Rohit Project.pdf

CHAPTER – I INTRODUCTION

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INTRODUCTION An initial public offering (IPO), referred to simply as an "offering" or "flotation", is when a company (called the issuer) 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. Capital market is an essential pre-requested for industrial and commercial development of a country. Capital market refers to the institutional arrangement which facilitates the borrowings and lending of long term fund. In capital market we can divided into two parts they are primary and secondary market. In primary market also known as new issue market. It represents primary market where new securities i.e. shares or bonds that have never been previously offered.The importance of this study is analyzing the IPO scrip’s during the year 2006 to 2010. This study based on differences of Issue price and LTP. In order to whether the IPO’s are overpriced or under priced. The investor how get the gain or loss.The study continued based on the only 2 parameters they are Issue price and LTP. The differences of LTP & Issue price we can describe the scrip is overpriced or under priced. Not other parameters considered. This study shows that sector wise scrip’s are overpriced or under priced. In this study find the IPO how gives the benefits and given the guidelines and suggestions to the investor. Before selecting a company the investor should think about the company. A good investor should diversify and reduces his risk by investing in different securities. Primary market returns are very attractive in short period especially on the day of listing. But investor in IPO’s should take wise decision in choosing the best company.

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NEED OF THE STUDY IPO’s are often looked upon as a speculative opportunity to earn abnormal profits onthe listing day. Companies which decide to go public face the added pressure of the marketwhich may cause them to focus more on short-term results rather than long-term growth. Theactions of the company's management also become increasingly scrutinized as investorsconstantly look for rising profits. This may lead management to perform somewhatquestionable practices in order to boost earnings. Before deciding whether or not to go public, companies must evaluate all of thepotential advantages and disadvantages that will arise and fix prices that are in the best interestof the company and investors. This study helps the investor to decide the suitable investment strategy to get maximized returns.

SCOPE OF THE STUDY: 

The study covers only NSE listed securities of primary market.

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Only LTP and Issue price are taken into consideration for judging whether the scrip’s are under priced or over priced not considering other parameters.

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The study covers the period from year 2006-2017 only

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Study covers randomly selected scrip’s under various sectors.

OBJECTIVES OF THE STUDY:

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The objective of doing this project is mainly to make a study of trends in primary market from 2006-2017 with special reference to LTP (Last Traded Price) and Issue Price.

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To examine the difference between LTP and Issue Price of various scraps in different sectors.

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To assess whether the Issue Price are over priced or under priced based on difference between LTP and Issue Price.

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To examine gain or loss to the investor based on the above study.

RESEARCH METHODOLOGY OF THE STUDY: The data collection methods include both primary and secondary collection methods. 4

Primary Data: This method includes the data collected from the personal interaction with authorized members of Sharekhan. Secondary Data: The secondary data collection method includes: 

The lecturers delivered by the superintendents of respective departments.

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The brochures and material provided by Sharekhan.

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The data collected from the magazines of the NSE, economic times, NSE website, etc.

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Various books relating to the investments, capital market and other related topics.

TOOLS USED FOR ANALYSIS:

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1) TABULATION: A Table is a systematic arrangement of statistical data in rows and columns. Rows are horizontal arrangements whereas columns are vertical. Tabulation is a systematic presentation of data in a form suitable for analysis and interpretation. The tables used are as follows: a) One way table: It presents only one characteristic and hence in answering one or more independent questions with regard to those characteristics. b) Two-way table: It contains sub divisions of a total and is able to answer two mutually dependent questions. 2) DIAGRAMETIC AND GRAPHICAL REPRESENTATION OF DATA: A picture is worth a thousand words. The impression created by a picture has much greater impact than any amount of detailed explanation. Statistical data can be effectively presented in the form of diagrams and graphs. Graphs and Diagrams make complex data simple and easily understandable. They help to compare related data and bring out subtle data with amazing clarity. The Diagram used are as follows: a) Bar diagrams: Bar diagrams are used specifically for categorical data or series. They consist of the group of equi-distant rectangles, one for each group or category of data in which the values of magnitudes are represented by length or height of rectangles. b) Sample Bar diagram: It is used of comparative study of two or more aspects of a single variable or single category of data.

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LIMITATIONS OF THE STUDY: A good report sells the results of the study. But every project has its own limitations. These limitations can be in terms of 1. The project doesn’t study the whole primary market due to time availability and course requirement. 2. Project doesn’t consider whole issues under each sector due to time limitation. Ittakes Into consideration randomly selected issues 3. Limited to a particular period: Data under consideration is taken from 2006-2017 Previous years are not taken into consideration. 4. Partial fulfillment: Project studied doesn’t fulfill all requirements because it does not study the whole primary market due to time availability and course Requirement. It only fulfills the partial requirement as it studies only certain important aspects of primary market. 5. Approximate results: The results are approximated, as no accurate data is Available. 6. Study takes into consideration only LTP and issue prices and their difference for Concluding whether an issue is overpriced or under priced leaving other. 7. The study is based on the issues that are listed on NSE only.

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CHAPTER – II REVIEW OF LITERATURE

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INITIAL PUBLIC OFFERS This project focuses on the relatively unexplored area of primary equity markets in India. Its broad goal is to begin the process of understanding how and why primary markets develop. Primary markets are where the firms raise capital through the issuance of financial securities traded after insurance. The research will examine the development of domestic primary market, focusing on macro economic factors. With the abolition of Control over Capital Issues prior approval of capital issue proposals by companies has been dispensed with. The companies are required now to be fair and honest to the investing public by disclosing all material facts along with the risk factors associated with their projects to the public. The present practice of brochure which is circulated widely to the investors along with application form has been replaced with abridged prospectus to be attached to the New Issue application forms. The word “market” can have different meanings but it is used most often as a catchall term to denote both primary and secondary market.

Infact

primary market and

secondary market are both distinct terms that refers to the market where securities are created and the one in which they are traded among investors respectively. Knowing the functions of primary and secondary market is the key to understanding how stocks trade. Without them, the stock market would be much harder to navigate and much less profitable. We will help you to understand how these markets work and how they relate to individual investors. The primary market is that part of capital markets that deals with issuance of new securities. Companies, government or Public sector institutions can obtain funding through the sale of new stock or bond issue. This is typically done through a syndicate of securities dealers .The process of selling new issues to the investors is called Underwriting. In the case of new stock issue, this sale is called an IPO (Initial public offering). Dealers earn a commission that is built into the price of the security, though it can be found in the prospectus.

The market in which investors have the first opportunity to find a newly issued security. After the first purchases, subsequent trading is said to occur in secondary 9

market. The primary market is where securities are created. It is in this market that firms sell (float) new stock and bonds to the public for the first time. For our purposes, you can think of a primary market as being synonymous with an IPO. Simply put, an IPO occurs when a private company sells stocks to the public for the first time.

METHODS OF FLOATING NEW ISSUES: The various methods which are used in floatation of new securities in the new issue market are 1)Public Issue / Offer through Prospectus 2) Offer for sale 3)Private Placement 4) Right Issues 5) Stock Exchange Pricing 6) Subscription by inside coteries 1) PUBLIC ISSUES: This is the most common method followed by joint

stock

companies to raise capital through the issue of new securities. Under this method, the issuing company directly offers to the general public or institutions a fixed number of shares at a stated price through a document called prospectus. The purpose of raising the new capital is to finance some capital expenditure, it is usual for companies to issue a prospectus inviting the public to take up the new securities. Legally no public limited company can raise capital from public without issuing prospectus. 2) OFFER FOR SALE: Under this method the company sells the shares /securities to the issue house / brokers at an agreed price . The issue house/brokers sell their shares / securities to the investors at a higher price. The company is relieved from the problem of printing and advertisement of prospectus and making allotment of shares . Offer for sale is not common in India.

3) PRIVATE PLACEMENT: The promoters sell their shares to their friends , relatives and well wishers to obtain the minimum subscription which is a precondition for issue of shares to the public. 10

Once this precondition for issue of shares is met , the issue house/brokers buy the securities out right with the intention of placing them with their clients afterwards. The issue house/brokers maintain their own list of clients and through customer contact sell the securities. The main disadvantage of this method is that the securities are not widely distributed to the large section of investors. 4) RIGHT ISSUES: Rights issue is a method of raising funds in the market by an existing company. A right means an option to buy certain securities at a certain privileged price within a specified period. Shares so offered to the existing shareholders are called Right shares. Right shares are offered to the existing shareholders in a particular proportion to their existing shareholders. The company should abide with section 81 of the companies act. If the shareholders fail to take the Right shares within a specified period, the balance is to be equally distributed among applicants for additional shares. Any balance still left over may be disposed off in the market. 5) STOCK EXCHANGE PLACING: this method has been discontinued in India due to strict regulations and statutory rules for listing of securities. According to it, “A company used to place its shares privately with the aid of brokers, and then secured permission for dealing on stock exchange”. This method involved little cost but often led to concentration of new shares in few hands. 6) SUBSCRITION BY INSIDE COTERIES: when a company goes to the new issue market a certain percentage of the capital is kept in reserve for subscription by inside coteries.

SEBI GUIDELINES FOR NEW ISSUE MARKET: The SEBI guidelines for different category of companies are as follows A) NEW COMPANY: A new company is a company which has not completed twelve months of production and where the promoters do not have a track record. These companies have to issue shares only at par.

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B) PRIVATE AND CLOSELY HELD COMPANIES: These companies having a track record of consistent profitability for last three years, are permitted to price their issues freely. C) EXISTING LISTED COMPANIES: The existing limited companies will be allowed to raise fresh capital by freely pricing its shares provided the promoters contribution is 50% on first 100 crores of issue. D) DIFFERENTIAL PRICING: Issue to the public can be priced differentially as compared to issue to right shareholders justification for the price difference should be mentioned in the offer document. E) LOCK IN PERIOD: Lock in period is five years for promoters contribution from the date of allotment or from commencement of commercial production whichever is later. F) GUIDELINES FOR PUBLIC ISSUE: 

Every application should be accompanied with an abridged prospectus.

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The risk factors should be highlighted in the abridged prospectus.

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Company’s management, Past history and present business of the firm should be highlighted in the prospectus.

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Justification for premium should be stated

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The public issues should be kept open for a minimum of three days and a maximum of ten working days.

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The quantum of issue should not exceed the amount specified in the prospectus

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Compliance report in the prescribed form should be submitted to SEBI within forty five days from the date of closure of issue.

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The allotment of shares has to be made in multiples of tradable lots if the minimum of subscription of ninety percent has not been received the entire amount is to be refunded to the investors within 120 days.

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Underwriting has been made mandatory

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The gap between the closure date of various issues i.e. rights and public should not exceed thirty days.

RECENT TRENDS AND DEVELOPMENTS IN NEW ISSUE MARKET: The recent economical changes i.e. privatization, liberalization, foreign private participation, disinvestment in public sector have given a new direction to the capital market. 12

The number of issues made and the amount of capital raised from the market has been phenomenal in the last decade. The public sector organizations like financial institutions, public sector undertaking have started dominating the primary market. In 1996-97, all public financial institutions including IDBI, IFCI, ICICI and many public sector backs have mobilized resources through public issue route. There is a major decline in the equity at premium issues over the years. CAPITAL MOBILISED THROUGH DEBT: the late 90’s have witnessed the bent of capital market for the issue of debt as that period is characterized with high interest rates and negative returns from the secondary market. MUTUAL FUNDS: New mutual funds were set up during the last decade. Many investors are turning towards mutual funds to take the advantage of expertise in investments and lowering of investment risk. SEBI has dispensed with the requirement of a minimum promoters contribution and lock in for listed companies with a three year dividend track record in the past five years The lock in period for employees in their stock option schemes was withdrawn but lock in will still apply to any preferential allotment made to promoters. The pricing of such issues would be based on market prices. The market reforms include the introduction of electronic trading with the setting up of OCTEI and NSE.th process of Book building was encouraged and IPO through Book building has picked up. Credit rating was made mandatory for some issues. This step has built the customer confidence in the market. Qualitative changes included the introduction of new innovative financial instruments. Certain innovative financial instruments were designed to suit the investors requirement. With the globalization of business, foreign markets have welcomed Indian companies. The Indian companies have issued GDR (global depository receipts) and ADR (American depository receipts) , foreign currency bomds , euro currency bonds etc.

TO SUGGEST GUIDELINES TO INVESTORS: 1. The investor should purchase the shares after a detailed study about the company. (That includes fundamental analysis, economical analysis and technical analysis.) 13

2. Liquidity and intrinsic value of the scrip should be high. 3. The investor should have a clear idea about the financial position, than determine an appropriate allocation mix of the assets, which maximizes the returns. 4. An easy solution to investor is to invest in to mutual fund schemes through a systematic investment plan (sip) the mutual fund gives you a well diversified, professionally managed portfolio at low cost 5. Investor need to develop a long term investment mindset rather than short term investment to get more returns or for achieving financial goals 6. Investors emotions and judgment plays a dynamic role in investment process. The investor should control his emotion and impatience and he should take strong decision 7. A good investor should diversifies and reduces his risk by investing in different securities which contained different risks and returns in order to achieve his goals 8. The investor should understand the market psychology apart from fundamental analysis. Because these psychological factors have a greater impact on market. 9. The investor must to review and revise the portfolio periodically. Based on circumstances he should change the production of the stock 10. Investor need to aware of new information, which reflects wider changes in share prices. 11. The investor can get certain tax benefit from investing in stock markets a) Investment on government fixed deposits b) Dividend on certain shares c) UTI units 12. If investor wants to manage their investment aggressively, you have to monitor important developments affecting the economy, various industrial sectors, and individual companies. a. Investor has to develop sound standards for selecting growth stocks and hold growth stocks as long as they remain growth stocks

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13. For purchasing stock of any company the investor to analyze the potentiality or worthiness of the product, profitability, treatment of HR, innovative ideas of the company, integrity 14. Avoid certain kinds of shares for ex; shares of unlisted companies 15. Participate in different schemes of mutual funds and high liquidity stocks.

Investors more crazy about the new issues because: i. The issues are often offered at par and they feel they are getting shares at “reasonable price” ii. If the company does well their capital appreciation and premium will be more iii. But before selecting a company the investor should think about that company in a following way iv. What is track record of the company v. Is there adequate assurance of the availability of inputs vi. How strong they are developing the market for product vii. What are the competitions etc… need to analyze.

PROBLEMS OF NEW ISSUE MARKET: The problems of new issue market can be summarized as follows: i.

The new issue market failed to mobilize adequate savings from the household sector. Only 10 % of the financial savings was mobilized. One reason for such failure is lack of awareness among these sector and private placement of capital by the companies.

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The new issue market has failed to communicate to the public the benefits of investing in new instruments.

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Merchant banks have failed to bridged the gap between the investors and the companies .they have failed to evaluate the projects taken up by companies, credentials of promoters, technical and managerial aspects, etc. this has led to

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customers being duped by companies. SEBI has now brought out stringent guidelines for companies and merchant bankers. iv.

Investment in capital markets are considered to be risky. So the risk averse attitude of customer have diverted the investment from shares to fixed deposits and debentures.

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Abnormally high cost of flotation has kept away small companies from the primary market.

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NIM has not reached to the semi urban and rural areas. An investor from this region has to spend additional cost for post and bank charges to access the NIM.

vii. Delay in allotment of shares, refunding of application money, posting of share certificates etc are common anomalies in NIM viii. New companies failed to gain the favor of underwriter. Caution investors have stayed away from new companies, which led to devolution on underwriters. ix.

Timing of an issue is very important. But companies failed to keep an eye on the other issues which are made during the same time. Thus crowding of new issues at one time has made the investor to select the one which he considered to be worthy.

INITIAL PUBLIC OFFERING IPO is an acronym for initial public offering. This is the first sale of stock by a company to the public. A company can raise money by issuing either debt or equity. If the company has never issued equity to the public , it is known as an IPO. Corporate may raise capital in the primary market by way of an IPO, right issue or private placement. Companies fall into two broad categories private and public. A privately held company has

fewer

shareholders. Anybody can come out and incorporate a private

company, put in some money file the right legal documents and follow the reporting rules. Most small businesses are privately held, but large companies can be private too. IKEA, Domino’s pizza and Hallmark cards are all privately held. It usually is not possible to buy shares in private company. The shares of private company are not offered to general public. On the other hand public companies can sold at least a portion of themselves to the public and trade on stock exchange. This is why doing an IPO is also referred to as going public. Public companies have thousands of share holders and are subjected to strict rules and regulations. 16

WHY GO PUBLIC? Going public raises cash , being publicly traded also opens many financial doors .Because of increased scrutiny public companies can usually get better rates when they issue debt. As long as there is a market demand a public company can always issue more stock. Trading in open market means liquidity. Being on a major stock exchange carries a considerable amount of prestige. In past companies with strong fundamentals could only qualify for an IPO, but Internet boom changed all this. Firms no longer needed strong financial and a solid history to go public. Instead, IPO’s were done by smaller start ups seeking to expand their business. There is nothing to worry for expansion of IPO but most of these firms had never made a profit and didn’t plan on being profitable any time. In cases like this companies might be suspected of doing an IPO just to make the founders rich. The IPO then becomes the end of the road rather than beginning. How can this happen? Remember an IPO is just selling stock, it is all about the sales job. If you can convince people to buy stock in your company, you can raise a lot of money . In our opinion IPO’s came just to collect money are extremely risky and should be avoided.

IPO BASICS: HOW TO GET INTO AN IPO? 1) UNDERWRITING PROCESS: Getting a piece of a hot IPO is very difficult, if not impossible. To understand why we need to know how an IPO is done , a process known as underwriting. When a company wants to go public , the first thing it does is hire an investment bank. A company could theoretically, sell its shares on its own but realistically, an investment bank is required. Underwriting is the process of raising money by either debt or equity. Underwriter acts as a middlemen between companies and the investing public. The company and the investment bank will first meet to negotiate the deal. Items usually discussed includes the amount of money company will raise , the types of securities to be issued and all details in underwriting agreement. The deal can be structured in a variety of ways. For example, in a “firm commitment” deal the underwriter guarantees that a certain amount will be raised by buying the entire offer and then reselling to the public. In a “best effort” deal the underwriter sells the securities , but doesn’t guarantee the amount raised.

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Once all sides agree to deal , the investment bank puts together a registration statement to be filed with SEC, governing bodies. This document contains information about offering as well as company information such as financial statements , management background , legal problems and insider holdings. The SEC then requires a “cooling off period” in which they investigate and make sure all material information has been disclosed. Once SEC approves the offering, a date is set when the stock will be offered to the public. During the cooling off the period the underwriters put together what is known as red herring. This is an initial prospectus containing all information about the company except for the offer price and effective date , which aren’t known at the time with the red herring in hand , the underwriter and the company attempt to hype and build up interest for the issue. They go on a road show also known as “the dog and pony show” where the big institutional investors are courted . As an effective date approach the underwriter and company sit down and decide on the price. This is not an easy decision, it depends on the company , the success of the road show and most importantly current market conditions. Of course it is in both parties interest to get as much as possible. Finally the securities are sold on the stock market and money is collected from investors. 2) INDIVIDUAL INVESTOR:As you can see, the road to an IPO is an long and complicated one. You may have noticed that individual investors are not involved until the very end, because small investors are not the target market. They do not have more cash and therefore hold little interest for the underwriters. If the underwriters think that an IPO will be successful they will usually pad the pockets of their favorite institutional client with shares at IPO price. The only way for individual investor to get shares is to have an account with one of the investment banks that is part of the underwriting syndicate. But an individual cannot expect to open an account with $1000 and be showered with an allocation. He has to be frequently trading client with a large account to get into an hot IPO.

POINTS TO BE CONSIDERED TO GET INTO AN IPO: 1)NO HISTORY:It’s hard enough to analyze the stock of an established company. An IPO company is even trickier to analyze since there won’t be a lot of historical information. The main source of data is Red herring prospectus, so make sure you examine this document

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carefully. Look for the usual information but also pay special attention to the management team and how they plan to use the funds generated from an IPO. 2) LOCK UP PERIOD : If you look at the charts following many IPO’s, you will notice that after few months the stock takes a sleep downturn, this is often because of lockup period. When a company goes public, the underwriters make company officials and employees sign a lock up agreement. Lock up agreements are legally binding contracts between underwriters and insiders of the company, prohibiting them from selling any shares of stock for a specified period of time. The period can be anything from 3 to 24 months. 90 days is minimum period stated under rule, but lockup specified by the underwriters can last much stronger. The problem is when lockups expire all the insiders are permitted to sell their stock. The result is a rush of people trying to sell their stock to realize their profit. This excess supply can put severe downward pressure on the stock price. 3) FLIPPING: Flipping is reselling a hot IPO stock in the first few days to earn a good profit. This is not easy to do and you will be strongly discouraged by your broker. The reason behind this is that, the companies want long term investors who hold their stock, not traders. There are no laws that prevent flipping, but your broker may black list you from future offering or just smile less when you shake hands. 4) Of course, institutional investors flip stocks all the time and make big money. The double standard exists and there is nothing we can do about it as they have buying power. Because of flipping , it is a good rule not to buy shares of an IPO if you don’t get in on the initial offering. Many IPO’s that have big gains on the first day will come back to earth as the institutions take their profits. 5) AVOID THE HYPE :Its important to understand that underwriters are salesmen . The whole underwriting process is intentionally hyped up to get as much attention as possible. Since IPO’s only happen once for each company, they are often presented as “once in a lifetime” opportunities. Of course some IPO soar high and keep soaring. But many end up selling below their offering prices within the year. Don’t buy a stock because it is an IPO do it because it is a good investment. BOOK BUILDING PROCESS: The abolition of the capital issues control act, 1947 has brought a new era in the primary market in India. The control over the pricing of the issues, designing and tenure of capital 19

issues were abolished. The issuers at present are free to make the price of issue. The main drawback of pricing was the process of pricing of issues. The issue price was determined around 60 to 70 days before the opening of the issue and the issuer had no clear idea abut the market perception of the price determined. The traditional fixed price method of tapping individual investor from two defects 1) Delay in initial public process. 2) Under pricing/over pricing of issues. In fixed price method, public offers do not have any flexibility in terms of prices as well as number of issues. From experience it can be stated that a majority of the public issues come through fixed price method are either under priced or over priced. Retail investors are unable to distinguish good issues from bad one. That is why book building mechanism, a new (product) process of price discovery has been introduced to overcome this limitation and determine issue price effectively. SEBI guidelines defines book building as a process undertaken by which a demand for the securities proposed to be issued by a corporate body is elicited and build up and the price for such securities is assessed for the determination of the quantum of such securities to be issued by means of a notice, circular, advertisement, document or information memoranda or offer document. Book building is basically a capital issuance process used in IPO which aids price and demand discovery. It is a process used for marketing a public offer of equity shares of a company. It is a mechanism where during a period fro which a book for IPO is open, bids are collected from the investors at various prices, which are above or equal to the floor price. The process aims at tapping both wholesale and retail investors. The offer/issue price is then determined after the bid closing date based on certain evaluation criteria.

FEATURES OF BOOK BUILDING PROCESS: 1) Public offers in fixed price method involves a pre issue cost of 2-3 percent and carry the risk of failure if it does not receive 90 percent of total subscription. In Book building such cost and risk can be avoided because Issuer Company can withdraw the market if demand for security does not exist. 2) Institutional investor like to participate largely in book built transactions as in this process the time taken for completion of entire process is less than the fixed price issues 20

3) Here the price is determined on the basis of the demand received or at the price above or equal to the floor price whereas in fixed price option the price of issues is fixed first and then securities are offered to the investors. 4) Book is built by book running lead manager to know the everyday demand whereas in case of fixed price of public issues, the demand is known at the close of the issue. 5)Book should remain open for minimum of 5 days.

BOOK BUILDING PROCESS IN INDIA: The main parties who are directly associated with book building process are issuer company. BRLM (Book Running Lead Managers) and the syndicate members. The BRLM (merchant banker) and the syndicate members who are the intermediaries are both eligible to act as underwriters. The steps involved in book building process are as under: 1) The issuer company proposing an IPO appoints a lead merchant banker as BRLM. 2) Initially the issuer company consults with the book running lead manager in drawing up a draft prospectus which does not mention the price of the issues but includes other details about the size of the issues, past history of a company and a price band. The securities available to the public are separately identified as net offer to the public. 3) The draft prospectus is filed with SEBI which gives it a legal standing. 4) A definite period is fixed as a bid period and BRLM conducts awareness campaign like advertisements, road shows etc. 5) The BRLM appoints a syndicate member, a SEBI register intermediary who underwrite the issues to the extent of net offer to the public 6) The BRLM is entitle to remuneration for conducting the book building process 7) The copy of draft prospectus may be circulated by BRLM to the institutional investors as well as to the syndicate members 8) The syndicate members create demand and ask each investor for the number of shares and offer price 9) The BRLM receives the feedback about the investors bid through syndicate members 10) The prospective investors may revise their bids at any time during the bi d period 11) The BRLM on receipt of feedback from the syndicate embers about the bid price and quantity of share apply has to build up an order book showing the demand for the shares of the company at various prices. The syndicate members must also maintain a record book for orders received from institutional investors for subscribing to the issue of private portion.

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12) On receipt of above information, the BRLM and the issuer company decides the issue price. This is known as market clearing price. 13) The BRLM then closes the book in consultation with the issuer company and determine the issue size of placement portion and public offer portion. 14) Once the final price is determined the allocation of securities should be made by BRLM based on prior commitment, investors quality, price aggression, earliness of bids etc. the bid of an institutional bidder, even if he has paid full amount may be rejected without being assigned any reason as the book building portion of institutional investors is left entirely at the discretion of issuer company and the BRLM. 15) The final prospectus if filed with the registrar of companies within 2 days of determination of issue price and receipts of acknowledgement card from SEBI. 16) Two different accounts for collection of application money, one for the private placement portion and the other for the public subscription should be opened by Issuer Company. 17) The placement portion is closed a day before the opening of public issue through faxed price method. The BRLM is required to have the application forms along with application money from the institutional buyers and underwriters to the private placement portion. 18) The allotment for the private placement portion shall be made on the second day from the closure of the issue and the private placement portion is ready to be listed. 19) The allotment an listing of issues under the public portion i.e. fixed price portion must be as per the existing statuary requirements 20) Finally the SEBI has the right to inspect such records and books which are maintained by BRLM and the intermediaries involved in the Book building process. DIIFFERENCE BETWEEN SHARE OFFERED THROUGH BOOK BUILDING AND THROUGH NORMAL PUBLIC ISSUE: 1) In

normal public issue method the price at which the securities are offered/allotted is

known in advance to the investor whereas the price at which these securities will be offered/allotted is not known in advance to the investor in book building process. Only indicative price range is known. 2) In normal public issue method demand for the securities offered is known only after the closure of the issue whereas in book building method demand for the securities offered can be known everyday as the book is built

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3) In normal issue method payment is made at the time of subscription wherein refund is given after allocation whereas in book building method payment is made only after allocation. 4) In book building securities are offered a t prices above or equal to the floor prices, whereas securities are offered at a fixed price in case of normal public issues.

OFFER TO THE PUBLIC THROUGH BOOK BUILDING PROCESS The oxford dictionary of business jumps from “bonus shares to book keeping” and then on “book of primary entry” without devoting an entry for book building. Book building is the process by which an underwriter attempts to offer an IPO based on demand form institutional investors. An underwriter “builds a book” by accepting orders from fund managers, indicating the number of shares they desire and the price they are willing to pay. Book maker is not the same as the book builder. The former takes bets and pays out money to the people who win. The IPO can be made through fixed price method, book building method or a combination of both. In case the issuer choose to issue securities through book building route then as per SEBI guidelines, an issuer company can issue securities in the following manner. A) 100 percent of the net offer to the public through book building route B) 75 percent of the net offer to the public through the book building process and 25 percent through fixed price portion. C) Under 90 percent scheme this percentages will be 90 and 10 respectively.

A) 100 % THROUGH BOOK BUILDING PROCESS :In the 100 percent of the net offer to the public, entire issue is made through book building process. In case of 100 percent book building process, the bidding centers should be at all the places where recognized stock exchanges are situated. B) 75 % THRUOGH BOOK BUILDING PROCESS : The option of 75 percent book building is available through the book building process are indicated as placement portion category and securities available to public are identified as net offer to the public. In this option, underwriting is mandatory to the extent of net offer to the public. The issue price for placement portion and offers to public are required to be same.

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C) 90 % THROUGH BOOK BUILDING PROCESS: This option is not available in India.

TYPES OF INVESTORS There are three kinds of investors in book building issue. The retail individual investor (RII), the non-institutional investor (NII) and the qualified institutional buyers (QIB). RII is an investor who applies for stocks for a value of not more than rupees 100000. Any bid exceeding this amount is considered in the NII category. NIIs are commonly referred to as high net worth individuals. On the other hand QIBs are institutional investors who posses the expertise and the financial muscle to invest in securities markets. Mutual funds, financial institutions, scheduled commercial banks, insurance companies, provident funds, state industrial development corporations fall under the definition of being a QIB. Each of these is allotted a certain percentage of total issue. The total allotment of RII category has to be at least 35 percent of the total issue. RII also have an option of applying at cut-off price. This option is not available to other classes of investors. NIIs are to be given at least 15 percent of the total issue and QIBs are to be issued not more than 50 percent of the total issue

REVERSE BOOK BUILDING PROCESS: The reverse book building is a mechanism provided for capturing the sell orders online basis from the shareholders through respective BRLMs which can be used by the companies intending to delist its shares through buy back process. In reverse book building scenario, the acquirer/company offers to buy back shares from the shareholders. The reverse book building is basically a process used for efficient price discovery. It is a mechanism where during the period for which the reverse book building is open offers are collected from the shareholders at various prices, which are above or equal to the floor price. The buy back price is determined after the offer closing date. Business process for delisting through book building is as follows 1. The acquirer shall appoint designated BRLM for accepting offers form the shareholders 2. The company/acquirer intending to delist its shares through book building process is identified by way of a symbol assigned to it by BRLM. 3. Orders for the offer shall be placed by the shareholders only through the designated trading members, duly approved by the exchange. 24

4. The designated trading members shall ensure that the security/shareholder deposit the securities offered with the trading members prior to the placement of an order. 5.

The offer shall be open for N number of days

6. The BRLM shall intimate the final acceptance price and provide the valid accepted order file to the National Securities Clearing Corporation Limited (wholly owned securities of NSE carrying out clearing and responsible for settlement operation.). SEBI guidelines shall be applicable to delisting of securities of companies and specifically apply to: 1.

Voluntary delisting being sought by the promoters of a company.

2.

Any acquisition of shares of the company (either by a promoter or by any other person)or scheme or arrangement, by whatever name referred to, consequent to which the public shareholding falls below the minimum limit specified in the listing conditions or listing agreement that may result in delisting of securities.

3.

Promoters of the company who voluntarily seek to delist their securities from all or some of the stock exchanges.

4.

Case where a person in control of the management is seeking to consolidate his holding in a company in a manner which would result in the public share holdings or in the listing agreement that may have affect of company being delisted.

5.

The companies which may be compulsorily delisted by stock exchanges

Advantages of Reverse book building process 1. It provides a fair,efficient and transparent method for collecting offer using latest electronic trading systems. 2. The NSE system offers a nation wide bidding facility in securities. 3. Cost involved in issue are far less than those in a normal IPO. RED HERRING PROPECTUS: A preliminary registration statement that must be filed with the SEC describing a new issue of stock and the prospects of the issuing company. "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. This means that in case the price is not disclosed, the number of shares and the upper and lower price bands are disclosed. On the other hand, an issuer can state the issue size and the number of shares are determined later. 25

An RHP for and FPO can be filed with the RoC without the price band and the issuer, 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. In the case of book-built issues, it is a process of price discovery and the price cannot be determined until the bidding process is completed. Hence, such details are not shown in the Red Herring prospectus filed with the RoC in terms of the provisions of the Companies Act. Only on completion of the bidding process, the details of the final price are included in the offer document. The offer document filed thereafter with ROC is called a prospectus. “Abridged Prospectus” means contains all the salient features of a prospectus. It accompanies the application form of public issues.

GREEN SHOE OPTION: In most of the case it is experienced that IPO through book building method in India turns out to be over priced or under priced after their listing and ultimately the small investor becomes the net loser. If the prices in open market fall below the issue price, small investors may start selling their securities to minimize losses. Therefore there was a vital need of a market stabilizer to smoothen swing in the open market price of a newly listed shares after an IPO. Market stabilization is the mechanism by which stabilizing agent acts on behalf of the issuer company, buys a newly issued securities for the limited purpose of preventing a decline in the new securities in open market price in order to facilitate its distribution to the public. It can prevent the IPO from huge price fluctuation and save investors from potential loss. Such mechanism is known as Green Shoe Option. Green Shoe Option can rectify the demand and supply imbalances and can stabilize the price of the stock. It owes its origin to the green shoe option company, which used this option for the first time in the world. SEBI recognized GSO system of initial public 2004 August. According to SEBI Guidelines “A company desirous of availing GSO shall pass the resolution in the general body meeting authorizing the public issue, seek authorization, also for possibility of allotment of further shares to the stabilizing agent. The company shall appoint one of the Lead book runners among the issue management team as stabilizing agent, will be responsible for price stabilization process if required. The stabilizing agent shall enter into an agreement with the promoters who will lend their share, specifying the maximum number of shares that may be borrowed from the 26

promoters, which shall not be in excess of fifteen percent of the total issue size. The stabilization mechanization shall be available for the period disclosed by the company in the prospectus, which shall not exceed 30 days from the date when trading permission was given by the exchanges. Ideally, with the intervention of the stabilizing agent the share price should not fall below the issue price for a period of 30 days from the listing date. Due to this option, the investor has a time period of 30 days up to which he is safe and his chances of incurring the losses are minimum. A GSO is a clause contained in the underwriting agreement of IPO. The GSO is also referred to as an over allotment provision, allows the underwriting syndicate to buy up an additional 15 % of the shares at the offering price if public demand for the shares exceeds expectations and the stock trades above its offering price. The GSO provides extra incentive for the underwriters of a new stock offering. In addition this investment banks, brokerages and other financing parties also often exercise the GSO the cover some of the short position. They may have create an effort to maintain a stable market after a new stock begins to trade as well as to meet after market demand.

AN INTERESTING FACT: The Green shoe company was the first issuer to allow the over allotment option to its underwriters, hence the name. The provision that has become standard in firm commitment underwriting is the over allotment option or green shoe option. Where the company and other sellers of securities grant and option to the underwriters to purchase additional shares (around 15 % in total offerings) on the same term as the original shares offer to the underwriters. The GSO allows the underwriters to exercise significant market clout in stabilizing activities during a 30 day period immediately following a public offering. The over allotment gives the underwriters buying power to cover their short position in order to stem a falling stock price, without the risk of having to buy stock at higher prices to cover their short position is the stock price increases.

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CHAPTER – III INDUSTRY PROFILE & COMPANY PROFILE

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INDUSTRY PROFILE INDIAN STOCK MARKET Stocks that respond to interest rate moves, coupled with select debt schemes, are likely to be the winners in 2015, with the Reserve Bank of India expected to start easing its monetary policy. Fund managers said economic prospects have improved, but the New Year may be tougher for equity investors to make money as valuations of many stocks are rich after the broadbased rally in 2014. Concern over interest rate hike in the US and weak global crude oil prices may also keep investors on. India is among the top-performing emerging markets in 2014. So far in 2014, the Sensex has gained 34%. Smaller companies have fared even better, with the BSE Mid Cap index surging 56% and the BSE Small Cap Index jumping 75%. Though the falling crude prices have improved the prospects of the Indian economy, India may not be spared if there is an emerging market sell-off. "On the global front, oil exporting nations could face problems, and there could be a global risk aversion. Market participants consider probable interest rate cuts by the Reserve Bank of India (RBI) as the biggest trigger for the economy and the markets. The extent of monetary policy easing would determine the strength of rally in shares of the so-called interest rate-sensitive sectors such as banks, auto, real estate and bonds. Fund managers said debt funds could offer good returns in the coming year as a fall in interest rates could lead to an appreciation in bond prices. With wholesale price inflation coming at nil for November, expectations of interest rate cuts as early as in the March quarter are high. "Shortterm rates can fall more than long-term rates. We expect consumer inflation to be in the range of 5-5.5%, and expect RBI to cut interest rates by 50 basis points in 2015," said DhawalDalal, executive V-P and head (fixed income), DSP BlackRock Mutual Fund. If interest rates fall by 50 basis points, investors could see a 5% capital appreciation on their long-term gilt fund portfolio. Measured by BSE Sensex, stock market has generated a positive return of about 9 per cent for investors in 2013, while gold prices fell by about three per cent and its poorer cousin silver plummeted close to 24 per cent. 29

After outperforming stock market for more than a decade, gold has been on back foot for two consecutive years now vis-a-vis equities, shows an analysis of their price movements. "Gold's under-performance was mainly due to prices falling in dollar terms amid anticipated tapering over last several months combined with FII investment in Indian stocks. "This movement has been equally true for global markets as 2013 saw gold losing its shine and markets coming back with a bang," said Jayant Manglik, President Retail Distribution, Religare Securities. "As always, gold and stock prices follow opposite trends and this year was no different except that both changed direction," he said. Improvement in the world economy has brought the risk appetite back amongst retail investors and this has drenched the liquidity from safe havens such as gold leading to its under-performance, an expert said. In 2012, the Sensex had gained over 25 per cent, which was nearly double the gain of about 12.95 per cent in gold. The appreciation in silver was at about 12.84 per last year. According to Hiren Dhakan, Associate Fund Manager, Bonanza Portfolio, "Markets have particularly shown great strength post July-August 2013 when RBI took some strong measures to control the steeply depreciating rupee." "When the US Fed gave indications that it might taper its stimulus programme given the economy shows improvement, a knee-jerk correction was seen in most risky assets, including stocks in Indian markets. However, assurance by the Fed about planned and staggered tapering in stimulus once again proved to be a catalyst for the markets." "External factors affecting Indian stocks seem to be negative for the first half of 2014 due to continued strength of the US dollar and benign in the second half. By that time, elections too would have taken place. A combination of domestic and international factors point to a bumper closing of Indian markets in 2014 with double-digit percentage growth," he said. Stock market segment mid-cap and small-cap indices have fallen by about 10 per cent and 16 per cent, respectively, in 2013.

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Foreign Institutional Investors have bought shares worth over Rs 1.1 lakh crore (nearly USD 20 billion) till December 19. In 2012, they had pumped in Rs 1.28 lakh crore (USD 24.37 billion).

Evolution Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meager and obscure. The East India Company was the dominant institution in those days and business in its loan securities used to be transacted towards the close of the eighteenth century. By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers recognized by banks and merchants during 1840 and 1850. The 1850's witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60. In 1860-61 the American Civil War broke out and cotton supply from United States of Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began (for example, Bank of Bombay Share which had touched Rs 2850 could only be sold at Rs. 87). At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business. In 1887, they formally established in Bombay, the "Native Share and Stock Brokers' Association" (which is alternatively known as " The Stock Exchange "). In 1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated.

Other leading cities in stock market operations Ahmadabad gained importance next to Bombay with respect to cotton textile industry. After 1880, many mills originated from Ahmadabad and rapidly forged ahead. As new mills were floated, the need for a Stock Exchange at Ahmadabad was realized and in 1894 the brokers formed "The Ahmadabad Share and Stock Brokers' Association". 31

What the cotton textile industry was to Bombay and Ahmadabad, the jute industry was to Calcutta. Also tea and coal industries were the other major industrial groups in Calcutta. After the Share Mania in 1861-65, in the 1870's there was a sharp boom in jute shares, which was followed by a boom in tea shares in the 1880's and 1890's; and a coal boom between 1904 and 1908. On June 1908, some leading brokers formed "The Calcutta Stock Exchange Association". In the beginning of the twentieth century, the industrial revolution was on the way in India with the Swadeshi Movement; and with the inauguration of the Tata Iron and Steel Company Limited in 1907, an important stage in industrial advancement under Indian enterprise was reached. Indian cotton and jute textiles, steel, sugar, paper and flour mills and all companies generally enjoyed phenomenal prosperity, due to the First World War. In 1920, the then demure city of Madras had the maiden thrill of a stock exchange functioning in its midst, under the name and style of "The Madras Stock Exchange" with 100 members. However, when boom faded, the number of members stood reduced from 100 to 3, by 1923, and so it went out of existence. In 1935, the stock market activity improved, especially in South India where there was a rapid increase in the number of textile mills and many plantation companies were floated. In 1937, a stock exchange was once again organized in Madras - Madras Stock Exchange Association (Pvt) Limited. (In 1957 the name was changed to Madras Stock Exchange Limited). Lahore Stock Exchange was formed in 1934 and it had a brief life. It was merged with the Punjab Stock Exchange Limited, which was incorporated in 1936. Indian Stock Exchanges - An Umbrella Growth The Second World War broke out in 1939. It gave a sharp boom which was followed by a slump. But, in 1943, the situation changed radically, when India was fully mobilized as a supply base. On account of the restrictive controls on cotton, bullion, seeds and other commodities, those dealing in them found in the stock market as the only outlet for their activities. They were 32

anxious to join the trade and their number was swelled by numerous others. Many new associations were constituted for the purpose and Stock Exchanges in all parts of the country were floated. The Uttar Pradesh Stock Exchange Limited (1940), Nagpur Stock Exchange Limited (1940) and Hyderabad Stock Exchange Limited (1944) were incorporated. In Delhi two stock exchanges - Delhi Stock and Share Brokers' Association Limited and the Delhi Stocks and Shares Exchange Limited - were floated and later in June 1947, amalgamated into the Delhi Stock Exchnage Association Limited.

Post-Independence Scenario Most of the exchanges suffered almost a total eclipse during depression. Lahore Exchange was closed during partition of the country and later migrated to Delhi and merged with Delhi Stock Exchange. Bangalore Stock Exchange Limited was registered in 1957 and recognized in 1963. Most of the other exchanges languished till 1957 when they applied to the Central Government for recognition under the Securities Contracts (Regulation) Act, 1956. Only Bombay, Calcutta, Madras, Ahmadabad, Delhi, Hyderabad and Indore, the well established exchanges, were recognized under the Act. Some of the members of the other Associations were required to be admitted by the recognized stock exchanges on a concessional basis, but acting on the principle of unitary control, all these pseudo stock exchanges were refused recognition by the Government of India and they thereupon ceased to function. Thus, during early sixties there were eight recognized stock exchanges in India (mentioned above). The number virtually remained unchanged, for nearly two decades. During eighties, however, many stock exchanges were established: Cochin Stock Exchange (1980), Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982), and Pune Stock Exchange Limited (1982), Ludhiana Stock Exchange Association Limited (1983), Gauhati Stock Exchange Limited (1984), Kanara Stock Exchange Limited (at Mangalore, 1985), Magadh Stock Exchange Association (at Patna, 1986), Jaipur Stock Exchange Limited (1989), Bhubaneswar Stock Exchange Association Limited (1989), Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989), Vadodara Stock Exchange Limited (at Baroda, 1990) and recently 33

established exchanges - Coimbatore and Meerut. Thus, at present, there are totally twenty one recognized stock exchanges in India excluding the Over The Counter Exchange of India Limited (OTCEI) and the National Stock Exchange of India Limited (NSEIL). The Table given below portrays the overall growth pattern of Indian stock markets since independence. It is quite evident from the Table that Indian stock markets have not only grown just in number of exchanges, but also in number of listed companies and in capital of listed companies. The remarkable growth after 1985 can be clearly seen from the Table, and this was due to the favouring government policies towards security market industry. Trading Pattern of the Indian Stock Market Trading in Indian stock exchanges are limited to listed securities of public limited companies. They are broadly divided into two categories, namely, specified securities (forward list) and non-specified securities (cash list). Equity shares of dividend paying, growth-oriented companies with a paid-up capital of atleast Rs.50 million and a market capitalization of atleast Rs.100 million and having more than 20,000 shareholders are, normally, put in the specified group and the balance in non-specified group. Two types of transactions can be carried out on the Indian stock exchanges: (a) spot delivery transactions "for delivery and payment within the time or on the date stipulated when entering into the contract which shall not be more than 14 days following the date of the contract" : and (b) forward transactions "delivery and payment can be extended by further period of 14 days each so that the overall period does not exceed 90 days from the date of the contract". The latter is permitted only in the case of specified shares. The brokers who carry over the outstandings pay carry over charges (cantango or backwardation) which are usually determined by the rates of interest prevailing. A member broker in an Indian stock exchange can act as an agent, buy and sell securities for his clients on a commission basis and also can act as a trader or dealer as a principal, buy and sell securities on his own account and risk, in contrast with the practice prevailing on New York and London Stock Exchanges, where a member can act as a jobber or a broker only. The nature of trading on Indian Stock Exchanges are that of age old conventional style of face-to-face trading with bids and offers being made by open outcry. However, there is a great amount of effort to modernize the Indian stock exchanges in the very recent times. 34

Over The Counter Exchange of India (OTCEI) The traditional trading mechanism prevailed in the Indian stock markets gave way to many functional inefficiencies, such as, absence of liquidity, lack of transparency, unduly long settlement periods and benami transactions, which affected the small investors to a great extent. To provide improved services to investors, the country's first ringless, scripless, electronic stock exchange - OTCEI - was created in 1992 by country's premier financial institutions - Unit Trust of India, Industrial Credit and Investment Corporation of India, Industrial Development Bank of India, SBI Capital Markets, Industrial Finance Corporation of India, General Insurance Corporation and its subsidiaries and CanBank Financial Services. Trading at OTCEI is done over the centres spread across the country. Securities traded on the OTCEI are classified into: Listed Securities - The shares and debentures of the companies listed on the OTC can



be bought or sold at any OTC counter all over the country and they should not be listed anywhere else Permitted Securities - Certain shares and debentures listed on other exchanges and



units of mutual funds are allowed to be traded Initiated debentures - Any equity holding atleast one lakh debentures of a particular



scrip can offer them for trading on the OTC. OTC has a unique feature of trading compared to other traditional exchanges. That is, certificates of listed securities and initiated debentures are not traded at OTC. The original certificate will be safely with the custodian. But, a counter receipt is generated out at the counter which substitutes the share certificate and is used for all transactions. In the case of permitted securities, the system is similar to a traditional stock exchange. The difference is that the delivery and payment procedure will be completed within 14 days. Compared to the traditional Exchanges, OTC Exchange network has the following advantages: 

OTCEI has widely dispersed trading mechanism across the country which provides greater liquidity and lesser risk of intermediary charges.



Greater transparency and accuracy of prices is obtained due to the screen-based scripless trading.

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

Since the exact price of the transaction is shown on the computer screen, the investor gets to know the exact price at which s/he is trading.



Faster settlement and transfer process compared to other exchanges.



In the case of an OTC issue (new issue), the allotment procedure is completed in a month and trading commences after a month of the issue closure, whereas it takes a longer period for the same with respect to other exchanges.

Thus, with the superior trading mechanism coupled with information transparency investors are gradually becoming aware of the manifold advantages of the OTCEI.

National Stock Exchange (NSE) With the liberalization of the Indian economy, it was found inevitable to lift the Indian stock market trading system on par with the international standards. On the basis of the recommendations of high powered Pherwani Committee, the National Stock Exchange was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and Investment Corporation of India, Industrial Finance Corporation of India, all Insurance Corporations, selected commercial banks and others. Trading at NSE can be classified under two broad categories: (a) Wholesale debt market and (b) Capital market. Wholesale debt market operations are similar to money market operations - institutions and corporate bodies enter into high value transactions in financial instruments such as government securities, treasury bills, public sector unit bonds, commercial paper, certificate of deposit, etc. There are two kinds of players in NSE: (a) Trading members and (b) Participants. Recognized members of NSE are called trading members who trade on behalf of themselves and their clients. Participants include trading members and large players like banks who take direct settlement responsibility.

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Trading at NSE takes place through a fully automated screen-based trading mechanism which adopts the principle of an order-driven market. Trading members can stay at their offices and execute the trading, since they are linked through a communication network. The prices at which the buyer and seller are willing to transact will appear on the screen. When the prices match the transaction will be completed and a confirmation slip will be printed at the office of the trading member. NSE has several advantages over the traditional trading exchanges. They are as follows: 

NSE brings an integrated stock market trading network across the nation.



Investors can trade at the same price from anywhere in the country since inter-market operations are streamlined coupled with the countrywide access to the securities.



Delays in communication, late payments and the malpractice’s prevailing in the traditional trading mechanism can be done away with greater operational efficiency and informational transparency in the stock market operations, with the support of total computerized network.

Unless stock markets provide professionalized service, small investors and foreign investors will not be interested in capital market operations. And capital market being one of the major source of long-term finance for industrial projects, India cannot afford to damage the capital market path. In this regard NSE gains vital importance in the Indian capital market system.

Planning History of India The development of planning in India began prior to the first Five Year Plan of independent India, long before independence even. The idea of central directions of resources to overcome persistent poverty gradually, because one of the main policies advocated by nationalists early in the century. The Congress Party worked out a program for economic advancement during the 1920’s, and 1930’s and by the 1938 they formed a National Planning Committee under the chairmanship of future Prime Minister Nehru. The Committee had little time to do anything but prepare programs and reports before the Second World War which put an end to it. But it was already more than an academic exercise remote from administration. Provisional government had been elected in 1938, and the Congress Party leaders held positions of responsibility. After the war, the Interim government of the pre-independence years appointed an Advisory Planning Board. The Board produced a number of somewhat

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disconnected Plans itself. But, more important in the long run, it recommended the appointment of a Planning Commission. The Planning Commission did not start work properly until 1950. During the first three years of independent India, the state and economy scarcely had a stable structure at all, while millions of refugees crossed the newly established borders of India and Pakistan, and while ex-princely states (over 500 of them) were being merged into India or Pakistan. The Planning Commission as it now exists, was not set up until the new India had adopted its Constitution in January 1950.

Objectives of Indian Planning The Planning Commission was set up the following Directive principles : 

To make an assessment of the material, capital and human resources of the country, including technical personnel, and investigate the possibilities of augmenting such of these resources as are found to be deficient in relation to the nation’s requirement.



To formulate a plan for the most effective and balanced use of the country’s resources.



Having determined the priorities, to define the stages in which the plan should be carried out, and propose the allocation of resources for the completion of each stage.



To indicate the factors which are tending to retard economic development, and determine the conditions which, in view of the current social and political situation, should be established for the successful execution of the Plan.



To determine the nature of the machinery this will be necessary for securing the successful implementation of each stage of Plan in all its aspects.



To appraise from time to time the progress achieved in the execution of each stage of the Plan and recommend the adjustments of policy and measures that such appraisals may show to be necessary.



To make such interim or auxiliary recommendations as appear to it to be appropriate either for facilitating the discharge of the duties assigned to it or on a consideration of the prevailing economic conditions, current policies, measures and development programs; or on an examination of such specific problems as may be referred to it for advice by Central or State Governments.

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The long-term general objectives of Indian Planning are as follows: 

Increasing National Income



Reducing inequalities in the distribution of income and wealth



Elimination of poverty



Providing additional employment; and



Alleviating bottlenecks in the areas of : agricultural production, manufacturing capacity for producer’s goods and balance of payments.

Economic growth, as the primary objective has remained in focus in all Five Year Plans. Approximately, economic growth has been targeted at a rate of five per cent per annum. High priority to economic growth in Indian Plans looks very much justified in view of long period of stagnation during the British rule

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COMPANY PROFILE SHAREKHAN Share khan, India’s leading stock broker is the retail arm of SSKI, an organization with over eighty years of experience in the stock market with more than 280 share shops in 120 cities and big towns, and premier online trading destination www.sharekhan.com. Share khan offers the trade execution facilities for cash as well as derivatives, on BSE and NSE, depository services, commodities trading on the MCX(Multi Commodity Exchange of India Ltd) and NCDEX (National Commodity and Derivative Exchange) and most importantly, investment advice tempered by eighty years of broking experience. Share khan provides the facility to trade in commodities through Share khan Commodities Pvt.Ltd-a wholly owned subsidiary of its parent SSKI. Share khan is the member of two major commodity exchanges MCX and NCDEX.

SSKI Apart from Share khan, the SSKI group also comprises of institutional broking and corporate finance. The institutional broking division caters to domestic and foreign institutional investors, while the corporate finance division focuses on niche areas such as infrastructure, telecom and media. SSKI owns 56% in Share khan and the balance ownership is HSBC, First Caryl and Intel Pacific. SSKI has been voted as the top domestic brokerage house in the research category, twice by Euro money survey and four times by Asia money survey. SHAREKHAN STOCK BROKING COMPANY Share khan is one of the leading retail brokerage of City Venture which is running successfully since 1922 in the country. Earlier it was the retail broking arm of the Mumbai based SSKI (SRIPAL SRAVANTHI KANTHILAL ISWARLAL)Group, which has over eight decades of experience in the stock broking business. Share khan offers its customers a wide range of equity related services including trade execution on BSE, NSE, Derivatives, depository services, online trading, investment advice etc. Earlier with a legacy of more than 80 years in the stock markets, the SSKI group ventured into institutional broking and corporate finance 18 years ago. SSKI is one of the leading players in institutional broking and corporate finance activities. SSKI holds a sizeable portion 40

of the market in each of these segments. SSKI’s institutional broking arm accounts for 7% of the market for Foreign Institutional portfolio investment and 5% of all Domestic Institutional portfolio investment in the country. It has 60 institutional clients spread over India, Far East, UK and US. Foreign Institutional Investors generate about 65% of the organization’s revenue, with a daily turnover of over US$ 2million.The objective has been to let customers make informed decisions and to simplify the process of investing in stocks. “Mission” of the Share khan is “To educate and empower the individual investor to make better investment decisions through 

QUALITY ADVICE

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INNOVATIVE PRODUCTS and

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SUPERIOR SERVICE.”

WORK STRUCUTRE OF SHAREKHAN: Share khan has always believed in investing in technology to build its business. The company has used some of the best-known names in the IT industry, like Sun Microsystems, Oracle, Microsoft, Cambridge Technologies, Nexgenix, Vignette, VeriSign Financial Technologies India Ltd, Spider Software Pvt. Ltd. to build its trading engine and content. The City Venture holds a majority stake in the company. HSBC, Intel & Carlyle are the other investors. On April 17, 2002 Sharekhan launched Speed Trade and Trade Tiger, are net-based Executable application that emulates the broker terminals along with host of other information relevant to the Day Traders. This was for the first time that a net-based trading station of this caliber was offered to the traders. In the last six months Speed Trade has become a de facto standard for the Day Trading community over the net. Share khan’s ground network includes over 700+ Share shops in 130+ cities in India.

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The firm’s online trading and investment site www.sharekhan.com - was launched on Feb 8, 2000. The site gives access to superior content and transaction facility to retail customers across the country. PRODUCT AND SERVICES OFFERD BY SHAREKHAN: 

Equity Trading Platform (Online/Offline).

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Commodities Trading Platform (Online/Offline).

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Portfolio Management Service.

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Mutual Fund Advisory and Distribution.

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Insurance Distribution.

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Forex

REASON TO CHOOSE SAHREKHAN LIMITED Experience SSKI has more than eight decades of trust and credibility in the Indian stock market. In the Asia Money broker's poll held recently, SSKI won the 'India's best broking house for 2004' award. Ever since it launched Share khan as its retail broking division in February

42

2000, it has been providing institutional-level research and broking services to individual investors. Technology With their online trading account one can buy and sell shares in an instant from any PC with an internet connection. Customers get access to the powerful online trading tools that will help them to take complete control over their investment in shares. Knowledge In a business where the right information at the right time can translate into direct profits, investors get access to a wide range of information on the content-rich portal, www.sharekhan.com. Investors will also get a useful set of knowledge-based tools that will empower them to take informed decisions. Convenience One can call Share khan’s Dial-N-Trade number to get investment advice and execute his/her transactions. They have a dedicated call-center to provide this service via a Toll Free Number 1800 22-7500 & 39707500 from anywhere in India. Customer Service Its customer service team assist their customer for any help that they need relating to transactions, billing, demat and other queries. Their customer service can be contacted via a toll free number, email or live chat on www.sharekhan.com. Investment Advice Sharekhan has dedicated research teams of more than 30 people for fundamental and technical research. Their analysts constantly track the pulse of the market and provide timely investment advice to customer in the form of daily research emails, online chat, printed reports etc. Benefits 

Free Depository A/c



Instant Cash Transfer



Multiple Bank Option.

43



Secure Order by Voice Tool Dial-n-Trade.



Automated Portfolio to keep track of the value of your actual purchases.



Personalized Price and Account Alerts delivered instantly to your Mobile Phone & Email address.



Special Personal Inbox for order and trade confirmations.



On-line Customer Service via Web Chat.



Buy or sell even single share



Anytime Ordering.

Share khan offers the following products :CLASSIC ACCOUNT This is a User Friendly Product which allows the client to trade through website www.sharekhan.com and is suitable for the retail investors who is risk-averse and hence prefers to invest in stocks or who does not trade too frequently. Features 

Online

trading

account

for

investing

in

Equity

and

Derivatives

via

www.sharekhan.com 

Live Terminal and Single terminal for NSE Cash, NSE F&O & BSE.



Integration of On-line trading, Saving Bank and Demat Account.



Instant cash transfer facility against purchase & sale of shares.



Instant order and trade confirmation by E-mail.



Streaming Quotes (Cash & Derivatives).

SPEEDTRADE SPEEDTRADE is an internet-based software application that enables you to buy and sell in an instant. It is ideal for active traders and jobbers who transact frequently during day’s session to capitalize on intra-day price movement. Features 

Single screen trading terminal for NSE Cash, NSE F&O & BSE.



Technical Studies & Multiple Charting.



Market summary (Cost traded scrip, highest clue etc.)



Alerts and reminders. 44



Back-up facility to place trades on Direct Phone lines.

DIAL-N-TRADE Along with enabling access for trade online, the CLASSIC and SPEEDTRADE ACCOUNT also gives Dial-n-trade services. With this service, one can dial Share khan’s dedicated phone lines 1800-22-7500, 3970-7500. Beside this, Relationship Managers are always available on Office Phone and Mobile to resolve customer queries. SHARE MOBILE Sharekhan had introduced Share Mobile, mobile based software where one can watch Stock Prices, Intra Day Charts, Research & Advice and Trading Calls live on the Mobile. (As per SEBI regulations, buying-selling shares through a mobile phone are not yet permitted.)

PREPAID ACCOUNT Customers pay Advance Brokerage on trading Account and enjoy uninterrupted trading in their Account. Beside this, great discount are also available (up to 50%) on brokerage. 

Prepaid Classic Account: - Rs.750



Prepaid Speed trade Account: - Rs.1000

IPO ON-LINE Customers can apply to all the forthcoming IPOs online. This is quite hassle-free, paperless and time saving. Simply allocate fund to IPO Account, Apply for the IPO and Sit Back & Relax. Mutual Fund Online Investors can apply to Mutual Funds of Reliance, Franklin Templeton Investments, ICICI Prudential, SBI, Birla, Sundaram, HDFC, DSP Merrill Lynch, PRINCIPAL and TATA with Sharekhan.

45

Zero Balance ICICI Saving Account Sharekhan had tied-up with ICICI bank for Zero Balance Account for Share khan’s Clients. Now their customers can have a Zero Balance Saving Account with ICICI Bank after your demat account creation with Sharekhan. AWARDS: 

Rated among the top 20 wired companies along with Reliance, HLL, Infosys etc by Business Today edition.



PIONEERS of online trading in India.



Amongst the top 3 online trading websites from India.



Most preferred financial destination amongst online banking customers.



Winner of ‘Best Financial Website Award



Awarded to Share khan at the Ahwaz ‘Consumer Awards 2005’ in the "Stock Broking" category. Research conducted by AC Nielsen-ORG MARG for Ahwaz.

SWOT ANALYSIS Strengths 

Strong credibility among investors because of its heritage.



Excellent reputation among the business society.



Capability of providing superior customer service.



Quality research team.



Easier access to the customer due to largest ground network of 280 branded share shops in 120 cities.



Abundant information about economy and companies.



Ability to attract and retain superior and quality personnel.



Highly sophisticated infrastructure.



Efficient research and analysis team, which by interpreting the economy and company’s performance accurately is enhancing the profitability of the clientele.

Weaknesses 

Limited customer appeal as the company product line does not include mutual funds which is increasingly becoming a preferred customer investment option. 46



Inadequate product awareness among the retail investors.



Limited customer appeal as the company does not have access to the BSE online space.



Brand awareness is low in the financial market.



Promotional activities conducted by the company are not at par with the other firms.

Opportunities  Hyderabad covers only 3% of investors which gives huge potential for the market penetration. 

Bullish phase of the market attracts investing public.



Access to the BSE online space for the retail investors creates opportunity to increase clientele base.



An awareness campaign about online trading creates new market.

Threats 

Availability of Unit Linked Insurance Policies (ULIP’s) and mutual funds in the market.



Threat of entry is high in this industry as the manpower required is less and capital requirement is medium.

Observations: 

Fluctuations are more in secondary market than any other market.



There are more speculators than investors.



Information plays a vital role in the secondary market.



Previously rolling settlement is T+5 days, now it changed to T+2 days and further it will be changing to T+1 day.



It was also observed that many broking houses offering internet trading allow clients to use their conventional system as well just ensure that they do not loose them and this instead of offering e-broking services they becomes service providers.



The number of players is increasing at a steady rate and today there are over a dozen of brokerage houses who have opted to offer net trading to their customers and prominent among them are SHARE KHAN, India bulls, kotakstreet, ICICI direct and geojit. 47



The Bombay stock exchange sensex zoomed past the 7700 barrier for the first time in history to achieve new all time high of 7800 intra day trade and ended at a historic close of 7732 points.

48

CHAPTER – IV DATA ANALYSIS & INTERPRETATION

49

DATA ANALYSIS & INTERPRETATION IPO Issues in 2016-2017 Issuer Company

Issue Open

Issue Close

Offer Issue

Issue

Price

Type

(Rs Crore)

27.35

9.4

336.70

34.68

(Rs.)

OFS Techno

14th Jan

-----

Narayana Hruda

6th Jan

-----

Narayana Hrudayalaya Ltd Dec 17, 2016 Dec IPO

2016

Alkem Laboratories Limited Dec 8, 2016

Dec

IPO

2016

Dr. Lal PathLabs Limited IPO Dec 8, 2016

Dec

26.75 291.0 0 21, 250/-

IPO-BB 613.08

10, 1050/- IPO-BB 1,349.61

10, 550/-

IPO-BB 638.00

Oct 30, 2016 180/-

IPO-BB 200.00

Oct 27, 2016

Oct 29, 2016 765/-

IPO-BB 1,272.20

Coffee Day Enterprises Ltd Oct 14, 2016

Oct 16, 2016 328/-

IPO-BB 1,150.00

2016

S H Kelkar& Company Ltd Oct 28, 2016 IPO

Interglobe Aviation Ltd IPO

IPO

Sadbhav

Infrastructure Aug 31, 2016 Sep 2, 2016

103/-

IPO-BB 425.00

115/-

IPO-BB 520.00

Project Limited IPO

Prabhat Dairy Limited IPO

Aug 28, 2016 Sep 4, 2016

50

Size

Shree Pushkar Chemicals and Aug 25, 2016 Aug

27, 65/-

IPO-BB 70.00

27, 178/-

IPO-BB 156.19

26, 155/-

IPO-BB 600.00

11, 640/-

IPO-BB 273.22

Ltd Jul 27, 2016

Jul 29, 2016 250/-

IPO-BB 550.00

Ltd Jun 24, 2016

Jun 26, 2016 320/-

IPO-BB 400.00

May

12, 378/-

IPO-BB 488.44

30, 625/-

IPO-BB 600.00

23, 63/-

IPO-BB 324.00

17, 205/-

IPO-BB 473.88

20, 310/-

IPO-BB 700.00

Fertilisers Ltd IPO

2016

Pennar Engineered Building Aug 25, 2016 Aug Systems Ltd IPO

2016

Navkar Corporation Limited Aug 24, 2016 Aug IPO

2016

Power Mech Projects Ltd IPO Aug 7, 2016

Aug 2016

Syngene

International

IPO

Manpasand

Beverages

IPO

PNC Infratech Limited IPO

May 8, 2016

2016

UFO Moviez Ltd IPO

Apr 28, 2016 Apr 2016

MEP

Infrastructure Apr 21, 2016 Apr

Developers Ltd IPO

VRL Logistics Ltd IPO

2016

Apr 15, 2016 Apr 2016

Inox Wind Limited IPO

Mar 18, 2016 Mar 2016 51

Adlabs

Entertainment

IPO

Ltd Mar 10, 2016 Mar

12, 168/-

IPO-BB 341.48

2016

INTERPRETATION The above table projects the difference between LTP and Issue price of different companies in the current year and the positions in the company’s are dependent on the market value only. Based on LTP and Issue price differences we can conclude that the investor who invested in Amrapali cap and Just dial got highest benefit respectively.

IPO Issues in 2015-2016 52

Equity

Issue Price

Current Price

%Gain/Loss

Monte Carlo

645.00

544.40

-15.60

Anubhav Infra

15.00

14.60

-2.67

Captain Pipes

40.00

42.50

6.25

AanchalIspat

20.00

17.00

-15.00

Jet Infra

125.00

128.00

2.40

JLA Infraville

10.00

13.49

34.90

Vibrant Global

19.00

18.90

-0.53

Aryaman Cap

12.00

13.25

10.42

Dhabriya Poly

15.00

24.00

60.00

Momai Apparels

78.00

82.35

5.58

AtishayInfotec

16.00

18.75

17.19

Ultracab India

36.00

54.00

50.00

Shemaroo Ent

170.00

158.95

-6.50

Encash Ent

40.00

111.05

177.63

Naysaa Sec

15.00

15.00

0.00

December-2015

November-2015

October-2015

September-2015

53

Sharda Crop

156.00

257.55

65.10

Snowman Logist

47.00

96.55

105.43

Vishal Fabrics

45.00

55.00

22.22

CarewellInds

15.00

8.20

-45.33

Bhanderi Infra

120.00

120.00

0.00

30.00

35.20

17.33

TariniInt

41.00

24.25

-40.85

DhanukaCommerc

10.00

8.50

-15.00

SPS Finquest

75.00

84.00

12.00

GCM Capital

20.00

115.30

476.50

Bansal Roofing

30.00

30.50

1.67

Wonderla

125.00

291.85

133.48

R&B Denims

10.00

11.00

10.00

Women's Next

65.00

65.70

1.08

OceanaaBiotek

10.00

11.40

14.00

August-2015

July-2015 Oasis Tradelink June-2015

May-2015

April-2015

54

March-2015 Krishna Prasad

10.00

23.00

130.00

Karnimata Cold

20.00

19.50

-2.50

Unishire Urban

10.00

10.00

0.00

PolymacThermo

35.00

96.00

174.29

February-2015

INTERPRETATION The above table projects the difference between LTP and Issue price of different companies in the current year and the positions in the company’s are dependent on the market value only. Based on LTP and Issue price differences we can conclude that the investor who invested in Amrapali cap and Just dial got highest benefit respectively.

55

New issues in future market Issuer Company Exchange Issue Open

Issue Close

Offer Price

Issue

Issue

(Rs.)

Type

Size (Rs Crore)

NCML

BSE,

Industries

Dec 29, 2015 Jan 2, 2016

100/- to 120/- IPO-BB 60.00 -

Ltd NSE

72.00

IPO Monte

Carlo BSE,

Dec 3, 2015

Dec 5, 2015

630/- to 645/- IPO-BB 350.43

Fashions Limited NSE IPO Shemaroo

BSE,

Entertainment

NSE

Sep 16, 2015 Sep 18, 2015 155/- to 170/- IPO-BB 120.00

Ltd IPO Sharda

BSE,

Cropchem

Sep 5, 2015

Sep 9, 2015

145/- to 156/- IPO-BB 351.86

Ltd NSE

IPO Snowman Logistics

BSE,

Aug 26, 2015 Aug 28, 2015 44/- to 47/-

IPO-BB 197.40

Ltd NSE

IPO Wonderla Holidays

BSE,

Apr 21, 2015 Apr 23, 2015 115/- to 125/- IPO-BB 181.25

Ltd NSE

IPO 

BB = 100% Book Building Issue, FP = Fixed Price Issue



Initial Public Offer (IPO), is the first sale of shares by the privately owned company to the public. The companies going public raises funds through IPO's for working capital, debt repayment, acquisitions, and a host of other uses.



Investor can apply for IPO Stocks by filling an IPO Application Form. These forms are usually available with stock brokers for free. Investor can also apply for IPO Stocks online through Online Stock Brokers like ICICI bank, Share Khan, and Reliance Money. 56



Chittorgarh.com, India's No. 1 IPO investment portal provide recent IPO information from primary stock market. IPO Tools available on this website includes IPO Allotment Status, IPO Bidding Information, IPO Ratings, IPO Grading, IPO Reviews, Grey Market Premiums of IPO's, IPO News and IPO Performance Tracker

INTERPRETATION The above table projects the difference between LTP and Issue price of different companies in the current year and the positions in the company’s are dependent on the market value only. Based on LTP and Issue price differences we can conclude that the investor who invested in Amrapali cap and Just dial got highest benefit respectively. IPO Issues in 2014-2015 Equity

Issue Price

Current Price

%Gain/Loss

Suyog Tele

25.00

25.15

0.60

RCI Industries

40.00

36.15

-9.63

Tentiwal Wire

13.00

11.50

-11.54

Captain Poly

30.00

38.00

26.67

Stellar Capital

20.00

10.95

-45.25

Mitcon Cons

61.00

45.45

-25.49

100.00

100.00

0.00

January-2015

December-2014

November-2014

October-2014 Amrapali Cap

57

VCU Data Mgmt

25.00

28.15

12.60

15.00

7.40

-50.67

Edynamics Sol

25.00

57.30

129.20

Just Dial

530.00

1575.00

197.17

Onesource Tech

14.00

7.85

-43.93

172.00

326.20

89.65

Bothra Metals

25.00

26.25

5.00

HPC Bio

35.00

166.00

374.29

Channel Nine

25.00

108.50

334.00

Kavita Fabrics

40.00

108.50

171.25

Sunstar Realty

20.00

128.25

541.25

25.00

184.00

636.00

August-2014 Silverpoint June-2014

April-2014 Repco Home March-2014

February-2014 Esteem Bio

58

Issue Price Current Price %Gain/Loss

INTERPRETATION: The above table projects the difference between LTP and Issue price of different companies in the current year and the positions in the company’s are dependent on the market value only. Based on LTP and Issue price differences we can conclude that the investor who invested in Amrapali cap and Just dial got highest benefit respectively.

59

IPO Issues in 2013-2014 Equity

Issue Price

Current Price

%Gain/Loss

25.00

25.60

2.40

Bharti Infratel

220.00

209.90

-4.59

PC Jeweller

135.00

141.90

5.11

CARE

750.00

820.35

9.38

Veto Switch

50.00

50.75

1.50

Tara Jewels

230.00

212.00

-7.83

15.00

14.65

-2.33

RCL Retail

10.00

9.70

-3.00

Anshus Clothing

27.00

31.50

16.67

Comfort Comm

10.00

17.55

75.50

ThejoEngg

402.00

17.55

-95.63

SRG Housing Fin

20.00

21.25

6.25

Jointeca Edu

15.00

15.90

6.00

Jupiter Infomed

20.00

24.50

22.50

Sangam Advisors

22.00

23.95

8.86

VKS Projects

55.00

189.10

243.82

Max Alert Syste

20.00

94.95

374.75

Monarch Health

40.00

142.50

256.25

Speciality Rest

150.00

173.40

15.60

Tribhovandas

120.00

226.25

88.54

106.00

158.15

49.20

January-2014 Eco Friendly December-2013

November-2013 Bronze Infra October-2013

September-2013

August-2013

July-2013

May-2013

April-2013 NBCC

60

MT Educare

80.00

107.60

34.50

Olympic Cards

30.00

60.60

102.00

BCB Finance

25.00

25.00

0.00

MCX India

1032.00

1343.25

30.16

74.00

10.70

-85.54

VaswaniInd

49.00

4.73

-90.35

M and B Switch

186.00

25.95

-86.05

Flexituff Inter

155.00

223.45

44.16

TaksheelSolut

150.00

8.36

-94.43

March-2013

November-2012 Indo Thai Secu October-2012

INTERPRETATION:

61

The above table projects the difference between LTP and Issue price of different companies in the current year and the positions in the companys are dependent on the market value only. Based on LTP and Issue price differences we can conclude that the investor who invested in Rushil Decorand One life Capital got highest benefit respectively. IPO Issues in 2012 Equity

Issue Price

Current Price

%Gain/Loss

74.00

12.93

-82.53

VaswaniInd

49.00

10.99

-77.57

M and B Switch

186.00

68.30

-63.28

TaksheelSolut

150.00

13.53

-90.98

Flexituff Inter

155.00

249.70

61.10

Onelife Capital

110.00

299.20

172.00

TijariaPolypip

60.00

8.94

-85.10

Prakash Constro

138.00

131.70

-4.57

PG Electroplast

210.00

171.00

-18.57

SRS

58.00

34.25

-40.95

TD Power System

256.00

244.05

-4.67

Brooks Labs

100.00

14.08

-85.92

Tree House Edu

135.00

214.15

58.63

L&T Finance

52.00

48.95

-5.87

Inventure Grow

117.00

210.20

79.66

Readymade Steel

108.00

63.75

-40.97

Birla Pacific

10.00

7.01

-29.90

Rushil Decor

72.00

161.05

123.68

63.00

28.70

-54.44

November-2012 Indo Thai Secu October-2012

September-2012

August-2012

July-2012

June-2012 Timbor Home

62

VMS Industries

40.00

44.55

11.37

INTERPRETATION: The above table projects the difference between LTP and Issue price of different companies in the current year and the positions in the companys are dependent on the market value only. Based on LTP and Issue price differences we can conclude that the investor who invested in Rushil Decorand One life Capital got highest benefit respectively.

TABLE SHOWING SCRIPS OF FINANCIAL SERVICES

63

S.NO

1 2 3 4 5 6

NAME OF THE ISSUE

MotilalOswal services Ltd

23/8/10

ICRA Ltd

20/03/10-

Power

finance 31/01/10-

Corporation Ltd

06/02/10

Transwarranty

Finance 23/01/10-

Ltd

02/02/10

Emkayshare&stock

31/03/09-

brokers Ltd

07/04/09

Mahindra&Mahindra

21/02/09-

Financial services Ltd

24/02/09

development

Financial

9 10

IL&FS Investment Ltd

15/07/0822/07/08 4/07/0908/07/09

India Infoline Ltd

21/04/0827/04/08

Indian Bulls Financial 06/10/07Services Ltd

SIZE (LAKHS)

23/03/10

co. Ltd 8

ISSUE

Financial 20/08/10-

Infrastructure 7

DATE OF

ISSUE

10/09/07

64

PRICE RANGE

DIFFRENCE

ISSUE PRIC

LTP

E

BETWEEN ISSUE PRICE <P

29.8271

725-825

825

971.20

+146.20

25.811

275-330

330

1030

+700

1173.167

73-85

85

200.90

+115.90

60

48-55

52

29.15

-22.85

62.50

100-120

120

140.10

+20.10

200

170-200

200

233.95

+33.95

4036

29-34

34

140.10

+106.10

114

110-125

125

194.10

+69.10

118.78138 70-80

76

849.50

+773.50

271.87519 16-19

19

593.10

+574.10

CHART SHOWING ISSUE PRICE & LTP

1200 1000 800 600 400 200 0

M

I

PF ISSUE T PRICE E M

ID LTP

IL

IIL

IB

INTERPRETATION: 1.The above table reveals that the difference between LTP and Issue Price of MotilalOswal Financial services Ltd , ICRA Ltd, Power finance Corporation Ltd , Transwarranty Finance Ltd , Emkayshare&stock brokers Ltd , Mahindra&Mahindra Financial services Ltd , .Infrastructure development Financial co. Ltd , IL&FS Investment Ltd , India Infoline Ltd , Indian Bulls Financial Services Ltd is (+)146.20, (+)700 , (+) 115.90 , (-)22.85 , (+)20.10 , (+)33.95 , (+)106.10 , (+)69.10 , (+)773.50 , (+)574.10 respectively. Based on LTP & Issue price differences we can conclude that the investor who invested in India infoline Ltd and ICRA Ltd got highest gain of Rs.773.50 and Rs.700 respectively. It can be concluded that the all the above scrip’s are under priced except Transwarranty Finance Ltd, which is overpriced.

65

TABLE SHOWING SCRIPS OF ELECTRONICS & ELECTRICAL

NAME S.NO

OF

OF

ISSUE

ISSUE

MIC 1

Electronic s Ltd Redington

2

(Indian) Ltd Autoline

3

Industries Ltd FIEM

4

Industries Ltd Voltamp

5

Transform ers Ltd Opto

6

DATE

circuits(In dia) Ltd

30/04/1008/05/10 22/01/1025/01/10 08/01/1012/01/10 21/09/0827/09/08

ISSUE PRICE

ISSUE

(LAK

RANGE

PRICE

51

129-150

150

525.05

+375.05

132.31

95-113

113

320

+207

37.5

200-225

225

209.95

-15.05

41

125-145

137

102.95

-34.05

295-345

345

1342.25

+997.25

31/03/0805/04/08

240-270

270

532

+262

LTP

4

40

66

BETWEEN

ISSUE

PRICE & LTP

HS)

24/08/08- 48.838 29/08/08

DIFFERENCE

SIZE

1600 1400 1200 1000 800 600 400 200 0

CHART SHOWING ISSUE PRICE & LTP

MIC

issue price

RL LTP AIL

FIEM

VTL

OCL

INTERPRETATION: 1. .The above table shows that the difference between LTP and Issue Price of MIC electronics Ltd , Redington (India) Ltd , Autoline industries Ltd , FIEM industries Ltd , Voltamp Transformers Ltd , Opto circuits (India) Ltd is (+) 375.05 , (+)207 , (-)15.05 , (-) 34.05, (+) 997.25, (+) 262 respectively. Based on LTP and Issue Price differences we can conclude that the investor who invested in Voltamp Transformers Ltd, MIC Electronics Ltd, Opto Circuits (India) Ltd, Redington (India) Ltd got benefits of Rs.997.25, Rs.375.05, Rs.262, and Rs.207 respectively. It can be interpreted that the conclusion all the above scrip’s are under priced except Autoline industries Ltd and FIEM industries Ltd , which are over priced.

67

TABLE SHOWING SCRIPS OF INFRASTRUCTURE

S.N

NAME

O

THE ISSUE IVR

1

OF

DATE

ISSUE

OF THE SIZE ISSUE

PRICE

ISSUE

RANG

PRIC

DIFFRENCE LTP

BETWEEN ISSUE PRICE &

(LAKHS) E

E

141.5

510-600

550

407.95

-142.05

29

150-175

175

757.45

+582.45

200-240

240

363

+123

43

130-150

150

285.90

+135.90

381.3698

210-250

210

807.65

+597.65

400-440

440

470.10

+30.10

47

275-315

315

31.89870

385-415

395

LTP

Prime 23/07/10

Urban

-26/07/1

developers Ltd

0

DLF Ltd

11/06/10

2

-14/06/1 0

3

LancoInfratec

06/11/08

h Ltd

-10/11/0 8

4

5

6

7

8

Atlanta Ltd

1/09/0807/10/8

GMR

31/07/08

Infrastructure

-04/08/0

Ltd.

8

Patel

03/05/08

Engineering

-09/05/0

Ltd

8

AIA

17/11/07

Engineering

-22/11/0

Ltd

7

IVRCL

18/03/07

Infrastructure

-23/03/0

& Projects Ltd

7

444.7238 1

106.2496 5

68

1396.5 0

415.40

+1081.50

+20.40

CHART SHOWING ISSUE PRICE & LTP

L C

IV R

IA

LTP

A

G

A

PE L

M R

L

L

ISSUE PRICE

LI

LF D

IV R

1600 1400 1200 1000 800 600 400 200 0

INTERPRETATION: The above table reveals that the difference between LTP and Issue Price of in case of DLF Ltd , LancoInfratech Ltd , Atlanta Ltd , GMR Infrastructure Ltd , Patel Engineering Ltd , AIA engineering Ltd , IVRCL Infrastructure and projects Ltd is (+)582.45 , (+)123 , (+)135.90 , (+)597.65 , (+)30.10 , (+)1081.50 , (+)20.40 and IVR Prime Urban developers Ltd is (-)142.05. Based on LTP and Issue price differences we can concluded that the investor who invested in IVR Prime Urban Developers Ltd got loss of Rs.(-)142.05 and other (who invested in other scrip’s) investor got benefit. At the end it can be concluded that the scrip IVR Prime Urban Developers ltd has been over priced and the others DLF Ltd, LancoInfratech Ltd, Atlanta Ltd, GMR Infrastructure Ltd, Patel Engineering Ltd, AIA engineering Ltd, IVRCL Infrastructure and projects Ltd have been under priced.

69

TABLE SHOWING SCRIPS OF TOYS AND TEXTILES

S.N

NAME OF

O

THE ISSUE

1

DATE

ISSUE

PRICE

ISSUE

OF

SIZE

RANG

PRIC

ISSUE

(LAKHS) E

Gangothri

18/05/08

textiles ltd

-23/05/0 8

2

Mudra

08/02/10

Lifestyle ltd

-14/02/1

134.1463

DIFFERENCE LTP

E

BETWEEN ISSUE PRICE & LTP

41-46

41

21.05

- 19.95

95.8

75-90

90

66.40

- 23.60

48.43789

170-185

170

31

250-275

260

300

+ 40

85

55-65

65

23.80

- 41.20

18-21

21

13.50

- 7.50

19-22

22

13.90

- 8.10

45.50

160-180

180

67.40

- 112.60

134.75

60-70

70

248

+ 178

4

0 Indus 3

Fila 12/02/10

Ltd

-14/02/1 0

4

Kewalkiran

20/03/08

clothing Ltd

-23/03/0

216.3 0

+ 46.30

8 5

Raj

Royan 12/01/08

Ltd

-18/01/0 8

6

Nitin

06/01/08

Spinners Ltd

-12/01/0 8

7

8

Ginni

19/12/07

Filaments

-23/12/0

Ltd

7

Celebrity

19/12/07

Fashions Ltd

-22/12/0

222.2222 2 252.6315 8

7 9

Bombay

11/11/07

Rayon

-17/11/0

Fashion Ltd

7 70

10

Provogue

10/06/07

(India) Ltd

-16/06/0

40.49402

130-150

150

886

+ 736

7

P

E

R B

LTP

C

F G

S N

R R

C K

ISSUE PRICE

K

IF

T G

M L

CHART SHOWING ISSUE PRICE & LTP

1000 900 800 700 600 500 400 300 200 100 0

INTERPRETATION: It is understood from the above table the difference between LTP and Issue price of Gangothri textiles ltd , Mudra Lifestyle ltd , Indus Fila Ltd , Kewalkiran clothing Ltd , Raj Royan Ltd , Nitin Spinners Ltd , Ginni Filaments Ltd , Celebrity Fashions Ltd , Bombay Rayon Fashion Ltd , Provogue (India) Ltd is (-)19.95 , (-)23.60 , (+)46.30 , (+)40 , (-)41.20 , (-)7.50 , (-)8.10 , (-)112.60 , (+)178 , (+)736 respectively. Based on LTP and Issue Price differences we can concluded that the investor who invested in Indus Fila Ltd , Kewalkiran clothing Ltd , Bombay Rayon Fashion Ltd and Provogue (India) Ltd got benefit of Rs.46.30 , Rs.40 , Rs.178 and Rs.736 respectively.

71

It can be concluded that the all the above scrip’s are overpriced except

Indus Fila Ltd ,

Kewalkiran clothing Ltd , Bombay Rayon Fashion Ltd and Provogue (India) Ltd which is under priced.

TABLE SHOWING SCRIPS OF AVIATION INDUSTRY

S.N

NAME OF

O

THE ISSUE

1

2

DATE

ISSUE

PRICE

ISSUE

OF

SIZE

RANG

PRIC

ISSUE

(LAKHS) E

E

35

175-200

185

245.46

146-175

148

172.6680

950-

1

1125

Global

29/09/08

Vectra

-06/10/0

Helicop Ltd

8

Deccan

18/05/08

Aviation ltd

-26/05/0 8

Jet Airways 18/02/07 3

(India) Ltd

-24/02/0 7

72

1100

DIFFERENC LTP

E BETWEEN ISSUE PRICE & LTP

188

143.7 0 912.6 0

+3

- 4.30

- 187.40

CHART SHOWING ISSUE PRICE & LTP

1200

1000

800

600

400

200

0

GLOBAL

ISSUE PRICE

DECCAN

LTP

JET

INTERPRETATION: From the above table shows the difference between the Issue price and Last Traded Price in case of global vector helicop ltd is (+)3 and that of Deccan aviation Ltd and Jet Airways Ltd is (-)4.30 and (-)187.40 respectively. Based on LTP and Issue price differences we can conclude that the investors who invested in Global vector Helicop Ltd of Rs.3 and the investor of Deccan Aviation Ltd and Jet Airways Ltd got a loss of Rs.4.30 and 187.40 respectively. At the end it can be concluded that the scrip Global Vector Helicop Ltd has been under priced and the others Deccan and Jet Airways Ltd have been over priced.

73

TABLE SHOWING SCRIPS OFPETROLEUM INDUSTRY

S.NO

1 2 3 4

DIFFERENC

ISSUE

PRICE

ISSUE

SIZE

RANG

PRIC

(LAKHS)

E

E

160-190

160

4500

57-62

60

1380

23-27

27

60.85

+ 33.85

Oil & Natural 05/03/06-

1425.9330

680-750

750

912.5

+ 162.55

Gas

0

NAME

OF DATE OF

THE ISSUE Cairn India Ltd

ISSUE 11/12/08-

3287.9967

15/12/08

5

Reliance

13/04/08-

petroleum Ltd

20/04/08

Gujarat

state 24/01/08-

Petronet Ltd

28/01/08 13/03/06

LTP

ISSUE PRICE & LTP

173.3 5 134.4 5

5 74

E BETWEEN

+ 13.35 + 74.45

Corporation Ltd 5

Gas

Authority 27/02/06-

of India Ltd Indian

6

Petrochemicals Corporation Ltd

7

05/03/06 20/02/0627/02/06

IndraPrastha

28/11/05-

Gas Ltd

05/12/05

1000 900 800 700 600 500 400 300 200 100 0

845.6516

195

195

718.5006

170

170

400

40-48

48

348.9 5 429.0 5 120.1 0

+ 153.95

+ 259.05

+ 72.10

CHART SHOWING ISSUE PRICE & LTP

CIL

RPL

GSPL ONGC GAIL IP

LTP

IPCL

IPGL

INTERPRETATION: It is understood from the above table the difference between LTP and issue price of Cairn India Ltd , Reliance petroleum Ltd , Gujarat state Petronet Ltd , Oil & Natural Gas Corporation Ltd , Gas Authority of India Ltd , Indian Petrochemicals Corporation Ltd , IndraPrastha Gas Ltd is (+)13.35 , (+)74.45 , (+)33.85 , (+)162.55 , (+)153.95 , (+)259.05 , (+)72.10 respectively Based on LTP and Issue price differences we can say that the investor who invested in Indian Petrochemicals Corporation Ltd and Oil & Natural Gas Corporation Ltd got highest benefit of Rs.259.05 and Rs.162.55 respectively. 75

It can be concluded that the all the above scrip’s are under priced.

TABLE SHOWING SCRIPS OF IT SERVICES / TECHNOLOGIES

S.NO

1

NAME

OF

THE ISSUE

DATE OF ISSUE

Everonn

05/07/10

Systems

India -11/07/1

Ltd

ISSUE

ISSUE

RANG

PRIC

E

E

5000

125-140

140

21

675-730

730

40.50

200-240

200

127.46

315-365

365

90

100-120

120

880

+ 760

53.23851

290-320

320

1106.0

+ 786.05

SIZE (LAKHS )

LTP

E BETWEEN ISSUE PRICE & LTP

752.50

+ 612.50

0

Take Solutions 01/08/10 2

DIFFERENC

PRICE

Ltd

-07/08/1 0

1043.2 0

+ 313.20

HOV Services 04/10/08 3

Ltd

-07/10/0

183.20

- 16.80

8 Tech mahindra 01/08/08 4

Ltd

-04/08/0 8

Tulip 5

1317.5 0

+ 952.50

IT 09/12/07

Services Ltd

-15/12/0 7

6

Info (India) Ltd

Edge 30/10/08 -02/11/0

5

8 76

7

Tata

29/07/06

Consultancy

-05/08/0

Services Ltd

6

554.526

775-900

850

1001

+ 151

103

101-110

110

44.50

- 65.50

39.76374

485

485

1010

+ 525

40

110-125

125

3015

+ 2890

39.617

530

530

1865

+ 1335

Datamatic Tech 12/04/06 8

Ltd

-19/04/0 6

CMC Ltd

23/02/06

9

-28/02/0 6

10

Educomp

19/12/07

Solutions Ltd

-22/12/0 7

I-Flex Solutions 05/06/04 11

Ltd

-11/06/0 4

3500 3000 2500 2000 1500 1000 500 0

CHART SHOWING ISSUE PRICE & LTP

ESIL

HOV

TIT

TCS

IP

CMC

I-FS

LTP

INTERPRETATION: The above table reveals that the difference between LTP and issue price in case of Everonn Systems India Ltd , Take Solutions Ltd , Tech mahindra Ltd , Tulip IT Services Ltd , Info Edge (India) Ltd , Tata Consultancy Services Ltd , CMC Ltd , Educomp Solutions Ltd , IFlex Solutions is (+)612.50, (+)313.20 , (+)952.50 , (+)760 , (+)786.05 , (+)151 , (+)525 ,

77

(+)2890 , (+)1335 and HOV Services Ltd , Datamatic Tech Ltd is (-) 16.80 , (-)65.50 respectively. Based on LTP and Issue price differences we can conclude that the investor who invested in Educomp Solutions Ltd, I-Flex Solutions and Tech mahindra Ltd got more gain of Rs.2890, Rs.1335 and Rs.952.50 and the investor of HOV Services Ltd, Datamatic Tech Ltd got loss of Rs.16.80, Rs.65.50 respectively. At the end it can be concluded that the above all scrip’s are under priced except HOV Services Ltd , Datamatic Tech Ltd which is overpriced.

FINDINGS 

The IPO returns are more when comparing with nifty returns for the year 2006 to 2016.



ICICI, Rushil Decorand Onelife Capital has given highest benefit to the investor.



Sun TV Ltd has given highest negative benefit to the investor.



This study reveals IPO given 75% positive result and 25% negative result or benefit to investor.



Investors more crazy about the new issues or IPO.

78

SUGGESTIONS 

The returns of IPO’s are higher when compare to benchmark portfolio of Nifty. So an investor can invest in IPO’s for better returns.



There is a probability of listing a stock returns in positive is 75% and negative is 25%.



Investor need to develop a long term investment mindset rather than short term investment to get more returns or for achieving financial goals



A good investor should diversifies and reduces his risk by investing in different securities which contained different risks and returns in order to achieve his goals



An easy solution to investor is to invest in to mutual fund schemes through a systematic investment plan (sip) the mutual fund gives you a well diversified, professionally managed portfolio at low cost



Investor need to aware of new information, which reflects wider changes in share prices.

79

CONCLUSION 

It can be observed that it is safe for the general public to invest in different sectors of primary market in present than in the past because SEBI has been introduced and it controls the operations and working of new issue market



Primary market returns are very attractive in short period especially on the day of listing. But investors in IPO’s should take wise decision in choosing the best company.



From the overall study it can be concluded that the highest positive difference between Issue price and LTP is Educomp Solutions Ltd. scrip.



The conclusion from the study is that the highest negative difference between Issue price and LTP is Sun TV Ltd scrip.



The study reveals that the scrip’s of Textiles and Media industries have highest negative difference between LTP and Issue price.

80



The study shows that the scrip’s of Bank and Power or Energy industries have highest positive difference between LTP and Issue price.

BIBLIOGRAPHY BOOKS 1. Financial Management By I.M Pandey - 11 th Edition Published by Vikas Publishing in the year of 2005 2. Financial Management By Prasanna Chandra - 9 th Edition published by Mcgraw Higher Ed in the year of 2005 3. Total Quality Management By K. Shridhara Bai - 2nd Edition Published by Himalaya Publishing House in the year of 2009 4. Management Accounting by R.K.Sharma & S.KGuptha - 2nd Edition published by Kalyani Publishers in the year of 2015 Website Referred:

www.nseindia.com 81



www.capitalmarket.com



www.sebi.com



www.google.com



www.sharekhan.com

82