CHAPTER -1ABSTRACT

REVIEW -1IPOs are particularly suitable investments for anyone who is looking for a large amount of growth in short period of time for their capital. Before utilizing an IPO investment though, considers performing an IPO valuation to ensure we are buying an investment that is worth weir capital. An evaluation is one of the most important steps we can possibly take when we are considering an investment in the open marketplace. During this phase of the investment process, look into a variety of different factors that can affect the financial situation of the IPO we are interested in, this is an important step in how to IPO. As we are scouring financial statements representing the company we are investing in, should first analyze the value of the current assets of the company. Next, we should analyze the value of the debt the company owes. Once we compare these two factors, we will understand where the company currently stands financially speaking. The best investments available are investments consisting of companies that have far less debt than they do assets. If we can compare the assets of the company to its debt and find that the current sale price of the company is less than that difference of these two sums, we can be certain that we are evaluating a very valuable investment. Of course, we should look into many other factors that can affect weir investments too. The amount of income the company is receiving on an ongoing basis is one of the most important factors we can consider. We should also analyze the value of the expenses the company is currently facing due to operating costs. As we compare the amount of income the company is pulling in compared to the amount of expenses it is paying out, we will understand its current financial situation. As we probably already know, a companys income should far exceed the total expenses the company is experiencing each month and each year.Another important factor we should take into consideration as we are looking at an IPO investment is the type of products and services the company offers. If, once we analyze the companys current product presentations, we will understand the type of company we are looking at. If we would buy the products the company is selling on our own, we can be certain that we are analyzing a high quality company. Even though the financial records of a company are often the most important pieces of data we can analyze when we are looking at the company as an investment, look into other factors such as who the owners are of the company, the people releasing the IPO, the reasons why they are releasing the IPO to the public, and other factors that may affect the value of weir investment in the future. As long as we take all these precautions into consideration as we are considering investing into an IPO market, we will be investing into solid investments. As we perform IPO valuation, dig as deep as we possibly can into the financial records in order to better understand the many different aspects of the company. As long as we discover many different instances that state the company is worth more than it is currently selling for, we are purchasing a very valuable company through the IPO offering we are looking at.ABSTRACTREVIEW -2Many companies try to raise capital for growth through a process called the Initial Public Offer or IPO. Investing in these IPOs can give us huge profits in short time frame.They are great wealth creator tools. At the same time they can wipe out wear investments equally quickly. So the IPOs are high risk, high return avenues of investment. There are always items to consider when investing in an IPO that can make them less risky.Why do Companies launch IPOs?In the growth trajectory of any company there comes a time when it needs to make a huge investment to grow to the next level. Whenever a company hits this point, it needs to look at two options: raise debt through bonds where it will get the investment money, but it pays interest and it needs to repay the debt eventually. Alternatively, go for an IPO where it decides to share its profits in the coming years. Understanding this is very important when investing in IPOs; after all we will now become a part of its profits and losses.Understanding the Company PerformanceWe must first look at the company value in absolute terms and its value as per the IPO issue rates. The absolute company value is the difference between its asset value and debt. Typically, the asset value must be significantly higher than the debt to indicate that it is financially healthy. Besides, the IPO value must be less than its absolute value for us to make decent listing gains. Apart from the company value, its annual performance too is a great indicator. Some relatively new companies may not have a huge absolute value; however they have good growth numbers in the past and show great promise for strong future growth too. In such cases, we can still invest with a long term view and its value is bound to increase. On the side of caution, the thing that we need to look at is the legal problems that the company currently faces. If there are too many legal issues with it, it could be a very risky IPO to enter in. We are better off avoiding it till its legalities clear off and we can enter the stock in secondary market. Finally, we need to look at the market position of the company. A market leader or a big player is a relatively safer bet than someone at the bottom of the chain. It is not to say that unknown companies will not grow or make profit, but they are always higher risk investments. If were aim is to cut down risks, we should avoid such companies. Apart from these, we could also have current news, economic situation, etc that could affect the stock listing and were potential gains. It is best to look at these on a case by case basis that follow a general rule. In summary, if we are looking to reduce risk in IPOs, we must look at items to consider when investing in an IPO. Simple checks that can protect weir money.

INTRODUCTION

1.1. INTRODUCTION: Finance is the science of funds management. The general areas of finance are business finance, personal finance, and public finance. Finance includes saving money and often includes lending money. The field of finance deals with the concepts of time, money, risk and how they are interrelated. It also deals with how money is spent and budgeted. One facet of finance is through individuals and business organizations, which deposit money in a bank. The bank then lends the money out to other individuals or corporations for consumption or investment and charges interest on the loans.The general areas of finance are 1] Business finance which is used by companies2] Personal finance which is used by individuals 3] Public finance which is used by governments.

WHAT IS FINANCIAL MARKET: Financial Markets are place where financial instruments are made to purchase or sell indirectly through intermediaries. This may be a physical location (like the NYSE) or an electronic system (like NASDAQ). Much trading of stocks takes place on an exchange; still, corporate actions are outside an exchange, while any two companies or people, for whatever reason, may agree to sell stock from the one to the other without using an exchange.Trading of currencies and bonds is largely on a bilateral basis, although some bonds trade on a stock exchange, and people are building electronic systems for these as well, similar to stock exchanges. Financial markets can be domestic or they can be international.

Types of financial markets:The financial markets can be divided into different subtypes:A] Capital markets which consist of: 1] Stock markets, which provide financing through the issuance of shares or common stock, and enable the subsequent trading thereof. 2] Bond markets, which provide financing through the issuance of bonds, and enable the subsequent trading thereof. B] Commodity markets, which facilitate the trading of commodities. C] Money markets, which provide short term debt financing and investment.

1.2 INTRODUCTION TO IPO:Definition: Initial public offering (IPO), also referred to simply as a "public offering" or "flotation," is when a company issues common stock or shares to the public for the first time. They are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded.In an IPO the issuer may obtain the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), best offering price and time to bring it to market.An IPO can be a risky investment. For the individual investor, it is tough to predict what the stock or shares will do on its initial day of trading and in the near future since there is often little historical data with which to analyze the company. Also, most IPOs are of companies going through a transitory growth period, and they are therefore subject to additional uncertainty regarding their future value. However, in order to make money, calculated risks need to be taken.Reasons for listing: When a company lists its shares on a public exchange, it will almost invariably look to issue additional new shares in order to raise extra capital at the same time. The money paid by investors for the newly-issued shares goes directly to the company in contrast to a later trade of shares on the exchange, where the money passes between investors. An IPO, therefore, allows a company to tap a wide pool of stock market investors to provide it with large volumes of capital for future growth. The company is never required to repay the capital, but instead the new shareholders have a right to future profits distributed by the company and the right to a capital distribution in case of dissolution.The existing shareholders will see their shareholdings diluted as a proportion of the company's shares. However, they hope that the capital investment will make their shareholdings more valuable in absolute terms.In addition, once a company is listed, it will be able to issue further shares via a rights issue, thereby again providing itself with capital for expansion without incurring any debt. This regular ability to raise large amounts of capital from the general market, rather than having to seek and negotiate with individual investors, is a key incentive for many companies seeking to list.Introduction of IPO in context of Indian market :The Indian primary market has come a long way particularly in the last decade after deregulation of the Indian economy in 1991-92. Both the primary and secondary markets have had their fair share of reforms, structural cum policy changes time to time. The most commendable being the dismantling of the Controller of Capital Issues (CCI) and introduction of the free pricing mechanism. This changed the whole facet of Initial Public. Around 80 IPOs made its entry into stock market in this year, which was never in the history of Indian capital market. Maximum number of issues received enormous response from the investors. Coal India IPO which is raising around 15,000 crores is making its entry into stock market in this October, it is considered to be the largest IPO ever made in the Indian history. Many experts are viewing that its going to change the Indian economic scenario. Industries raises finance from capital markets through various instruments likeEquity finance Debt finance IPOS comes under equity finance and debt finance. During the last decade, more than a third of the increase in net assets of large firms in Chile, South Korea, Malaysia, Mexico, Taiwan and Thailand has been secured through equity issuance. This pattern contrasts sharply with that of the industrial countries, in which equity financing during the same period has accounted for less than 5 percent of the growth in net assets. Future of the capital market:In the liberalized economic environment, the capital market is all set to play a highly critical role in the process of economic development. The Indian capital market has to arrange funds to meet the financial needs of both domestic and foreign resources. What is more critical is that the changed environment is characterized by cutthroat competition. Ability of enterprises to mobilize funds at cheap cost will determine their competitiveness.Changes in the capital market:Four sets of changes in the Indian capital market can be identified which set the market of the twenty-first century different from what obtained earlier. These can be categorized as follows: 1] Introduction of new institutions 2] Introduction of new instruments 3] Changes in administrative control and regulatory framework 4] Some recent initiatives

Introduction of New Institutions :The composition of the Indian capital market has undergone a total change. Till very recent times, Bombay Stock Exchange dominated the capital market in India. The daily turnover on the Bombay Stock Exchange (BSE) alone exceeded the total turnover of all other exchanges put together. The BSE with the monopolistic claw like control over the market was posing a severe constraint on the spread and diversification of the capital market culture. It was content with practicing non-transparent time and resource consuming trading practices that failed to evoke confidence among new investors, both in primary and secondary market. Its trading practices were becoming somewhat totally out of tune with the ongoing communication revolution in India and worldwide. In response to this, the most important are the OTCEI and NSE. What is more important is that the NSE has worked as a catalyst of change for other exchanges, which are introducing on-line trading systems. Along with NSE, mutual funds have also emerged in the country. Different types of mutual funds catering to the needs of different types of investors have been set up in the country. The increasing growth of the capital market has witnessed the mergence of foreign institutional investors (FIIs) as significant players. Their sale and purchase decisions are already having a significant impact on the market conditions. Introduction of New Instruments:Along with these new players, a set of new supporting institutions have also emerged on the horizon such as the Discount and Finance House of India, Securities Trading Corporation of India, Stock Holding Corporation of India, settlement and depository systems, etc. Along with new institutions, new instruments have emerged on the capital market. These encompass both the domestic instruments and foreign instruments. Many new instruments of finance have already been introduced in recent years. Still, the current intensity of the Indian financial market reveals that there is a tremendous scope to deploy new financing instruments connected to equity, debentures, bonds, add-on products and derivatives. This may require appropriate changes in certain economic legislations and the will on the part of the Indian corporate enterprises to take risks and tune their decision-making to the investor psychology and market preferences. Changes in Rules and Regulations:Responding to the changes in the environment, the administrative framework has also undergone a total overhaul. The earlier chains have been totally removed. The Controller of Capital Issues has been done away with. The Indian capital market has been left free to find its own depth and strength. However, it is a paradox of a free market economy that whenever chains are removed effective watchdogs have to be employed. This latter function has now been entrusted to the Securities and Exchange Board of India. The SEBI in turn has been laying down guidelines to be followed by different players in the different segments of the market. Some Recent Initiatives: Buy-back of shares by corporate has been permitted; this will enable the promoters of Indian companies to consolidate their positions. Disclosure of end use of funds rose in public issue in annual statements; it will impart transparency to the manner in which the funds raised from the public are deployed. This will also impose greater accountability on companies. One-time waiver of capital gains tax for corporatization of stock broking tickets; this will result in speeding up the pace of professionalization of stock broking operations, which will benefit investors. Provision of nomination facility in share certificates; this will ease procedures for transfer of shares in the names of the nominee in case of death of the shareholder. In short, the capital market has witnessed metamorphic changes in recent past and is all set to meet the varied needs of the changed liberalized economic environment.About Indian Brokerage Industry :Indian brokerage industry dates back to 1850s, but started growing strongly in the 1990safter the creation of the regulatory body, the Securities Exchange Board of India (SEBI)and incorporation of NSE. But competition is intense as there are far too many brokers -almost double the number of brokers in the US - competing for a much smaller market.The market is extremely fragmented with the top 5 firms accounting for only 14.6% of the turnover share during FY08. The brokerage market is largely retail and the retail investors are spread across the country (with majority from Mumbai). Online trading channels can play an important part in catering to the regional spread and has indeed shown good growth (30.6% CAGR in number of internet enabled brokerage firms, 71.1% CAGR in number of customers and 49.7%CAGR in share of total traded value since 2003). However, retail investors have shown an over whelming preference for non-delivery based trading (70.8% of the total cash market turnover during FY08). Intra-day trading makes physical distribution channel necessaryBecause it offers high market data latency and proximity to trading advice of the brokers/Other investors. Growth in the number of sub-broker network reflects this (CAGR of 46.1%from 150 in 1993 to 44,074 in 2008) as expansion of sub-brokerage network means less capital outgo for the brokers. High competition has resulted in a steady compression of brokerage commissions over the years and intensely since 2008 when Reliance Money, one of the new entrants with a massive physical distribution network, dropped it to extremely low levels. For a relatively young market, commissions are lower than even in the advanced markets. In order to improve profitability, top firms have been consciously trying to broaden their portfolio of services. But this is likely not to pay high dividends over the short to medium term due to the economic, competitive and regulatory headwinds against these service lines.Overall, from here, the industry will likely traverse the following path: Likely recovery of trading turnover in FY10. Further consolidation of the market share of the top 100 brokers. Possible decline inthe number of brokers but increase in the number of sub-brokers. Rise in market share of Reliance Money but muted industry profitability in the shortAnd medium term. Gain in FII market share by few of the top domestic brokerages. Their success isLikely to draw in other players into this segment. Technology is a key success enablerFor this client category and the overall electronification of the industry will progressRapidly over the next few years.Globalization and the Indian capital market:With the gradual opening up of the Indian economy, increasing importance of foreign portfolio investment in the Indian markets and drastic reduction in import tariffs that has exposed Indian companies to foreign competition, Indian capital market is acquiring a global image. Till recently, participants in the Indian capital market could largely afford to ignore what happened in other parts of the world. Share prices largely behaved as if the rest of the world just did not exist. At present, in sharp contrast to recent past, Indian capital market responds to all types of external developments, like US bond yields, the value of the peso or for that matter of any other currency, the political situation in China, or new petrochemical capacity in South Korea, etc. In short, the Indian capital market is on threshold of a new era. Gradual globalization of the market will mean four things, as follows: The market will be more sensitive to developments that take place abroad. There will be a power shift as domestic institutions are forced to compete with the FIIs who control the floating stock and are in control of the GDR market. Structural issues will come to the fore with a plain message: reform or despair. The individual investor in his own interest will refrain from both primary and secondary market; he will be better off investing in mutual fund.

OBJECTIVES OF THE STUDY

To study in detail about the various methodologies that are involved in making an IPO, such as fixed price issues, book built issues. To study on various stages involved in the process of IPO such as issue pricing, issue structuring, procedural requirements of an IPO etc. It can be used as a tool of increasing market value of the companies. It also can attract foreign capital e.g. it can attract FIIs to invest in Indian companies.

SCOPE OF THE STUDY1] To make an initial public offer (IPO), the companies have to look into the various aspects like what guidelines it has to follow, the procedure for coming to Public issue of shares for the proposed objective. 2] Scope of this project is limited to the guidelines and procedures for coming to an IPO.3] Scope is limited to mentioned companies which came for an IPO and their strengths and weaknesses for succeeding in an IPO.

NEED FOR THE STUDY

1] Study about IPO helps to know about the various procedures, requirements and need for the company for making an IPO.

2] The process made through the analysis of success and failure of various IPOs helps to know about the attitude of investorstowards the issue made.

Limitationsof study:A] The project is prepared in limitation to the availability of data. B] The regulations and procedure to be followed is mentioned according to the SEBI rules. C] The data is limited to recent amendments which are to be followed. D] The data presented is from the secondary source.E] Study is restricted to a timeframe of 2 months.

Company profile

Angel Brookings tryst with excellence in customer relations began in 1987. Today, Angel has emerged as one of the most respected Stock-Broking and Wealth Management Companies in India. With its unique retail-focused stock trading business model, Angel is committed to providing Real Value for Money to all its clients. The Angel Group is a member of the Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and the two leading Commodity Exchanges in the country: NCDEX & MCX. Angel is also registered as a Depository Participant with CDSL. COMPANYS Business Equity Trading Commodities Portfolio Management Services Mutual Funds Life Insurance Personal Loans IPO Depository Services Investment AdvisoryAngel Group: Angel Broking Ltd. Angel Commodities Broking Ltd. Angel Securities Ltd.

Companys VisionTo provide best value for money to investors through innovative products, trading/investments strategies, state of the art technology and personalized service.

Companys MottoTo have complete harmony between quality-in-process and continuous improvement to deliver exceptional service that will delight our Customers and Clients.Companys CRM Policy: Customer is KingA Customer is the most Important Visitor on our premises. He is not dependent on us, but we are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favour by serving him. He is doing us a favour by giving us an opportunity to do so.Business Philosophy Ethical practices & transparency in all our dealings Customers interest above our own Always deliver what we promise Effective cost managementCOMPANY Quality Assurance PolicyWe are committed to providing world-class products and services which exceedthe expectations of our customers, achieved by teamwork and a process of continuous improvement.Work CultureAt Angel, we keep exploring new paths to provide the best value to all our internal and external customers. We consider people as our biggest asset and believe in creating long term relationships by nurturing talent from within. A fast-growing, forward-looking organization like ours, demands HR to be a key responsibility area of our core management team. Our HR team constantly explores ways to enhance and augment the knowledge base and productivity of all Angels by providing various learning and development Programs. Our three tier Leadership Development program helps all star performers to grow and develop their managerial skills to become effective mentors for their teams and thereby take on the next level of responsibility effectively. Ours is a winning team of highly determined, motivated, and adaptable people, all working diligently to take Angel's exciting success story forward. HR PhilosophyAt Angel, People come first. Along with our customers, our employees are equally vital to our organization. The Business of HR is to foster an entrepreneurial spirit whereby Angels can operate with ownership as an entrepreneur (profit center) within the confines of their job role and earn over and above their fixed salaries. We believe in inculcating a sense of responsibility and ownership in all Angels which brings out the entrepreneurial zeal to explore potential within as well as beyond job boundaries. Companys HR Philosophy is to engage employees at professional, emotional and material levels. We aim to create an environment conducive to both personal and professional development of the employees, leading to a productive and happy work force Angel believes that people impact business and therefore each and every Angel is a key resource and a valuable asset Our business philosophy of being transparent in all our dealings with our customers, is equally applicable in dealings with employees We encourage initiative, provide professional freedom and empower Angels based on trustEMPLOYEE ENGAGEMENT:Team HR at Angel works effectively to create a work environment and performance culture that fosters team spirit and enhances employee productivity through motivation and positive ambition. Our HR team is continually working to rationalize and restructure measures to ensure better employee relationship management, employee communications and relations, recruitment and training need analysis; program design and implementation, performance evaluation and other work-life initiatives.

SprintSprint is an engagement program devised for better inclusion of new joiners from Day 1. The major aim is to help employee understand the company products & services and present them to customers.RaceAfter having done well in the Sprint program, Race is highly effective in harnessing the potential of new joiners for further development in the next three months.Hall Of FameIt is a display to increase visibility of initiatives taken by employees with an objective to motivate and recognize contribution and develop sense of pride and belonging.Am parkSam park is our way of bridging the employee-management communication through a common forum where, ideas, achievements, insight and visions for success are shared on a regular basis.Clash of AngelsAngel organizes a cricket tournament Clash of Angels with an aim to encourage the competitive spirit and sportsmanship in all employees. The best team lifts the rolling trophy. Cricket being the favorite sport of the nation, the event generates a lot of fanfare among the employeesPragatiAngel strongly believes that innovation does not come from processes but people. We also believe in evolving continuously to meet the customer needs and create a competitive advantage through truly personalized service. Pragati is a platform to capture creative ideas from employees with the objective of bringing tangible results by increasing efficiency, enhancing productivity and reducing TAT in our work areas.Red Tag DayAngel encourages employees to reduce, recycle & reuse as a way of life. To re-enforce the significance of red tagging every year we celebrate Red Tag Day across Angel.

PERFORMANCE MANAGEMENT:Core essence of PMSThe core essence of PMS is to build and strengthen the team members Connect with Angel through Enrolling the team member to Angels vision Meaningful engagement Meaningful dialogue Openness to give and receive feedback Compliment achievements Focus on the team members growth to enhance performanceThe whole focus of PMS is to look for goodness in a person. The onus is on the managers to look for that goodness, identify strengths and try to create a role around strengths rather than getting bogged down with weaknesses. The Performance Management System at Angel has reduced manual intervention to a minimal level. The fully integrated online system uses sophisticated tools such as national and regional stack ranking, performance bands and rank based recommendations. All this is supported through one-on-one interactive feedback & coaching session with team. Performance credits are received for exceeding expected targets and there are equal opportunities for all employees to earn rewards with no upper limits. Performance credit structures have been worked out differently for various categories of employees. Leadership Academy:Learning is a continuous process at Angel. We identify the strengths of employees and design training programs to build their strong points and overcome their shortcomings. We prepare our employees for future positions with training and by encouraging the learning process. This helps them to move towards their career objectives efficiently. We also employ various people development initiatives like E-learning opportunities for functional & behavioral skills through video conferences and through our employee portal. Our E Wise Be wise Program provides every Angel with 24x7 access to all relevant information about Angel. This encourages employees at all levels to upgrade their knowledge constantly and apply their learnings in the day to day work to achieve high productivity and customer satisfaction levels.

PROUD TO BE ANGEL: We Dont Just Build Careers...We Build LivesTestimonials from employees about what makes them to be proud to be an Angel and how this organization has made a difference to their lives.

VikramDivekar Sr. Manager E CommerceI joined Angel as a Trainee Web Designer in June 2005 and within a short span I have grown to the role of Senior Manager E-commerce, handling a team of 25 people. Angel not only focuses on retention but kindles the entrepreneurship spirit in each and every employee. Here equal opportunities are given to everyone and new & innovative ideas are welcomed.

ManishaMishraExecutive OperationsProud-to-be-an-Angel, there are several aspects that bring this feeling. The values of Angel that have a major impact are Service Orientation, Transparency, and Quality Mindset. When we receive appreciation on the same by our clients, it makes us happy & encourages us to work the same way and cherish our work.

The various aspects of Angel Culture that has a major appeal and encourage me to perform during my tenure are firstly the training provided to me & constructive feedback received from my seniors to enhance my performance. Also, I appreciate the fairness of policies & procedures followed by Angel. Also, the freedom & openness to the ideas & suggestions contributed from my side. Also, the process driven approach towards work help us work systematically.

The infrastructure & resources provided to us to do our job well creates an environment that makes us comfortable. We feel cared for & valued as a team member working in Angel. While working in Angel, they make us feel that the work done by us adds value to the organization. And lastly the image & value associated with Angel brand makes me proud to be part of this organization.

DhavalShahBusiness ManagerIn am proud to be an Angel because of transparency of our organization for giving me path for next level of growth. I joined this company as a Sales Executive. In the first 3 months I achieved my targets and was soon promoted as a Team Leader handling a team of 8 members. Within a short span of 6 months, I was promoted as a Business Manager heading my Branch. The recognition of work performance is a significant as aspect of Angels work culture. As an example I have received a trophy for outstanding performance from the senior management. I am very happy to be a part of the Angel family.

ShwetaTiwariManager Software DevelopmentI joined Angel in May 2007 as a trainee programmer. Angel has given me new challenges and roles every year. Now I am designated as Manager in Software Development Department. I dont think this would have been possible in any other company in such a short period of time. Angel is really a performance-based equal opportunity company. The back work environment allows us to have our own work style and everyone is always open to new, innovative ideas. Not only do the people working here care about our products and appreciate them, they also care about each other as well.Freedom, Flexibility, Passion. I have the freedom to do what is necessary to accomplish what is asked of me, the flexibility to take care of social life and responsibilities, and I share a passion with my team members for what we do. I am very proud that I work for this company and to contribute to its success.

Financial Industry:It all started in the year 2002 with the US lowering its interest rates fearing the slowdown of their economy. To be in line with the world, India also lowered its interest rates, thereby initiating a new consumption cycle. This had a cascading effect on all sectors: commodities, agriculture, infrastructure, banking, auto and auto ancillary, IT and IT enabled services.

The stupendous growth trajectory achieved in the past 4 years was due to sound government fiscal policies which assisted in giving a fillip to the Indian economy. Indian economy has been growing at 7-8% over the last few years and is not only expected to recover soon but also maintain a high trajectory for a long time to come. Financial sector leading from the front with growth rates much higher at 20%. Demat accounts growing @ 20% CAGR over the last few years. But, equity penetration is still very low: 116cr population*, 17cr PAN* card holders, only 1.47cr Demat accounts*. Historically, Equity (@ 15% CAGR) as an asset class outperforms all others.

Historically, the Sensex has been growing at a compounded rate of 17% per annum. Fiscal stimulus and RBIs Monetary Policy will put economy on strong growth path. Interest rates on a decline, equities expected to gain from this. Indian economy expected to bounce back by year end. Corporate earnings to improve in the second half of the current financial year.Why Angel? The most trusted retail-centric broking house with 'Service Truly Personalized'. Angel is among the top five broking houses in the country. Angel was first to concentrate on retail-centric research. Angel was first to adopt the branch concept. Angel was first to launch the web-enabled Back Office Software for sub brokers and clients. Angel has the highest number of registered sub-brokers on BSE and NSE. Angel has the highest number of trading terminals (excluding e-broking terminals). Angel has been awarded most coveted Major Volume Driver award by BSE from the year 2004-05 to 2008-09. Angel has recently been awarded two prestigious award of "Best Retail Broking House" and "Broking house with Largest Distribution Network" by Dun and Bradstreet.Products & Services Equities Commodities Currencies E-Broking PMS Angel Gold Insurance Mutual Fund Personal Loan Fixed Deposits IPO Depository Services

Value Added Services Research & Advisory Services Margin Funding Pre-paid Products E-Chopda SMS Services M-Connect Client Back Office NRI Services

Business PlansAngel Broking offers a wide selection of Business Plans for all the aspiring entrepreneurs out there. You select the one which you think is the most beneficial to you or simply call our experts who will guide and direct you towards the right path.

SupportAngel Broking offers a host a comprehensive support infrastructure to its partners and clients.

As Angel's Business Partner, you get Hand-holding to identify business potential. Specially designed training program to develop the necessary business skills. Technology that guarantees seamless connectivity for trading. Flexibility of a local broking house and sophistication of corporate brokerage. A dedicated Relationship Manager to help in sales and other business related queries. Online products for partner's clients at no additional cost. Basic, Induction and Functional training to Business Partners and their employees for operational knowledge. A specially designed glow Sign Board provided with Angel Branding. Branding support in terms of regular Research & Advisory workshops. 24x7 Online Back-office systems for the Partner as well as all their customers.

REVIEW OF LITERATURE

Popular Articles about Initial Public Offer:

Rashtriya Ispat Nigam may file DRHP for initial public offer by June

NEW DELHI: State-owned Rashtriya Ispat Nigam Ltd (RINL) is likely to file the draft prospectus for its upcoming initial public offer (IPO) by June, a top company official said. The share sale, in which 10 per cent stake will be sold by the government, is part of Rs 30,000 crores revenue generations through disinvestment of equities in the state-owned public sector firms for the current fiscal. "The drafting of prospectus is on.Adlabs gets Sebi go-ahead for initial public offerMUMBAI: Adlabs Entertainment has received capital market regulator Sebi's approval to raise funds through an initial public offer (IPO). The company had filed its draft red herring prospectus ( DRHP ) with Sebi in May, this year, for the proposed public offer. The document was filed by Deutsche Equities India Private Ltd, which is the lead manager for the issue. The Securities and Exchange Board of India (Sebi) had issued its final observations on the draft offer...

Momai Apparels to list shares on NSE's SME platform

MUMBAI: Momai Apparels Ltd plans to enter National Stock Exchange's SME platform, 'Emerge' through book building route to raise Rs 41 crore through an Initial Public Offer (IPO). The issue will remain open for subscription from September 25 to September 30. The company will offer its equity shares with face value of Rs 10 each at price band in range of Rs 78-90. This will be the biggest IPO filed on Indian SME (Small & Medium Enterprises) Exchanges so far, a company...

Shemaroo IPO subscribed 7.37 times on final day of offerMUMBAI: The initial public offer of Shemaroo Entertainment, which is into film and entertainment content business, saw good demand from investors, getting subscribed 7.37 times, on the last day of the issue today. The Rs 100-crore IPO, received bids for over 4.21 crore shares as against the issue size of over 57.20 lakh shares, data available with the NSE showed. The final break-up for subscription in retail, qualified institutional buyers and non institutional...

12 companies came out with initial public offering in September this yearMUMBAI: Tapping strong investor sentiments, as many as 12 small and medium enterprises came out with their IPOs in September, the highest in a single month since the launch of dedicated SME platforms in March 2012. The SMEs, most of them to be listed on BSE SME platform, had come out with their IPO to together raise at least Rs 81 crore. Top bourses, the BSE and the NSE, had launched dedicated platforms for SMEs in March 2012 to enable the listing of these...

Alkali Metals IPO subscribed 0.53 timesMUMBAI: The initial public offer of Alkali Metals was subscribed 0.53 times on Tuesday. The issue closes on Oct 15. According to NSE website, the 25.50 lakh-share issue received 13,43,420 bids, of which 3,91,690 bids were received at cut off price.

PTC India Fin Services IPO fully subscribed at 1400hrsMUMBAI: The initial public offer of PTC India Financial Services got fully subscribed at 1400 hours on the final day of the issue today. The company's initial public offer IPO , which got subscribed 1.18 times, received bids for 15.75 crore shares against a total of 13.32 crore shares on offer, as per data available on the National Stock Exchange till 1400 hrs today. HDFC MF launches monthly income planNEW DELHI: HDFC Mutual Fund on Monday launched a monthly income plan, which would invest at least 75 per cent in debt instruments. The initial public offer, which opened on Monday and would close on December eight, could be bought for a minimum Rs 5,000. HDFC MF MIP would offer two options -- short term plan and a long term plan, a company release said.Future Capital sets IPO price at 765 rupees/shareMUMBAI: Financial services firm Future Capital Holdings Ltd said on Thursday it has set a price of 765 rupees a share for its initial public offer (IPO). Future Capital will raise around 4.91 billion rupees by selling 6.4 million shares. Future capital is the financial services arm of the diversified Future Group, which promotes top retailer Pantaloon Retail India Ltd.

TCS IPO over-subscribed 1.08 timesMUMBAI: Tata Consultancy Service's initial public offer has been over-subscribed by 1.08 times. The 100 per cent book-built issue received bids for 1.08 times the issue size, investment banking sources said here on Friday. Bidding for the IPO for 5.54 crore equity shares opened on Thursday. The price band for bidding is Rs 775-990 per share.

Shemaroo IPO subscribed 7.37 times on final day of offerMUMBAI: The initial public offer of Shemaroo Entertainment, which is into film and entertainment content business, saw good demand from investors, getting subscribed 7.37 times, on the last day of the issue today. The Rs 100-crore IPO, received bids for over 4.21 crore shares as against the issue size of over 57.20 lakh shares, data available with the NSE showed. The final break-up for subscription in retail, qualified institutional buyers and non institutional.

Cos garner Rs 1,205 crore via IPO in FY14; market may revive in FY'15NEW DELHI: Indian companies have raised a meagre Rs 1,205 crore through initial share sale in the past financial year but IPO market may see a revival in the current fiscal (2014-15) on the back of revival in demand. According to a report by Prime Database, nine firms had raised a total of Rs 6,289 crore through initial public offer (IPO) in 2012-13 as against Rs 1,205 crore garnered in the past fiscal.

Quick Heal plans initial public offer in December-JanuaryMUMBAI: Pune-based security software-maker Quick Heal Technologies has drawn up plans for an initial public offering in India in December-January to fund its expansion into new markets and product lines. "We are finalising plans for IPO in December-January to fund our expansion into new overseas markets and launching more products," Quick Heal Managing Director and CEO Kailash Katkar told PTI here. The promoters own 90 per cent and venture.

BSE's initial public offering likely to be delayedMUMBAI: The BSE would be missing the year-end deadline it had set for itself for going public, as the oldest bourse of Asia is yet to hear from market regulator Sebi on its IPO application. "The exchange is yet hear from the Sebi, despite it submitting all the clarification that the regulator sought after filing the IPO documents a few months back," a source told PTI. Managing director and chief executive of BSE Ashishkumar Chauhan refused to comment. Sebi...What are the decisions involved in making an IPO? The IPO decision depends on the following two stages the pre IPO stage and the post IPO stage. The pre IPO stage relates to the timing of an IPO decision, while the post IPO stage is about continuance or discontinuance of the listed status. Timing of an IPO is a strategic, financial and merchant banking decision. The strategic decision is to determine whether listing fits into the companys overall strategy and if so, whether the company is mature enough for it. The financial decision to make is to decide whether a company needs the capital proposed to be raised, how much is to be raised and how effectively it should be deployed. The merchant banking decision is made to determine the appropriate structure, pricing, timing and marketing strategy for the IPO.

What are the dimensions in decisions involved in making an IPO?

STATEGIC DIMENSION:Strategically speaking a company should go for an IPO only when it is mature enough for it. This depends on the following points:1. Does the company need the IPO as a liquidity event for its existing investors? In other words, are there no private exit options available so that the IPO can be pushed further into the future?1. Has the company matured enough to unlock the value?1. Is the companys business model retail-oriented with a strong brand presence so as to identify with the retail investor?1. Is the companys visibility in the market is sufficient enough for investors to perceive its business model to the full extent and unlock value for its share holders through the IPO.

Is the company confident of strong financial growth in the future so as to sustain the pressure of constant market validation after?

The Financial Dimension The next dimension of the IPO decision is a financial one. In capital intensive industries and large industries such as heavy engineering, automobiles, infrastructure and some other industries the business model is so large that going public could become inevitable in order to maintain balance in the capital structure. They would require IPO and some multiple rounds of offers after IPO to keep financing their growth and consolidation. Therefore, in such cases, IPO and public offers are more of financing decisions than strategic. The same is true of certain start-up businesses that need to look at an IPO more as a source of finance than as a strategic move.The second financial aspect relating to the IPO decision is to evaluate if unlocking value through an IPO is the need of the hour or whether other options are available. Strategic sale of equity happens through the private window that realizes better value for the company than an IPO since private investors offer valuations significantly higher than what the company gets from an IPO.The third aspect of the financial decision is to evaluate how much capital is proposed to be raised through the IPO and its deployment. Generally, IPOs that have well laid out investment plans sell better than those that do not have convincing application for the funds. Investors need to be shown an investment avenue in the company that can generate the expected return on their funds. Sometimes, the require of funds for the company could be too large to be raised through an IPO without causing too much dilution of promoters stakes. At such times, the company has to formulate an ideal issue structure in consultation with the merchant banker and prune down the size of the issue if necessary.

The Merchant Banking Dimension

Lastly, the IPO is also driven by merchant banking considerations. Merchant bankers take a call on the IPO proposal based on the business plan and financial position of the company, expected future performance, prevailing conditions in the primary market, expected issue pricing, size of the offer and post issue capital structure. The key drivers for the merchant banker are the market conditions, own placement strength and the main selling points in the issue. On the other hand, if the promoters are bringing in additional contribution in the issue at the same issue price, it adds to the marketability of the issue. Usually in strong market conditions, merchant bankers tend to be aggressive and push companies to go public. The logic put forward in such times is that when there is money for the taking at good pricing, issuers go ahead and make use of best opportunity even if they have no use of for the funds right away. In depressed markets, it would be difficult for a company to plan an IPO and get a good pricing and response for the issue. It would even difficult in such a market to find a merchant banker who would be confident of selling the issue comfortably. Therefore, most companies would defer their IPO plans even if they have matured enough and have a requirement for funds.

To summarize and conclude the decision of IPO the following points are prominent.1. Timing is an important criterion in the IPO decision.1. The IPO decision should be taken considering the strategic, financial and merchant banking considerations.1. For certain projects and business, going public is an imperative. In such cases, the IPO should be structured to deliver the best results.3 Key Concepts in IPO1. IPO- Initial Public Offer is the first public issue of fresh equity or convertibles by a company due to which its share gets listed on the stock exchange.1. Public Issue - An invitation by a company to public to subscribe to the securities offered through a prospectus.1. Offer for sale- An offer of securities by the existing share holders to the public for subscription.1. Rights Issue - An issue of cap ital under sub-section (1) of sec 81 of the companies Act, 1956 to be offered to the existing shareholders of the company through a letter of offer.1. Preferential Allotment- An issue of capital made by a body corporate in pursuance of a resolution passed under sub-sec (1A) of sec 81 of the companies Act, 1956.1. Private Placement- An offer made to select private investors known to the issuer through a private arrangement to the exclusion of the general public.1. Lock-in- A specified time period during which shares are cannot be sold, transferred and pledged in any way.1. QIBs- Qualified Institutional Buyers shall mean public financial institutions as defined under sec 4A of companies Act, scheduled commercial banks, mutual funds, foreign institutional investors registered with SEBI, venture capital funds and insurance companies registered with SEBI, provident funds and pension funds with a minimum corpus of Rs. 25 crore and state industrial development corPROCEDURE, PRICING, STRUCTURING AND REQUIREMENTS OF AN IPOPROCEDURE FOR MAKING AN ISSUE: For making an IPO the following procedure has to be followed

1] Appointment of Lead Manager or Merchant Banker.

2] Issue pricing

3] Issue Structuring

4] Other requirements that are needed.

1] Appointment of Merchant Banker

A] Merchant bankers with valid registration certificates from SEBI have been provided with statutory exclusivity in managing public offers such as IPO, rights and secondary issues of equity as well as issues of debt securities. B] Whenever there is an offer of securities to the public, the involvement of a merchant banker is mandatory, subject to the minor exceptions. From a business perspective too, issue management forms the biggest chunk of revenue for investment bankers in those years when the primary market for public flotation is very vibrant.C] In the overall process of issue management, the merchant banker plays a variety of roles as an expert advisor to the management of the company, as an auditor who performs due diligence on the company, as an event manager and coordinator to ensure timely completion of the issue, as a watch dog for statutory compliance and as a person in fiduciary capacity for the protection of the interests of investor.

2] Issue Pricing The Securities and Exchange Board of India (SEBI) introduced free pricing of shares for public offerings in 1992. As per the current guide lines (Disclosure and Investor Protection guide lines 2000), every company either unlisted or listed, which is eligible to make a public issue can freely price its shares.

1] The first step in formulating an issue structure is pricing of the issue. This is one important thing done by the merchant banker in public offering. Appropriate price can not only ensure success of the issue but provide good returns to the prospective investors as well. Therefore, proper issue pricing can be a win-win situation for the company and investor as well. 2] The danger of overpricing is also an important consideration. If a stock is offered to the public at a higher price than the market will pay, the underwriters may have trouble meeting their commitments to sell shares. Even if they sell all of the issued shares, if the stock falls in value on the first day of trading, it may lose its marketability and hence even more of its value.3] Investment banks, therefore, take many factors into consideration when pricing an IPO, and attempt to reach an offering price that is low enough to stimulate interest in the stock, but high enough to raise an adequate amount of capital for the company. The process of determining an optimal price usually involves the underwriters ("syndicate") arranging share purchase commitments from leading institutional investors. 4] Pricing issue is done keeping in mind the qualitative features, and by using selective multiples as benchmarks than through the conventional approach of the discounted cash flow method. The usual parameters used are the Price to Earning Ratio and Price to Book value Ratio. In addition to the above, the following points have to be kept in mind:1. Projected earnings of the company cannot be used as a justification for the issue price in the offer document.1. The accounting ratios should be calculated after giving effect to the consequent increase in capital on account of compulsory conversions outstanding, as well to subscribe for additional capital shall be exercised.1. Comparison of all the accounting ratios of the issuer company as mentioned

3] Issue Structuring The issue structure refers to the following points1. The face value of the share, the premium thereon and the final price. In book built issues, the final price is not done until after the bidding is over, but a floor price is determined.1. The minimum amount of subscription per applicant and the maximum.1. The terms of the issue with regard to payment of the offer price and eligibility criteria for applicants.1. Firm allotments if any and any other details thereof, as per applicable DIP guide lines.1. Net public offer.1. Underwriting, either mandatory or discretionary.1. Cost parameters for the issue and an acceptable issue budget.

The issue size and structure is determined as follows:1. The issue size = promoters quota+ firm allotments + net public offer.1. Public offer = firm allotments + net public offer.Net public offer = issue size promoters quota firm allotment4] Other important requirementsA] Firm Allotments and ReservationsThese are novel concepts that help in pre-marketing of a sizeable part of issue thereby bringing down the risk in the issue. In a firm allotment, a particular investor or category of them are approached in advance by the lead manager or the issuer of the company to subscribe the issue on firm basis. The provisions on firm allotments and reservations in IPO are as given below:1. The net public offer for issuing companies shall not be less than 25% of the post-issue capital, except in case of IT and infrastructure companies it can be 10%.1. The issuer can make reservations on competitive basis or on firm basis for allotments to the permanent employees, shareholders of group companies, mutual funds, foreign institutional investors and banks.1. All firm allotments which have not subscribed after filling the prospectus shall be brought in before opening the issue and treated as preferential one.1. All reserved categories can be adjusted with the net public offer as well.

B] Differential Pricing and Price Band1. Any unlisted company making an IPO for equity shares or convertibles may issue such securities to applicants in the firm allotment category at a price different from the price at which net offer to the public is made provided that the price at which the security is offered to the applicant is higher than the price to the public issue made.1. A justification has to be furnished in the offer document on the price differential for the firm allotment category.1. The issuer company can mention a price band of 20 %( the cap should not be more than the floor by 20%) in the offer documents filed with SEBI and the actual price can be determined at a later date before filing the offer document with the ROC.

C] Methodologies for Making Issues Under the DIP guide lines, it is possible to make an IPO in the form of a 100% retail issue, a book built issue or as a bought out deal either for listing on the main stock exchanges or on the OTC exchange. The different methods are explained as follows:100% Retail (Fixed Price) Issues Under this method, the issue is made by offering the same directly to the investors from the public that could include the retail small investors as well as other categories of investors. Using this method obviates the need to sell the issue initially to the wholesale investors and them in turn marketing it to retail investors. The main advantage of this system is that it is possible to get a wide dispersal of shareholding among the retail investors that would add depth to the trading in the stock after listing. Secondly, it does not require approaching QIB investors to subscribe to the issue, which could sometimes prove to be difficult, as these investors need to be thoroughly convinced.On the other hand, small investors can be persuaded easily if a reasonable short-term market opportunity is visible in the issue. Due to apparent inflexibility in a fixed price issue, it has a lot of uncertainty attached to it in difficult market conditions. Therefore, after the introduction of the book built system of making issues most companies prefer to use that route. 1] Mandatory Conditions for a 100% Retail IssueA company can make an IPO of pure equity or convertibles only if it meets all of the following conditions.1. The company has net tangible assets of at least Rs.3 crore in each of the preceding 3 full years, of which not more than 50% of the net tangible assets in mandatory assets.1. The company has a track record of having profits distributable as dividends as per the provisions of section 205 of the companies Act out of its normal business activity without reckoning extra-ordinary profits, for at least three out of the immediately preceding five years.1. The company has a net worth of at least Rs one crore in each of the preceding three 3 full financial years.1. The aggregate size of the proposed issue and all previous issues made in the same financial year by the company does not exceed five times its pre-issue net worth as per the audited balance sheet of the last financial year.1. In case the company has changed its name within the last one year, at least 50% of the revenue for the preceding 12 months is earned by the company from the activity suggested by the new name.Additional ConditionsAn unlisted company not complying with any of the above conditions may make an IPO of equity shares or convertibles only if it meets following conditions.0. The project has at least 15% participation by financial institutions of which at least 10%comes from the appraisers. In addition to this at least 10% of the issue size is allotted to QIBs, failing which the full subscription monies shall be refunded.0. The minimum post-issue nominal value of equity capital of the company shall be RS. 10 crore.The mandatory conditions ensure that the company has a track record of at least 3 years with minimum net worth and profit record. This would ensure that paper companies couldnt go public just after incorporation making tall claims of future business potential.

2].Promoters ContributionSEBI has also introduced the concept of minimum promoters contribution to be present in companies going public so that they become interested parties in preserving the interests of the shareholders. In terms of DIP guide lines, following are the main points that apply to promoters contribution in case of IPOs:1. In an IPO the promoters contribution shall not be less than 20% of the post-issue capital.1. The 20% in case of IPO, shares acquired by the promoter with in the preceding one year for a price less than the IPO price shall be ignored.1. The minimum promoters contribution criterion does not apply to companies with no promoters.Promoters contribution where required to be brought in the issue shall be brought in one day before the issue opens.

Book Built IssuesA book built mechanism allows the issuer company to make a public issue through the process of price discovery rather than through a price that is fixed beforehand. This mechanism, to a large extent, overcomes the deficiency in the fixed price mechanism of over pricing or under-pricing an issue. It however operates on the basis of a floor price, which is fixed by the company in consultation with the merchant banker.Companies now can make an issue to the extent of 100% or 75% of the net public offer as they may decide, through the book built route. If the 75% route is followed, the price applicable to the balance 25% under the retail route would be the issue price under the book built portion. And under the 100% route, the entire issue happens through one bidding process applicable to both categories investors.

Applicable Provisions for a Book-built IssueIn a book-built issue, reservation and firm allotment may be made only in respect of permanent employees of the issuer company/promoting company and share holders of the promoting companies to the extent they permitted in the DIP guide lines.The other allocation norms for a 100% and 75% book-built issue are as listed below:1. Not more than 50% of the net public offer shall be allocated to QIBs.1. Not less than 25% of the net public offer shall be allocated to non-institutional bidders.1. Not less than 25% issue shall be available for allocation to retail investors.

Lock-in of SharesLock-in of promoters shares and other share capital is also a novel concept brought in for the purpose of preventing such shareholders in making unfair gains and exits from the company. The provisions are as follows:1. The minimum promoters contribution of 20% shall be locked-in for 3 yrs from the allotment date.1. Excess contribution by the promoters in an issue over what is required is shall be lock-in for one year.1. Firm allotments made in any issue shall be locked in for one year. The amount brought in by promoters to make good under-subscribed portion of firm allotments would also be locked in for 3 years.1. The entire pre-issue capital in case of an IPO shall be locked in for one year. Similarly, shares held by venture capitalists and shares held for more than one year preceding the IPO and are being offered for sale in the IPO are excluded from lock-in provisions.D] Other Important Issue Requirements All new issues shall be in dematerialized form can also be made through online interface following the necessary guide lines. The minimum application size shall be worth Rs. 2000. The maximum size of an application can be equal to the net public offer. In an offer for sale, the entire subscription amount shall be brought in at the time of application. If there are calls on shares, they should be completed within 12 months of the issue. Over-subscription of a maximum of 10% of the net offer to public can be retained. Buy back arrangements can be made with a minimum period of 6 months and for a maximum of 1000 shares per allot tee. Issues should be opened within 365 days from the date of SEBI approval or after 21 days of filing with SEBI. IPO shall be kept open for a min of 3 days and max of 10 working days. Every company which has been subscribed by the investors and completed Issue successfully should get listed within 15days after the closure of the issue.

1] The Stock Exchange Listing AgreementCompliance with the stock exchanges listing guide lines under its listing agreement is also important in order to be able to seek listing of shares pursuant to an IPO. The conditions for listing shares by an unlisted company pursuant to an IPO on the BSE are listed below:1. New companies can be listed on the exchange, if their issued and subscribed equity capital after the public issue is equal to or more than Rs. 10 crore. In addition to this, the company should have a post-issue net worth of Rs.20 crore.1. For new companies in high technology sectors, the following criteria will be applicable.0. The total income/sales from the main activity should not be less than 75% of the total income during the two preceding years.0. The minimum post-issue paid-up capital should be Rs.5 crores.0. The minimum market capitalization should be Rs.50 crores.0. Post-issue net worth of Rs.20 crores.

2] The conditions for listing on the NSE are given below:1. New companies can be listed on the exchange, if issued and subscribed capital after the issue is equal to or more than Rs. 10 crores and post-issue net worth of Rs. 20 crores.2. For new companies in knowledge based industries, the applicable capital criterion is Rs. 5 crores with a minimum market capitalization of Rs. 50 crores. The total income/sales should not be less than 75% of the total income during the immediately two preceding years.3. The applicant company should have a track record of three years of existence. If the applicant is promoted by another company, that company should have the minimum stipulated existence.4. The application for listing in the case of an IPO shall be made within 6 months of the closure of the issue.5. The project should have been appraised by specified agencies such as the all India financial institutions.

Role of Underwriters IPOs generally involve one or more investment banks as "underwriters." The company offering its shares, called the "issuer," enters a contract with a lead underwriter to sell its shares to the public. The underwriter then approaches investors with offers to sell these shares.The sale of shares in an IPO may take several forms. Common methods include: Best efforts contract Firm commitment contract All-or-none contract Bought deal Dutch auction Self distribution of stock In the business of initial public offering, the underwriting contract is the contract between the underwriter and the issuer of the common stock. The following types of underwriting contracts are most commona] In the firm commitment contract the underwriter guarantees the sale of the issued stock at the agreed-upon price. For the issuer, it is the safest but the most expensive type of the contracts, since the underwriter takes the risk of sale.b] In the best efforts contract the underwriter agrees to sell as many shares as possible at the agreed-upon price.c] Under the all-or-none contract the underwriter agrees either to sell the entire offering or to cancel the deal. d] Stand-by underwriting, also known as strict underwriting or old-fashioned underwriting is a form of stock insurance: the issuer contracts the underwriter for the latter to purchase the shares the issuer failed to sell under stockholders subscription and applications.

e] Procedural Aspects of an Issue1. The first task is to hold a Board Meeting to consider the proposal for a public issue, authorize the managing director to do all tasks relating to this issue and including expenses for the issue. 1. On the appointed day, the EGM is held and the shareholders pass a special resolution under section 81(1A) of the companies Act authorizing the company to make public issue.1. Before embarking on an IPO, the first task is to identify the good merchant banker who can be appointed as lead manager for the issue. The details of the companys project or fund raising plan are discussed with the merchant banker. After the discussion the company finalizes the appointment and enters into a memorandum of understanding with the lead manager.1. The LM immediately on being appointed starts a due diligence on the company. Usually they go through the all documents and certificates and every relevant information for the issue.1. In parallel, the LM starts preparation of the draft prospectus or offer document. All disclosure requirements and DIP guide lines have to be filled in.1. The LM advises the company in the appointments of other intermediaries for the issue. These are the registrar to the issue, bankers to the issue, the printer and advertising agency. The registrar and bankers have to be registered with SEBI.1. The LM also draws up the issue budget estimated to be spent on the issue. The main components of these are fees for LM, underwriters, registrar and banker, brokerage, postage, stationery, issue marketing expenses and statutory costs.1. The draft prospectus is finalized by the LM in all respects in consultation with the management and placed before the board of directors for the approval so that it can be issued for filing. The draft prospectus has to be accompanied by the memorandum of understanding signed by the LM with the company.1. Simultaneously, the company has to make listing applications to all stock exchanges where the shares are proposed to be listed accompanied by at least 10 copies of the draft prospectus. And that prospectus has to be made available to the public by the LM. The LM should also obtain and furnish to SEBI, an in-principle listing approval of the SEBI within 15 days of filing the draft offer documents with them.1. The company has to enter into a tripartite agreement with the registrar and all depositories-(presently NSDL or CDSL) for offering the facility of offering the shares on dematerialized mode. Investors have to be given the facility to receive allotments through any one of the depositories or in physical mode according to option.1. Within 21 days, SEBI would come out with their observations on the prospectus. The SEBI would also mention any changes that are to be changed in the prospectus. The LM has to file a certificate with SEBI that all amendments and suggestions made by the SEBI have been incorporated in the offer document.1. Once the draft prospectus is ready in its final form, a board meet has to be held to approve the filing of the same with ROC after being signed by all the directors.1. This filing should be accompanied by all the material contracts pertaining to the issue and the company and all other documents listed in the prospectus.1. The marketing of the issue is usually co-coordinated by the LM with the advertising agency.1. Advertisements are regulated by DIP guidelines and the rules of the stock exchange.1. The mandatory collection centers are finalized as per the SEBI guidelines in consultation with the bankers and the LM.1. The LM and the printer finalize the dispatch schedule to all SE, SEBI, collection centers, investor associations, brokers and underwriters.1. The marketing should be completed one week before the opening of the issue.

f] Post-Issue Procedures1. In issues wherein there is more than one LM, it is usual to entrust the entire post-issue responsibility to one LM in inter-se allocation.1. There are two reports that are required to be furnished to SEBI by the post-issue LM in the case of an IPO in the retail route in the prescribed form.1. The main task of the post-issue LM is to coordinate the process of collection of subscription figures from the bankers to the issue, processing of applications by the registrar, dispatch of allotment letters and refund orders to all applicants with in time.1. The issue is to be closed on the earliest closing date; the LM should ensure that issue is fully subscribed before announcing closure.1. In the case of devolved issues, the LM shall ensure that the underwriters honor their commitments within 60 days from the date of closure of issue.1. The LM has to ensure that all issue proceeds are kept in separate bank accounts as provided in the companies Act and the funds are released to the company only after obtaining listing approvals from the respective stock exchanges.1. The LM has to release an advertisement announcing the closure of the issue on the last day.1. The responsibility of finalizing the basis of allotment in a fair and proper manner lies with the executive director of the designated stock exchange along with the post-issue LM and the registrar.1. The post issue LM shall ensure that the demat credit and refund orders to the allot tees is completed within two working days after the basis of allotment is done.1. The LM is responsible for following duties.17. Refund of subscription money to all non-allot tees.17. Refund of excess application money to all.17. Attending to all investors grievances.

DATA ANALYSIS AND INTERPRETATION

DATA ANALYSIS AND INTERPRETATION OF TWO COMPANIES IPOS1] RELIANCE POWER IPO2] COX&KINGS IPO

4.1COMPANY RELIANCE POWER LIMITED

COMPANY PROFILE

Reliance Power Limited is under the Anil Ambani Group and it is involved in the business of developing large and medium size power projects. The company was incorporated in January 1995 as Bawana Power Private Limited and changed its name to Reliance Delhi Power Private Limited in February 1995. Later, it changed its name to Reliance EGen Private Limited in January 2004, to Reliance Energy Generation Limited in March 2004, and to Reliance Power Limited in July 2007.Reliance Power Limited has plans developing around thirteen large and medium sized power projects. The projects that are being developed by Reliance Power Limited are located in southern India, western India, north- eastern India and northern India. The total installed power generation capacity of all the thirteen power projects would be around 28,200 MW. A] Reliance Power will have a diversified project portfolio in terms of geography, fuel mix and technology.B] Along with its subsidiaries, it is presently developing 13 medium and large-sized power projects with a combined planned installed capacity of 33,480 MW. C] Nine of the proposed thirteen projects are coal-fired or gas-based and two of those have fuel security; the rest are yet to be finalized for such huge capacity, fuel linkage is of paramount importance. It is presently dealing with Mundra, Sesan and Krishna patnam power projects. Total project outlay is 1, 12,127 crores and post IPO net worth of 13,707 crores. The company website identifies project sites broadly to be located in western India (12,220 MW), northern India (9,080 MW) and northeastern India (4,220 MW) and southern India (4,000 MW). They include six coal-fired projects (14,620 MW) to be fueled by reserves from captive mines and supplies from India and abroad, two gas-fired projects (10,280 MW) to be fueled primarily by reserves from the Krishna Godavari basin (the "KG Basin") off the east coast of India, and four hydroelectric projects (3,300 MW), three of them in Arunachal Pradesh and one in Uttarakhand. Projects under Development Rosa stage -2 Butubori power project Sesan UMPP Krishnapatnam UMPP Tilaiya UMPP Chithrangi Power Project Gas Based Power Project TATO HEPP SIYOM HEPP Urthing Soba HEPP Other Hydro Electric Power Projects Kalai-2 HEPP Amulin HEPP Emini HEPP Mithundan HEPP

Project going on all over India

CHAIRMAN'S PROFILEAnil D. Ambani son of LATE.SHRI Dhirubhai AmbaniRegarded as one of the foremost corporate leaders of contemporary India, Shri Anil D Ambani, 48, is the chairman of all listed companies of the Reliance ADA Group, namely, Reliance Communications, Reliance Capital, Reliance Energy and Reliance Natural Resources limited.He is also Chairman of the Board of Governors of Dhirubhai Ambani Institute of Information and Communication Technology, Gandhi Nagar, Gujarat. Till recently, he also held the post of Vice Chairman and Managing Director of Reliance Industries Limited (RIL), Indias largest private sector enterprise. Anil D Ambani joined Reliance in 1983 as Co-Chief Executive Officer, and was centrally involved in every aspect of the companys management over the next 22 years. He is credited with having pioneered a number of path-breaking financial innovations in the Indian capital markets. He spearheaded the countrys first forays into the overseas capital markets with international public offerings of global depositary receipts, convertibles and bonds. Starting in 1991, he directed Reliance Industries in its efforts to raise over US$ 2 billion.

ABOUT THE ISSUE Anil Ambani- owned Reliance Power Ltds mega initial public offer (IPO) was opened for subscription on 15th January 2008 to raise Rs 11,500 crore. The company proposed to issue 26 crore equity shares of Rs. 10 each, including promoterscontribution of 3.2 crore shares allotted at the IPO price. The balance 22.8 crore equity shares constituted the net issue to the public. The price band for the book building was Rs 405 to Rs 450 for every fully paid up share of Rs 10 each. The issue was managed by UBS, ABN AMR, JPMorgan, Deutsche Bank, Enam Securities, ICICI Securities, JM Financial, and Kotak Mahindra Capital. Macquarie and SBI Capital Markets are co-managers. This was the largest IPO ever.Reliance Power IPO Analysis Price Band: Rs. 405 - 450 per share Issue opened between: January 15 - 18, 2008Book Running Lead Managers: Kotak, UBS,Enamsecurities To List on: NSE and BSE Market Cap post-listing: Rs. 1017 billion or $25.7 billion (based on the cap price)

With the high promoter holding of around 90% post-listing is a positive, it has been viewed negatively from the point of view of minority shareholders, since the latter will enter the company @ Rs450 per share vis--vis promoters average cost of Rs16.92 per share. Given the long gestation period of projects, which are likely to get commissioned from FY10 onwards, we have considered non-earnings related valuation parameters. The valuation of the IPO in terms of price/book (7.4x FY08E) appears expensive NTPC (2.8x) and Tata Power (4.5x). The issue appears expensive, also on the basis of asset valuation in FY13. It is only on the basis of FY17 estimates, that the issue looks attractive. The aggression and track record of the promoter group in shareholder wealth creation in all its businesses including telecommunications, power distribution, financial services and entertainment is likely to have a positive rub-off effect on this IPO as well.

BOARD OF DIRECTORS:

NAME DESIGNATIONANIL DHIRUBHAI AMBANI Chairman/ChairpersonS.L RAO DirectorYOGENDER NARAIN DirectorK.H.MANKAD Whole time DirectorJ.L.BALAJI DirectorV.K.CHATURVEDI DirectorSHAREHOLDING PATTERN OF RELIANCE POWERHolder's NameNo of Shares% Share Holding

Promoters203200000084.78%

General Public1893943597.90%

Foreign Institutions899342063.75%

Other Companies372779711.56%

Financial Institutions369561451.54%

Banks and Mutual Funds79532730.33%

Foreign NRI32840460.14%

TOTAL100%

SUBSCRIPTION DETAILS Reliance Power Initial Public Offering has closed with 73 times overbooking as against the released shares on January 18 breaking over all records in the Indian stock history as bourses informed media. The retail investors quota was subscribed by 15 times. Anil Ambani backed Reliance Power Ltd has raised nearby $180 billion (Rs.7, 52,000 crores) for its shares worth offered price of $2.9 billion {Rs.122crore}. For making better comfort to retail investors, Reliance Anil Dhirubhai Ambani Group, ADAG has provided two options to them, either they can submit the entire price (Rs.430) of the asking lot or they can only deposit the one-quarter price (Rs.115) of the asking shares. The rest price of the shares can be submitted after getting the allotment of the shares. Besides, R-Power has also provided a subsidy of Rs.20 for each share of Reliance Power IPO to the retailers. Thus the retailer investors have submitted approximately Rs. 50,000crores collectively. Several public sector banks have also subscribed the offer joylessly tremendously. Punjab National Bank, State Bank of India, Bank of India and Indian Overseas Bank put in bids worth Rs 1,500-2,000 crore. Reliance Power had offered a total of 228-milion equity shares with face value of Rs.10 each in the price band of Rs.405-450 for the public through 100% book-building process. It has targeted to collects much as Rs 11,700-crore from this offer, which has now gone beyond Rs.75, 000-crore from this collected money. The total collected price has been more than that of the combined market capitalization of companies listed in Portugal and the Czech Republic as Bloomberg.ALLOTMENT DETAILS Over 41.7 lakh successful bidders in the retail category will get around 15 shares each while approximately 4.5 lakh retail investors who bid for less than 225 shares would not get any shares according to the allocation as approved. The excess application money of approximately Rs one lakh crore received from the investors is being refunded to the investors. Post allotment Reliance Power has approximately 42 lakh shareholders.LISTING DETAILSListing Date:Monday, February 11, 2008

BSE Scrip Code:532939

NSE Symbol:RPOWER

Listing In:A Group

Sector:Power - Generation and Supply

ISIN:INE614G01033

Issue Price:Rs. 450.00 Per Equity Share

Face Value:Rs. 10.00 Per Equity Share

TABLE -1LISTING DAY TRADING INFORMATION BSE NSE

Issue Price:Rs. 450.00Rs. 450.00

Open:Rs. 547.80Rs. 530.00

Low:Rs. 355.05Rs. 355.30

High:Rs. 599.90Rs. 530.00

Last Trade:Rs. 372.50Rs. 372.30

Volume:63,882,239134,392,544

CHART .1ISSUE PRICE OF RELIANCE POWER IPO

INTERPRETATION The above bar diagram shows the issue price of Reliance Power IPO in both BSE and NSE. X-axis represents the exchanges traded {i.e. BSE AND NSE} and Y-axis represents issue price amount {i.e. 450 in both exchanges}.

CHART -2 LISTING DAY OPENING PRICE OF RELIANCE POWER IPO

INTERPRETATION The above chart shows the listing day opening price of RELIANCE POWER IPO. Here X- axis represents exchanges traded and Y-axis represents the opening price in both the exchanges. {I.e. Rs 547.80 in BSE and Rs530 in NSE].It opened at a premium in both the exchanges as there was more demand among the investors.

CHART-3LISTING DAY LOW PRICE OF RELIANCE POWER IPO

INTERPRETATION The above chart shows the listing day low price of RELIANCE POWER IPO. Here X- axis represents exchanges traded and Y-axis represents the listing day low price in both the exchanges. {I.e. Rs 355.05 in BSE and Rs355.30 in NSE].Its because of heavy selling pressure created by the investors as they want to come out of the stock with profits.

CHART-.4LISTING DAY HIGH PRICE OF RELIANCE POWER IPO

INTERPRETATION The above chart shows the listing day low price of RELIANCE POWER IPO. Here X- axis represents exchanges traded and Y-axis represents the listing day high price in both the exchanges. {I.e. Rs 599.90 in BSE and Rs530 in NSE].

CHART-5

LAST TRADE OF RELIANCE POWER IPO ON LISTING DAY

INTERPRETATION The above chart shows the listing day low price of RELIANCE POWER IPO. Here X- axis represents exchanges traded and Y-axis represents the last trading price of reliance power on listing day in both the exchanges. {I.e. Rs 372.50 in BSE and Rs372-30 in NSE].

Conclusion

The stock which has been issued for a price of Rs450 has been listed at Rs 372 in both the exchanges which are 18% lower than its issue price. It has made its opening at Rs 547.80 in BSE and Rs 530 in NSE AND AN INTRADAY LOW OF Rs355.05 in BSE and Rs 355.50 in NSE.The intraday high of the stock is Rs 599.90 in BSE and Rs 530 in NSE.The volumes were above 6 lakhs in BSE and ABOVE 14 lakhs in NSE.The data clearly shows that the stock made a flop show in its listing day although people were expecting it to be listed double the issue price. This clearly tells that Reliance POWER IPO is failed at its entry into stock market.Performance of Reliance Power Stock after IPO Reliance Power IPO which was listed on Feb 11th 2008 has been showing poor performance since its listing. The companys IPO has been closed 73 times overbooking and raised around 7, 52000 crores against its issue of equity shares worth 122 crores.The listing price was around Rs 372 in both BSE and NSE which is approximately 18% lower than its issue price; considerably the stock price has been declining aftTaking the failure of the IPO into consideration Reliance Power Ltd has announced that the Board of Directors of the Company at its meeting held on February 24, 2008, has approved a proposal for issuing free bonus shares to all categories of shareholders, excluding the promoter group (comprising of Reliance Energy Ltd. and the ADA Group), in the ratio of 3 shares for every 5 shares held, subject to necessary approvals. The proposed bonus offering will result in reduction of the cost of Reliance Power shares is Rs 269 per share for retail investors and Rs281per share for other investors

In a related development, Mr. Anil D Ambani, Chairman, Reliance ADA Group, on February 24, 2008 simultaneously announced a voluntary contribution of 2.6% of his shareholding in Reliance Power to Reliance Energy Ltd., to protect the Company from any dilution of its existing 45% stake in Reliance Power, as a result of the bonus proposal. Accordingly, Reliance Energys stake in Reliance Power will be maintained at the existing level of 45%, and the revised shareholding pattern of Reliance Power will be as follows: -----------------------------------------------Previous Existing -----------------------------------------------

Anil D Ambani 45% 40%

Reliance Energy 45% 45% Public shareholders 10% 15% -----------------------------------------------

The reduction of Mr. Ambanis shareholding in Reliance Power by 5% from 45% to 40%, represents a contribution of nearly Rs 5,000 crore (US$ 1.2 billion) by him, in favor of nearly 6 million investors in Reliance Energy and Reliance Power. Even after this, there was no improvement; the share price fell to Rs 235 on the day of listing of bonus shares. This even made loss to investors who bought bonus shares as they could get the shares at lower price in exchanges.

Reliance Power Limited Key Recent DevelopmentsMay 03, 2010: India Awards Four Ultra Mega Power ProjectsJan 29, 2010: Reliance Power Reports Net Profit of INR1.33 Billion in Q3 Fiscal 2010Jan 18, 2010: Indian Supreme Court to Resume the Case on Reliance Power's 7,840 MW Gas-Fired Power ProjectJan 17, 2010: The 4,000 MW UMPP to Get a Separate Transmission Link In Andhra Pradesh, India Dec 28, 2009: Reliance Power Commissi