
spans various cities and towns across India
NSE decided to offer this infrastructure for conducting online IPOs through the Book
Building process. 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.
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Book Building through the NSE system offers several advantages:

The

It provide a fair, efficient & transparent method for collecting bids using latest

NSE

system

offers

nation

wide

bidding

facility

in

securities

electronic trading systems

Costs involved in the issue are far less than those in a normal IPO

The IPO market timings are from 10.00 a.m. to 3.00 p.m. On the last day of the IPO, the
session timings can be further extended on specific request by the Book Running Lead
Manager.

Merchant banker/ lead manager:


Merchant banker carry a lot of importance in the process of capital issue, therefore
it is now mandatory that all public issues should be managed by the merchant banker
functioning as the Lead Manger.
Merchant banker/Lead manager performs major services and functions in initial public offers.
They are:

Determining the type of securities to be issued.

Compliances with the procedural formalities.

Selection of a banker and a broker to the issue.

Drafting of prospectus and application forms.

Appointment of registrars to deal with share applications and transfers.

Arrangement of underwriting and sub underwriting.

Placing of issue.

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Code of Conduct of the Merchant Banker in public issue:

He should render at all times high standards of services, proper care in all his
dealings and a high quality of professional judgment

Should disclose all information to his client.

He is prohibited from acquiring securities of any company on the basis of


unpublished price sensitive information

He should follow the regulation of SEBI.

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. Members have to submit
a one time undertaking to the Exchange. Eligible trading members have to give in the
prescribed format details of the user IDs that they Would like to use.

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.

Bid:
A bid is the demand for a security that can be entered by the syndicate/sub-syndicate
members in the system. The two main components of a bid are the price and quantity.

Bidder:
The person who has placed a bid in the Book Building process.

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Book Running Lead Manager:


A Lead Merchant Banker who has been appointed by the Issuer Company as the Book
Runner Lead Manager. The name of the Book Runner Lead Manager is mentioned in the
offer document of the issuer company.

.
Floor Price:
The minimum offer price below which bids cannot be entered The Issuer Company in
consultation

with

the

Book

Running

Lead

Manager

fixes

the

floor

price.

Merchant Banker
An entity registered under the Securities and Exchange Board of India (Merchant
Banker) regulation 1999.

Syndicate Member
Syndicate Members are the intermediaries registered with the Board and permitted to carry
on activity as underwriters. The Book Running Lead Managers
To the issue appoints Syndicate Member

Order Book
It is an 'electronic book' that shows the demand for the shares of the company at various
prices.

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Rules for the allotted shares and not allotted Shares.


The investor is entitled to receive a Confirmatory Allotment Note (CAN) in case he has been
allotted shares within 15 days from the date of closure of a book Built issue. The registrar has
to ensure that the demat credit or refund as applicable is completed within 15 days of the
closure of the book built issue.
The Lead Merchant Banker also publishes an advertisement giving details relating to
oversubscription, basis of allotment, number, value and percentage of applications, number,
value and percentage of successful allottees, date of completion of despatch of refund orders,
date of despatch of certificates and date of filing of listing application is released within 10
days from the date of completion of the various activities at least in an English National Daily
with wide circulation, one Hindi National Paper and a Regional language daily circulated at
the place where registered office of the issuer company is situated.

Period for the shares to get listed


The listing on the stock exchanges is done within 7 days from the finalization of the issue.
Ideally, it would be around 3 weeks after the closure of the book built issue. In case of fixed
price issue, it would be around 37 days after closure of the issue.

Role of a Lead Manager (pre and post issue)


In the pre-issue process, the Lead Manager (LM) takes up the due diligence of companys
operations/ management/ business plans/ legal etc. Other activities of the LM include drafting
and design of Offer documents, Prospectus, statutory advertisements and memorandum
containing salient features of the Prospectus. The BRLMs shall ensure compliance with
stipulated requirements and completion of prescribed formalities with the Stock Exchanges,
RoC and SEBI including finalization of Prospectus and RoC filing. Appointment of other
intermediaries viz., Registrar(s), Printers, Advertising Agency and Bankers to the Offer is

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also included in the pre-issue processes. The LM also draws up the various marketing
strategies for the issue.

The post issue activities including management of escrow accounts, coordinate noninstitutional allocation, intimation of allocation and dispatch of refunds to bidders etc are
performed by the LM. The post Offer activities for the Offer will involve essential follow-up
steps, which include the finalization of trading and dealing of instruments and dispatch of
certificates and demat of delivery of shares, with the various agencies connected with the
work such as the Registrar(s) to the Offer and Bankers 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. A merchant banker is required to do the necessary due
diligence in case of QIP mechanism.

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CURRENT IPO PERFORMANCE

Name of
the issue

Date of
Issue

Issue Date
Price Price
of
Range (Rs.) Listing

Roman
Tarmat
Limited
DLF
Limited

12/06/07
to
19/06/07
11/06/07
to
14/06/07

Rs.150
to
Rs.175
Rs.500
to
Rs.550

Vishal
Retail
Limited
Nelcast
Limited

BSE

NSE

BSE Gain/
Loss

NSE
Gain/Loss

175

9-Jul07

319.85

319.20

82.77

82.4

525

5-Jul07

573.95

574.7

9.32

9.47

11/06/07 Rs.230
to
to
13/06/07 Rs.270

270

4-Jul07

780.60

782.80

189.11

189.11

04/06/07 Rs.195
to
to
08/06/07 Rs.219

219

27Jun-07

182.15

181.70

-16.83

-17.03

27.05

27.05

42.37

42.37

Meghmani
Organics
Limited

04/06/07
to
07/06/07

Rs.17
to
Rs.19

19

28Jun-07

Decolight
Ceramics
Limited

24/05/07
to
29/05/07

Rs.45
to
Rs.54

54

19Jun-07

35.45

35.65

-34.35

-33.98

18/05/07 Rs.290
to
to
23/05/07 Rs.315

315

13Jun-07

563.80

565.20

78.98

79.43

15/05/07 Rs.171
to
to
18/05/07 Rs.190

190

5-Jun07

401.20

401.30

111.16

111.21

Time
Technoplast
Limited
Nitin Fire
Protection
Industries
Limited

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Above chart shows that post IPO performance good in the market. Out of 8 IPO Vishal retail
Ltd shown excellent performance. Only 2 companies are shown bad performance in market.

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Analysis
1. How are you made aware of about new IPO's?
Frequenc Percent

Valid

Cumulative
Percent
27.0

y
27

27.0

Percent
27.0

Family &

12

12.0

12.0

39.0

Friends
Brokers

52

52.0

52.0

91.0

Internet

9.0

9.0

100.0

Total

100

100.0

100.0

Valid Advertisement

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60

50

52

40

30
27
20

Count

10

12
9

0
Advertisement Family & Friends

Brokers

Internet

How are you made aware of about new IPO's?

Interpretation: This above chart shows that 52% of the clients aware of IPO through Brokers.
Because of Broking firms are creating more awareness through his executives. 27% of the
clients are aware through Magazines, News papers & TV etc. 12% & 9% of the clients are
getting awareness through Family & Friends respectively.

2. How do you recognize IPO as Investment Avenue?


Frequency

Percent

Valid

Cumulative

Percent

Percent

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Valid

ANAND RATHI SECURITIES LTD


11
11.0
11.0

11.0

Satisfactor

17

17.0

17.0

28.0

y
Good

41

41.0

41.0

69.0

Poor

31

31.0

31.0

100.0

Total

100

100.0

100.0

Excellent

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50

40

41

30

31

20
17

Count

10

11

0
Excellent

Satisfactory

good

Poor

How do you recognize IPO as Investment Avenue?

Interpretation: In order to know the clients, were asked how they recognize IPO as
Investment Avenue. It was found that 41% clients recognize it as good, 31% clients are not
preferred, 17% satisfied and only 11% clients recognize it as excellent. Clients feel that IPO
investment is good in this volatile market, and as per 31% clients due to much loss has
incurred. According to them recent IPOs are not impressive & are aggressively priced.

3. What factors do you consider while bidding in IPO's and investing in it?
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Frequency

Percent

Valid Percent Cumulative

Industrial

11

11.0

11.0

Percent
11.0

Outlook
Company

38

38.0

38.0

49.0

earnings
Issue price

37

37.0

37.0

86.0

All of the above

14

14.0

14.0

100.0

Total

100

100.0

100.0

Valid

background &

40
38

37

30

20

14

Count

10

11

0
Industrial Outlook
Company backgroud &

Issue price
All of the above

What factors do you consider while bidding in IPO's and investing in it?

Interpretation: Here 38% & 37% of the clients consider company background and issue price
respectively. Because they perceive that IPO was risky so they always consider the company
background and issue price before biding in issue. So they want to know company
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performance through analyzing company background. And 11% & 14% client said that
industrial outlook and all of the above.

4. How much have you invested in IPO?


Frequency

Percent

Valid

Cumulative Percent

Percent
Valid Below 10000

10000 to

33

33.0

33.0

33.0

23

23.0

23.0

56.0

18

18.0

18.0

74.0

26

26.0

26.0

100.0

100

100.0

100.0

20000
20000 to
60000
more than
60000
Total

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40

33
30

26
23
20

Count

18

10
Bellow 10000

20000 to 60000
10000 to 20000

more than 60000

How much have you invested in IPO?

Interpretation: In this we conclude that 33% of the clients are investing below 10000.
Because investing in IPO is more risky. So high percentage of clients are investing bellow
10000 and some of clients means 26% investing more than 60000.because they all are high
risk takers. 23% & 18% clients are investing 10000 to 20000 and 20000 to 60000
respectively.

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5. According to you which sector is most preferable for investing in IPO's


Frequency

Percent

Valid Percent Cumulative


Percent

Valid

Finance

31

31.0

31.0

31.0

Entertainment

17

17.0

17.0

48.0

Sugar

23

23.0

23.0

71.0

Other

29

29.0

29.0

100.0

Total

100

100.0

100.0

& media

40

30

31
29

23
20

Count

17

10
Finance

Entertainment & medi

Sugar

Other

According to you which sector is most preferable for investing in IPO's

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Interpretation: In this order 31% clients said that investing in Finance sector is good and 29%
clients said other sector are good (Real estate, oil, power, Automobile, Cement And IT etc) so
it say that investing in finance sector is safest. 17% and 23% clients preferred entertainment
& media and sugar respectively.

6. What was your experience having invested in IPO's?


Frequency Percent Valid Percent

Cumulative
Percent

Valid Gained profit

35

35.0

35.0

35.0

Gained loss

19

19.0

19.0

54.0

Neither profit

46

46.0

46.0

100.0

100

100.0

100.0

nor loss
Total

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50

46
40

35
30

20

Count

19

10
Gained profit

Gained loss

Neither profit nor l

What was your experience having invested in IPO's?

Interpretation: when clients were asked experience having invested in IPO, it was found that
46% clients said that neither profit nor loss and 35% clients said profit. So it means that
clients are getting profit from investment. Only 19% clients said that loss . Finally it shows
that IPO performing Good.

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7. What is your opinion about current IPO PERFORMANCE?


Frequency

Valid Excellent

Percent

Valid

Cumulative

Percent

Percent

8.0

8.0

8.0

Good

37

37.0

37.0

45.0

Better

44

44.0

44.0

89.0

Poor

11

11.0

11.0

100.0

Total

100

100.0

100.0

50

44
40
37
30

20

Count

10

11
8

0
Excellent

Good

Better

Poor

What is your opinion about current IPO PERFORMANCE?

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Interpretation: Here 44% of respondent agreed that its performing Better and 37% of
respondent agreed that its performing Good and 11% & 8% respondent said that good and
excellent respectively. Because currently IPO performing moderate in market and clients are
getting more returns from there investment.

8. You always take the help of a broker while investing in IPO.


Frequency
Valid

Percent

Valid Percent Cumulative

Strongly Agree

32

32.0

32.0

Percent
32.0

Agree
Partly

38
17

38.0
17.0

38.0
17.0

70.0
87.0

Disagree
Strongly

9
4

9.0
4.0

9.0
4.0

96.0
100.0

disagree
Total

100

100.0

100.0

Agree/Disagree

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40
38

30

32

20
17
10

Count

9
4

0
Strongly Agree

Partly Agree/Disagre
Agree

Strongly disagree

Disagree

You always take the help of a broker while investing in IPO.

Interpretation: We already find in first question that clients are more aware of IPO through
Brokers and here also they perceived that 38% clients agree that take help of brokers while
investing in IPO.32% clients strongly agreed. So it shows that brokers are giving well
investment tips to the clients. 17%, 9% & 4% clients partly agreed /disagreed, Disagreed,&
Strongly disagreed respectively.

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Findings
1. In my survey I found 52% & 27% of investors are aware through Brokers and
Advertisement, 21% of investors is aware through Internet & Family and Friends. The
majority of the respondent aware through Brokers.
2. 31% of investors have a poor perception about Investment Avenue as IPOs and they
are dissatisfied
3. 75% of respondents consider company earnings,& issue price as a necessary factors
while investing in IPOs.
4. The survey reveals that 31%& 29% of investors prefer finance IT as investment
sector; where as 23% of the respondents have selected sugar for their investment.
5. 56% of investors have invested below 20000 and 26% of investors invested more than
60000 and 18% of investors moderately invested.
6. After conducted survey, 44%, 37%, & 8% of investors concluded in better good &
excellent, where as 11% says poor performance.
7. In my survey I found that most the investors have taken the help of brokers while
investing in IPOs.

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Recommendations
1. The brokers have to conduct conference, seminars, and workshops to investor
get more knowledge of IPO. They will interact about there knowledge with his
family and friends. It helps to increase investor.
2. TO ward off poor perception of Investors Company needs to provide expert
tips.
3. Apart from 14% of investors, rest respondents are considering only one factor
that may be company earnings, industry outlook & issue price so there may be
chance of loss so they have to look upon all aspects while investing in IPOs.
4. The investor has to more concentrate on booming sector while investing IPO.
5. They have to conduct investor meet regularly to identify the investor
problems. Its help broking firms to also.
6. Provide Stock Direct specialty to clients.

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Conclusion
The study aimed at identifying investor decisions with regard to IPOs, so I have concluded
that majority of the respondents are satisfied with IPOs performance and they are having
good investment decisions, so brokerage firm has to consider these impediments

for

improvement of investment decisions among investors. And investors are moving towards IT
sector for investment as it is known for upward moving, it offering good enticements for the
investors. Hence Anand Rathi has great potential market in Belgaum to make an aware about
IPOs.
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. At present book
building method is used for IPO.
All most all investors know about the IPO but when we talk of investment in it they told
better to investment. But for some following reason they hesitated.
Retail investors who are now has to pay 100% of the money while applying and
blocking of their money up to allotment and if allotment is not done they have to wait
again to get back their money back.
They are not sure that they will be allotted shares are not.
Current IPOs are aggressively priced.
Because of these reasons IPOs are not performing good.

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Bibliography
Websites:
www.bseindia.com
www.nseindia.com
Other Reference:

ANAND RATHI Manual.

Internet,

Magazines like Dalal street, Fortune India etc

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Annexure
QUESTIONNAIRE
Sir/ Madam,
I am pleased to introduce myself Santosh B Dandigadasar student of MBA 2 nd

semester

studying at KLESs IMSR Hubli. I have been assigned a project work entitled A
comparative study of investment decisions of individual investor with regard to IPOs at
ANAND RATHI Belgaum. Hence I request you to co-operation to in this regard. Please
spend your precious time and your opinion from the following Note: Please tick in () the
appropriate box.
Respondent profile
Name:
Address:
Gender:
Age:

Male

15-25

Female

25-45

45-55

Occupation: Salaried

55-65

Business man

Professional

Retired and others

1. How are you made aware of about new IPOS?


a. Advertisement

b. Family & Friends

c. Brokers

d.

Internet
2. How do you recognize IPO as Investment Avenue?
a. Excellent

b. satisfactory

c. Good

d. Poor

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3. What factor do you consider while biding in IPOs & investing in it


a. Industry outlook

b. Company background and earnings

c. Issue Price

d. All of the above

4. How much have you invested in IPO


a. Bellow 10,000

b. 10000 to 20000

c. 20000 to 60000

d. more than 60000

5. According to you which sector is most preferable for investing in IPOs


a. Finance

b) Entertainment & Media

c. Sugar

d.

Other specify
6. What was your experience having investing in IPOs?
a .Gained profit

b. Gained loss

c. Neither profit nor loss

7. What is your opinion upon current IPO PERFORMANCE?


a. Excellent

b. Good

c. Better

d. Poor

8. You always take the help of a broker while investing in IPO.


a) Strong agree

b) Agree

c) Partly agree/disagree

d) Disagree

e) Strongly disagree

Thanking you

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CODE SHEET

S No

q1

q2

q3

Q4

q5

a6

q7

q8

10

11

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12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

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27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

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42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

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58

59

60

61

62

63

64

65

66

67

68

69

70

71

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73

74

75

76

77

78

79

80

81

82

83

84

85

86

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87

88

89

90

91

92

93

94

95

96

97

98

99

100

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