IL&FS Transportation Networks to raise Rs 700 cr through IPO

MUMBAI: IL&FS Transportation Networks (ITNL), engaged in building roads on BOT basis (Build-Operate- Transfer) today said it would raise Rs
700 crore though an IPO in Januray for repayment of loan and support its growth plans.

“We have filed the Draft Red Herring Prospectus on September 29 with the market regulator SEBI and hope to open the IPO in the next one to one and a half months,”ITNL Managing Director K Ramchand said.

IL&FS holds around 85 per cent stake in ITNL. Trinity Capital, the AIM listed infrastructure fund, which holds 2.5 per cent stake in ITNL, would exit from the company by diluting its entire stake in the IPO.

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The company is currently executing 12 projects and the order book now stands at Rs 13,000 crore. ITNL would require to infuse Rs 2,000 crore as equity to execute the projects over a period of three years.

The company has entered into a strategic partnership with Airports Authority of India to venture into airport sector and has also been selected for developing 4.9 km elevated metro rail link project in Gurgaon, Ramchand said.

ITNL has not decided on the price band or number of fresh shares to be issued but venture capital fund Bessemer India recently picked up 2.4 per cent stake in ITNL at Rs 242 a share, valuing the company at Rs 4,200 crore, he said.

John Reiling asked: Is a Political Campaign a Project?I say, a resounding “YES” to the question “Is a political campaign a project?”. Why? Well, a political campaign has a distinctive beginning and end, and in between there is a lot of planning, a great deal of execution, and a great deal of monitoring and controlling. And of course there is a closing – usually with lots of lessons learned. Let us look a bit at these elements and explore if a political campaign is a project.Project Management Processes in Political CampaignsWe live in an increasingly projectized world, and projects abound all around us. Let’s take a look at how the Project Management Process Groups as per the PMBOK map to a political campaign.1.Initiating – How many times have you heard candidates say that they are considering running for a particular position? This is part of the initiating process. This involves assessing chances of success, introspection regarding desire to do the campaign and to occupy the office, as well as, effects on personal life and career. Financial and organizational assets are also a major factor in the initiation process for a political campaign.2.Planning – Once it has been decided to undertake a political campaign, there is a great deal of true project planning. If you use professional project management terminology, a work breakdown schedule is clearly plays a part in managing a political campaign, as there are many tasks to be coordinated. There is a great deal of planning related to where to spend money, where to travel, what to say, and a myriad of other things, to achieve the goal of winning the campaign.3.Execution – Putting the plan into action is a key to a political campaign. Having the feet on the ground (volunteers and paid), in action, handing out leaflets, putting out posters, organizing others, making phone calls, setting up ads, setting up engagements – all of these are part of the project execution process for a political campaign.4.Monitoring and Controlling – Just a cursory look at what happens in national campaigns in the United States reveals that the process of monitoring and controlling is not only of critical importance, but has gotten much more sophisticated. One example is the visual graphing of audience reaction – on a word-by-word basis – to what candidates say. Here the candidates get favorable, unfavorable, or in between ratings from listeners on virtually every word or phrase they utter! Campaign rhetoric strategy and approaches is changing constantly to try to adapt to political opinion and developments on the campaign trail.5.Closing – The ultimate objective of the campaign is to win the election. Win or loose, the campaign will actually end at the conclusion of the election. Eventually, the campaign organization will need to be dissolved and the project will be “in the books”.Absolutely, Political Campaigns are Projects!Yes, simply thinking about a political campaign in terms of the PMBOK Project Management Processes makes it clearer than I ever thought before that a political campaign indeed is a project. In fact, I think it is a quintessential project and one that most of us experience simply by living on a day-to-day basis. Indeed, it is plausible to consider that a political campaign is even a series of projects, but that can be a subject for exploration at another time.LINCOLN

How’s this for irony: the extremist group behind the drive to recruit Lou Dobbs into a presidential run has yanked support for their one-time champion.

While bloggers debated whether Dobbs was too mean to be President, it came out that he was no longer mean enough for the extreme base he’s cultivated all these years. The Plum Line’s Greg Sargent writes:

Wow. Lou Dobbs, putative presidential candidate, just can’t catch a break.

Americans for Legal Immigration PAC (ALIPAC), one of the most extreme anti-immigrant groups out there, isn’t happy with Dobbs’ recent statement that creating a way for hard-working, undocumented people to regularize their status and become legal citizens might not be such a bad idea.  Not only that, but Dobbs made those comments on Telemundo, a network that broadcasts in Español (gasp!).

Understandably, the reaction from Dobbs’ extremist base was essentially, “OMG!! WTF!?!  Why Lou Why!”

Or, to be precise:

Who are you and what have you done with Lou Dobbs?

But extremists of the world should be rest assured– those of us who believe in treating everyone in America with equal dignity and solving the immigration crisis aren’t ready to claim Dobbs as one of our own.  You see, Lou Dobbs has a habit of fibbing a little. Whether it’s that immigrants are bringing a new wave of leprosy to America or that the President of the United States might be an undocumented immigrant from Kenya, Dobbs is ready and willing to push the envelope on journalistic and personal integrity.

So, my ALIPAC amigos, while Dobbs may sound a lot less like that grumpy old man whose rants and rails against immigrants were the cornerstone of your movement, I wouldn’t fret. Deep down inside, I’m sure he’s still got it in him.

But I’ve got a question for all of you extremists out there – why are we still paying attention to this guy?  After all, Lou Dobbs is now just a man who had a TV show once, fired from CNN, and two other networks have said that they won’t hire him.  Imagine what else you could do with all the money you were going to spend propping him up after his 15 minutes of fame dries up.

So, this Mexican-American, constitution-hugging, diversity-loving advocate invites the anti-immigrant extremists of the world to unite with me for a common purpose – let’s just ignore him.  Together we can help Lou Dobbs make a speedy transition to TV has-been status.  Let’s just get it over with.  Are you with me?

Cross-Posted at America’s Voice and Huffington Post.

We can only marvel at the disarray. Here we are, 17 years after the signing of the UN framework convention on climate change, two years after the decision in Bali to agree a new climate policy, one year after Barack Obama's election, and days out from the Copenhagen conference. Yet a real global strategy to avoid catastrophe remains elusive.

Yes, there is some progress. The Obama administration has now offered a 2020 and 2050 target on emissions reduction. China and India have stepped forward with commitments to slow the rise of emissions, and Mexico has tabled creative proposals for climate financing. New technologies offer the possibility of low-cost abatement of greenhouse gas emissions. Through the fog of policy speeches, international meetings and domestic debates, one can begin to see a path to a low-carbon economy.

The mayhem, however, is at least as great. Greenhouse gas concentrations in the atmosphere continue to mount, and will do so for years or decades to come. The Wall Street Journal, America's biggest circulation paper, rails each day against climate science. Backroom deals in the U.S. Congress with industrial lobbies threaten to eviscerate already watered-down proposals for limiting carbon emissions. A vote on the U.S. legislation has been postponed till next spring at the earliest, and a similar bill has just been defeated in Australia.

The truth is that even if we reach a political agreement, we're not yet on track to achieve practical, significant and sustained progress. Whether it's the U.S. debate that ricochets among activists, deniers and lobbyists, or the global debate — which veers between empty agreements and bitter finger-pointing — we've somehow turned a life-and-death challenge into a scrum. After Copenhagen, which probably will be concluded with a patch-up accord, it will be vital to change paths from the one we've been on essentially since before Kyoto in 1997.

We've debated for years about who should control emissions, by how much, when, and according to binding or non-binding commitments. Yet we can't settle these issues without also getting into the details about the deployment of low-carbon technologies, social behaviors and the quantitative realities of energy systems, transport technologies, food production, water scarcity, and population trends. We will continue to go around in circles until we are much more systematic in bringing scientific and engineering realities to the table. Our negotiations need much greater grounding in our true options and their costs.

These issues are tough and complex. Each nation's plausible choices depend on what technologies will be available and when. It's pretty vacuous to spend a couple of years debating whether the emissions target for 2020 should fall by 20%, 30%, or 40% compared with 1990, or perhaps 2005, without knowing how and with what extra costs and disruptions such targets might be achievable.

We will need, in short, a lot more brainstorming than negotiation, at least until the world's plausible options and trade-offs come into view. When can low-carbon power plants truly be brought online? When will electric vehicles be ready for mass sales? Will carbon capture really work and if so, where? Which countries and regions within them have the right kind of geology to store carbon underground, and who is going to monitor it? Dare we advocate a massive revival of the nuclear power industry, in a world fraught with nuclear proliferation? During two years of lead-up to Copenhagen, the official negotiations never gave a place for such questions to be posed, much less answered.

Here, then, is a proposal for the post-Copenhagen attempt to square up national and global policies so they add up to something more than more years of empty promises. Let's start by recognizing that most of the human-made crisis emerges from a few pivotal human activities: how and what we grow to eat; how we mobilize and distribute energy; how we transport ourselves and our freight; and how we build our buildings and lay out our cities. Each related sector requires its own intensive strategy — to identify the kind of research and development activities, public infrastructure investments and public policy to accompany a positive price on carbon emissions, through permits or taxes. Countries would have a lot to share — for instance in new technological options — and a lot that would distinguish them, according to geography, resource base, development level, and more.

We have spent a lot of time debating the merits of tradable permits versus taxation but have failed to understand that operational policies must go far beyond either instrument. The future of nuclear power, for instance, depends not so much on tradable permits as on issues of safety, reliability, and risks of proliferation or terrorism. Similarly emissions trading may eventually spur the use of carbon capture and sequestration, but only after several such plants have been tried on the public expense, to investigate the real engineering and costs of possible technologies, and the real feasibility of safe, long-term storage in geological sites. The scale-up of solar and wind power will depend on land use choices, the future of the power grid, and the ability to store power.

The costs of these approaches can only be judged after more thorough testing and analysis. Thus the side payments that rich countries will have to make to poor ones to adopt such technologies can't yet be determined precisely. When the EU or any country announces their contribution to the poorer countries in Copenhagen, the number will be pulled out of the hat, and probably far too low. It's past time to do any of the real financial homework.

Perhaps it's no surprise we are stuck. Climate change is the most complicated issue the world has faced. Complex — but not hopeless. It's time to put the expertise at the front table, not to supplant public debate and discussion but finally to inform it. Copenhagen should be the end of negotiation by politicians with technical issues kept in the shadows or ignored. Let's get scientists, engineers and ordinary citizens involved in a true discussion about our common future, and especially the tradeoffs, costs and choices. Together we can prove that our world is still capable of reaching long-range agreements when our children's lives and wellbeing hang in the balance.

This post is part of a continuing series of essays and interviews from Earth Institute experts on the prospects for a global climate-change treaty. Check with our blog State of the Planet daily for news and perspectives, and to make comments, as events unfold throughout the Copenhagen meetings.

This article originally appeared in The Guardian.

The United States has taken a turn toward isolationism likely unseen in the post War World II era, according to a new poll by the Pew Research Center and historic Gallup polling.

For the first time in more than four decades a plurality, 49 percent, believe the United States should “mind its own business internationally and let other countries get along the best they can on their own,” Pew reported Thursday; only 44 percent of Americans' disagree.

Therefore, half the nation has turned inward at the very moment President Obama has ordered 30,000 more troops into the Afghan war zone.

A separate look at Gallup polling reveals how unique the Pew result is in the post-war era. Isolationism was the prevailing strain of U.S. thought following World War I. But Americans' views were reshaped with the United States rise as the world's dominate superpower following the second world war. In 1954, Gallup found that a majority, 53 percent, considered themselves an “internationalist” while only 13 percent said they were an “isolationist.”

Domestic Realty Companies faces Challenges Post Dubai Debt fallout

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Domestic realty companies which are planning to tap the primary markets may not see a smooth sailing as the Dubai debt crisis is likely to undermine investor confidence in the sector.

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As many as nine realty companies, including Emmar MGF, have filed their draft red herring prospectus (DRHP) with the market regulator Sebi aiming to raise about Rs 15,000 crore.

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“It will not be surprising if some realty companies defer their share sale plan.

The Dubai debt crisis will not give any positive signal to investors in realty companies and IPOs of companies like Emmar MGF will face huge challenge,”

SMC Capitals‘ equity head Jagannadham Thunuguntla said.

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As per the DRHP filed with the Sebi, nine relators are planning to raise an estimated Rs 15,000 crore through the initial public offers (IPOs).

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This includes Emmar MGF’s Rs 4,000 crore issue, followed by Sahara Prime City (Rs 3,400 crore), Lodha Developers (Rs 2,700 crore), BPTP (Rs 2,000 crore), and Godrej Properties (Rs 500 crore).

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Last month, the Dubai government-owned investment company Dubai World asked for a six-month delay on repaying its $ 59 billion debts.

Dubai’s Financial Sandstorm, Tip of Iceberg?

Vijay M. Deshpande

The news of rescheduling of interest payments on US $ 26 billion debt of Dubai World & Nakheen group came as a shock to the still fledgling global economy. Just when green shoots were claimed to be visible and feel of recession getting over in few countries was being talked about, the news from the unexpected quarters rattled the world for a day or two. As the details came out and bail out plans from Abu Dhabi reassured the global investors, the dust settled down. But this gave a stark reminder to the economists and financial institutions of the vulnerability of such shock waves.

Has the world taken a lesson from the global melt down of 2008 starting with Lehman Brothers and its fall out? At least in some aspects it seems there is a scope for picking up threads and putting an early warning system for potential triggers for financial catastrophes waiting to happen. It is obvious that the UAE government, Dubai World & Nakheen all were in the knowledge of the potential defaults and need to restructure their portfolios. They were on the brink of collapse and must have been trying hard to avoid a repayment default. Obviously it was kept under the wraps to void any unwarranted impact of financial markets and credibility of the economic driver in the Middle East. Now the UAE government has distanced itself from the Dubai World crisis. This disassociation hints at disowning any potential crisis in other government run companies. This helped a “stable” rating by Moody’s for UAE & Abu Dhabi governments.  S&P have downgraded credit rating of Dubai World related government companies to junk status.

It is sad & unprecedented that when these companies borrowed the funds in billions of dollars, they were perceived to be government backed companies and now that they have been “disowned” by the government, they are reduced to junk status. What was the basis for granting huge loans without adequate security or sovereign guarantee? In a country with national debt of $ 80 billion, only two entities accounted for nearly 80% debt. How can the government distance itself from such huge commitments? If the loan repayments on debts of billions of dollars were not guaranteed by the government of UAE, then it is the case of over leveraging the mere government status by the banks ever eager to lend money. That is not prudent banking. This is reflection of “Value Management Deficiency Syndrome”. This leaves the companies’ rating reduced to junk status. Can this phenomenon extend to public sector or government run companies in other countries making borrowers suddenly vulnerable? Have Indian public sector companies adequately secured their debts?

There could be a number of situations around the world which are potential time bombs of financial defaults. The credit rating agencies are sitting on a pile of information on potential defaulters. There would be umpteen number of securities created on presumptive backings giving false derived sense of security to investors and have potential of triggering a financial disaster. Most of securities have ratings from reputed rating agencies which are privy to such detailed information on instruments of investments globally. Now Moody’s have moved debts of certain Dubai companies on “watch” rating. But this has been done only when the cat has come out of the bag. What is required is a classification of such potentially explosive instruments in a different category with a red flag from the beginning so that the investors have accurate perception of risk involved.

The global community can not afford a slide back on the gains of financial stimuli all over the world. Japan has just announced another massive stimuli of US $ 114 billion. Dubai episode has given a strong message of unlikely V recovery with increased possibility of W pattern of recovery. So it is necessary to brace for potential reversals on the way up.

To ward off any potential disasters in near future, all the rating agencies should put together a list of say 100 top potential large value ( billion dollar plus) instruments which could be closely monitored by international agencies like International Organization of Securities Commissions to reduce the risk of global failure. If there was no immediate clarification from UAE / Abu Dhabi governments or Dubai companies on plan B to make repayments and to reschedule their debts, the global markets would have been adversely affected. The interests of the global investors have to be protected by proactive measures and early warning systems with closer coordination between different countries.

In India, Securities & Exchange Commission of India (SEBI) and RBI should prepare such international list of potential triggers with or without India’s stakes if any. A band width of variations permitted should be fixed after detailed analysis for each variable impacting on the risk associated with each instrument. We should have our own early warning system so that our investors are protected and exposure to such risk is safeguarded. The warning signals should be discreetly used and shared with key stake holders so as not to upset the markets and yet play on safer side.

“Value Management Deficiency Syndrome” is again rearing its head in global financial markets and we better watch out for symptoms well in time for constructive response to save the situations.

Vijay M. Deshpande

Corporate Advisor,

Strategic Management Initiative

Pune

December 4, 2009

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Or visit www.strami.com

by News Center, December 1, 2009.

On December 1, the industry body Confederation of Indian Industry (CII) released a code of conduct to ensure better governance for the corporate sector. The code will be voluntary in nature but has some critical pointers to ensure better governance especially in the aftermath of the Satyam scam.
A draft of the code will be prepared by the Ministry of Corporate Affairs (MCA) by December end after taking other industry bodies into considerations. Former Cabinet Secretary and Chairman of the CII’s Corporate Governance Panel Naresh Chandra explain what India can expect from the new code of conduct.
Here is a verbatim transcript of an exclusive interview with Naresh Chandra on CNBC-TV18…

Q: Can you take us through the broad contours of the voluntary corporate governance code? How is this different from what we have seen in the past?
A: It is for voluntary adoption. The idea is to have a more systematic procedure for appointments to the board, a clear definition of the role and responsibilities of independent directors, the functioning of the audit committee and the relationships that the management, directors and the auditors should have with each other for the proper and most efficient management of capital in tune with the highest standards of corporate governance…(continue reading)

For all who think that the stock market is the place for earning an honest living, here’s an article. SEBI has accused RIL of rigging the stock price of RPL.

This doesn’t come as a shock, even though it’s from the highest echelon of this corporatocracy-cum-thugocracy called India

PNC Infratech files DRHP, to raise Rs 175 cr via IPO

Delhi based engineering and infrastructure company, PNC Infratech is planning to raise Rs 175 crore (excluding issue related expenses) via initial public offering (IPO).The company refiled a draft red herring prospectus (DRHP) with SEBI after its initial filing on January 17, 2008 .The company intends to utilize the issue proceeds for investment in capital equipment; working capital requirements and prepayment/repayment of loans & advances.

Kumar Urban Development to raise Rs 450cr via IPO

Pune-based real estate firm Kumar Urban Development Ltd plans to raise Rs 450 Cr through an initial public offering (IPO) to retire high cost debts and for new projects. According to the Chairman and Managing Director Lalit Kumar Jain about Rs 200 Cr. would be used to retire high cost debt, while the rest would be for new development and existing projects.

Den Networks to list on Nov 24, issue price at Rs 195/sh

Den Networks, a cable distribution entity with a pan-Indian footprint, will list its equity shares on the exchanges on November 24, 2009 (Tuesday). It has fixed its issue price at Rs 195 per share. The company had entered the capital market on October 28, 2009, with an initial public offering (IPO) of up to 2 crore equity shares and the price band was at Rs 195-205/share. The IPO Proceeds will partly fund the company’s plans to invest in the development of cable television infrastructure and services; the development of cable broadband infrastructure and services; and acquisition of content and broadcasting rights amongst others.

Companies may have to list within 7 days of IPO’s

The Securities and Exchange Board of India (SEBI) plans to reduce the time taken to process initial public offers (IPO) applications to seven days from the existing 20 days. Further, the capital market regulator intends to extend the Application Supported by Blocked Amount (ASBA) system to non-retail investor categories, to reduce the overall time for the IPO process. In ASBA, an IPO applicant’s money does not leave his bank account till shares are allotted to him. At present, this facility is available only to retail investors.

Ashoka Buildcon plans IPO to raise Rs 225-cr

Ashoka Buildcon Ltd, the flagship company of the Ashoka Group, which operates many roads and bridges in India on build, operate and transfer basis (BOT), plans to raise Rs 225 crore through an Initial Public Offer (IPO). The amount raised from the IPO will be used to repay debt and to meet working capital requirements. The company has so far built a road network totaling approximately 2,523 kilometers of lanes in the country. The company also has 13 ready-mix concrete plants which have a capacity of 590 cubic meters per hour.

SEBI Allows Auctions for QIBs in FPOs

Market regulator, SEBI has introduced a significant change in the way institutional bidders invest in follow-on public offers by allowing allotments through auctions.

The Securities and Exchange Board of India (Sebi) has amended the Issue of Capital and Disclosure Requirements Regulations (ICDR) to allow pure auctions for qualified institutional investors (QIBs) in follow-on public offerings to begin with.

The method may be later extended to initial public offerings.

Under the new method, bidders will be free to bid at any price above the floor price.

At present, allotments are made at the floor price.

Retail investors, however , will be allotted shares at the floor price.

The board also decided that the issuer is free to place a cap either in terms of the number of shares or percentage to issued capital of the company so that a single bidder does not garner all the shares on offer, ensuring a wider distribution of shareholding.

Jagannadham Thunuguntla, Equity Head,  SMC Capitals, said this means an institutional investor can continue to bid above the floor price and the QIB allotment will be made to the highest bidder.

“The intent is to enable companies to mop up more funds. Earlier, even when there were huge subscriptions and huge demand for an issue, the company could not get more money. This becomes more relevant in the context of the recently announced divestment plans and FPOs by the government for public sector units,” he said.

Auction for QIBs is welcome as it would allow risk-taking entities and not just the promoters to be a part of the price discovery process, other analyst said.

A SEBI release issued after the board meeting also said the minimum market capitalisation required by listed firms to sell shares in follow-on offerings has been halved to Rs.5,000 crores  from Rs 10,000 crore.

Moreover, the market regulator has also made it a mandatory that all listed companies would have to furnish audited or un-audited balance sheets on a half-yearly basis within 45 days from the end of the quarter instead of the current yearly basis.

This would imply that Indian companies will be required to disclose balance sheet items.

Shareholders would be able to access the statement of assets and liabilities of the company and its solvency position on a half-yearly basis.

Shareholders would receive immense help in making informed investment decisions now and would be in better position to assess the financial health of the companies, with the implementation of this SEBI regulation of mandating frequent disclosure of the asset-liability position of companies by companies.

Mumbai: The Securities and Exchange Board of India (Sebi) wants companies going public to list their shares within seven days after closing the initial public offer (IPO) subscription process, a move that could lower the risks and costs associated with a longer gestation period of about 20 days currently in place. “The listing time should come down to seven days,” C B Bhave, chairman, Sebi, said. The top regulator, who was speaking at an industry conference, said that several changes take place during the time an IPO closes and shares are finally listed, and due to this investors get exposed to potential risks for a longer period. The regulator was looking to cut down the interim period between an IPO and the listing to seven days, from around 20 days currently, he added. A shorter gestation period would unlock money invested in IPOs faster, so that the money can be productively employed. The Sebi chief also sought to lower the costs and risks associated with mutual fund investments so that the investors get benefited. “We need to look at reducing the cost of mutual funds and risk for investors,” Bhave said. Over the past few months, a number of initiatives have been taken by Sebi towards bolstering the IPO and mutual fund segments. “We believe the primary issuance process in India is not as efficient as the secondary market,” the Sebi chief said. The initiatives taken by Sebi in the past few months include opening up gates for longer trading hours for stock exchanges by allowing the bourses to extend market hours by upto twoand-a-half hours between 9am and 5pm. The current market hours stand from 9.55am to 3.30pm. In September, Sebi had notified the Issue of Capital and Disclosure Requirement (ICDR) norms which would replace the Disclosure and Investor Protection (DIP) Guidelines, 1992. Under the new norms, allotment period of fixed price public issue has been reduced to 15 days from 30 days. Under the ICDR Guidelines, book building by a company going for IPO has to be done only through an issue size of 100%.

SEBI vide its Order No. WTM/PS/IVD/ID-2/17/NOV/09 dated November 17, 2009 has inter-alia restrained the entities viz. Shri Manu N Sonate, Shri P B Chandrashekhar and Shri S Thirunavukarasu from buying, selling or dealing in the securities market in any manner whatsoever or accessing the securities market, directly or indirectly, for a period of six months.

SEBI's Auction Move on FPOs Impresses Marketmen

SEBI’s has planned to remove the cap price for the follow-on public offerings and this idea seems to be impressing market players.

SEBI has said that  it would introduce “pure auction as an additional book building mechanism for institutional investors for follow-on public offerings (FPOs).”

Analysts and market men feel that this is going to generate loads of excitement and fun for market players, as those investors who are convinced about a particular issue will invest at a higher price to seek allotment and those not-so-convinced can invest at a lower price.

Merchant bankers said it will be interesting to see how this will work as there are a few PSU FPOs likely to hit the market soon.

PSUs likely to come out with FPOs include NMDC, MMTC, Neyveli Lignite Corporation, Rashtriya Chemicals and Fertilizers, National Fertilizers, Coal India and Engineers India

As of now, the IPO price is determined through a price band (which has a lower and upper level).

An auction or floor price is the minimum price at which bids can be made for an IPO.

Meanwhile, merchant bankers welcomed SEBI’s announcement on Monday that exchanges could have a separate platform for Small and Medium Enterprises (SME).

As the primary market size grows, the smaller companies are getting lost amid the big ticket IPOs.
Having such exclusive guidelines for SMEs is definitely a good idea, said merchant bankers.

SME platform SEBI on the lines of the AIM on the London Stock Exchange will be better.

Those SMEs with a paid-up capital of between Rs 10 crore and Rs 25 crore have an option of either being on the SME exchange or the main bourses.

According to the new guidelines, SMEs should have a maximum paid up capital of Rs 25 crore for listing.

For an investor the minimum application size in an SME IPO will now be Rs 1 lakh.

Though such a limit might seem like it will prevent the retail investor of small means from investing in SME IPOs, merchant bankers said that it is a good move.

“This will allow retail investors to take more informed decisions. It will protect these investors as the chances of manipulation with respect to smaller companies are much higher. Those investors with the right amount of knowledge and liquidity will be the ones investing in these IPOs,” said Mr Jagannadham Thunuguntla, Head of Equity at SMC Capital.

Having the merchant bankers underwriting the IPO will make sure that they price the issue properly and also provide proper valuations.

Merchant bankers are also happy that for an SME issue the minimum number of investors is only 50 for a particular issue.

“For an issue, as of now, there has to be a minimum of 1,000 investors,” said Mr Thunuguntla.

SME exchanges can be a separate entity: Sebi
Market regulator Sebi on Tuesday said proposed exchanges for SMEs need not necessarily be a part of existing exchanges but can also be opened separately. With a view to encourage small and medium firms to come out with public issues, Sebi had on Monday allowed existing stock exchanges to set up a separate trading platform and relaxed the criteria for their listings. AGENCIES

·Astec Lifesciences IPO subscribed fully

The Astec Lifesciences IPO closed for subscription on 4th November. It received a mild response on the last day and was subscribed 1.56 times. The non-institutional investors’ portion got subscribed 3 times; retail segment was subscribed 2.36 times and QIB 0.61 times. The issue was of 75,00,000 equity shares of Rs 10 each for cash at a price of Rs 77-82 per equity share, aggregating Rs 57.75-61.50 crore. The company is engaged in the manufacture and sale of intermediates, active ingredients and formulations in the off patent–proprietary category with a focus on agrochemical and pharmaceutical sector.

·Rural Electrification Corp to divest 20% via FPO

P Uma Shankar, CMD of REC (Rural Electrification Corporation) said the company would be filing a draft red herring prospectus (DRHP) with SEBI by mid-December 2009. The company will divest 20% via FPO (follow-on-public offering) including 15% fresh equity and 5% government stake dilution. The FPO of 17.17 crore shares will hit the market by February 2010 and the company will reserve 50% for QIBs, 15% for HNIs and 35% for retail investors.

·Intrasoft Technologies files IPO papers with SEBI

Intrasoft Technologies, owner of 123greetings.com has filed a draft red herring prospectus (DRHP) with the Securities & Exchange Board of India (SEBI) for a public issue of 37,00,000 equity shares of Rs 10 each. The issue will constitute 25.12% of the post issue paid up capital of the company. The company intends to utilize the issue proceeds for branding & promotion; purchasing a corporate office at Kolkata and investment in technology infrastructure. Out of proceeds, it is planning to use over Rs 35 crore for above three purposes. For the period ended March 31, 2009, the company reported total income of Rs 10.52 crore and profit after tax of Rs 5.2 crore.

·GPL eyes IPO by end-Dec, to strongly focus on affordable housing

Godrej group company, Godrej Properties Limited (GPL), plans to hit the market with its IPO by end-December. A DRHP has been filed with SEBI for the purpose. The company proposes to issue fresh capital to the tune of around 13 per cent of its present capital. The proceeds of the issue will be used to fuel Godrej Properties’ expansion. The company’s thrust would be on affordable housing which will be its main growth-driver and in the future the revenue-mix of the company would be 80 per cent from residential housing (primarily affordable) and the balance from commercial realty.

·Coal India engages fund managers for IPO

State-owned Coal India Ltd has engaged large fund managers for its coming IPO which is likely to hit the market within a year. CIL, which had received Navratna status last year, was scheduled to get listed in the bourses within a three year period. Apart from this, it also planned to offer stock options to its over four lakh employees besides considering a proposal to issue shares to its former employees. Turning to coal imports, he said that coal import was increasing by 20 per cent annually. Import of coal was necessary since CIL could not meet the entire demand supply gap of coal.

·PSU divestment back on govt agenda

Home Minister P Chidambaram announced on 5th November that all profitable PSU’s are to give 10% equity to the public sector. The

government has made it mandatory for all listed profitable PSUs to disinvest 10 % to public sector. All unlisted PSUs which do not have any accumulated losses and positive networth and have made profits would be listed. Hitherto, the policy was to put the sale proceeds in a National Investment Fund (NIF) and use only its dividends for social security schemes. But given the tight fiscal situation, a special dispensation is being made for the three-year period 2009-12. The corpus comprising deposits from April 2009 till March 2012 will now be available in full for investment as capital expenditure in specific social sector schemes determined by Planning Commission and Department of Expenditure.

 The Insurance Regulatory and Development Authority (IRDA) is in discussion with the Securities and Exchange Board of India (SEBI) regarding guidelines to be followed for the initial public offer (IPO) by an insurance company, IRDA Chairman J. Hari Narayan said here on Friday.

Speaking to media persons on the sidelines of a graduation ceremony of the second batch of the executive programme in insurance and risk management, Mr. Hai Narayan said one company had shown interest in the IPO.

Though SEBI is the market regulator, the insurance industry had its own peculiarities. Therefore, the IRDA and SEBI were engaged in discussion to evolve guidelines, he said.

On the recommendations of the Swarup Committee to reduce commission to insurance agents, Mr. Hari Narayan felt that its proposals were not well-founded. He said the health of the insurance industry was satisfactory.

Giving a positive outlook for the general insurance industry and ICICI Prudential Life Insurance Company, its Managing Director and CEO V. Vaidyanathan said that with the world coming out of recession, sentiment improving and India’s growth trajectory again in the path of 8 to 9 per cent from 6.5 per cent, the company’s second half of the current fiscal might see a growth of 45 per cent over that of the first half.

Earlier, the IRDA Chairman gave away certificates to the students who graduated from the programme. Mr. Hari Narayan said transparency, accuracy and access to information were essential to address the concerns of customers/investors and prepare them to detect ‘bubble’ phenomenon.

The previous bubble was due to artificial hiking of property prices. At present, with the dollar interest rate frozen to zero and the value of the dollar dropping in the U.S. market, questions were being raised whether this would lead to a new bubble. “We should be sensitive to this,” he said.

Institute of Insurance and Risk Management (IIRM) Managing Director Vepa Kamesam said the curriculum was developed by both ICICI Prudential Life and the institute.

IFAs tying up with Brokerage Houses to turn Sub-Broker

Independent financial advisors (IFAs) are tying up with large distributors and brokerage houses to act as sub-brokers, to keep themselves afloat after the entry load ban on mutual funds.

Earlier, IFAs used to make most of their earnings by selling fund schemes.

A sub-broker is a person who acts on behalf of a stock-broker as an agent, or otherwise for assisting the investors in buying, selling or dealing in financial products through stock-brokers.

Many independent financial advisors have approached the company asking it to create a platform through which they can offer advisory services to their clients.

There is a plan by companies also to launch such a platform in coming weeks.

Broking industry representatives said that IFAs have been left with no option but to tie up with large brokerage houses after they have been denied of their basic source of income (2.25 per cent entry fee on mutual fund investment).

Brokerage Houses are set to provide them with basic infrastructure and resources to provide investors advisory services.

IFAs are now required to charge a fee for providing their advisory services, instead of a commission on each transaction that they received earlier.

The Securities and Exchange Board of India (Sebi) had asked mutual fund distributors not to charge any entry load with effect from August 1. It had instead asked them to charge as per the service provided.

It means that a distributor cannot charge any fee for merely selling a product but can charge only if they offer advisory services to investors.

The new norm has queered the pitch for thousands of independent financial advisors, who used to make their earnings by merely selling mutual fund products.

Jagannadham Thunuguntla, equity head of Delhi-based brokerage house SMC Capital, said that the entry load ban has come as blessing in disguise for large brokerage and distribution houses.

“Most of the mutual fund business would now be routed through big distribution houses as IFAs struggle to provide the necessary advisory service on their own.

The sub-broker model is one of the few viable options available with the small financial advisors,” he added.

When asked if IFAs approached SMC showing their interest in becoming sub-brokers, Thunuguntla said that though inquiries were not so aggressive, they expect more IFAs to come seeking their help as the time passes.

 The Sebi is convening a meeting on November 9 to consider relaxing listing standards for small and medium enterprises. “Based on feedback from market participants we are considering relaxation of certain standards,” Sebi wholetime member M S Sahoo said in New Delhi. AGENCIES

Downward Movement Hits Indian Equities Markets

Indian equities markets entered into a consolidation zone with analysts terming the downward movement as long expected.

A benchmark index fell 5.44 percent from its last weekly close and ended trade below the 16,000-mark.

The 30-share sensitive index (Sensex) ended 914.53 points, or 5.44 percent lower, at 15,896.28 points at the weekly close Friday, as opposed to the previous week’s close at 16,810.81 points.

The broader S&P CNX Nifty of the National Stock Exchange (NSE), too slipped, closing at 4,711.7 points, down 5.7 percent from its last weekly close.

However, companies with large-to-medium market capitalization saw greater selling with the BSE midcap index ending 7.36 percent lower and the BSE smallcap index losing 8.01 percent over the last week.

“This consolidation was expected anyways as the valuations were not commensurate with the earnings of corporates. To an extent a correction in valuations was warranted,” said Jagannadham Thunuguntla, equities head of brokerage and capital markets consultancy SMC Capital.

The markets started on a cautious note Monday ahead of the Reserve Bank of India’s mid-year policy review Tuesday.

The Sensex ended a volatile day at 16,740.50 points — 70.31 points or 0.42 percent lower than Friday’s close.

The Nifty followed a similar trajectory and ended in negative at 4,970.9 points, down 0.52 percent.

Both benchmark indices nosedived Tuesday as the RBI indicated in its policy review that it would start tightening the monetary policy and look at exiting the stimulus measures.

Data with markets watchdog Securities and Exchange Board of India (SEBI) showed that foreign funds were net sellers during the week, having sold scrips worth $12.8 million.

The top gainers this week on the Sensex were

Tata Motors (up 7.2 percent),
Ranbaxy Labs (up 4.8 percent),
Wipro (up 2.9 percent),
Grasim (up 1.6 percent) and
Hindustan Unilever (up 1 percent).

The top losers were :

DLF (down 18.5 percent),
Reliance Capital (down 14.5 percent),
Reliance Infrastructure (down 14.2 percent),
Hindalco (down 13.9 percent) and
Reliance Power (down 12.9 percent).

“Broadly speaking only about one percent of the quarterly results show a sound top line growth. Profits might have increased, but that is not because of increase in core operations – cost cutting and other income have contributed towards it,” said Thunuguntla.

SEBI May Reduce the Trading Holidays at Bourses

Market regulator SEBI is looking into a proposal by several investors to allow fewer trading holidays on stock exchanges in line with the global practice.

“SEBI is actively considering the proposal to reduce the trading holidays at bourses and is likely to take a decision on the matter soon,” an official close to the development said.

According to analysts, this move by Securities and Exchange Board of India (SEBI) will increase the trading volume in domestic bourses and would also attract foreign investors.

SMC Capitals Equity Head Jagannadham Thunuguntla said,

“From the global standards, India has more number of trading holidays. The reducing of holidays would increase the participation of investors, including the foreign ones, and would increase the trading volume,” he said.

For 2009, the Bombay Stock Exchange has 19 listed trading holidays and these exclude the weekly Saturday and Sunday off.

In developed countries, the trading holiday at leading bourses are far less.

For 2009, there are only nine trading holidays on the New York Stock Exchange.

In European markets, there are just four holidays this year excluding Saturdays and Sundays.

Recently, Sebi opened gates for longer trading hours for stock exchanges, allowing the bourses to extend market hours by around two-and-a-half hours between 9 am and 5 pm.

The market regulator had further asked the bourses to reset their timings provided they have in place risk management system and infrastructure commensurate to the trading hours.

by Apurv Gupta & M. Padmakshan, for The Economic Times, Ocotber 30, 2009.

MUMBAI: In the past three months, the income-tax department has conducted raids and searches at over a dozen listed companies. In some cases, media reports quoting unnamed I-T officials have referred to recovery of unaccounted income or assets, raising questions about compliance of corporate governance norms by some of these publicly-traded entities.

While some companies have disputed the claims of I-T officials that undisclosed money had been found, others have chosen not to comment. Firms which have come under the I-T department’s scanner include real estate major HDIL, shipping major ABG Shipyard, Supreme Infrastructure, Temptation Foods, Bombay Rayon, J Kumar Infra, Radhe Developers and the IPO-bound Polycab Wires, according to media reports and stock exchange filings.

According to people closely connected with the developments, several other Mumbai and Ahmedabad based infrastructure, logistics and textile companies have also been searched in recent months by the I-T department…(continue reading)

The Market is likely to remain volatile this week as a host of triggers are set to guide investor sentiments. These factors are :

1. Expiry of the October series of derivatives contracts,

2. September quarter results of some key companies such as Reliance Industries and

3. the RBI money policy review.

Global cues may also induce some choppiness in the market.

Noted Market analyst, Jagannadham Thunuguntla, head of equities at SMC Capital quoted that;

“The market is facing heavy pressure.  There a wide gap between fundamentals and stock valuations.  The second quarter results have come up less than what most investors had anticipated”.

He also added “though the average profits of companies, which have so far reported second quarter results, have grown 30-40 per cent on cost-cutting measures, growth in net sales has been sluggish“.

Also Thunuguntla said that “we have huge liquidity in the market thanks to the 100 per cent rally and this has helped the market sustain at this level till now. No doubt, fundamentals are catching up with valuations slowly”.

Thunuguntla said the market was in a consolidation phase.

“It may remain volatile this week ahead of the expiry of near-month futures and options contracts and the RBI policy review.”

On the global front, the US will disclose its third quarter GDP figures on Thursday.

Meanwhile, the rate of inflation jumped to 1.21 per cent for the week ended October 10 against 0.92 per cent a week ago.

The BSE Sensex slipped 512.01 points, or 2.96 per cent, last week to close at 16,810.81.01.

The Nifty index on the NSE dipped 145.10 points, or 2.82 per cent, to end the week at 4,997.05.

According to other observers, Nifty has a support at 4,900.
Market sentiment may get hurt if this level is breached.

Thunuguntla also said investors would keenly follow the quarterly results of Reliance Industries as well as global cues.

“Amid the fight between the Ambani brothers, investors will watch the RIL results keenly.  Global cues will also be followed after a few bad economic numbers from the US last week,” he said.

Foreign institutional investors (FIIs) on Friday remained net sellers, offloading equities worth Rs 295.70 crore, according to figures available at the website of market regulator Sebi.

Sebi Directs Intermediaries/Stock Markets on the matter of Terror Funding

Market regulator SEBI has directed all stock exchanges and other securities intermediaries to keep a strict watch on UN-listed terror funding entities, including the famous underworld don Dawood Ibrahim.

The Securities and Exchange Board of India has asked the securities intermediaries to inform the Union home ministry within 24 hours if they find any client, whose particulars match with those of the entries listed by the United Nations.

SEBI has issued a statement that in case of the issue of particulars of any of customers matching the particulars of the listed individuals or entities, stock exchanges, depositories and intermediaries are instructed to inform full particulars to Ministry of Home Affairs, within 24 hours.

SEBI has also asked the securities intermediaries to prevent designated persons from conducting financial transactions in aforesaid events, under intimation to the Home Ministry.

According to laid down rules, on receipt of particulars, the home ministry would initiate a verification to be conducted by the state police and the central agencies.

The verification would be completed within a week.

In Past, Concerns were raised by the National Security Advisors and Home ministry about the prospect of Terrorists using the stock markets to bring money into India to fund their activities.

Trading Hours of Bourses Extended by SEBI

Market regulator SEBI on Friday extended the trading hours of bourses by up to two-and-a-half hours from 9 am to 5 pm, a move that may help in bringing back the trade that was seen shifting to Singapore Stock Exchange.

It has been decided to permit the stock exchanges to set their trading hours (in the cash and derivatives segments) subject to the condition that the trading hours are between 9 am and 5 pm,” SEBI said in a statement.

The new trading hours would now help integrate the Indian bourses with Singapore and other Asian markets in the morning hours, and the European market in the evening hours, said SMC Capitals Equity Head Jagannadham Thunuguntla.

“Some trade that had shifted to SGX Nifty (Indian Nifty traded in Singapore Stock Exchange) can now be brought back to the country,” he said.

The current market hours stand from 9.55 am to 3.30 pm.

In Singapore, trading sessions are held between 9 am to 12.30 pm and 2 pm to 5 pm (local time).

In addition, there is pre-open routine from 8.30 am to 9 am and pre-close routine from 5 pm to 5.06 pm.

Singapore is around two and a half hours ahead of India.

This would provide an opportunity to NSE to try and align their timings to that of a few Asian markets like the SGX since this exchange permits trading in Nifty.

With market regulator SEBI now allowing longer trading hours, it is now up to the bourses to decide on the duration and when to reset their trade timings.

Thunuguntla said, “All stock exchanges are likely to go for the maximum possible trading hours as they have been demanding it to be extended to 9 am to 9 pm.”

He said there is a serious competition ongoing between Bombay Stock Exchange and National Stock Exchange, and then there is the new competitor MCX-SX.

“I will be surprised if any bourse not utilises the full timing,” he added.