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Submitted byAndrea Henriques Roll No. 505 MMS II
Prospectus is a legal document that institutions and businesses use to describe the securities they are offering for participants and buyers. A prospectus commonly
In the case of book-built issues. any litigation that is taking place. any adverse economic conditions in the company’s particular industry. financial statements. and dependence upon key personnel. detailed information about their compensation. the company’s competitive disadvantages. Fees and Expenses -. Obtaining a prospectus is relatively easy.The prospectus lists the shareholder fees and the annual operating expenses of the fund. In the context of an individual securities offering. Red Herring Prospectus Red Herring Prospectus is a prospectus which does not have details of either price or number of shares being offered or the amount of issue. such as an initial public offering. or exchanging shares of the fund are listed in this section of the prospectus. at least 21 days prior to the filing of the Offer Document with ROC/SEs. a list of material properties and any other material information. any lack of a market for the securities offered. Performance Information of the company. an issuer can state the issue size and the number of shares are determined later. the regulatory structure and dangers in the event of non-compliance. but WITHOUT ANY HYPE. however deciphering it is even harder.provides investors with material information about mutual funds. Minimum account balances and tax consequences of buying. a prospectus is distributed by underwriters or brokerages to potential investors. and the lack of assurance that there will be a market. On the other hand. Thus the key information in the Prospectus are as followsInvestment Objectives. This means that in case price is not disclosed. SEBI may specifies changes. if any. in the draft Offer Document and the issuer or the Lead Merchant banker shall carry out such changes in the draft offer document before filing the Offer Document with ROC/SEs.include any lack of business operating history. Shareholder Information -. selling. Hence for the convenience of the investor the various guidelines have been laid down in order to safeguard the right of the investor & to ensure transparency. stocks.The prospectus provides information relating to the purchase and redemption of fund shares. bonds and other investments. providing readable information. The draft offer documents are filed with SEBI. TYPES OF PROSPECTUS Draft Offer document: Draft Offer document means the offer document in draft stage. any past problems with the company or members of its management. biographies of officers and directors. in such a case will notify the floor price or a price band by way of an advertisement one day prior to the opening of the issue. the number of shares and the upper and lower price bands are disclosed. it is a process of price discovery and the price cannot be . Risks -. holding. An RHP for an FPO can be filed with the RoC without the price band and the issuer. Financial Highlights -. A well designed prospectus ideally would be similar to a well crafted brochure. such as a description of the company's business. the "dilution" between the price the new shareholders are paying and the low price the insiders bought their shares at. Prospectus can also be called an Offer Document in case of a public issue or offer for sale and Letter of Offer in case of a rights issue which is filed Registrar of companies (ROC) and Stock Exchanges.The financial highlights section need to be included which has been audited by an independent certified public accountant.
. price and amount of the instruments offered. if applicable .The ‘Risks in relation to the first issue’ . The accountability and responsibility of the Abridged Prospectus is with the SEBI Registered Category I Merchant Banker. fax number and E.The name and address of the registered office of the company. such details are not shown in the Red Herring prospectus filed with ROC in terms of the provisions of the Companies Act. The offer document filed thereafter with ROC is called a prospectus.Credit Rating. telephone. the details of the final price are included in the offer document. 2000 prescribes the guidelines for Abridged Prospectus.Index of the contents Inner Cover Pages . Letter of offer Letter of offer means the offer document prepared by company for its rights issue and which is filed with the Stock Exchanges. . number.‘Issuer’s Absolute Responsibility’ . VARIOUS GUIDELINES FOR A PROSPECTUS Companies Act 1956 SEBI Guidelines 2000 Cover Pages Front Outer Cover Page .Name/s of stock exchanges where listing of the securities is proposed and the details of inprinciple approval for listing obtained from these stock exchanges Front Inside Cover Page . Only on completion of the bidding process. This memorandum is required to be signed by all the directors who have signed the main prospectus and is not required to be filed with Registrar of Companies. 2A).The other risk factors Back Cover Pages Cover page No provision . Abridged Prospectus Every set of two applications should accompany the memorandum containing salient features of Abridged Prospectus (Form No.The nature. The letter of offer contains all the disclosures as required in term of SEBI (DIP) guidelines and enable shareholder in making an informed decision. SEBI (Disclosure and Investor Protection) Guidelines. mail address.The name and address of the Registrar to the issue . Hence.determined until the bidding process is completed.Issue Opening Date .
Merchant Banker) No provision .Financial information Statutory and other information Statutory and other information Revaluation of assets. any performance guarantee or assistance in marketing by the collaborators . Company management and directors (their directorships in other project companies) No provision re Key personnel Location of the Project .Details regarding major shareholders No provision re: Promoters` Terms of payments Project Cost Contribution/lock in period .Disclaimer Clause (from SEBI.Collaboration. auditors. .A report by the auditors .Notes to Capital Structure company . if any (during last five Material contracts and years) inspection of documents Material contracts and inspection of documents .Consent of directors.Means of financing .Financial Information solicitors/advocates etc .Issuer factors Company .Appraisal History and main objects and present business of the company Promoters and their Background .Schedule of implementation of the project and progress made so far Future prospects Stock Market Data Management Discussion and Analysis of the Financial Condition and Results of the Operations as Reflected in the Financial Statements.Key Managerial Personnel .Consent of directors.Intermediaries and auditors . Financial of Group Companies Management perception of risk Promise vis-à-vis Performance . address. solicitors/ General information advocates etc .Compliance Officer Capital Structure of the company Capital structure of the .PART I General Information General Information .Names.Filing of offer document with the Board and Disclaimer/Compliance Officer RoC .Promoters’ contribution and lock-in period Terms of the present issue .Listed Ventures of Promoters Basis for Issue Price Outstanding litigations or Defaults Risk factors and management perception Disclosure on Investor Grievances and Redressal System PART II General Information PART II . auditors. occupation of manager.
indebtedness and proceeds to be raised from the public Business Information The key to determining how successful the IPO Company is going to be is by finding out about what it does and who its competitors are.per share & at a premium of Rs. in this case equity share of Face value Rs. and • Summary of share capital. 2011 and March 31. • Summary of the IPO company's financial information. Goldman Sachs (India) Securities Private Limited. and key management. 2011 respectively.464 for eligible employees.Listing Rules of the stock exchanges. 193/-. DSP Merrill Lynch Limited. ‘Listing’ information has been provided that the company has been listed on the NSE and the BSE. 10/-.553. the company had selected 4 lead managers to overlook the issue namely. The prospectus clearly discloses the ‘BOOK RUNNING LEAD MANAGERS’. and . ‘BID/ISSUE PROGRAMME’ mentions the open & close dates for various types of investors. as this would give it an edge .340 at a price of Rs. Key Information Summary Key information includes the following: • General description of the IPO company. issue or offer statistics.Securities Commission's "Policies and Guidelines on Issue/Offer of Securities The ‘PROMOTER’ information has been provided followed by the ‘OFFER DETAILS’. including its prospects and outlook. Further information is provided regarding reservation of a certain number of shares. 203/. its business activities. A small paragraph has been provided on the ‘GENERAL RISKS’ were the company urges Bidders to read the Risk Factors carefully before making an investment decision in this Issue. promoters and substantial shareholders. in this case the company has reserved 275. followed by the date of listing. . that being. It mentions the securities being sold. You might also ask whether the IPO Company has patented products or niche products.Companies Act 1965. The company has mentioned to different close dates for QIB Bidders & for Non QIB Bidders. April 4.ANALYSIS OF POWER FINANCE CORPORATION LIMITED Cover Page Basic Information The cover page of the prospectus clearly mentions that the prospectus is currently governed by the following rules and regulations: . The number of equity shares 229. • Summary of risk factors affecting or which may affect the business and financial performance of the IPO company. ICICI Securities Limited & JM Financial Consultants Private Limited.
Shareholders. experience and area of responsibility. activities and operations so as to give a big picture of what the company is all about. brand names. corporate structure. and • Future financial information. From the forecast profit. franchises. Historical financial information usually comprises a summary of the audited Profit and Loss Account. patents and research and development capabilities. distributorship. and • Gross and net dividend rates/amount. Directors and Management The prospectus provides adequate information on the following groups: • Substantial shareholders and promoters of the IPO company. This is a heavy read as preparers of an IPO prospectus would assume the reader is finding out about the company for the first time and may just pour out all the facts about the company's history. and the offer price of the shares of the IPO company. The information provided in this section would include the following: • background of the industry or sector(s) including the characteristics of the industry or sector(s) in which the IPO company operates. and whether they are executive or non-executive directors. • Customers and suppliers of the IPO company. • Pre-tax profit before minority interest. • Prospects of the industry or sector(s) concerned. • Pre-tax profit after minority interest. including the names and shareholdings of individuals behind the IPO company. and • Commercial aspects such as retail network.over its rivals. Future financial information has been covered by forecasts on the following: • Turnover. Financial Information The Financial Information section is a key part of the prospectus and is generally divided into: • Historical financial information. • Type of products/services sold. There is also a segment on analysis of turnover and profits by subsidiary/associated companies. These and other questions should be answered in the Business Information section. licenses. detailing their . production methods and distribution channels adopted. has been computed by the prospective price-earnings multiple of the IPO company. • After-tax profit. agencies. products/services and markets/geographical locations in both the historical and forecast financial information. • Board of directors including their representation and details of each director's qualification. as extracted from the Accountant's Report in the appendices of the prospectus. Cash Flow Statement and Balance Sheet of the company (on a consolidated basis). The information is provided with explanatory text (Note to Accounts) and analysis of past financial performance. and • Key management staff below the level of directors. • Technology.
industry and financial performance of the IPO Company can be of a general nature or specific to the company. we should not forget to read all the fine prints. • Performance of Non performing assets • Inability to maintain a low effective cost of funds • Inability to develop or implement effective risk management policies and procedures which could expose them unidentified risks or unanticipated levels of risk • Risk of non-recovery of loans • Unable to recover costs incurred on the Ultra Mega Power Projects ("UMPPs") and Independent Transmission Projects ("ITPs"). it can help you to better understand the company in which you may decide to put your money. and areas of responsibility. experience. As for any document that is contractual in nature. • Climatic conditions. CONCLUSION An IPO prospectus may be a lengthy document to read. and • Volatility in interest rates. small print and "Notes to the Accounts" in the prospectus. It has also been mentioned how the directors of the company propose to deal with or reduce the impact of the risk factors identified. • Foreign exchange risks. • Materialization of contingent liabilities. General risks include in this section are: • The fall and rise in prices of securities depending on stock market conditions • Changes in government policies. However. . • Emergence of new competitors or players in the industry. Risk Considerations Risk factors relevant to the business. This means the footnotes. and • Specific litigation that has started or brought before the court. civil unrest and other acts of violence or war involving India and other countries • Outbreak of an infectious disease or any other serious public health concerns in Asia or elsewhere Risk considerations which are specific to the company are mentioned as follows: • Dependency on key personnel. • Inability to attract and retain management team and skilled personnel Above are few of the risks mentioned in the prospectus. • Increase in competition • On account of economic slowdown • Inability to raise foreign currency borrowings • Terrorist attacks.qualification.
nasdaq.bseindia.in ipo.com .sebi.gov.com www.BIBLIOGRAPHY • • • • • Prospectus for the Public Offering of Securities in Europe by Dirk Van Gerven Power finance Corporation Ltd Prospectus www.