CHAPTER -1

ABSTRACT
REVIEW -1
IPOs are particularly suitable investments for anyone who is looking for a large amount of
growth in short period of time for their capital. Before utilizing an IPO investment though,
considers performing an IPO valuation to ensure we are buying an investment that is worth weir
capital.
An evaluation is one of the most important steps we can possibly take when we
are considering an investment in the open marketplace. During this phase of the investment
process, look into a variety of different factors that can affect the financial situation of the IPO
we are interested in, this is an important step in how to IPO.
As we are scouring financial statements representing the company we are
investing in, should first analyze the value of the current assets of the company. Next, we should
analyze the value of the debt the company owes. Once we compare these two factors, we will
understand where the company currently stands financially speaking.
The best investments available are investments consisting of companies that
have far less debt than they do assets. If we can compare the assets of the company to its debt
and find that the current sale price of the company is less than that difference of these two sums,
we can be certain that we are evaluating a very valuable investment.
Of course, we should look into many other factors that can affect weir investments
too. The amount of income the company is receiving on an ongoing basis is one of the most
important factors we can consider. We should also analyze the value of the expenses the
company is currently facing due to operating costs. As we compare the amount of income the
company is pulling in compared to the amount of expenses it is paying out, we will understand

its current financial situation. As we probably already know, a companys income should far
exceed the total expenses the company is experiencing each month and each year.
Another important factor we should take into consideration as we are looking at an IPO
investment is the type of products and services the company offers. If, once we analyze the
companys current product presentations, we will understand the type of company we are looking
at. If we would buy the products the company is selling on our own, we can be certain that we
are analyzing a high quality company.
Even though the financial records of a company are often the most important pieces of
data we can analyze when we are looking at the company as an investment, look into other
factors such as who the owners are of the company, the people releasing the IPO, the reasons
why they are releasing the IPO to the public, and other factors that may affect the value of weir
investment in the future.
As long as we take all these precautions into consideration as we are considering
investing into an IPO market, we will be investing into solid investments. As we perform IPO
valuation, dig as deep as we possibly can into the financial records in order to better understand
the many different aspects of the company. As long as we discover many different instances that
state the company is worth more than it is currently selling for, we are purchasing a very
valuable company through the IPO offering we are looking at.
ABSTRACT
REVIEW -2
Many companies try to raise capital for growth through a process called the Initial Public Offer
or IPO. Investing in these IPOs can give us huge profits in short time frame.They are great
wealth creator tools. At the same time they can wipe out wear investments equally quickly. So
the IPOs are high risk, high return avenues of investment. There are always items to consider
when investing in an IPO that can make them less risky.
Why do Companies launch IPOs?
In the growth trajectory of any company there comes a time when it needs to make a huge
investment to grow to the next level. Whenever a company hits this point, it needs to look at two
options: raise debt through bonds where it will get the investment money, but it pays interest and
it needs to repay the debt eventually. Alternatively, go for an IPO where it decides to share its

profits in the coming years. Understanding this is very important when investing in IPOs; after
all we will now become a part of its profits and losses.
Understanding the Company Performance
We must first look at the company value in absolute terms and its value as per the IPO issue
rates. The absolute company value is the difference between its asset value and debt. Typically,
the asset value must be significantly higher than the debt to indicate that it is financially healthy.
Besides, the IPO value must be less than its absolute value for us to make decent listing gains.
Apart from the company value, its annual performance too is a great indicator.
Some relatively new companies may not have a huge absolute value; however they have good
growth numbers in the past and show great promise for strong future growth too. In such cases,
we can still invest with a long term view and its value is bound to increase.
On the side of caution, the thing that we need to look at is the legal problems that
the company currently faces. If there are too many legal issues with it, it could be a very risky
IPO to enter in. We are better off avoiding it till its legalities clear off and we can enter the stock
in secondary market.
Finally, we need to look at the market position of the company. A market leader or
a big player is a relatively safer bet than someone at the bottom of the chain. It is not to say that
unknown companies will not grow or make profit, but they are always higher risk investments. If
were aim is to cut down risks, we should avoid such companies.
Apart from these, we could also have current news, economic situation, etc that
could affect the stock listing and were potential gains. It is best to look at these on a case by case
basis that follow a general rule.
In summary, if we are looking to reduce risk in IPOs, we must look at items to
consider when investing in an IPO. Simple checks that can protect weir money.

INTRODUCTION
1.1. INTRODUCTION:
Finance is the science of funds management. The general areas of finance are
business finance, personal finance, and public finance. Finance includes saving money and often
includes lending money. The field of finance deals with the concepts of time, money, risk and
how they are interrelated. It also deals with how money is spent and budgeted. One facet of
finance is through individuals and business organizations, which deposit money in a bank. The
bank then lends the money out to other individuals or corporations for consumption or
investment and charges interest on the loans.
The general areas of finance are
1] Business finance which is used by companies
2] Personal finance which is used by individuals
3] Public finance which is used by governments.
WHAT IS FINANCIAL MARKET:
Financial Markets are place where financial instruments are made to purchase or
sell indirectly through intermediaries. This may be a physical location (like the NYSE) or an
electronic system (like NASDAQ). Much trading of stocks takes place on an exchange; still,
corporate actions are outside an exchange, while any two companies or people, for whatever
reason, may agree to sell stock from the one to the other without using an exchange.
Trading of currencies and bonds is largely on a bilateral basis, although some bonds trade on a
stock exchange, and people are building electronic systems for these as well, similar to stock
exchanges. Financial markets can be domestic or they can be international.

Types of financial markets:

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

1.2 INTRODUCTION TO IPO:

Definition:
Initial public offering (IPO), also referred to simply as a "public offering" or
"flotation," is when a company issues common stock or shares to the public for the first time.
They are often issued by smaller, younger companies seeking capital to expand, but can also be
done by large privately-owned companies looking to become publicly traded.In an IPO the issuer
may obtain the assistance of an underwriting firm, which helps it determine what type of security
to issue (common or preferred), best offering price and time to bring it to market.
An IPO can be a risky investment. For the individual investor, it is tough to predict what the
stock or shares will do on its initial day of trading and in the near future since there is often little
historical data with which to analyze the company. Also, most IPOs are of companies going
through a transitory growth period, and they are therefore subject to additional uncertainty
regarding their future value. However, in order to make money, calculated risks need to be taken.

Reasons for listing:

When a company lists its shares on a public exchange, it will almost invariably
look to issue additional new shares in order to raise extra capital at the same time. The money
paid by investors for the newly-issued shares goes directly to the company in contrast to a later
trade of shares on the exchange, where the money passes between investors. An IPO, therefore,
allows a company to tap a wide pool of stock market investors to provide it with large volumes
of capital for future growth. The company is never required to repay the capital, but instead the
new shareholders have a right to future profits distributed by the company and the right to a
capital distribution in case of dissolution.
The existing shareholders will see their shareholdings diluted as a proportion of the company's
shares. However, they hope that the capital investment will make their shareholdings more
valuable in absolute terms.
In addition, once a company is listed, it will be able to issue further shares via a rights issue,
thereby again providing itself with capital for expansion without incurring any debt. This regular
ability to raise large amounts of capital from the general market, rather than having to seek and
negotiate with individual investors, is a key incentive for many companies seeking to list.

Introduction of IPO in context of Indian market :

The Indian primary market has come a long way particularly in the last decade after deregulation
of the Indian economy in 1991-92. Both the primary and secondary markets have had their fair
share of reforms, structural cum policy changes time to time. The most commendable being the
dismantling of the Controller of Capital Issues (CCI) and introduction of the free pricing
mechanism. This changed the whole facet of Initial Public.
Around 80 IPOs made its entry into stock market in this year, which
was never in the history of Indian capital market. Maximum number of issues received enormous
response from the investors. Coal India IPO which is raising around 15,000 crores is making its
entry into stock market in this October, it is considered to be the largest IPO ever made in the
Indian history. Many experts are viewing that its going to change the Indian economic scenario.

Industries raises finance from capital markets through various instruments like
Equity finance
Debt finance
IPOS comes under equity finance and debt finance. During the last decade, more
than a third of the increase in net assets of large firms in Chile, South Korea, Malaysia, Mexico,
Taiwan and Thailand has been secured through equity issuance. This pattern contrasts sharply
with that of the industrial countries, in which equity financing during the same period has
accounted for less than 5 percent of the growth in net assets.

Future of the capital market:

In the liberalized economic environment, the capital market is all set to play a highly critical role
in the process of economic development. The Indian capital market has to arrange funds to meet
the financial needs of both domestic and foreign resources. What is more critical is that the
changed environment is characterized by cutthroat competition. Ability of enterprises to mobilize
funds at cheap cost will determine their competitiveness.

Changes in the capital market:

Four sets of changes in the Indian capital market can be identified which set the market of the
twenty-first century different from what obtained earlier. These can be categorized as follows:
1] Introduction of new institutions
2] Introduction of new instruments
3] Changes in administrative control and regulatory framework
4] Some recent initiatives

Introduction of New Institutions :

The composition of the Indian capital market has undergone a total change. Till very recent
times, Bombay Stock Exchange dominated the capital market in India. The daily turnover on the
Bombay Stock Exchange (BSE) alone exceeded the total turnover of all other exchanges put
together. The BSE with the monopolistic claw like control over the market was posing a severe
constraint on the spread and diversification of the capital market culture. It was content with
practicing non-transparent time and resource consuming trading practices that failed to evoke
confidence among new investors, both in primary and secondary market. Its trading practices
were becoming somewhat totally out of tune with the ongoing communication revolution in
India and worldwide. In response to this, the most important are the OTCEI and NSE. What is
more important is that the NSE has worked as a catalyst of change for other exchanges, which
are introducing on-line trading systems.
Along with NSE, mutual funds have also emerged in the country. Different types of mutual funds
catering to the needs of different types of investors have been set up in the country. The
increasing growth of the capital market has witnessed the mergence of foreign institutional
investors (FIIs) as significant players. Their sale and purchase decisions are already having a
significant impact on the market conditions.

Introduction of New Instruments:

Along with these new players, a set of new supporting institutions have also emerged on the
horizon such as the Discount and Finance House of India, Securities Trading Corporation of
India, Stock Holding Corporation of India, settlement and depository systems, etc. Along with
new institutions, new instruments have emerged on the capital market. These encompass both the
domestic instruments and foreign instruments. Many new instruments of finance have already
been introduced in recent years. Still, the current intensity of the Indian financial market reveals
that there is a tremendous scope to deploy new financing instruments connected to equity,
debentures, bonds, add-on products and derivatives. This may require appropriate changes in
certain economic legislations and the will on the part of the Indian corporate enterprises to take
risks and tune their decision-making to the investor psychology and market preferences.

Changes in Rules and Regulations:

Responding to the changes in the environment, the administrative framework has also undergone
a total overhaul. The earlier chains have been totally removed. The Controller of Capital Issues
has been done away with. The Indian capital market has been left free to find its own depth and
strength. However, it is a paradox of a free market economy that whenever chains are removed
effective watchdogs have to be employed. This latter function has now been entrusted to the
Securities and Exchange Board of India. The SEBI in turn has been laying down guidelines to be
followed by different players in the different segments of the market.

Some Recent Initiatives:

Buy-back of shares by corporate has been permitted; this will enable the promoters of
Indian companies to consolidate their positions.

Disclosure of end use of funds rose in public issue in annual statements; it will impart
transparency to the manner in which the funds raised from the public are deployed. This
will also impose greater accountability on companies.

One-time waiver of capital gains tax for corporatization of stock broking tickets; this will
result in speeding up the pace of professionalization of stock broking operations, which
will benefit investors.

Provision of nomination facility in share certificates; this will ease procedures for transfer
of shares in the names of the nominee in case of death of the shareholder.

In short, the capital market has witnessed metamorphic changes in recent past and is all set to
meet the varied needs of the changed liberalized economic environment.

About Indian Brokerage Industry :

Indian brokerage industry dates back to 1850s, but started growing strongly in the 1990s
after the creation of the regulatory body, the Securities Exchange Board of India (SEBI)

and incorporation of NSE. But competition is intense as there are far too many brokers almost double the number of brokers in the US - competing for a much smaller market.
The market is extremely fragmented with the top 5 firms accounting for only 14.6% of the
turnover share during FY08.
The brokerage market is largely retail and the retail investors are
spread across the country (with majority from Mumbai). Online trading channels can play an
important part in catering to the regional spread and has indeed shown good growth (30.6%
CAGR in number of internet enabled brokerage firms, 71.1% CAGR in number of customers and
49.7%CAGR in share of total traded value since 2003). However, retail investors have shown an
over whelming preference for non-delivery based trading (70.8% of the total cash market
turnover during FY08). Intra-day trading makes physical distribution channel necessary
Because it offers high market data latency and proximity to trading advice of the brokers/
Other investors. Growth in the number of sub-broker network reflects this (CAGR of 46.1%from
150 in 1993 to 44,074 in 2008) as expansion of sub-brokerage network means less capital outgo
for the brokers.
High competition has resulted in a steady compression of brokerage
commissions over the years and intensely since 2008 when Reliance Money, one of the new
entrants with a massive physical distribution network, dropped it to extremely low levels. For a
relatively young market, commissions are lower than even in the advanced markets. In order to
improve profitability, top firms have been consciously trying to broaden their portfolio of
services. But this is likely not to pay high dividends over the short to medium term due to the
economic, competitive and regulatory headwinds against these service lines.
Overall, from here, the industry will likely traverse the following path:
Likely recovery of trading turnover in FY10.
Further consolidation of the market share of the top 100 brokers. Possible decline in
the number of brokers but increase in the number of sub-brokers.
Rise in market share of Reliance Money but muted industry profitability in the short
And medium term.
Gain in FII market share by few of the top domestic brokerages. Their success is
Likely to draw in other players into this segment. Technology is a key success enabler
For this client category and the overall electronification of the industry will progress

Rapidly over the next few years.

Globalization and the Indian capital market:

With the gradual opening up of the Indian economy, increasing importance of foreign portfolio
investment in the Indian markets and drastic reduction in import tariffs that has exposed Indian
companies to foreign competition, Indian capital market is acquiring a global image. Till
recently, participants in the Indian capital market could largely afford to ignore what happened in
other parts of the world. Share prices largely behaved as if the rest of the world just did not exist.
At present, in sharp contrast to recent past, Indian capital market responds to all types of external
developments, like US bond yields, the value of the peso or for that matter of any other currency,
the political situation in China, or new petrochemical capacity in South Korea, etc.
In short, the Indian capital market is on threshold of a new era. Gradual globalization of the
market will mean four things, as follows:
The market will be more sensitive to developments that take place abroad.
There will be a power shift as domestic institutions are forced to compete with the FIIs who
control the floating stock and are in control of the GDR market.
Structural issues will come to the fore with a plain message: reform or despair.
The individual investor in his own interest will refrain from both primary and secondary
market; he will be better off investing in mutual fund.

OBJECTIVES OF THE STUDY

To study in detail about the various methodologies that are involved in making an
IPO, such as fixed price issues, book built issues.

To study on various stages involved in the process of IPO such as issue pricing,
issue structuring, procedural requirements of an IPO etc.

It can be used as a tool of increasing market value of the companies.

It also can attract foreign capital e.g. it can attract FIIs to invest in Indian
companies.

SCOPE OF THE STUDY

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

NEED FOR THE STUDY

1] Study about IPO helps to know about the various procedures, requirements and need for the
company for making an IPO.
2] The process made through the analysis of success and failure of various IPOs helps to know
about the attitude of investors towards the issue made.

Limitations of study:
A] The project is prepared in limitation to the availability of data.
B] The regulations and procedure to be followed is mentioned according to the SEBI rules.

C] The data is limited to recent amendments which are to be followed.

D] The data presented is from the secondary source.
E] Study is restricted to a timeframe of 2 months.

Company profile

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

Equity Trading

Commodities

Portfolio Management Services

Mutual Funds

Life Insurance

Personal Loans

IPO

Depository Services

Investment Advisory

Angel Group:

Angel Broking Ltd.

Angel Commodities Broking Ltd.

Angel Securities Ltd

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

Companys Motto
To have complete harmony between quality-in-process and continuous improvement to deliver
exceptional service that will delight our Customers and Clients.
Companys CRM Policy: Customer is King
A Customer is the most Important Visitor on our premises. He is not dependent on us, but we
are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an
outsider in our business. He is part of it. We are not doing him a favour by serving him. He is
doing us a favour by giving us an opportunity to do so.
Business Philosophy
Ethical practices & transparency in all our dealings
Customers interest above our own
Always deliver what we promise
Effective cost management
COMPANY Quality Assurance Policy
We are committed to providing world-class products and services which exceed
the expectations of our customers, achieved by teamwork and a process of
continuous improvement.
Work Culture
At Angel, we keep exploring new paths to provide the best value to all our internal and external
customers. We consider people as our biggest asset and believe in creating long term
relationships by nurturing talent from within. A fast-growing, forward-looking organization like
ours, demands HR to be a key responsibility area of our core management team. Our HR team

constantly explores ways to enhance and augment the knowledge base and productivity of all
Angels by providing various learning and development Programs. Our three tier Leadership
Development program helps all star performers to grow and develop their managerial skills to
become effective mentors for their teams and thereby take on the next level of responsibility
effectively. Ours is a winning team of highly determined, motivated, and adaptable people, all
working diligently to take Angel's exciting success story forward.
HR Philosophy
At Angel, People come first. Along with our customers, our employees are equally vital to our
organization. The Business of HR is to foster an entrepreneurial spirit whereby Angels can
operate with ownership as an entrepreneur (profit center) within the confines of their job role and
earn over and above their fixed salaries.
We believe in inculcating a sense of responsibility and ownership in all Angels which brings out
the entrepreneurial zeal to explore potential within as well as beyond job boundaries.
Companys HR Philosophy is to engage employees at professional, emotional
and material levels.

We aim to create an environment conducive to both personal and professional

development of the employees, leading to a productive and happy work force

Angel believes that people impact business and therefore each and every Angel is a key
resource and a valuable asset

Our business philosophy of being transparent in all our dealings with our customers, is
equally applicable in dealings with employees

We encourage initiative, provide professional freedom and empower Angels based on

trust
EMPLOYEE ENGAGEMENT:

Team HR at Angel works effectively to create a work environment and performance culture
that fosters team spirit and enhances employee productivity through motivation and positive

ambition. Our HR team is continually working to rationalize and restructure measures to

ensure better employee relationship management, employee communications and relations,
recruitment and training need analysis; program design and implementation, performance
evaluation and other work-life initiatives.

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

Angel encourages employees to reduce, recycle & reuse as a way of life. To re-enforce the
significance of red tagging every year we celebrate Red Tag Day across Angel.

PERFORMANCE MANAGEMENT:
Core essence of PMS
The core essence of PMS is to build and strengthen the team members Connect with Angel
through

Enrolling the team member to Angels vision

Meaningful engagement

Meaningful dialogue

Openness to give and receive feedback

Compliment achievements

Focus on the team members growth to enhance performance

The whole focus of PMS is to look for goodness in a person. The onus is on the managers to look
for that goodness, identify strengths and try to create a role around strengths rather than getting
bogged down with weaknesses. The Performance Management System at Angel has reduced
manual intervention to a minimal level. The fully integrated online system uses sophisticated
tools such as national and regional stack ranking, performance bands and rank based
recommendations. All this is supported through one-on-one interactive feedback & coaching
session with team.
Performance credits are received for exceeding expected targets and there are equal opportunities
for all employees to earn rewards with no upper limits. Performance credit structures have been

worked out differently for various categories of employees.

Leadership Academy:
Learning is a continuous process at Angel. We identify the strengths of employees and design
training programs to build their strong points and overcome their shortcomings. We prepare our
employees for future positions with training and by encouraging the learning process. This helps
them to move towards their career objectives efficiently. We also employ various people
development initiatives like E-learning opportunities for functional & behavioral skills through
video conferences and through our employee portal.
Our E Wise Be wise Program provides every Angel with 24x7 access to all relevant
information about Angel. This encourages employees at all levels to upgrade their knowledge
constantly and apply their learnings in the day to day work to achieve high productivity and
customer satisfaction levels.

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

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

ManishaMishra
Executive Operations
Proud-to-be-an-Angel, there are several aspects that bring this feeling. The values of
Angel that have a major impact are Service Orientation, Transparency, and Quality
Mindset. When we receive appreciation on the same by our clients, it makes us happy
& encourages us to work the same way and cherish our work.
The various aspects of Angel Culture that has a major appeal and encourage me to
perform during my tenure are firstly the training provided to me & constructive
feedback received from my seniors to enhance my performance. Also, I appreciate the
fairness of policies & procedures followed by Angel. Also, the freedom & openness to
the ideas & suggestions contributed from my side. Also, the process driven approach
towards work help us work systematically.
The infrastructure & resources provided to us to do our job well creates an environment
that makes us comfortable. We feel cared for & valued as a team member working in
Angel. While working in Angel, they make us feel that the work done by us adds value
to the organization. And lastly the image & value associated with Angel brand makes
me proud to be part of this organization.

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

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

Financial Industry:
It all started in the year 2002 with the US lowering its interest rates fearing the slowdown of their
economy. To be in line with the world, India also lowered its interest rates, thereby initiating a
new consumption cycle. This had a cascading effect on all sectors: commodities, agriculture,
infrastructure, banking, auto and auto ancillary, IT and IT enabled services.
The stupendous growth trajectory achieved in the past 4 years was due to sound government
fiscal policies which assisted in giving a fillip to the Indian economy.

Indian economy has been growing at 7-8% over the last few years and is not only
expected to recover soon but also maintain a high trajectory for a long time to come.

Financial sector leading from the front with growth rates much higher at 20%.

Demat accounts growing @ 20% CAGR over the last few years.

But, equity penetration is still very low: 116cr population*, 17cr PAN* card holders, only
1.47cr Demat accounts*.

Historically, Equity (@ 15% CAGR) as an asset class outperforms all others.

Historically, the Sensex has been growing at a compounded rate of 17% per annum.

Fiscal stimulus and RBIs Monetary Policy will put economy on strong growth path.

Interest rates on a decline, equities expected to gain from this.

Indian economy expected to bounce back by year end.

Corporate earnings to improve in the second half of the current financial year.

Why Angel?

The most trusted retail-centric broking house with 'Service Truly Personalized'.

Angel is among the top five broking houses in the country.

Angel was first to concentrate on retail-centric research.

Angel was first to adopt the branch concept.

Angel was first to launch the web-enabled Back Office Software for sub brokers and
clients.

Angel has the highest number of registered sub-brokers on BSE and NSE.

Angel has the highest number of trading terminals (excluding e-broking terminals).

Angel has been awarded most coveted Major Volume Driver award by BSE from the
year 2004-05 to 2008-09.

Angel has recently been awarded two prestigious award of "Best Retail Broking House"
and "Broking house with Largest Distribution Network" by Dun and Bradstreet.

Products & Services

Equities

Commodities

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REVIEW OF LITERATURE
Popular Articles about Initial Public Offer:
Rashtriya Ispat Nigam may file DRHP for initial public offer by June
NEW DELHI: State-owned Rashtriya Ispat Nigam Ltd (RINL) is likely to file the draft
prospectus for its upcoming initial public offer (IPO) by June, a top company official said. The
share sale, in which 10 per cent stake will be sold by the government, is part of Rs 30,000 crores
revenue generations through disinvestment of equities in the state-owned public sector firms for
the current fiscal. "The drafting of prospectus is on.

Adlabs gets Sebi go-ahead for initial public offer

MUMBAI: Adlabs Entertainment has received capital market regulator Sebi's approval to raise
funds through an initial public offer (IPO). The company had filed its draft red herring
prospectus ( DRHP ) with Sebi in May, this year, for the proposed public offer. The document
was filed by Deutsche Equities India Private Ltd, which is the lead manager for the issue. The
Securities and Exchange Board of India (Sebi) had issued its final observations on the draft
offer...

Momai Apparels to list shares on NSE's SME platform

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

Shemaroo IPO subscribed 7.37 times on final day of offer

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

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

Alkali Metals IPO subscribed 0.53 times

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

PTC India Fin Services IPO fully subscribed at 1400hrs

MUMBAI: The initial public offer of PTC India Financial Services got fully subscribed at 1400
hours on the final day of the issue today. The company's initial public offer IPO , which got
subscribed 1.18 times, received bids for 15.75 crore shares against a total of 13.32 crore shares
on offer, as per data available on the National Stock Exchange till 1400 hrs today.

HDFC MF launches monthly income plan

NEW DELHI: HDFC Mutual Fund on Monday launched a monthly income plan, which would
invest at least 75 per cent in debt instruments. The initial public offer, which opened on Monday
and would close on December eight, could be bought for a minimum Rs 5,000. HDFC MF MIP
would offer two options -- short term plan and a long term plan, a company release said.

Future Capital sets IPO price at 765 rupees/share

MUMBAI: Financial services firm Future Capital Holdings Ltd said on Thursday it has set a
price of 765 rupees a share for its initial public offer (IPO). Future Capital will raise around 4.91

billion rupees by selling 6.4 million shares. Future capital is the financial services arm of the
diversified Future Group, which promotes top retailer Pantaloon Retail India Ltd.

TCS IPO over-subscribed 1.08 times

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

Shemaroo IPO subscribed 7.37 times on final day of offer

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

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

Quick Heal plans initial public offer in December-January

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

BSE's initial public offering likely to be delayed

MUMBAI: The BSE would be missing the year-end deadline it had set for itself for going public,
as the oldest bourse of Asia is yet to hear from market regulator Sebi on its IPO application. "The
exchange is yet hear from the Sebi, despite it submitting all the clarification that the regulator
sought after filing the IPO documents a few months back," a source told PTI. Managing director
and chief executive of BSE Ashishkumar Chauhan refused to comment. Sebi...

What are the decisions involved in making an IPO?

The IPO decision depends on the following two stages the pre IPO stage and the
post IPO stage. The pre IPO stage relates to the timing of an IPO decision, while the post IPO
stage is about continuance or discontinuance of the listed status. Timing of an IPO is a strategic,
financial and merchant banking decision.

The strategic decision is to determine whether listing fits into the companys overall
strategy and if so, whether the company is mature enough for it.

The financial decision to make is to decide whether a company needs the capital
proposed to be raised, how much is to be raised and how effectively it should be
deployed.

The merchant banking decision is made to determine the appropriate structure, pricing,
timing and marketing strategy for the IPO.

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

STATEGIC DIMENSION:
Strategically speaking a company should go for an IPO only when it is mature enough for it. This
depends on the following points:

Does the company need the IPO as a liquidity event for its existing investors? In other
words, are there no private exit options available so that the IPO can be pushed further
into the future?

Has the company matured enough to unlock the value?

Is the companys business model retail-oriented with a strong brand presence so as to

identify with the retail investor?

Is the companys visibility in the market is sufficient enough for investors to perceive its
business model to the full extent and unlock value for its share holders through the IPO.

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

The Financial Dimension

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

The Merchant Banking Dimension

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

To summarize and conclude the decision of IPO the following points are prominent.

Timing is an important criterion in the IPO decision.

The IPO decision should be taken considering the strategic, financial and merchant
banking considerations.

For certain projects and business, going public is an imperative. In such cases, the IPO
should be structured to deliver the best results.

3 Key Concepts in IPO

IPO- Initial Public Offer is the first public issue of fresh equity or convertibles by a
company due to which its share gets listed on the stock exchange.

Public Issue - An invitation by a company to public to subscribe to the securities offered

through a prospectus.

Offer for sale- An offer of securities by the existing share holders to the public for
subscription.

Rights Issue - An issue of cap ital under sub-section (1) of sec 81 of the companies Act,
1956 to be offered to the existing shareholders of the company through a letter of offer.

Preferential Allotment- An issue of capital made by a body corporate in pursuance of a

resolution passed under sub-sec (1A) of sec 81 of the companies Act, 1956.

Private Placement- An offer made to select private investors known to the issuer
through a private arrangement to the exclusion of the general public.

Lock-in- A specified time period during which shares are cannot be sold, transferred and
pledged in any way.

QIBs- Qualified Institutional Buyers shall mean public financial institutions as defined
under sec 4A of companies Act, scheduled commercial banks, mutual funds, foreign
institutional investors registered with SEBI, venture capital funds and insurance
companies registered with SEBI, provident funds and pension funds with a minimum
corpus of Rs. 25 crore and state industrial development cor

PROCEDURE, PRICING, STRUCTURING AND REQUIREMENTS OF AN

IPO

PROCEDURE FOR MAKING AN ISSUE:

For making an IPO the following procedure has to be followed
1] Appointment of Lead Manager or Merchant Banker.
2] Issue pricing
3] Issue Structuring
4] Other requirements that are needed.

1] Appointment of Merchant Banker

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

2] Issue Pricing
The Securities and Exchange Board of India (SEBI) introduced free
pricing of shares for public offerings in 1992. As per the current guide lines (Disclosure and
Investor Protection guide lines 2000), every company either unlisted or listed, which is eligible
to make a public issue can freely price its shares.
1] The first step in formulating an issue structure is pricing of the issue. This is one important
thing done by the merchant banker in public offering. Appropriate price can not only ensure

success of the issue but provide good returns to the prospective investors as well. Therefore,
proper issue pricing can be a win-win situation for the company and investor as well.
2] The danger of overpricing is also an important consideration. If a stock is offered to the
public at a higher price than the market will pay, the underwriters may have trouble meeting their
commitments to sell shares. Even if they sell all of the issued shares, if the stock falls in value on
the first day of trading, it may lose its marketability and hence even more of its value.
3] Investment banks, therefore, take many factors into consideration when pricing an IPO, and
attempt to reach an offering price that is low enough to stimulate interest in the stock, but high
enough to raise an adequate amount of capital for the company. The process of determining an
optimal price usually involves the underwriters ("syndicate") arranging share purchase
commitments from leading institutional investors.
4] Pricing issue is done keeping in mind the qualitative features, and by using selective
multiples as benchmarks than through the conventional approach of the discounted cash flow
method. The usual parameters used are the Price to Earning Ratio and Price to Book value Ratio.
In addition to the above, the following points have to be kept in mind:

Projected earnings of the company cannot be used as a justification for the issue price in
the offer document.

The accounting ratios should be calculated after giving effect to the consequent increase
in capital on account of compulsory conversions outstanding, as well to subscribe for
additional capital shall be exercised.

Comparison of all the accounting ratios of the issuer company as mentioned

3] Issue Structuring
The issue structure refers to the following points

The face value of the share, the premium thereon and the final price. In book built issues,
the final price is not done until after the bidding is over, but a floor price is determined.

The minimum amount of subscription per applicant and the maximum.

The terms of the issue with regard to payment of the offer price and eligibility criteria for
applicants.

Firm allotments if any and any other details thereof, as per applicable DIP guide lines.

Net public offer.

Underwriting, either mandatory or discretionary.

Cost parameters for the issue and an acceptable issue budget.

The issue size and structure is determined as follows:

The issue size = promoters quota+ firm allotments + net public offer.

Public offer = firm allotments + net public offer.

Net public offer = issue size promoters quota firm allotment

4] Other important requirements

A] Firm Allotments and Reservations
These are novel concepts that help in pre-marketing of a sizeable part of issue thereby bringing
down the risk in the issue. In a firm allotment, a particular investor or category of them are
approached in advance by the lead manager or the issuer of the company to subscribe the issue
on firm basis.
The provisions on firm allotments and reservations in IPO are as given below:

The net public offer for issuing companies shall not be less than 25% of the post-issue
capital, except in case of IT and infrastructure companies it can be 10%.

The issuer can make reservations on competitive basis or on firm basis for allotments to
the permanent employees, shareholders of group companies, mutual funds, foreign
institutional investors and banks.

All firm allotments which have not subscribed after filling the prospectus shall be
brought in before opening the issue and treated as preferential one.

All reserved categories can be adjusted with the net public offer as well.

B] Differential Pricing and Price Band

Any unlisted company making an IPO for equity shares or convertibles may issue such
securities to applicants in the firm allotment category at a price different from the price at
which net offer to the public is made provided that the price at which the security is
offered to the applicant is higher than the price to the public issue made.
A justification has to be furnished in the offer document on the price differential for the
firm allotment category.
The issuer company can mention a price band of 20 %( the cap should not be more than
the floor by 20%) in the offer documents filed with SEBI and the actual price can be
determined at a later date before filing the offer document with the ROC.
C] Methodologies for Making Issues
Under the DIP guide lines, it is possible to make an IPO in the form of a 100%
retail issue, a book built issue or as a bought out deal either for listing on the main stock
exchanges or on the OTC exchange. The different methods are explained as follows:
100% Retail (Fixed Price) Issues
Under this method, the issue is made by offering the same directly to the
investors from the public that could include the retail small investors as well as other categories
of investors. Using this method obviates the need to sell the issue initially to the wholesale
investors and them in turn marketing it to retail investors. The main advantage of this system is
that it is possible to get a wide dispersal of shareholding among the retail investors that would
add depth to the trading in the stock after listing. Secondly, it does not require approaching QIB
investors to subscribe to the issue, which could sometimes prove to be difficult, as these
investors need to be thoroughly convinced.
On the other hand, small investors can be persuaded easily if a reasonable short-term market
opportunity is visible in the issue. Due to apparent inflexibility in a fixed price issue, it has a lot

of uncertainty attached to it in difficult market conditions. Therefore, after the introduction of the
book built system of making issues most companies prefer to use that route.
1] Mandatory Conditions for a 100% Retail Issue
A company can make an IPO of pure equity or convertibles only if it meets all of the following
conditions.

The company has net tangible assets of at least Rs.3 crore in each of the preceding 3 full
years, of which not more than 50% of the net tangible assets in mandatory assets.

The company has a track record of having profits distributable as dividends as per the
provisions of section 205 of the companies Act out of its normal business activity without
reckoning extra-ordinary profits, for at least three out of the immediately preceding five
years.

The company has a net worth of at least Rs one crore in each of the preceding three 3 full
financial years.

The aggregate size of the proposed issue and all previous issues made in the same
financial year by the company does not exceed five times its pre-issue net worth as per
the audited balance sheet of the last financial year.

In case the company has changed its name within the last one year, at least 50% of the
revenue for the preceding 12 months is earned by the company from the activity
suggested by the new name.

Additional Conditions
An unlisted company not complying with any of the above conditions may make an IPO of
equity shares or convertibles only if it meets following conditions.
a

The project has at least 15% participation by financial institutions of which at

least 10%comes from the appraisers. In addition to this at least 10% of the issue
size is allotted to QIBs, failing which the full subscription monies shall be
refunded.

The minimum post-issue nominal value of equity capital of the company shall be
RS. 10 crore.

The mandatory conditions ensure that the company has a track record of at least 3 years with
minimum net worth and profit record. This would ensure that paper companies couldnt go
public just after incorporation making tall claims of future business potential.

2].Promoters Contribution
SEBI has also introduced the concept of minimum promoters contribution to be present in
companies going public so that they become interested parties in preserving the interests of the
shareholders. In terms of DIP guide lines, following are the main points that apply to promoters
contribution in case of IPOs:

In an IPO the promoters contribution shall not be less than 20% of the post-issue
capital.

The 20% in case of IPO, shares acquired by the promoter with in the preceding
one year for a price less than the IPO price shall be ignored.

The minimum promoters contribution criterion does not apply to companies

with no promoters.

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

Applicable Provisions for a Book-built Issue

In a book-built issue, reservation and firm allotment may be made only in respect of permanent
employees of the issuer company/promoting company and share holders of the promoting
companies to the extent they permitted in the DIP guide lines.
The other allocation norms for a 100% and 75% book-built issue are as listed below:

Not more than 50% of the net public offer shall be allocated to QIBs.

Not less than 25% of the net public offer shall be allocated to non-institutional bidders.

Not less than 25% issue shall be available for allocation to retail investors.

Lock-in of Shares
Lock-in of promoters shares and other share capital is also a novel concept brought in for the
purpose of preventing such shareholders in making unfair gains and exits from the company. The
provisions are as follows:

The minimum promoters contribution of 20% shall be locked-in for 3 yrs from the
allotment date.

Excess contribution by the promoters in an issue over what is required is shall be lock-in
for one year.

Firm allotments made in any issue shall be locked in for one year. The amount brought in
by promoters to make good under-subscribed portion of firm allotments would also be
locked in for 3 years.

The entire pre-issue capital in case of an IPO shall be locked in for one year. Similarly,
shares held by venture capitalists and shares held for more than one year preceding the
IPO and are being offered for sale in the IPO are excluded from lock-in provisions.

D] Other Important Issue Requirements

All new issues shall be in dematerialized form can also be made through online interface
following the necessary guide lines.

The minimum application size shall be worth Rs. 2000. The maximum size of an
application can be equal to the net public offer.

In an offer for sale, the entire subscription amount shall be brought in at the time of
application.

If there are calls on shares, they should be completed within 12 months of the issue.

Over-subscription of a maximum of 10% of the net offer to public can be retained.

Buy back arrangements can be made with a minimum period of 6 months and for a
maximum of 1000 shares per allot tee.

Issues should be opened within 365 days from the date of SEBI approval or after 21 days
of filing with SEBI.

IPO shall be kept open for a min of 3 days and max of 10 working days.

Every company which has been subscribed by the investors and completed
Issue successfully should get listed within 15days after the closure of the issue.

1] The Stock Exchange Listing Agreement

Compliance with the stock exchanges listing guide lines under its listing agreement is also
important in order to be able to seek listing of shares pursuant to an IPO.
The conditions for listing shares by an unlisted company pursuant to an IPO on the BSE are
listed below:
1

New companies can be listed on the exchange, if their issued and subscribed equity
capital after the public issue is equal to or more than Rs. 10 crore. In addition to this,
the company should have a post-issue net worth of Rs.20 crore.

For new companies in high technology sectors, the following criteria will be
applicable.
c

The total income/sales from the main activity should not be less than 75% of the
total income during the two preceding years.

The minimum post-issue paid-up capital should be Rs.5 crores.

The minimum market capitalization should be Rs.50 crores.

Post-issue net worth of Rs.20 crores.

2] The conditions for listing on the NSE are given below:

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

Role of Underwriters
IPOs generally involve one or more investment banks as "underwriters." The
company offering its shares, called the "issuer," enters a contract with a lead underwriter to sell
its shares to the public. The underwriter then approaches investors with offers to sell these
shares.
The sale of shares in an IPO may take several forms. Common methods include:

Best efforts contract

Firm commitment contract

All-or-none contract

Bought deal

Dutch auction

Self distribution of stock

In the business of initial public offering, the underwriting contract is the contract

between the underwriter and the issuer of the common stock. The following types of
underwriting contracts are most common
a] In the firm commitment contract the underwriter guarantees the sale of the issued stock at the
agreed-upon price. For the issuer, it is the safest but the most expensive type of the contracts,
since the underwriter takes the risk of sale.
b] In the best efforts contract the underwriter agrees to sell as many shares as possible at the
agreed-upon price.
c] Under the all-or-none contract the underwriter agrees either to sell the entire offering or to
cancel the deal.
d] Stand-by underwriting, also known as strict underwriting or old-fashioned underwriting is a
form of stock insurance: the issuer contracts the underwriter for the latter to purchase the shares
the issuer failed to sell under stockholders subscription and applications.

e] Procedural Aspects of an Issue

1

The first task is to hold a Board Meeting to consider the proposal for a public issue,
authorize the managing director to do all tasks relating to this issue and including
expenses for the issue.

On the appointed day, the EGM is held and the shareholders pass a special resolution
under section 81(1A) of the companies Act authorizing the company to make public
issue.

Before embarking on an IPO, the first task is to identify the good merchant banker who
can be appointed as lead manager for the issue. The details of the companys project or
fund raising plan are discussed with the merchant banker. After the discussion the

company finalizes the appointment and enters into a memorandum of understanding with
the lead manager.
4

The LM immediately on being appointed starts a due diligence on the company. Usually
they go through the all documents and certificates and every relevant information for the
issue.

In parallel, the LM starts preparation of the draft prospectus or offer document. All
disclosure requirements and DIP guide lines have to be filled in.

The LM advises the company in the appointments of other intermediaries for the issue.
These are the registrar to the issue, bankers to the issue, the printer and advertising
agency. The registrar and bankers have to be registered with SEBI.

The LM also draws up the issue budget estimated to be spent on the issue. The main
components of these are fees for LM, underwriters, registrar and banker, brokerage,
postage, stationery, issue marketing expenses and statutory costs.

The draft prospectus is finalized by the LM in all respects in consultation with the
management and placed before the board of directors for the approval so that it can be
issued for filing. The draft prospectus has to be accompanied by the memorandum of
understanding signed by the LM with the company.

Simultaneously, the company has to make listing applications to all stock exchanges
where the shares are proposed to be listed accompanied by at least 10 copies of the draft
prospectus. And that prospectus has to be made available to the public by the LM. The
LM should also obtain and furnish to SEBI, an in-principle listing approval of the SEBI
within 15 days of filing the draft offer documents with them.

10 The company has to enter into a tripartite agreement with the registrar and all
depositories-(presently NSDL or CDSL) for offering the facility of offering the shares on
dematerialized mode. Investors have to be given the facility to receive allotments through
any one of the depositories or in physical mode according to option.
11 Within 21 days, SEBI would come out with their observations on the prospectus. The
SEBI would also mention any changes that are to be changed in the prospectus. The LM
has to file a certificate with SEBI that all amendments and suggestions made by the SEBI
have been incorporated in the offer document.

12 Once the draft prospectus is ready in its final form, a board meet has to be held to
approve the filing of the same with ROC after being signed by all the directors.
13 This filing should be accompanied by all the material contracts pertaining to the issue and
the company and all other documents listed in the prospectus.
14 The marketing of the issue is usually co-coordinated by the LM with the advertising
agency.
15 Advertisements are regulated by DIP guidelines and the rules of the stock exchange.
16 The mandatory collection centers are finalized as per the SEBI guidelines in consultation
with the bankers and the LM.
17 The LM and the printer finalize the dispatch schedule to all SE, SEBI, collection centers,
investor associations, brokers and underwriters.
18 The marketing should be completed one week before the opening of the issue.
f] Post-Issue Procedures
1

In issues wherein there is more than one LM, it is usual to entrust the entire post-issue
responsibility to one LM in inter-se allocation.

There are two reports that are required to be furnished to SEBI by the post-issue LM in
the case of an IPO in the retail route in the prescribed form.

The main task of the post-issue LM is to coordinate the process of collection of

subscription figures from the bankers to the issue, processing of applications by the
registrar, dispatch of allotment letters and refund orders to all applicants with in time.

The issue is to be closed on the earliest closing date; the LM should ensure that issue is
fully subscribed before announcing closure.

In the case of devolved issues, the LM shall ensure that the underwriters honor their
commitments within 60 days from the date of closure of issue.

The LM has to ensure that all issue proceeds are kept in separate bank accounts as
provided in the companies Act and the funds are released to the company only after
obtaining listing approvals from the respective stock exchanges.

The LM has to release an advertisement announcing the closure of the issue on the last
day.

The responsibility of finalizing the basis of allotment in a fair and proper manner lies
with the executive director of the designated stock exchange along with the post-issue
LM and the registrar.

The post issue LM shall ensure that the demat credit and refund orders to the allot tees is
completed within two working days after the basis of allotment is done.

10 The LM is responsible for following duties.

a

Refund of subscription money to all non-allot tees.

Refund of excess application money to all.

Attending to all investors grievances.

DATA ANALYSIS AND INTERPRETATION

DATA ANALYSIS AND INTERPRETATION OF TWO COMPANIES IPOS
1] RELIANCE POWER IPO
2] COX&KINGS IPO

4.1COMPANY RELIANCE POWER LIMITED

COMPANY PROFILE

Reliance Power Limited is under the Anil Ambani Group and it is

involved in the business of developing large and medium size power projects. The company was
incorporated in January 1995 as Bawana Power Private Limited and changed its name to
Reliance Delhi Power Private Limited in February 1995. Later, it changed its name to Reliance
EGen Private Limited in January 2004, to Reliance Energy Generation Limited in March 2004,
and to Reliance Power Limited in July 2007.Reliance Power Limited has plans developing
around thirteen large and medium sized power projects. The projects that are being developed by
Reliance Power Limited are located in southern India, western India, north- eastern India and
northern India. The total installed power generation capacity of all the thirteen power projects
would be around 28,200 MW.

A] Reliance Power will have a diversified project portfolio in terms of geography, fuel mix and
technology.
B] Along with its subsidiaries, it is presently developing 13 medium and large-sized power
projects with a combined planned installed capacity of 33,480 MW.
C] Nine of the proposed thirteen projects are coal-fired or gas-based and two of those have fuel
security; the rest are yet to be finalized for such huge capacity, fuel linkage is of paramount
importance. It is presently dealing with Mundra, Sesan and Krishna patnam power projects. Total
project outlay is 1, 12,127 crores and post IPO net worth of 13,707 crores. The company website
identifies project sites broadly to be located in western India (12,220 MW), northern India (9,080
MW) and northeastern India (4,220 MW) and southern India (4,000 MW). They include six coalfired projects (14,620 MW) to be fueled by reserves from captive mines and supplies from India
and abroad, two gas-fired projects (10,280 MW) to be fueled primarily by reserves from the
Krishna Godavari basin (the "KG Basin") off the east coast of India, and four hydroelectric
projects (3,300 MW), three of them in Arunachal Pradesh and one in Uttarakhand.

Projects under Development

Rosa stage -2

Butubori power project

Sesan UMPP

Krishnapatnam UMPP

Tilaiya UMPP

Chithrangi Power Project

Gas Based Power Project

TATO HEPP

SIYOM HEPP

Urthing Soba HEPP

Other Hydro Electric Power Projects

Kalai-2 HEPP

Amulin HEPP

Emini HEPP

Mithundan HEPP

Project going on all over India

CHAIRMAN'S PROFILE
Anil D. Ambani

son of LATE.SHRI Dhirubhai Ambani Regarded as one of the foremost corporate

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

ABOUT THE ISSUE

Anil Ambani- owned Reliance Power Ltds mega initial public offer
(IPO) was opened for subscription on 15th January 2008 to raise Rs 11,500 crore. The company
proposed to issue 26 crore equity shares of Rs. 10 each, including promoters contribution of 3.2
crore shares allotted at the IPO price. The balance 22.8 crore equity shares constituted the net
issue to the public. The price band for the book building was Rs 405 to Rs 450 for every fully
paid up share of Rs 10 each. The issue was managed by UBS, ABN AMR, JPMorgan, Deutsche

Bank, Enam Securities, ICICI Securities, JM Financial, and Kotak Mahindra Capital. Macquarie
and SBI Capital Markets are co-managers. This was the largest IPO ever.
Reliance Power IPO Analysis
Price Band: Rs. 405 - 450 per share
Issue opened between: January 15 - 18, 2008
Book Running Lead Managers:
Kotak,
UBS,
Enamsecurities
To List on: NSE and BSE
Market Cap post-listing: Rs. 1017 billion or $25.7 billion (based on the cap price)
With the high promoter holding of around 90% post-listing is a positive, it
has been viewed negatively from the point of view of minority shareholders, since the latter will
enter the company @ Rs450 per share vis--vis promoters average cost of Rs16.92 per share.
Given the long gestation period of projects, which are likely to get
commissioned from FY10 onwards, we have considered non-earnings related valuation
parameters. The valuation of the IPO in terms of price/book (7.4x FY08E) appears expensive
NTPC (2.8x) and Tata Power (4.5x).
The issue appears expensive, also on the basis of asset valuation in FY13. It is
only on the basis of FY17 estimates, that the issue looks attractive. The aggression and track
record of the promoter group in shareholder wealth creation in all its
businesses

including

telecommunications,

power

distribution,

financial

entertainment is likely to have a positive rub-off effect on this IPO as well.

services

and

BOARD OF DIRECTORS:
NAME

DESIGNATION

ANIL DHIRUBHAI AMBANI

Chairman/Chairperson

S.L RAO

Director

YOGENDER NARAIN

Director

K.H.MANKAD

Whole time Director

J.L.BALAJI

Director

V.K.CHATURVEDI

Director

SHAREHOLDING PATTERN OF RELIANCE POWER

Holder's Name
Promoters
General Public
Foreign Institutions
Other Companies
Financial Institutions
Banks and Mutual Funds
Foreign NRI
TOTAL

No of Shares
2032000000
189394359
89934206
37277971
36956145
7953273
3284046

% Share Holding
84.78%
7.90%
3.75%
1.56%
1.54%
0.33%
0.14%
100%

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

LISTING DETAILS
Listing Date: Monday, February 11, 2008
BSE
Scrip
532939
Code:
NSE Symbol: RPOWER
Listing In:
A Group
Sector:
Power - Generation and Supply
ISIN:
INE614G01033
Issue Price:
Rs. 450.00 Per Equity Share
Face Value:
Rs. 10.00 Per Equity Share

TABLE -1
LISTING DAY TRADING INFORMATION
BSE
Issue Price:
Open:
Low:
High:
Last Trade:
Volume:

NSE

Rs. 450.00
Rs. 547.80
Rs. 355.05
Rs. 599.90
Rs. 372.50

Rs. 450.00
Rs. 530.00
Rs. 355.30
Rs. 530.00
Rs. 372.30

63,882,239

134,392,544

CHART .1
ISSUE PRICE OF RELIANCE POWER IPO

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

CHART -2
LISTING DAY OPENING PRICE OF RELIANCE POWER IPO

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

CHART-3
LISTING DAY LOW PRICE OF RELIANCE POWER IPO

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

CHART-.4

LISTING DAY HIGH PRICE OF RELIANCE POWER IPO

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

CHART-5

LAST TRADE OF RELIANCE POWER IPO ON LISTING DAY

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

Conclusion

The stock which has been issued for a price of Rs450 has been listed at Rs 372 in both the
exchanges which are 18% lower than its issue price. It has made its opening at Rs 547.80 in BSE
and Rs 530 in NSE AND AN INTRADAY LOW OF Rs355.05 in BSE and Rs 355.50 in
NSE.The intraday high of the stock is Rs 599.90 in BSE and Rs 530 in NSE.The volumes were
above 6 lakhs in BSE and ABOVE 14 lakhs in NSE.The data clearly shows that the stock made a
flop show in its listing day although people were expecting it to be listed double the issue price.
This clearly tells that Reliance POWER IPO is failed at its entry into stock market.
Performance of Reliance Power Stock after IPO
Reliance Power IPO which was listed on Feb 11 th 2008 has been showing
poor performance since its listing. The companys IPO has been closed 73 times overbooking
and raised around 7, 52000 crores against its issue of equity shares worth 122 crores.
The listing price was around Rs 372 in both BSE and NSE which is approximately 18% lower
than its issue price; considerably the stock price has been declining aftTaking the failure of the
IPO into consideration Reliance Power Ltd has announced that the Board of Directors of the
Company at its meeting held on February 24, 2008, has approved a proposal for issuing free
bonus shares to all categories of shareholders, excluding the promoter group (comprising of
Reliance Energy Ltd. and the ADA Group), in the ratio of 3 shares for every 5 shares held,
subject to necessary approvals. The proposed bonus offering will result in reduction of the cost
of Reliance Power shares is Rs 269 per share for retail investors and Rs281per share for other
investors
In a related development, Mr. Anil D Ambani, Chairman, Reliance ADA Group,
on February 24, 2008 simultaneously announced a voluntary contribution of 2.6% of his
shareholding in Reliance Power to Reliance Energy Ltd., to protect the Company from any
dilution of its existing 45% stake in Reliance Power, as a result of the bonus proposal.
Accordingly, Reliance Energys stake in Reliance Power will be maintained at the existing level
of 45%, and the revised shareholding pattern of Reliance Power will be as follows:
----------------------------------------------Previous

Existing

-----------------------------------------------

Anil D Ambani

45%

40%

Reliance Energy

45%

45%

Public shareholders

10%

15%

----------------------------------------------The reduction of Mr. Ambanis shareholding in Reliance Power by 5% from 45%

to 40%, represents a contribution of nearly Rs 5,000 crore (US$ 1.2 billion) by him, in favor of
nearly 6 million investors in Reliance Energy and Reliance Power.

Even after this, there

was no improvement; the share price fell to Rs 235 on the day of listing of bonus shares. This
even made loss to investors who bought bonus shares as they could get the shares at lower price
in exchanges.
Reliance Power Limited Key Recent Developments
May 03, 2010: India Awards Four Ultra Mega Power Projects
Jan 29, 2010: Reliance Power Reports Net Profit of INR1.33 Billion in Q3 Fiscal 2010
Jan 18, 2010: Indian Supreme Court to Resume the Case on Reliance Power's 7,840 MW GasFired Power Project
Jan 17, 2010: The 4,000 MW UMPP to Get a Separate Transmission Link In Andhra Pradesh,
India
Dec 28, 2009: Reliance Power Commissions Rosa Thermal Power Plant

Balance Sheet of Reliance Power Limited

Balance Sheet of Reliance Power

------------------- in Rs. Cr. -------------------

Mar '06

Mar '07 Mar '08

Mar '09

Mar '10

12 mths

12 mths 12 mths

12 mths

12 mths

0.05
0.05
102.36
0.00
-0.15
0.00
102.26
0.00
0.00
0.00
102.26
Mar '06

200.04
200.04
0.00
0.00
0.02
0.00
200.06
0.00
0.00
0.00
200.06
Mar '07

2,396.80
2,396.80
0.00
0.00
11,396.01
0.00
13,792.81
0.00
0.00
0.00
13,792.81
Mar '09

2,396.80
2,396.80
0.00
0.00
11,669.24
0.00
14,066.04
0.00
0.00
0.00
14,066.04
Mar '10

12 mths

12 mths 12 mths

12 mths

12 mths

Application Of Funds
Gross Block
Less: Accum. Depreciation
Net Block
Capital Work in Progress
Investments
Inventories
Sundry Debtors
Cash and Bank Balance
Total Current Assets
Loans and Advances
Fixed Deposits
Total CA, Loans & Advances
Deffered Credit
Current Liabilities
Provisions
Total CL & Provisions

66.77
0.76
66.01
35.86
0.01
0.00
0.00
0.58
0.58
0.35
0.00
0.93
0.00
0.53
0.02
0.55

67.27
1.00
66.27
53.57
41.28
0.00
2.25
0.72
2.97
40.68
0.05
43.70
0.00
3.53
1.25
4.78

67.41
1.06
66.35
61.14
8,489.75
0.00
0.00
361.11
361.11
4,988.93
0.05
5,350.09
0.00
423.86
0.79
424.65

78.18
1.58
76.60
55.84
6,282.71
0.00
0.00
14.37
14.37
7,407.58
0.06
7,422.01
0.00
43.05
1.30
44.35

Net Current Assets

0.38

38.92

4,925.44

7,377.66

Miscellaneous Expenses
Total Assets

0.00
102.26

0.00
200.04

0.00
13,542.68

0.00
13,792.81

81.16
2.40
78.76
55.30
7,213.04
0.00
0.00
98.21
98.21
1,656.40
0.00
6,754.61
0.00
33.60
2.08
35.68
6,718.9
3
0.00
14,066.03

Contingent Liabilities
Book Value (Rs)

0.70
-19.22

9.03
10.00

8.57
59.92

8.13
57.55

0.00
58.69

Sources Of Funds
Total Share Capital
Equity Share Capital
Share Application Money
Preference Share Capital
Reserves
Revaluation Reserves
Net worth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities

2,259.95
2,259.95
0.00
0.00
11,282.72
0.00
13,542.67
0.00
0.00
0.00
13,542.67
Mar '08

Future Growth Estimates of the Company

The company made a net profit of 33 billion in FY2010.The revenue is
generated through Rosa phase 1 project which had a capacity to produce 300 MW.The company
is preparing to produce above 2800 MW in FY2012.It gets its amount invested in all its projects
and enormous profits after second half of 2020 decade. It aims an EPS of Rs42 by that time
whereas its present EPS is 1.42 and the company could generate 33,800 MW by that time.
Investors who think to invest in this share should wait until that time to reap good profits. At
resent the stock is quoting at Rs 158 with 52 week high of around Rs 190 and Low of Rs 135 in
both the exchanges. The company is facing competition from public enterprises like Power Grid
Corporation, private enterprises like Adani power, JSW power etc. Reliance Power is also
planning to set up gas-based projects in full steam and has plans to add 10,000 MW capacity in
the future. With this, the company's total generation capacity from all sources of energy would
touch 35,000 MW by 2017.

Company COX & KINGS

Company Profile- COX &KINGS is an U.K based organization founded by COX in 1763 in
Yorkshire, it has been operating in subcontinents and is one of the most recognized holiday
brands today. The principal services offered by the company are:

Destination Management

Outbound Tourism

Business Travel

Incentive & Conference Solutions

Domestic Holidays

NRI

Trade Fairs

Foreign Exchange

Insurance

C&K designs travel packages for both individuals and groups, for their domestic
and international leisure travel.

1] The company makes travel arrangements for corporate clients to cater to their business
meetings, conferences, events, and as an incentive for their employees and business partners.
2] The company also provides value-added services, such as customizing travel plans for NRI
customers, travel arrangements for Trade Fairs and providing private air charter services.
Besides, C&K offers travel-related foreign exchange and payment solutions.
3] The company is one of the first travel companies in India to be granted a license as an
Authorized Dealer - Category -2, under the new licensing regime.
4] Within Leisure Travel, the company has three sub-segments, Outbound Travel, Inbound Travel
and Domestic Travel. The Inbound Travel business represents destination management services
that cover all aspects of ground tour arrangements required by tour operators across the world.
The Domestic and Outbound Travel businesses include the selling of holiday packages for travel
in India and overseas, respectively. Under Corporate Travel, a full range of business travel
services, through a team of dedicated relationship managers, is offered.
In India, C&K has been operating since 1905 and has 255 points of presence,
covering 164 locations, through a mix of branch sales offices, franchised sales shops, General
Sales Agents (Gas) and Preferred Sales Agents (Pass). The company has 14 branch sales offices
located in Mumbai, New Delhi, Chennai, Kolkata, Bangalore, Hyderabad, Ahmadabad, Jaipur,
Kochi, Pune, Nagpur and Goa. Besides, it also operates through 56 franchised sales shops spread
across India. The company has a global presence, with operations in 19 countries (besides India)
through subsidiaries, branch offices and representative offices (in the UK, Australia, New
Zealand, Japan, US, UAE, Singapore and Hong Kong). Over the period of FY2006-09, the
company has made 6 acquisitions, and it will continue to explore various opportunities for
inorganic growth in the future.

FOUNDERS PROFILE
Cox was born in Yorkshire in 1718. His father, Joshua, had made a good living as a lawyer and
had moved from his birthplace in Clent in Worcestershire to Yorkshire. He then bought an estate
near Quarley in Hampshire. There is little documentary evidence of the early life of Richard Cox,
although he must have received an excellent education after which he came into the service of
the English General, Lord Ligonier, as a clerk in the early 1740s. He was clearly exceptionally
good at making important contacts with all echelons of the army and society, and in 1747 he
married Caroline Codrington, daughter of Sir William Codrington who was an established
military figure.
Coxs career really took off when Lord Ligonier led the Flanders campaigns of the War of the
Austrian Succession. In one letter sent back to London, Richard Cox makes a demand that
suitable winter provisions and housing should be made available for the three English
companies and he became ever increasingly entwined with the organization of provisions and
the general welfare of the troops. Ligonier, in turn, thought the world of his 'beloved Mr. Cox',
making him his private secretary in the late 1740s. Ligonier went on to become the Colonel of
the First Foot Guards (Grenadier Guards) in 1757, and rewarded Richard Cox with the post of
'military agent' after the incumbent died in May 1758. Thus was born Cox & Co, the forebear of
Cox & Kings.

Company Overview
Cox and Kings (C&K) is a global tour operator, deriving around 90% of its revenues from the
leisure segment. The company has a strong presence in the emerging and developed markets, and
offers travel, forex and visa services. The company is
1] Well-positioned to gain market share on the back of a strong brand franchise and a
presence across the value-chain: C&K has a history of over 250 years, making it one of the
oldest travel brands in the world. Over the years, the company has built a strong brand franchise
for itself in overseas markets as well as in India. The travel market is highly fragmented, with a
large number of travel agents catering to most of the demand. C&K's strong brand, coupled with
services across the value-chain would act as a key driver in garnering a higher market share in
the future.
2] C&K's focus on emerging markets to help garner higher growth: C&K derives over half
of its earnings from the emerging markets and is focused on increasing its presence in other high
growth geographies mainly the Middle-East and South-East Asia. The company is poised to
benefit from a strong growth in demand for outbound and inbound services in these areas,
enabling it to achieve a high growth rate in the future.
3] Tourism industry (especially in emerging markets) to witness robust growth: According
to WTTC (World Travel and Tourism Council) estimates, the world travel and tourism industry is
expected to clock a CAGR of 4% over FY2009-2019E. The growth rate is expected to be much
higher in the case of emerging markets, mainly India, the Middle-East and South-East Asia.
According to WTTC estimates, the tourism industry in India, the Middle-East and South-East
Asia is likely to witness a CAGR of 8% over FY2009-2019E.

4] Outlook and Valuation: Over FY2006-09, C&K's Revenues and PAT have witnessed a
CAGR of 65.6% and 80.7%, respectively; these, however, have also been aided by the five
acquisitions it has made across the globe since 2006. Going ahead C&K's Top-line PAT to
witness a CAGR of 27.4% and 37.7% over FY2009-11E, respectively On the lower and upper
end of the price band, the stock would quote at 16.5x and 17.3x its post diluted FY2011E
estimates, respectively.
AWARDS & RECOGNITION:
Over the years Cox & Kings has been conferred with numerous awards that
stand testimony to its excellent service.
1] "Most admired tour operator 2010" awarded by SATTE (2010)
2] First Runner Up in the Best Large Tour Operator category awarded by the Telegraph Ultra
Travel luxury survey UK 2010.
3] First Runner Up in the Favorite Tour Operator category awarded by Cond Nast Traveller
Readers Choice Awards (2010).
4] Best Domestic Tour Operator awarded by the Abacus TAFI TravelBiz Monitor Awards
(2009).
5] Best Inbound Tour Operator awarded by the Abacus TAFI TravelBiz Monitor Awards
(2009).
6] The Number One Brand in India based on a survey conducted by research agency, TNS and
co-funded by Media magazine, ranking it 152 amongst the top 1,000 brands in the Asia Pacific
region - Australia, China, India, Japan, Hong Kong, Korea, Malaysia, Singapore, Taiwan and
Thailand.

ISSUE DETAILS
Issue Open: Nov 18, 2009 Nov 20, 2009
Issue Type: 100% Book Built Issue IPO
Issue Size: 18,496,640 Equity Shares of Rs. 10
Issue Size: Rs. 584.49 610.39 Crore
Face Value: Rs. 10 per Equity Share
Issue Price: Rs. 316 Rs. 330 per Equity Share
Market Lot: 20 Shares
Minimum Order Quantity: 20 Shares
Listing At: BSE, NSE
Lead Manager- India Infoline Limited
Objects of the Issue:
The objects of the Issue are to achieve the benefits of listing on the Stock Exchanges &
to raise capital to:
1. Repayment of Loans;
2. Acquisitions & Other Strategic Initiatives;
3. Investment in Overseas Subsidiaries;

4. Investment in Corporate Office & Upgrading our existing Operations;

5. General Corporate Purposes.

Shareholding Pattern of Cox and Kings

Holder's Name
Promoters
ForeignInstitutions
ForeignPromoter
NBanksMutualFunds
General Public
OtherCompanies
Foreign Companies
Financial Institutions
Foreign Industries
Foreign NRI
Others

No of Shares
26475348
13935398
13565532
4218609
1767002
1454667
760648
342479
205424
118992
78843

Total

% Share Holding
42.08%
22.15%
21.56%
6.70%
2.81%
2.31%
1.21%
0.54%
0.33%
0.19%
0.13%
100%

SUBSCRIPTION DETAILS
Cox and Kings IPO closed for subscription and got a decent response from investors especially
QII investors. Analysts said that it is a good issue for long term investors. The IPO has got
subscribed by over 6 times. Retail segment though did not get fully subscribed.
At the close of the day,
QII segment got subscribed by 9.95 times
NII segment got subscribed by 10.7 times
Retail segment got subscribed by 0.98 times
Employee reservation got subscribed by 0.10 times.
The figures above suggest that it has got good response from the
entire investors segment, which made the company to go forward through the issue. Many
experts suggested this IPO as the company got huge potential to grow.
Allotment

A person who applied for 6 shares got one share of Cox & Kings
LISTING DETAILS
Listing Date:
BSE Scrip Code:
NSE Symbol:
Listing In:
Sector:
ISIN:
Issue Price:
Face Value:

Friday, December 11, 2009

533144
COX&KINGS
'B' Group of Securities
INE008I01018
Rs. 330.00 Per Equity Share
Rs. 10.00 Per Equity Share

TABLE -3
LISTING DAY TRADING INFORMATION OF COX & KINGS IPO

Issue Price:
Open:
Low:
High:
Last Trade:
Volume:

BSE
Rs. 330.00
Rs. 304.10
Rs. 304.10
Rs. 433.45
Rs. 426.05
16,954,687

CHART -6
ISSUE PRICE OF COX AND KINGS IPO

NSE
Rs. 330.00
Rs. 343.20
Rs. 343.20
Rs. 433.90
Rs. 425.40
29,896,728

INTERPRETATION
The above bar diagram shows the issue price of COX & KINGS IPO in
both BSE and NSE.x-axis represents the exchanges traded { i.e. BSE AND NSE} and Y-axis
represents issue price amount { i.e. Rest 330.00 in both exchanges }

CHART -7
IPO LISTING DAY OPEN PRICE OF COX & KINGS

INTERPRETATION
The above chart shows the listing day opening price of COX & KINGS IPO.
Here X- axis represents exchanges traded and Y-axis represents the opening price in both the
exchanges. {I.e. Rs 304.10 in BSE and Rs 343.20in NSE].

CHART -8
LISTING DAY LOW PRICE OF COX & KINGS IPO

INTERPRETATION
The above chart shows the listing day opening price of COX & KINGS IPO.
Here X- axis represents exchanges traded and Y-axis represents the listing days low price in both
the exchanges. {I.e. Rs 304.10 in BSE and Rs343.20in NSE].

CHART -9
CHART SHOWING LISTING DAY HIGH PRICE

INTERPRETATION
The above chart shows the listing day high price of COX & KINGS stock.
Here X- axis represents exchanges traded and Y-axis represents the last traded price of COX &
KINGS IPO on listing day in both the exchanges. {I.e. Rs 433.45 in BSE and Rs433.90 in
NSE].

CHART -10
LAST TRADED PRICE OF COX & KINGS IPO ON LISTING DAY

INTERPRETATION
The above chart shows the listing day opening price of COX & KINGS IPO.
Here X- axis represents exchanges traded and Y-axis represents the last traded price of COX &
KINGS IPO on listing day in both the exchanges. {I.e. Rs 426.05 in BSE and Rs426 and 425.40
in NSE].

Conclusion
From the data and interpretation it can be analyzed that the stock is listed at a
premium of around 30%.This shows that the IPO of the company is success, with volumes of
above 16 lakes in BSE and above 29 lakhs in NSE.

Performance of Cox & Kings Stock after Its IPO

COX & KINGS IPO which was listed on 11 th DECEMBER 2009 has
been showing consistent performance till now. The listing price of COX & KINGS was Rs426
and 425 in both BSE and NSE.52 week high of the stock is Rs 530 and its low is Rs364.There
has been an increase in FIIS investments in the company after its listing which was a huge
success.

Balance Sheet of Cox & Kings

Mar '06

Mar '07

Mar '08

Mar '09

Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

Total Share Capital

5.44

5.44

27.93

27.93

62.92

Equity Share Capital

5.44

5.44

27.93

27.93

62.92

Share Application Money

0.00

0.00

0.00

0.00

0.00

Preference Share Capital

0.00

0.00

0.00

0.00

0.00

Reserves

48.52

69.60

120.23

157.75

636.02

Revaluation Reserves

0.00

0.00

0.00

0.00

0.00

Net worth

53.96

75.04

148.16

185.68

698.94

Secured Loans

45.75

27.21

50.24

82.63

145.67

Unsecured Loans

18.59

30.00

71.30

102.02

90.00

Total Debt

64.34

57.21

121.54

184.65

235.67

Total Liabilities

118.30

132.25

269.70

370.33

934.61

Mar '06

Mar '07

Mar '08

Mar '09 Mar '10

12 mths

12 mths

12 mths

12 mths 12 mths

Sources Of Funds

------------------- -------------------

Utilization of IPO Proceeds

As on March 31, 2010, amount raised through public issue has been utilised by the Company
toward the following objects of the issue:
(Rs. in Lakhs)
Particulars
1 Repayment of Loans
Acquisitions & Other Strategic
Initiatives
3 Investment in Overseas Subsidiaries

Utilisation
8,470.00
2 1,600.00
887.00

Investment in Corporate Office &

4 Upgrading our existing Operations

203.00

5 General Corporate Purposes

4,557.00

6 Meeting Fresh Issue related

Expenses

5,817.38

Total

21,534.38

Pending utilization, the balance proceeds have been temporarily invested in Mutual Funds, Fixed
Deposit and Bank Accounts.

Future Growth Estimates of the Company

At present the stock is quoting at Rs567 in BSE and NSE with 52
week high of Rs 630 and low of Rs 304 in both the exchanges. The company acquired East India
Company in 2009 and Australian based Benjour previously owned by U.K giant TUI in January
2010.The Company is expected to make a CAGR of 24.7 and 37.6% during FY2009-11. On the
lower and upper end of the price band, the stock would quote at 16.5x and 17.3x its post diluted
FY2011E estimates, respectively. The company has made a PAT of above 5008 crore in 2010 u/s
3029 crore in 2009.At present the book value of the stock is Rs 111.Company is facing a stiff
competition from Thomas Coo.

FINDINGS AND SUGGESTIONS

FINDINGS:
Findings of my study on Initial Public Offer and Analysis on Reliance power and Cox &
Kings IPOs are as follows.
Reasons for the success of the COX & KINGS IPO are
GROWTH POTENTIAL-The areas in which the company is operating like tourism, forex
services etc has got good growth potential and the company is expected to become organized
player with good brand equity. This might be one of the reasons for the investors to have a better
view on this stock and so the stock is listed at a premium.
GOOD BRAND FRANCHISE-Cox & kings has been operating since 250 years across all over
the world maintaining strong presence in the market. This can be said as another reason for the
company to attract good investors
The factors which led to the failure of RELIANCE POWER IPO are
PRESENCE OF HUGE AMOUNT OF MONEY OF INVESTORS -The main factor which
led to the failure of Reliance Power IPO is the amount

the investors had put in this IPO during

subscription, they invested around 180 billion crores for 2 billion worth shares offered. Money
possessed by all investors is present in this IPO at that time which led to shortage of money with
the investors. This made them to take their money from this IPO, that created selling pressure in
the day1 itself leading to fall in the share price.
NEED TO BE A LONG TERM INVESTOR-Second reason is, an investor who thinks to
invest in this stock should be a long term investor and should not think of being a short term

investor as the power projects require long gestation period get completed and for positive cash
flows to be generate.

SUGGESTIONS:
My suggestions on the study are as follows
1] Company should take in account the world market scenario before making any

offering to

public
2] Effective comparison must be made with its competitors in all aspects such as the production
capacity of its competitors, their stock price and many other factors and then make an offer.
3] Trust among the investors is must for any company to survive. The company should plan its
offer such a way that it fulfills all the interests of its investors.

CONCLUSION
A STUDY ON IPO AND ANALYSIS OF RELIANCE POWER AND COX & KINGS Some
of the factors which I found is as follows.
A] Presently Reliance Power is one of the largest portfolios of power generation under
development in India. The gestation period of Reliance power projects is high, and the
investment return will need time to payback to its investor. So it takes times to generate profits
for this firm.
B] COX & KINGS is striving towards sectorial diversification and geographical diversification
i.e. to less developed countries. It is present in 19 countries and it could be the leading player in
tourism and all the services which it offers. COX & KINGS has good growth potential in all its
operations and could be one among good performing stocks in Indian stock market.

BIBILOGRAPHY
Bibilography
The above information regarding the project has been collected from the following different
sources.
Secondary information
Books referred
Investment Banking and Analysis.
Investment, Analysis and management by Francis.
Security Analysis by Graham and Dodd.
Sites visited
www.sebi.gov.in
www.moneycontrol.com
www.investopedia.com
www.reliancemoney.com