Naya Issue Monitor

Naya Issue: Voltamp Transformers

2006-08-23T04:49:00.000-07:00

Type of Issue:Book Built
Issue Opens:24 August, 2006
Issue Closes:29 August, 2006
Issue Size:4,883,840 (No. of Shares)

Focused on supplying to industries

Voltamp Transformers manufactures transformers. It has a capacity of 5,400 MVA capable of manufacturing transformers up to 50MVA / 132 KV class. It essentially focuses on industry segment and supplies to customers like Reliance industries, Jindal Steel, Siemens, ABB, Larsen & Toubro, Suzlon for applications in industries like petrochemicals, oil refining, cement, paper, pharmaceuticals, steel, and power plant. Building and service sector projects (17% of total sales) and the steel and metal (16% of total sales) industry are the main user industries.

As per an arrangement dated 5 December 2005 between Lalitkumar H Patel and Kunjal L Patel (continuing promoters) and Navinchandra R Patel, Bharat N Patel, Rashmikant Patel and Udyan Patel (selling shareholders), the selling shareholders will sell their entire 48.27% equity stake though the present offer for sale to exit from the company. No details about why they are exiting and whether they can compete with the company in future are given in the prospectus.

Strengths
* As on June 2006, Voltamp Transformers had an order book position of Rs 248 crore. The industry segment to which the company supplies and the power sector to which it can supply in a bigger way in future are doing well and have good growth prospects due to large capex planned in various industries and the power sector.

Weaknesses
* Voltamp Transformers had negative cash flows from operating activities in FY 2006 and FY 2003 due to large funds blocked in inventories, negating the benefit of lower credit periods associated with the industry segment (compared with the state electricity boards).
* A few raw materials such as CRGO, copper, oil, insulation, resin, and steel constitute over 70% of the sales revenue. Most of the raw material contracts entered by the company allow for cost escalation, but its contracts with customer usually have a committed price. If prices of raw materials continue surge, as they have been in the recent past, then its financial performance may come under stress.

Valuation
Net profit in FY 2006 was Rs 70.55 crore. EPS based on net profit before extraordinary items (EO) works out to Rs 22.8. At the offer price band of Rs 295-345, the PE range work out between 12.9 and 15.1, respectively. TTM P/E of the Electric Equipment – Transformers sector is around 15.4. Voltamp Transformers is operating at 83% capacity utilisation and as of now does not have any expansion plans nor it is going to get any money from the present offer.

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Cairn to get desi identity via mega IPO

2006-08-16T08:13:00.000-07:00

When a chief executive of a growing oil driller turns up wearing a horseshoe motif tie and an oversized Tissot, it certainly belies a wish for dame luck and a flaring ambition. So, when Rahul Dhir, barely four months in the CEO hot seat at Cairn Energy India, says that the Scottish explorer’s new strategy is basically an application for Indian citizenship, you know he requires both in equal measure.

The first step in the $6.5 billion Cairn’s strategy to become Indian is an initial public offer that is likely to open sometime late this year or early next. “Essentially we want to become an Indian company,’’ Dhir says. “Since 90% of our assets are in this country, it only made sense that the Indian public had a share in it.’’ Cairn, which has its largest block acreage of nearly 8,000 sq km in Rajasthan, made India’s biggest oil discovery in 22 years there. Named Mangala, the wells in the field are expected to pump 1-1 .1 lakh barrels of oil per day when production begins .

The company found recoverable oil reserves in 17 different locations in the desert. The fields are estimated to contain a total of 3.5 billion barrels of crude oil and are expected to yield 1.5 lakh barrels of oil per day for at least 25 years. Cairn is producing oil from its Ravva fields and gas in the Krishna-Godavari basin, both off the Andhra Pradesh coast and Cambay basin on the western coast of Gujarat.

The Indian assets have burnished the company’s blue-chip status in the FTSE 100 in London. Dhir did not reveal how much of the company’s equity will be offered to investors here. Investment banking sources say that the equity offer could be one of the largest ever in India—something upwards of Rs 15,000 crore or $3.5 billion. Cairn, however, did not confirm the figure. Neither did it deny. “Honestly , we are yet to work out all those details,’’ said David Nisbet, director of communications at Cairn, who has shifted base to New Delhi before the action hots up.

The company also does not share how the money raised would be used. “We recently tied up a $1 billion credit from a group of banks in London. Besides, the cash flows from our fields are strong. But if equity money is available, we would not draw down from the credit lines,’’ Dhir, an advisor to oil companies in his previous role as investment banker with Merrill Lynch, said.

Cairn, however, may have some reason to worry about its Rajasthan fields. India’s biggest oil explorer, state-owned ONGC, has shelved plans for a well-head refinery, with a likely equity participation of Cairn, in Rajasthan after the government discouraged it from going into downstream oil businesses of refining and retailing. It has also reportedly shelved plans for a refinery in Kakinada in Andhra Pradesh. ONGC chairman RS Sharma, however, denied that the plans have been dropped. “We have not yet taken a decision. The feasibility studies are still on. A decision is possible only after that,’’ Sharma told ToI.

Talk within the company, however, is that the decision to not set up the refineries was taken at a mid-July business planning meeting. The other option that the oil producer has is to pipe the oil to its refinery at Mangalore. Even that is now seen as unviable unless Cairn too participates in building the pipeline or sells oil at a discount. The low-grade , waxy crude in the Rajasthan fields does not flow easily and the pipelines have to be jacketed with special material to raise the temperature. That would, however, increase the cost substantially.

Nisbet says the company is continuing to hold talks on various issues and is optimistic everything will be sorted out by the time it is ready for production in a couple of years. “India needs oil. Ultimately , it is beneficial to the state and the people,’’ he said, dodging a question whether the company could face problems in selling the oil.

An industry insider says Cairn could be selling equity to build its own refinery in Rajasthan. He said the company had told the government of its intent of setting up one. Nisbet declined to confirm it. “It is an option. I cannot say anything beyond that,’’ he said. He, however , added that Cairn’s job was producing oil. “It is up to the state and others to decide what to do with it,’’ he added.

While India today has more refining capacity than it requires, the business is on an upswing with refining margins going through the roof. Reliance’s Jamnagar refinery, for instance, had reported margins of over $13 in the first quarter. Globally, refineries capable of cracking low-grade crude are relatively few in number and the requirement is increasing as most new finds have oil deposits that have a high sulphur content.

The scenario presents a good business opportunity for Cairn Energy if it were to build a complex refinery at its wellhead in Rajasthan, given that it has large reserves there.

“We have enough oil to take us through at least until the middle of the next decade. Besides, we are drilling in several other places that could potentially yield oil,’’ says Dhir, who started his career as an oil and gas reservoir engineer at ONGC. Dhir’s engineering and finance background are ideal for a company like Cairn, which depends on technological prowess and financial discipline for growth. But his horse-shoe tie may have a larger role to play as Cairn begins life as a local company in the Indian economic and political milieu.

Realty cos vie for FII placement

2006-07-05T21:27:00.000-07:00

The recent green signal for participation by foreign institutional investors (FIIs) in the proposed IPOs and pre-IPO placements of DLF and Parasvnath has led to a scramble among real estate companies.

A number of companies, including Ansal Properties & Infrastructure and the Pirmal-Morajee combine’s Peninsula Land, have sought permission for selling equity to FIIs through IPOs and pre-IPO placements.The department of industrial policy & promotion (DIPP) has received communications from various players, including the Bangalore-based Sobha Developers and the Mumbai-based Akruti Nirman, according to government sources. Some of these players have sought permission for FII participation in follow-on public offer (FPO) and qualified institutional placements (QIP), the sources said.

DLF, which has filed a Red Herring prospectus with Securities and Exchange Board of India ((Sebi) for its proposed IPO, was the first to seek clarification on FII participation in its IPO and pre-IPO placements. The DIPP then clarified that FIIs are allowed to participate in the placements, and a copy of the clarification was sent to the RBI.

The apex bank said FII participation could be allowed in both IPO and pre-IPO placements, subject to lock-in requirements of Sebi.In the meanwhile, Parasvnath had also sought a similar clarification and DIPP replied in the affirmative. Seeing a new window opening up, a number of companies have sent requests to the DIPP. Sources said Ansal Properties & Infrastructure, Peninsula Land, Sobha Developers and Akruti Nirman are among those who have sought clarification on FII investment in real estate firms.

The clarifications were necessary due to the regulations laid down under Press Note 2 of the DIPP, which allows foreign investment in real estate subject to minimum built-up area and capitalisation norms.

Since FIIs would be able to purchase shares of real estate companies once they are listed, the DIPP felt it was okay to allow realty players to go ahead with FII participation in IPO and pre-IPO placements.

While real estate companies are obtaining clearance in advance, it is not clear how many of them would actually attract FII investments. Since the stock market is going through fluctuations, it might take more time for real estate companies to launch large IPOs of the type planned by DLF.In view of the not-so-buoyant sentiment, the FII role could be crucial in deciding the fate of realty IPOs.

DLF IPO may be delayed by 2 mths

2006-07-05T21:24:00.000-07:00

Real estate developer DLF Universal’s mega initial public offer slated for mid-July is set to be delayed by at least a couple of months. As things stand now, the delay may not be prolonged, provided the company redresses residual investors’ grievances, which the company affairs ministry is looking into.

Capital market regulator Sebi had referred a decision on clearing DLF’s public offer to the company affairs ministry (MCA). DLF is expected to look at a fresh date, most likely in September-October.A quick resolution of the last minute glitch in its estimated Rs 13,000 crore public offer looks possible as the government does not intend to institute an inspection or an investigation into the affairs of the company under company law provisions. “We follow a laid down procedure to redress investor grievances.

We would ask the firm to redress these issues at the earliest,” said a government source. The ministry’s next move would depend on how quickly the company responds to its request.

Launching an inspection or an investigation into the affairs of the company under section 209 or section 235 of the Companies Act would have proved damaging to the firm’s plans to go ahead with India’s biggest issue so far.Company sources told ET that talks are currently on with the disgruntled group of minority shareholders and that all outstanding issues would be resolved soon.

Sources in investment banking circles said that the group would now have to take a fresh look at its valuation and IPO size, apart from coming out with a new deadline for the issue.

DLF to invest Rs 30000cr in retail space by 2015

2006-07-03T04:47:00.000-07:00

Real estate major DLF has chalked out an aggressive expansion plan to invest Rs 30,000 crore (Rs 300 billion) by 2015, for developing 100 million square feet retail space.

The capital-based DLF, which is coming out with perhaps the country's largest initial public offer, IPO to raise more than Rs 10,500 crore (Rs 105 billion), has already started working on its upcoming 34 shopping malls covering 21 million sq ft.These commercial retail space projects are under various stages of implementation, a company official said.The demand for retail space, both from the organised and unorganised sector, in the country is pegged at 1,300-1,450 million sq ft by 2015, the company's internal report said.

DLF is eyeing to capture 5% share of retail space in the next ten years across the country.It is banking on the rapid growth in organised retail sector, which is expected to go upto 45-50 billion dollars in 2015 from just 7-8 billion dollars in 2005, the report added.

Infact, one of the objectives of the company to go public is to raise funds for acquiring land, part of which would be used for developing malls in future. It has made partial payments to acquire 2,893 acres in 62 cities.

The company has made an elaborate plan to develop 100 million sq ft retail space by 2015 under six different formats- prime downtown shopping districts, shopping centres, standalone stores, neighborhood malls, destination malls and super luxury malls.

As per the company's plans, 40 malls would be developed under prime downtown shopping districts format, to be located in prime shopping areas and each having a size of three to five lakh sq ft.

Naya Issue: SHIRDI INDUSTRIES LTD

2006-06-29T22:27:00.000-07:00

Type of Issue:Book Built
Issue Opens:29 June, 2006
Issue Closes:05 July, 2006
Issue Size:6,500,000 (No. of Shares)

Background :
* Shirdi Industries Ltd. (SIL) was incorporated in the year 1993 as Shirdi International Engineers Pvt. Ltd. Its name was changed to Shirdi Industries Pvt. Ltd. on 9th May 1997 and was subsequently converted into a Public Ltd. company as on 12th June 1997. It is a part of the ASIS Group.
* SIL is an interior solution company set up for trading consultancy services & other allied activities. It has diversified in local trading of products required for interior furnishing such as Particle Board (PB) Medium Density Fibre (MDF) board, plywood and veneer. Trading activities contributed up to 80% and 70% of total revenue in FY2005 and FY2006 respectively.
* The company started manufacturing door skin, panel doors and furniture components in October 2003. Its existing plant is in Mumbai.
* SIL does not have an internal sales network. The company distributes its products through dealer channel only. It has a wide distribution network of over 550 dealers spread all over India with godowns and branches in Hyderabad and New Delhi.

Object of the issue :
The project cost of the company is Rs. 127.41crore. The objects are
* Manufacture of MDF and Particle Board (Plain & Pre-laminated).
* Manufacture of flooring, door-skins, laminates, door and furniture components.
* Meet Issue expenses.

Strength :
* As a part of its expansion plan, SIL is setting up a new manufacturing unit in Uttaranchal. The plant would have an installed capacity of 48.58 lakh square meters per annum of MDF boards, 50.52 lakh square meters per annum of PB and also additional capacities for production of flooring, laminated doors and furniture components.
* SIL would enjoy tax benefits as Uttaranchal has a location advantage like exemption of excise duty for 10 years and income tax for 5 years from the date of commencement of production.
* The major raw material for manufacture of MDF and PB is wood waste. The same is readily available in Uttaranchal. In the manufacturing of MDF & PB, over 95% of the wood available from a tree is utilized as against less than 60% in the case of items made out of timber or plywood.
* Shirdi Industries will be the only player in domestic market having a fully integrated manufacturing facility of both products i.e. MDF and PB. Its comparable peers like Mangalam Timber Products Ltd. and Nuchem Ltd. have limited capacity for MDF only.
* Contribution of manufacturing revenue to total income has increased to 25% i.e. Rs.1,354 lakhs in FY2006. Manufacturing revenue has increased by 113% over FY2005.
* Revenue of the company in FY2006 grew by 30.79% over FY2005 from Rs.4,036.87 lakhs to Rs.5,279.93 lakhs. Net profits also increased by 238.21% during the same period from Rs.133.38 lakhs to Rs.451.11 lakhs. The increase in net profits was primarily on account of increase in manufacturing revenue.
* All the proposed products to be manufactured by SIL are eco-friendly products. The demand for such products will increase due to lower costs, ease of use and adaptability and also due to less availability of plywood in near future on account of orders from Supreme Court of India where many wood based industries have been ordered for closure.

Weakness :
* SIL currently imports MDF and PB for its trading activities. This involves high cost of duties and logistics.
* SIL imports raw material from China, South East Asia and Europe. Proposed plant is located away from seaport, which would result in high transportation cost and lead-time. This would hamper the profitability of the company.
* Group companies like Asis Industries (P) Ltd., Asis Global Ltd. and Asis Overseas Ltd. are in the same line of business. The promoters had started two partnership firms M/s Shirdi International and M/s A. S. Industrial Services. However, these were dissolved in 2004 due to conflict of interest with group companies engaged in similar activities.

Valuation :
* The Revenue of the company has grown at a CAGR of 10.16% from Rs.3,585 lakhs to Rs.5,280 lakhs in FY2002 to FY2006 . Net profits for the same period have grown at a CAGR of 164% from Rs.9.25 lakhs to Rs.451.11 lakhs.
* EPS for FY2006 is Rs.2.44. Post issue EPS is Rs.1.8. Post issue P/E will be in the range of 38 to 43 for the price band of Rs.69 to Rs.78. Industry average P/E is 13.26.
* Return on net worth has increased from 5.94% in FY2005 to Rs.11.64% in FY2006. Networth of SIL is Rs.3,834 lakhs for FY2006.

For More Information CLICK HERE
To View Prospectus CLICK HERE

Sebi to meet by mid-July to decide on retail quotas in IPOs

2006-06-27T02:28:00.000-07:00

The Securities and Exchange Board of India, Sebi, said 40% of real estate mutual funds can be invested in shares/securities of real estate firms.The board will meet by mid-July to decide on short selling, retail quotas in IPOs. They have circulated a draft on the pros and cons of retail quotas in IPOs.They will decide on short selling after considering the latest practices in the United States

Sebi exempts VC funds from lock-in period during an IPO

2006-06-27T02:26:00.000-07:00

The Securities and Exchange Board of India, Sebi, approved guidelines for real estate mutual funds, allowing them to invest directly in real estate properties in India, reports The Hindu Business Line.These funds would initially be close-ended schemes. Their units would be compulsorily listed on the stock exchanges and NAVs of the schemes would be declared daily.

Investment norms
Apart from real estate properties in India, the schemes can invest in mortgage (housing lease) backed securities, and equity shares/bonds/debentures of listed and unlisted companies dealing in properties and undertake property development, the Sebi said after its board meeting today.

The board also decided to exempt venture capital (VC) funds and foreign venture capital investors from the lock-in period during an IPO only if they hold shares in that company for a period of at least one year at the time of filing draft prospectus with the Sebi.

This would help to ensure that only those who invest in the company with a long term perspective would be allowed to get the benefit of exemption from requirement of lock-in period. Ashwin Ramesh, Director, Primary Real Estate Advisors of Quantum Real Estate Funds, said: "We will consider real estate since we have been raising funds overseas to invest in the Indian real estate market. However, we are not sure how convenient it would be to list NAVs every day."Dhirendra Kumar, CEO and managing director of Value Research, said: "Tradability issues would be a concern since the underlying market still has to evolve."

Custodian of securities
The funds would be required to appoint a custodian who has been granted a certificate of registration to carry on the business of custodian of securities by the board.

A P Kurien, chairman of AMFI, said: "This is a welcome development for the mutual fund industry which enables common investors to participate in real estate."

Sebi to review retail quotas in IPOs

2006-06-26T03:51:00.000-07:00

The Sebi Board is meeting today to discuss delivery-based settlement of derivatives and short selling, CNBC-TV18 reports.The two key issues the market is expecting Sebi Board to address in this meet is the current IPO infrastructure and IPO norms and whether stock lending and borrowing and physical settlements of derivatives will be permitted in the Indian market.

They may also review retail quotas in IPOs, though it is not known whether they are considering revising it downward or upwards.The other issue, which is of great importance and on which perhaps the board will take its call, is whether stock lending and borrowing and physical settlements of derivatives will be permitted in the Indian market or not.

It is seen that over the past month-month and a half, a lot of market participants have suggested that such a system should come in place, as it helps during market volatility.

Shirdi Ind plans Rs 50cr IPO, issue opens on June 29

2006-06-26T03:50:00.000-07:00

Housing interior furnishing products manufacturer Shirdi Industries, SIL, a division of the ASIS Group, is entering the capital market with an initial public offering of 65 lakh equity shares of Rs 10 each at a price band of Rs 69-78 per share.

The issue opens on June 29 and closes on July 05.The company is planning to raise Rs 50 crore (Rs 500 million) with its initial public offer to part finance its expansion programme of Rs 127.4 crore (Rs 1.27 billion), which is being undertaken in Uttaranchal.

"We are setting up additional capacities for manufacture of medium density fibre board, particle board to touch a total of about 10 million square metres," ASIS Group director Rakesh Agarwal said.It is also setting up new capacities of pre-laminated board.

"Already we have secured loans from banks aggregating Rs 56.5 crore (Rs 565 million). With the funds raised from the IPO we expect to complete the expansion and set it on-stream by December this year," he said.After the IPO, the promoter holding in the company would be diluted to 65.38% from the current holding of 88.43%, he said.

SIL registered a net profit of Rs 4.5 crore (Rs 45 million) for the year ended March 2006 over a total income of Rs 52.78 crore (Rs 527.8 million).Allianz Securities is the book running lead manager and Intime Spectrum Registry is the registrar to the issue.

SIL to raise Rs 50 crore through IPO

2006-06-23T04:12:00.000-07:00

Housing interior furnishing products manufacturer Shirdi Industries Ltd (SIL), a part of the ASIS Group, is tapping the capital markets to raise Rs 50 crore with its initial public offer to part finance its expansion programme.

"We are setting up additional capacities for manufacture of medium density fibre board, particle board to touch a total of about 10 million square metres," ASIS Group Director Rakesh Agarwal told reporters here.

The company will be issuing 65 lakh equity shares of Rs 10 each at a price band of Rs 69-Rs 78 through its IPO, which will open on June 29 and close by July 5.Agarwal said the total cost of its expansion project being undertaken in Uttaranchal is Rs 127.4 crore.

"Already we have secured loans from banks aggregating Rs 56.5 crore. With the funds raised from the IPO we expect to complete the expansion and set it on-stream by December this year," he said.He said after the IPO, the promoter holding in the company will be diluted to 65.38 per cent from the current holding of 88.43 per cent.
SIL had registered a profit after tax of RS 4.5 crore for the year ended March 2006 over a total income of Rs 52.78 crore.

Gujarat state Petronet on track

2006-06-23T04:10:00.000-07:00

Gujarat State Petronet, one of the few IPO stocks to quote above its issue price, has performed to the expectations of its investors.

During ‘06, its net sales grew by 30% to Rs 263.5 crore, due to a jump in the volume of gas transported. Volumes grew by 26.7% to 3,800m standard cubic metres (mmscm) during ‘06 over the last year. The current volume (daily) is higher and it may be able to post a 25-30% volume growth in the coming year.

The jump in volumes is partly due to an additional natural gas supply from the Shell LNG terminal at Hazira. GSPL is currently transporting 2.5-3 mmscm/day of gas from the Shell terminal. Its announcement of a new pipeline from the Panna-Mukti-Tapti field will give its business a further boost, from where it is transporting 1 mmscm/day.

While sales growth was good, profit growth has been better, due to a sharp fall in its gas transportation charges — down by 58% to Rs 19.2 crore in FY06.

GSPL has also been using Gujarat Gas Co’ s network to reach customers. The volume has fallen to almost zero now as GSPL’s network has expanded. Gujarat has three competing natural gas networks belonging to Gail, GSPL and Gujarat Gas, respectively. Its net profit nearly tripled to Rs 16.1 crore, but will settle down to normal rates in ‘07, and growth will depend on its ability to find new supplies and customers for gas.

Indian Bank to come out with IPO next year

2006-06-22T05:31:00.000-07:00

Indian Bank on Wednesday announced that it will come out with an Initial Public Offer some time next year, reports The Economic Times."We are on the recovery path. The final punch will come with the IPO next year," bank chairman and managing director K C Chakraborty told reporters.

The bank, he said, would file the prospectus in October or November this year."Its (Public Issue) will hit the market sometime in 2007," he said, adding, it would be through the book building process.

Asked about overseas expansion, he said the bank was looking at Vietnam and Indonesia but it depended on receiving regulatory approvals.He said the bank had more than doubled its disbursement to agriculture in two years, as against the three-year period stipulated by the Central government.

It also disbursed educational loans amounting to Rs 260.14 crore (Rs 2.60 billion) during 2005-06 to 24,809 students, which was expected to reach 30,000 this year.The bank's plan for 2006-07 included 25% rise in net profit, NPA recovery of more than Rs 500 crore (Rs 5 billion) and covering the entire bank by Core Banking Solutions, he said.

DLF may raise less money from IPO than expected

2006-06-22T05:29:00.000-07:00

The management of DLF Universal and company�s merchant bankers are believed to have quietly pruned the stratospheric valuation estimated for the company initially even as the IPO looks likely to be delayed beyond August, people familiar with the talks said, reports The Economic Times.

The company and its advisors are believed to have cut the estimated value of the company from about USD 25 billion to USD 15-18 billion. The number of shares proposed to be issued, about 202 million, remains the same, but the amount sought to be raised, about USD 3.1 billion, may be cut to about USD 1.6 billion, a person involved in the talks said.

The IPO may also be delayed beyond August, as clearance from the Securities and Exchange Board of India, Sebi, has not been received. The delay has been caused by objections raised by some minority shareholders of DLF who complained about unfair treatment during an earlier issue made by the company.

�We had never said that we are looking at mobilising USD 2.5 billion from the market. Different figures are floating around the market,� said Rajiv Singh, managing director, DLF Universal. �We never had plans to go for a pre-IPO roadshow. Currently, we are awaiting Sebi�s nod for the IPO. The markets are stabilising now. Our IPO plans are moving as per schedule,� he added.

Real estate stocks have been battered in recent weeks, coupled with other investors keeping away from markets due to the continuing interest rate increases in the US and its impact on global economic growth.If the markets have dropped about 25-30% and most valuations have also dropped, then it is reasonable to assume that DLF would not be immune,� a person involved in the talks said.

Internationally, and especially in Asia, a host of IPOs of real estate companies and Real Estate Investment Trust, REITs, have either postponed or shelved their equity issues on the back of low investor appetite. Companies, which are going ahead with their plans, are now looking at up to 45% discount to net asset value as against premiums in Indian markets.

According to an investment banker, real estate prices in China have, however, run up more than stock markets.Incidentally, while Hong Kong based Henderson Land Development shelved its USD 500 million while Shanghai based developer Shui On Land postponed its USD 760 million IPO, Singapore based Cambridge REITs also postponed a USD 75.4 million IPO. Others like Shimao Property, is offering a 30-45% discount to its net asset value.

In the case of DLF, sources also pointed out that the pre-IPO marketing, which was supposed to kick off this week, has been deferred till all outstanding issues have been resolved.According to the draft red herring prospectus DLF plans to issue 202 million shares, with a greenshoe option of an additional 17 million shares. If fully subscribed, the IPO will result in a floating stock of 12.7% shares, diluting promoter KP Singh�s holding to 87%.

The firm wants to reserve 2 lakh shares for allotment to employees. The balance 60% will be allotted to qualified institutional buyers and at least 10% will be available for non-institutional investors. Retail investors will be allocated 30%.

Sources also added that the firm is likely to postpone its IPO timing. It was earlier expected to hit the market in early July. �There is speculation in the market that adverse conditions could postpone the (DLF) issue by a much longer period, may be towards September,� industry observers said.

This is because August is the holiday season in western countries and market activity tends to be slack. The DLF issue would serve as a test case for some of the other real estate companies. Major IPOs in the pipeline include GMR Infrastructure, Lanco, Parsvnath Developers, Khanna Papers and others.

Tech Mahindra files draft prospectus

2006-06-21T23:49:00.000-07:00

Tech Mahindra, an IT solutions provider for telecom industry, has filed a draft red herring prospectus (RHP) with the Securities and Exchange Board of India (Sebi) for its proposed initial public offering (IPO).The company, which was formerly known as Mahindra British Telecom (MBT), is planning to offload 1.27 crore shares, or 11 per cent of its total shares to the public.

Of the total 1.27 crore shares, 11.5 lakh shares will be reserved for employees. Mahindra & Mahindra (M&M) and British Telecom (BT) will offer 38.2 lakh and 57.3 lakh shares as part of the issue.The company will issue additional equity of 31.8 lakh shares as part of the issue, vice-chairman, managing director and CEO Vineet Nayyar told reporters here today.“Our listing is the next step in our journey of evolution, assisting in our facility expansion plans to keep pace with our business needs,” he added.

However, neither the date of the IPO nor the amount it proposes to raise from the market were divulged.Post IPO, M&M’s stake will fall to 45.01 per cent from 51.12 per cent and BT’s stake will fall to 33.95 per cent from 38.56 per cent, while the company’s stake will reduce to 8.57 per cent from the present 8.81 per cent and other shareholders stake will slashed to 1.47 per cent (1.51 per cent at present). The company has a total of 11.26 crore equity shares.

Tech Mahindra intends to use the proceeds from the issue for creating facilities for expansion.The company has acquired 98,400 square metre of land at the Rajiv Gandhi Infotech Park in Hinjewadi, Pune, and proposes to build a world class facility.

Two companies withdraw IPOs on poor demand

2006-06-21T23:42:00.000-07:00

Two companies have decided to pull their initial public offering after a stock market slide soured demand, banking sources and a company official said on Wednesday, reports Reuters.

Textiles firm Vigneshwara Exports Ltd, which barely managed full subscription, and plastics maker Bluplast Industries Ltd will return the money to investors, they said. India's top-30 BSE share index has tumbled about 22% since hitting a record peak on May 11, erasing 5 billion in market capitalisation.

At its peak the market was worth 5 billion, nearly equivalent to the country's gross domestic product.The slide caused big losses to new listings and dampened demand for IPOs."Vigneshwara has decided not to go ahead with the listing because it did not generate as much demand as the founders expected," said a banker at Karvy Investors Services Ltd, the manager to the issue.

He said the 4.76-million-share offering was just about fully subscribed after Vigneshwara cut the price band earlier this month to Rs 110-124 a share from 121-140.Company officials were not available for comment. Bluplast has abandoned its 11-million-share offering at Rs 28-32 because of poor demand and has decided to seek funding from private equity investors, a senior company official said.

"After the stock performance of Deccan Aviation and Unity Infraprojects, lots of investors pulled out, Shashinand Nagori, Compliance Officer at Bluplast, said."So we have scrapped the IPO."Shares in low-cost airline Deccan Aviation Ltd have dropped 40% to Rs 88, from the IPO price of Rs 148, while Unity Infraprojects Ltd. has lost 32% to Rs 461 from 675 in the IPO. Bluplast's issue was handled by Allianz Securities Ltd.

Sebi clears MCX IPO

2006-06-15T04:25:00.000-07:00

The Securities and Exchange Board of India, Sebi, has cleared the initial public offering, IPO, of commodity exchange MCX. When listed, MCX would be the country's first exchange to do so, joining a select few globally in that league, reports The Hindu Business Line.Jignesh Shah, CEO and managing director of MCX, said that the exchange is going ahead with the issue despite the weak market sentiment. The company received Sebi's consent at the end of last week.

He said the exact price band for the issue would be finalised only after discussions with the merchant bankers of the issue, which include Citigroup, DSP Merrill Lynch and Kotak Mahindra.The company is sticking to the original size of 50 lakh shares through the IPO. As per the original plan, the company hopes to mobilise about Rs 300 crore (Rs 3 billion) through the IPO, which would put the issue price in the region of Rs 600 per share. Though Shah did not reveal the exact timing of the IPO, he said the company "will not defer" it.

On the issue price, he said: "We are not asking for too much (from the investors)." He pointed out that leading global fund house Fidelity had taken a 9.24% stake in the company at Rs 600 per share. "Fidelity's stake has one-year lock-in arrangement," Shah said.

Financial Technologies (India), a listed entity, is the promoter of MCX. Its stake in MCX will come down to 53.75% from 64.30% after the IPO. Several other public sector banks including State Bank of India and its associate banks, NABARD and the National Stock Exchange also hold stakes in the company.

DLF IPO delay may create negativity: Expert

2006-06-15T04:24:00.000-07:00

The biggest question mark that the market is facing is the DLF IPO. If that IPO gets called off or delayed or re-priced for any reason, experts say that there would be further negativity towards the real estate sector.

Sanjay Dutt, Quantum Securities says, "The real estate sector has some more downside to go because we have seen stocks running up much beyond. Real estate suddenly became the flavour just like the technology sector became a flavour in 1999-2000. I think there is more pain. We can see the values correcting there.”

Further he added, “The biggest question mark that the market is facing is the DLF IPO. If that IPO gets called off or delayed or re-priced for any reason, I think we will have further negative sentiments to the sector. Whatever ground realities I am understanding from people in the real estate whether they are brokers or developers and builders, in the last month or so some deals have been kept on the sidelines. In fact people have stopped looking at the real estate market. Seeing the fall that they have had in the commodity sector as well as the equity markets, we have seen some kind of a hesitation come into the real estate market. So the real estate prices also stand to correct. There is going to be much more pain in the real estate stocks. That is one place, one should just hold on buying at this point of time. Even though Mahindra Gesco or other stocks may have corrected 50-60% from their highs.”

Cambridge Tech files for IPO, fixes Rs 63-75 price band

2006-06-08T00:33:00.000-07:00

Cambridge Technology Enterprise, CTEL, has filed draft red herring prospectus, DRHP, with the Securities and Exchange Board of India, Sebi, reports The Hindu Business Line.

The company is offering equity shares of Rs 10 each in the price band of Rs 63- 75 per share aggregating to Rs 24 crore (Rs 240 million). Centrum Capital is the sole lead manager for the issue and Big Share is the registrar.

CETL, a CMMi Level 5 company, provides technology solutions using the Service Oriented Architecture, SoA. The company intends to deploy the funds from the issue to part finance its expansion plans and acquisitions.

Rathi Udyog lists below its issue price

2006-06-08T00:32:00.000-07:00

Rathi Udyog, a leading manufacturer of long steel products in Northern India, has listed today on the Bombay Stock Exchange. Its BSE ID is 504903.

At 10:30 am, the stock was trading at Rs 33.7 with volumes of 34,969 shares. It has touched an intraday high of 37 and an intraday low of Rs 33.Its issue price had been fixed at the lower end of the price band of Rs 50 per share. The issue oversubscribed by 1.27 times.

The company had entered the capital market with a follow-on public issue of equity shares to raise an aggregate amount of Rs 98 crore (Rs 980 million), of which the promoter’s contribution was Rs 40 crore (Rs 400 million) and the net issue to public Rs 58 crore (Rs 580 million). The issue, which was done through the book building process, which was opened for subscription/bids on May 19, 2006 and closed on May 25, 2006.The book running lead manager to the issue was UTI Securities and BOB Capital Markets acted as the Co BRLM.

GMR IPO to hit capital market by June end

2006-06-08T00:31:00.000-07:00

GMR Infrastructure, which has won the modernisation bid for Delhi Airport, said its initial public offer is likely to hit the capital market by June end reports agencies.

The company has received the market regulator' Sebi's approval for its IPO, which comprises issue of 45,331,238 equity shares of Rs 10 each constituting 13.69% stake through 100% book building process, it said in a release.GMR is also considering private placement of equity shares with investors on pre-IPO placement basis subject to minimum dilution of 10% as net offer to the public, it said.

As a part of its pre-IPO private placement, Citi Group recently acquired 1.12% stake for over Rs 100 crore (Rs 1 billion). Earlier, ICICI Ventures also picked up 2.89% stake for about Rs 250 crore (Rs 2.50 billion) in the company before filing of the DRHP with Sebi.Besides, Quantum Fund also acquired 0.75% stake for about Rs 67 crore (Rs 670 million) and PNB had acquired 0.30% stake for about Rs 27 crore (Rs 270 million).

The company said it intends to use part of the issue proceeds for investment in various infrastructure SPVs, which are currently in the development stages, including investment of Rs 196 crore (Rs 1.96 billion) in Hyderabad and Delhi airport and Rs 463 crore (Rs 4.63 billion) for four road projects. GMR has interest in airports, power and roads development.

M&M to offload equity in tourism arm before IPO

2006-06-07T04:41:00.000-07:00

Auto and farm equipment major Mahindra & Mahindra, M&M, is planning to sell shares in Mahindra Holidays & Resorts India, Mahindra Holidays, before its initial public offering, reports Business Standard.

The IPO of Mahindra Holidays, the tourism arm of the company, is likely to take place in the second half of this financial year.M&M has an option to place 15-49% of the group companies with private financial institutions, said sources close to the company.The Mahindra Holidays IPO will be followed by that of the group’s IT arm Tech Mahindra. Sources indicated that the group would resort to private equity placement prior to listing in this company as well.

However, Bharat Doshi, executive director, M&M declined to comment. “We will take appropriate decision at an appropriate time,” he said.Mahindra Holidays is planning to raise about Rs 50-100 crore (Rs 500-1000 million) through private placements. Another Rs 100 crore (Rs 1 billion) is expected to be raised from the IPO, it is learnt.“The proceeds from the private placements and the IPO will be primarily be utilised for acquisitions in US, Middle East and South East Asia,” said sources.

Mahindra Holidays recently set up a marketing office in US called Mahindra Holidays US. It has also set up representative offices in UAE and Kuwait in the West Asia.

Mahindra Holidays has reported a net profit of Rs 20.84 crore (Rs 208.4 million) for the year ended March 31, 2006, a growth of 126% compared to net profit of Rs 9.22 crore (Rs 92.2 million) reported in the previous year.The company’s gross revenue grew by 48% at Rs 156.73 crore (Rs 1.56 billion), compared to Rs 106.15 crore (Rs 1.06 billion) reported in the previous year.Tech Mahindra has plans to raise cash to fund expansion in US, UK and Australia.

M&M today informed the BSE that it would sell up to 5.32% stake in Tech Mahindra, TML, a subsidiary of the company, through IPO.Recently, the company’s board cleared spending of up to USD 300 million on overseas acquisitions. This month, Tech Mahindra set up its Noida development centre employing 2,000 people at an investment of Rs 100 crore.The Noida centre is the sixth development hub for the company after Chennai, Bangalore, Mumbai, Pune and Kolkata.Tech Mahindra has reported a net profit of Rs 235.4 crore (Rs 2.35 billion) for the year ended March 2006, a growth of 130%. The company’s gross revenue grew by 31% at Rs 1,242.7 crore (Rs 12.42 billion).

Allcargo Logistics IPO subscribed 7.89 times

2006-06-07T04:39:00.000-07:00

Allcargo Global Logistics, a logistics service provider involved in Multimodal Transport Operations, MTO, owning and operating Container Freight Station, CFS and handling of project cargo, closed for subscription. The public issue was of 2,079,000 equity share of Rs 10 each through book building process.The issue has been subscribed 7.89 times, as per the NSE website.

The qualified institutional investor’s portion has been subscribed 12.01 times. The non institutional investor’s portion has been subscribed 5.91 times. The retail investor’s portion has been subscribed 0.92 times.The price band was at Rs 625-725 per equity share of Rs 10 each. The issue will constitute 10.26% of the post issue paid- up capital of the company.

The company intends to deploy the net proceeds of the issue for setting up of CFS/ICD, prepayment of loan availed from Yes Bank, and general corporate expenses including acquisitions. The company intends to set up CFS/ ICD at Chennai, Mundra and NCR. The CFS near Chennai Port is intended to cater to the container traffic in the southern region. Chennai port is second largest in terms of container traffic in India. It plans to set up the CFS in two phases.Enam Financial Consultants was the BRLM, IL&FS Investsmart was the Senior Co-BRLM and Inga Advisors was the co- BRLM for the issue.

Malwa group to bring out IPO of 2cr shares

2006-06-07T04:37:00.000-07:00

Ludhiana-based Malwa Industries, a part of Rs 540-crore (Rs 5.40 billion) Malwa Group of companies, which is one of the leading players in the textile industry, will soon bring out an initial public offering, IPO, for 2 crore shares, reports Business Standard.

The Malwa group has varied interests in textiles ranging from cotton, yarn, denim, woollen garments and sewing thread.Apart from integrated operations in India, Malwa Industries has recently acquired a denim garment manufacturing facility in Jordan and also a denim garment finishing facility in Italy.

Rishi Oswal, chief executive officer and managing director, Malwa Industries said his company was a vertically integrated textile company, producing denim fabric and denim garments for Indian and international markets.

“We are coming out with an IPO for 2 crore shares in the current fiscal and we intend to raise market capital worth Rs 200 crore (Rs 2 billion) from it. Out of that money, Rs 60 crore (Rs 600 million) will be used for expansion purposes, Rs 50 crore (Rs 500 million) to pay off the debt of our Jordan and Italy plants, Rs 50 crore for working capital and Rs 28.5 crore (Rs 285 million) for setting up a 6 MW power plant where power will be generated from rice husk. This power plant will feed the entire complex and will start its production this July. Some of that money will also be used for acquisition of properties, as well as promotion of our own brands.”

The company’s installed capacity is 20 million meters per annum for denim fabric and 8.5 million pieces of denim garments comprising 4.5 million pieces per annum in India and 4 million pieces per annum in Jordan.It also has high-end finishing capacity for 2.5 million pieces per annum in Italy. “The company plans to double the denim production capacity from 20 to 40 million meters per annum,” said Oswal.

Naya Issue: VIGNESHWARA EXPORTS LTD

2006-06-06T22:56:00.000-07:00

Type of Issue:Book Built
Issue Opens:07 June, 2006
Issue Closes:13 June, 2006
Issue Size:4,760,000 (No. of Shares)

Backward Integration towards processing can improve margins
Vigneshwara Exports (VEL), is engaged in the home textile business of made ups for approximately 18 years. The company claims to be the largest exporter of bed linen to Europe. The company has been buying yarn, gets it converted into processed fabric from weavers / processors, and then makes bedlinen from that with its own cutting and sewing facilities. Now it company proposes a backward integration, whereby it will set up an integrated and modern weaving and processing plant.

The total cost of expansion is around Rs 200 crore, to be funded by debt of Rs 130.75 crore, IPO proceeds in the range of Rs 58 to 67 crore (depending on the issue price), while the balance will be from internal accruals. The plans includes setting up a weaving capacity of 15480 meters per day at a cost of Rs 32 crore, processing capacity of 1,20,000 meters per day at a cost of Rs 90 crore, 5MW gas based power plant with a cost of Rs 12 crore etc.

Strengths
The anti subsidy duty levied by European Union (EU) for many other domestic players were ranging upto 12%, but for VEL it is only 4.4% upto 18th January 2009. Hence, VEL has a competitive edge over other domestic players, in respect of exports to EU.The abolition of the quota regime has opened new growth avenues for export-oriented companies like VEL.Due to outsourcing of processing activities, the company is incurring huge wastage / shrinkage. Once it has its own processing facilities, with modernized machines, the company is hopeful that it would considerably reduce the loss due to wastage / shrinkage.

Presently the company outsourcers the weaving and dyeing where the shrinkage is around 18%. But once the company starts in-house production this could come down significantly due to modernized machines.Derives major portion of the revenues from EU, with Germany being the single largest market. However, the company has started diversifying into other market, with US operations having been started from April 2006.

Weakness
The cash flows from operating activities for the nine months ended December 2005 were negative Rs 3.58 crore as against a positive Rs 3.13 crore in the previous year.

Even after the proposed backward integration, the company would meet only 12% of its fabric requirements in-house.There has been run up in the performance of the company, just before IPO. For instance, its operating margins have been coming down from 5.0% in FY 2001 to 3.5% in FY 2004, but since then increased to 5% in FY05, which further zoomed to 10.6% for the nine months ended December 2005.

Valuation
On a net profit of Rs 3.70 crore in FY 2005, the company’s EPS on post- issue equity works out to Rs 3.5. At an offer price band of Rs 121 to Rs 140, the company seeks a discounting of 35 to 40 times the FY 2005 earnings, which are on a very high side. However, the company’s annualised EPS for the nine months ended December 2005 are discounted by mere 12 to 13 times. Welspun India, with dominant position in terry towels (of home textiles segment) currently trades at a PE of around 17 times (its FY 2006 earnings).

The company derived 39% of FY 2005 revenues and 26% of revenues for the nine months ended December 2005 from trading activities, which predominantly were in gems and jewellery. The company has since exited this business, but it was a blessing in disguise as the margins from this segment were in low single digits. Nevertheless, the company’s sales turnover may fall consequent to phase out of trading business, unless it scales up textile business significantly. The expansion is likely to be completed in October 2006, from which period, its margins can scale up further and hence the financials can get brighter from the second half of the current fiscal.

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Naya Issue: BLUPLAST INDUSTRIES LTD

2006-06-06T22:51:00.000-07:00

Type of Issue:Public
Issue Opens:05 June, 2006
Issue Closes:09 June, 2006
Issue Size:11,000,000 (No. of Shares)

Trying to open a new window of opportunity
Bluplast Industries (BIL) manufactures plastic articles using injection-moulding method. Its product range includes thermoware, vacuumware, insulatedware, kitchenware and other consumer products. The company has a network of 98 distributors, dealers and sub-dealers to market its products manufactured at its 5,400-tonne capacity plant in Daman. The company, operating in an industry dominated by unorganised sector, holds around 10% market share.

BIL is in the process of expanding its current installed capacity to 9,000 tonnes and foray into manufacturing PVC wood composite articles. The company is to set up a 4,900-tonne manufacturing facility to manufacture high value PVC–wood composite profiles/ sheets in Daman. This will be the first of its kind plant in India. The product, expected to compete with the existing pure wood or pure PVC products, will be marketed through its existing network of dealers. The company plans to concentrate on the doors and windows segment. The expansion of the existing capacity and the setting up of the new facility are to be completed by December 2006.

The capital expenditure for both the projects is estimated at Rs. 36.88 crore, which will be funded through internal accruals apart from the proceeds of the present IPO. BIL intends to raise Rs. 35.2 crore through the issue of 1.1-crore equity shares of Rs. 10 each at Rs 32.

Strengths
*In the existing product range of thermoware, BIL is well set and has been consistently operating at high capacity utilisation though under increasing pressure on margins

Weaknesses
*Both the projects are expected to complete by end of December 2006. This means no significant improvement can be expected in FY 2007.
*It can take considerable time, money and effort to introduce and establish the new range of PVC–wood composite products in a highly unorganized market.

Valuation
Bluplast has set Rs. 32 as the price of its IPO, which translates into a PE of 36 on fully diluted EPS of Rs. 0.89 for FY 2006. There are around eight listed companies (including Milton Plastics, National Flask, and Tokyo Plast) in the thermoware segment. Most of them are trading (or have stopped trading) at or below face value due to their poor financials. Considering the gestation period involved in the new products, chances of the scrip quoting below offer price are very high.

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Indian Bank IPO likely in 2007

2006-06-02T03:36:00.000-07:00

Chennai-based Indian Bank is likely to hit the capital market with an intial public offer next year that may dilute government stake in the bank by 25 per cent.The bank planned to come out with an IPO by the beginning of 2007, its Chairman K C Chakraborty told reporters here.Though how much the bank will raise is not known, the issue is expected to bring down government stake in Indian Bank to 75 per cent from 100 per cent at present.

Sebi gets 8 application for IPOs since Black Monday

2006-06-02T03:34:00.000-07:00

Initial public offers (IPOs) are feeling the heat of a volatile market. Prime Focus — the company that has Rakesh Jhunjhunwalla and Adlabs as investors — has extended the bidding period and cut the price at the lower end of the band. This is the second company in recent times to do this.

But a choppy sensex hasn’t completely taken the fizz off the IPO market. Eight draft prospectuses have been filed with Sebi since Black Monday. These include Minar International, Indo Asia Leisure Services, Tubeknit Fashions, Global Vectra Helicorp, Ahluwalia Contracts, Broadcast Initiatives and Info Edge India.

This apart, PFC is expected to file its prospectus next Monday. Once the prospectus is filed with Sebi, it’s usually cleared within 30-40 days. Thereafter, the company needs to come up with the issue within the next six months. The other option being to let the date lapse and prepare fresh prospectus.

“Nobody can correctly predict the market. Companies will go ahead with their IPO plans depending on their fundamental strengths and the urgency for fund requirements,” says Ravi Sardana, V-P, ICICI Securities.

Plans may get delayed
Merchant bankers, however, say those IPOs which are still in the drawing boards could get delayed. These firms may wait for the sentiments to turn positive on the stock market before taking a final call on their public issues.

Says Prithvi Haldea, MD of Prime Database: “The overall sentiment is not good as investors are wary of a volatile market.” He adds that given the current pipeline of IPOs which can be categorised into three levels, the anxiety levels would be higher in the first two where either the issue dates have been announced or where the firms have already filed prospectus with the Sebi.

There are four firms whose issue dates have been announced. In addition, there are some 8-10 firms whose prospectus have been approved by Sebi though dates have not been announced.

There are another group of 48 firms whose prospectuses have been filed but are yet to be cleared. The third set, which according to Mr Haldea stands at around 350, are those which are yet to file their plans and would be looking out for market to stabilise.

IPO financing dries up
Prime Focus revised the terms, despite an oversubscription of 1.29 times as of May 31 — the original date of closure of offer. A small oversubscriptions softens the demand for the scrip, and is particularly bad news for investors who borrow from banks to invest in IPOs. “IPO financing makes sense only if there are huge subscriptions.

“Thanks to low oversubscriptions and weak markets, the IPO financing market has virtually dried up,’’ said merchant banking sources. It’s no longer lucrative for investors to keep a margin with the lending bank and pay an interest for the loan to invest. These investors normally sell the shares the listing happens.

Prime Focus had entered the capital markets with an IPO of Rs 100 crore with a green shoe option of Rs 15 crore, aggregating Rs 115 crore with a price band of Rs 450 to Rs 500 per share. The issue opened on May 25 and was scheduled to close on May 31.

“However, considering the volatility in the Indian and global equity markets the company has extended the bidding period till June 3, ‘06 and revised the price band to Rs 417 to Rs 500,’’ according to a company.

All eyes are on the mega DLF issue, which is awaiting the Sebi approval. The company and its bankers have till now maintained that they will go ahead with the offer once the clearance is in place.

Sebi norms stipulate that a maximum 20% revision can be made in the price band of an IPO. The IPOs bidding period can be kept open for a period of maximum 10 days.

Asia Leisure Services Ltd files with Sebi

2006-05-31T23:01:00.000-07:00

Asia Leisure Services Ltd, engages in tours and travel, proposes to enter equity market with a public issue of 85,72,000 shares of Rs 10 each through 100 per cent book building.The company intends to utilise the funds raised through this issue to part finance its expansion plan. The project envisages construction of hotels or taking over of existing hotels on long term lease, the company said in a statement.It has appointed IDBI Capital Market Services Ltdasthe book running manger and Intime Spectrum Registry Ltd as the registrar.

NAYA ISSUE: ALLCARGO GLOBAL LOGISTICS LTD

2006-05-31T03:33:00.000-07:00

Type of Issue:Book Built
Issue Opens:01 June, 2006
Issue Closes:06 June, 2006
Issue Size:2,079,000 (No. of Shares)

Background
All Cargo Global Logistics Ltd.(ACGL) was incorporated on August 18, 1993 as a private ltd. company under the name of All Cargo Movers (India) Private Ltd. Subsequently, it was converted into a public ltd. company on January 17, 2006.The Company commenced its operations in 1993 as a shipping agency house. Main business involves storage, warehousing, transportation and handling of all kinds of cargo. The company has offices in Mumbai, Delhi, Chennai and Kolkata.Main areas of focus for the company's business are Multimodal Transport Operations (MTO), Container Freight Station Operations (CFS) and Project Cargo Handling.The Company has made strategic investments in Ecu Hold NV, Belgium, ACM Lines Pty. Ltd.,South Africa and has a Joint venture with Transworld Logistics and Shipping Services Inc., USA. These associations have enabled it to increase its global presence.The Company has strong marketing and distribution network with 17 branches and 11 franchisees in India.

Objects of Issue
* To finance the setting up of CFS at Chennai & Mundra and Inland Container Depot (ICD) at NCR.
* Prepayment of a medium term loan availed from Yes Bank.
* To meet general corporate expenses and issue related expenses.

Strengths
* The company started MTO in 1998 and since then has built expertise in this field. This will enable the company to reduce the transport cost, time required for transport and improve the quality of services.
* Port related logistic support services are provided through the CFS called Transindia Logistics Park located at a distance of about 18 kms from the Jawaharlal Nehru Port Trust (JNPT), India's largest container port. The company`s existing CFS depends directly upon the operations of JNPT for its business. The CFS has recorded 118.15% growth from FY04 to FY05.
* The company has acquired a 49.99% stake in Ecu Hold NV in 2006 as a part of its international expansion plan. Ecu Hold NV has a widespread network of 110 offices in 56 countries and a franchisee and agent network across 203 locations in 120 countries thus catering to over 4000 destinations.
* The company has a strong relationship with most of the leading carriers/ liners and as a result is able to negotiate favourable commercial terms. This also ensures fast and smooth transport of cargo.
* ACGL is also focusing on domestic expansion. A CFS is proposed be set up near Chennai Port to cater to the container traffic in the southern region. Another CFS is to be set up near Mundra port, which is a fast growing port of India. Moreover, to cater to the industrial belt of northern India, the company is planning to set up an ICD at NCR.

Weakness
* The company does not have firm commitments from the CFS/ICDs from where it operates. The operations may be affected in case it is unable to get warehouse space from these CFS/ICDs.
* The company depends on overseas agents for cargo handling, transportation, warehousing and delivery at the destination. Any deficiency in the service levels of overseas agents can directly impact the business.
* Logistics industry has low entry barriers leading to increase in competition, which may affect ACGL`s profit margins.

Peer Group Comparison
Financial Year 2005

COMPANY	NPM (%)	OPM (%)	EPS (Rs.)	P/E	Book Value (RS.)	RONW (%)
Gateway Distriparks Ltd.	36.58	57.00	4.66	30.9	22.10	21.10
Container Corporation of India Ltd.	21.27	31.39	65.58	22.9	261.38	25.09
All Cargo Global Logistics Ltd.	10.57	14.05	24.85	25.64-28.28	39.14	61.83

Valuation
* Return on net worth for ACGL in FY2005 is 61.88 %. Current net worth for the company for the nine months ended December 2005 is Rs 78.80 crore.
* EPS for the year ended 31st March 2005 is Rs 24.85. Post issue annualised EPS based on December 2005 will be Rs 24.38.
* Shares are being offered in the price range of Rs 625 to Rs 725. Post issue P/E multiple ranges from 25.64 to 28.28. Industry average P/E is 14.7.
* ACGL`s income and profits have grown at a CAGR of 21.89 % and 67.20 % from FY2001 to FY2005 respectively.

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L&T Infotech plans IPO in 2008

2006-05-30T21:40:00.000-07:00

L&T Infotech, the wholly owned IT subsidiary of the USD 4-billion L&T, plans to go public with an initial public offering in 2008, by when the mid-tier firm would have added 6,000 people to its strength, reports DNA.

“Though we do not have to raise funds from the market, we intend to go public in the next two years to unlock the value of our Infotech subsidiary,” L&T chairman and managing director A M Naik said.

He said the public listing would help the infotech arm to be a mid-sized software and services firm that has adopts corporate governance and offer value to shareholders.

Naik, however, declined to spell out details, including the dilution of the parent company’s stake and the amount to be raised from listing.

L&T Infotech is planning to consolidate its operations with an investment of Rs 600 crore (Rs 6 billion) to set up three software development centres and expand its headcount to about 9,000 people in the next 18 months. L&T Infotech currently employs 3,000 professionals and plans to locate new campuses in Faridabad, Chennai and Bangalore, besides Mumbai.

“Unlike other stand-alone or captive IT majors for software services and applications, we are positioning Infotech as a provider of end-to-end solutions to domestic and overseas customers,” Naik said.

Broadcast Initiatives files DRHP with Sebi

2006-05-30T21:36:00.000-07:00

Broadcast Initiatives, the media company that recently launched the news and views channel "JANMAT", promoted by the Adhikari Brothers, has filed draft red herring prospectus, DRHP, with the Securities & Exchanges Board of India, Sebi, to the enter the capital market with an initial public offering, IPO.

The company proposes to issue 85,50,000 equity shares of Rs 10 each for cash at a premium to be decided through the book building process. The equity shares will be listed on the BSE and NSE. The issue would constitute 44.27% of the fully diluted post issue equity capital of the company.

Proceeds from the issue will be used to part finance construction of a studio and purchase of equipments necessary for successful operation of its recently launched news and views television channel "JANMAT" besides other corporate purposes and retiring debts.The sole book running lead manager to the issue is Allianz Securities.

PFC plans Rs 1,500 cr IPO, to file draft on June 5

2006-05-30T21:27:00.000-07:00

State-run Power Finance Corporation (PFC) would file a draft red herring prospectus (DRHP) on June 5 with Securities & Exchange Board of India (Sebi) for its initial public offer (IPO) of Rs 1,500 crore, sources have revealed.

High volatility in stock markets had forced PFC to postpone filing the DRHP on May 22. But the sources refused to give details on when PFC’s issue would be launched. PFC had proposed to launch its IPO from July 1.

The IPO would be managed by Enam, ICICI Securities and Kotak Mahindra.The sources said, PFC’s price band for its IPO would be between Rs 60 and Rs 70. PFC plans to use proceeds from the IPO to pursue its business plans.PFC plans to raise Rs 1,500 crore by issuing 103 million fresh shares, or 10% of PFC’s pre-issue paid-up capital.

Also, government is expected to sell 5% of its stake in the company’s pre-issue paid-up capital through the IPO. After the issue, the company will have 1.133 billion shares.The government’s stake in PFC will be reduced to 86.40% after the issue.At present, the government holds the 100% equity in the company. The government is divesting 51.5 million shares in the IPO.

Public issue on schedule, says DLF

2006-05-30T21:26:00.000-07:00

Real estate major DLF group, on Tuesday said that its mega IPO is on, as scheduled with the Rs 13,000 crore issue to hit the market some time in June-end or the first half of July, as per original plans. “Short-term fluctuations will not impact our IPO,” Ramesh Sanka, CFO, DLF group said.

On being queried about the group’s plan of action, if it were not able to raise the entire Rs 13,000 crore from the primary issue, Mr Sanka said the group would then approach banks for raising debt to meet the shortfall. As per objects of the issue, the group plans to pre-pay loans to the company to the tune of Rs 4,000 crore, while earmarking Rs 6,500 crore for land acquisitions and Rs 3,100 crore for development and construction costs of existing projects.

Commenting on objections raised by certain minority shareholders and complaints filed to Sebi, he refuted those claims and said that the group has already send its response to the market-watcher and will go by whatever decision Sebi takes in this matter.

As per consolidated financial performance of the group, it recorded sales turnover of Rs 1,291 crore in FY’05-06, with net profit of Rs 199.4 crore, based on percentage completion method over the last five years. However, according to Mr Sanka, if one were to calculate the group’s net profit and turnover by percentage completion method, for only one year, the net profit would swell to Rs 410 crore over turnover of Rs 1,960 crore.

He said, around Rs 6,000 crore worth of projects were currently under development. Of these, around Rs 4,000 crore related to residential and retail space, while the remaining was commercial office space.

Enam Fin tops charts in IPO management

2006-05-30T21:25:00.000-07:00

ENAM Financial has topped the charts as the investment banker managing the largest number of equity issues in ‘05-06.League tables drawn up by Prime Database show Enam as the lead manager in 24 initial public offers (IPOs) of the 102 IPOs launched in the last financial year — a share of 23.5%.

Suzlon Energy, Shoppers Stop, Sasken Technologies, Radio Mirchi, INOX Leisure and YES Bank were some of the prominent issues Enam shepherded to the bourses for the first time.It was also an adviser to the GDR/ADRs of Infosys, Satyam Services, Arvind Mills, Balrampur Chini and Dwarikesh Sugars.Enam was followed by ICICI Securities and Karvy, which steered 17 offerings each. The tally was 16 for both Kotak Mahindra Capital and SBI Caps. JM Morgan Stanley oversaw 14.

Enam Securities, the stock broking company of the Enam Group, also topped the IPO and follow-on public offer (FPO) charts for FY06, data compiled by Prime Database said.

Raising cash from qualified institutional buyers (QIBs), Enam mobilised Rs 65,216.04 crore — or 29% of the total. JM Morgan Stanley raised Rs 49,156.5 crore, Kotak Securities Rs 43,642.32 crore, DSP Merrill Lynch Rs 27,713.66 crore and ICICI Brokerage Services Rs 18,510.9 crore.

In mobilisations from non-institutional and retail investors too, Enam Securities led the pack, arranging Rs 26,387.6 crore, or 24.3% of the total. It was followed by Kotak Securities, JM Morgan Stanley, IL&FS Investsmart and Karvy Stock Broking, Prime Database said.

Vigneshwara Exports fixes price band at Rs 121

2006-05-30T07:39:00.000-07:00

Home textile exporter, Vigneshwara Exports Limited has fixed a price band of Rs 121 to Rs 140 per equity share of Rs 10 each for its public issue of 47.6 lakh equity shares.Issue through the book building process opens on June 7 and closes on June 13.The proceeds from the issue would be utilized to part finance setting up a textile process and weaving unit near Vapi in Gujarat with an investment of Rs 200 crore and to meet out the working capital requirements.The company has raised Rs 5.40 crore through private placement and proposes to part finance this project through a term loan of Rs 130.75 crore. Part of funding will be by way of internal accruals and to meet the balance fund requirement company is entering the capital markets.
"Company was catering to the home textiles exports by converting its outsourced fabric with its own cutting and sewing facility. The new plant shall enble the company to have its own full fledged facilities encompassing entire chain of weaving, processing, cutting, sewing and packing," Company Director Mahendra Poddar told reporters here.The Book Running Lead Managers for the issue is Karvy Investors Services Ltd.Company is the largest exporter of bed linen to Europe and with new plant company will introduce its high and medium segment range in USA, Russia and Australia, he said.Of the public issue, 3.6 lakh equity shares have been reserved for eligible employees leaving the net issue to the public of 44 lakh equity shares.

Vigneshwara Exports IPO opens on June 7

2006-05-30T00:16:00.000-07:00

Vigneshwara Exports, the company in home textile business of made ups for more than a decade, proposes to enter capital market on June 7th, 2006 with a public issue of 47,60,000 equity shares of Rs 10 each through book building process.

The issue closes on June 13th, 2006 and the price band has been fixed at Rs 121 to Rs 140 per equity share of Rs 10 each.The issue would constitute 46.21% of the total post issue paid up equity capital of the company.Karvy Investor Services is the BRLM for the issue and Bigshare Services private is the registrar.

Out of the public issue, 3,60,000 equity shares have been reserved for eligible employees leaving the net issue to the public of 44,00, 000 equity shares. The issue is being made through 100% book building process where in up to 50% of the net issue to the public shall be offered on a proportionate basis to qualified institutional buyers.

Five per cent of the portion available for allocation to QIBs shall be allocated proportionately to mutual funds. Further not less than 15% of the net issue to the public shall be available for the allocation on a proportionate basis to Non-institutional bidders and not less than 35% of the net issue to the public shall be available for allocation on a proportionate basis to retail individual bidders, subject to valid. Bids being received at or above the issue price 3,60,000 equity shares would be allotted on a proportionate basis to eligible employees.

Vigneshwara Exports proposes to set up a textile process and weaving house with an estimated investment of around Rs 200 crore (Rs 2 billion). The company has raised Rs 5.40 crore (Rs 54 million) through private placement and proposes to part finance this projects through a term loan of Rs 130.75 crore (Rs 1.30 billion). Part of the funding will be by way of internal accruals and to meet the balance fund requirement, the company proposes to enter the capital market with this public issue.

The company has a competitive edge by way of the lowest anti subsidy duty for its exports to the European Union. While the rest of the exporters in India have been levied with a duty ranging up to 12%, VEL enjoys an advantage till the January 18, 2009 with 4.4% anti subsidy duty on its exports, a significant portion of which are made to the European Union.

Vigneshwara Exports, the largest exporter of bed linen to Europe, launched its wide range of products in the USA during the New York market week. The company so far was concentrating on European markets only, however, in view of the impending vertical integration into weaving, processing and printing operations, the company had decided to introduce its high and medium segment product range into other markets like USA, Russia and Australia.

The growth in the company’s business can be judged from the fact that its total income has jumped from Rs 46.18 crore (Rs 461.8 million) for the year ended March 31st, 2002 to Rs 145.52 crore (Rs 1.45 billion) for the year ended March 31st, 2005 and the net profit during the same period has increased substantially from Rs 34 lakh to Rs 3.58 crore (Rs 35.8 million) respectively. During the first three quarters of the current year ended December 31st, 2005, the company has increased its net profit to Rs 7.75 crore (Rs 77.5 million) on a total income of Rs 115.56 crore (Rs 1.15 billion).

Rathi Udyog sets public issue price at Rs 50/shr

2006-05-29T08:17:00.000-07:00

Steel maker Rathi Udyog Ltd said on Monday it has set an issue price of Rs 50 a share for its follow-on public offer, which closed on May 25.The company is raising Rs 98 crore to partly fund an integrated steel plant in eastern India, of which Rs 58 crore is being raised from the public.The shares are to be listed on the Bombay and Delhi stock exchanges.Rathi Udyog shares ended at Rs 70.40, down 1 per cent, in a firm Mumbai market.

Renaissance Jewellery files for IPO

2006-05-28T21:40:00.000-07:00

Mumbai-based Renaissance Jewellery Ltd (RJL) would be investing close to Rs 33 cr in retail expansion, capacity expansion and modernisation of existing facilities within next two years."The company will invest Rs 17 crore in retail ventures, Rs 11.5 crore in capacity expansion of its manufacturing unit at Bhavnagar and Rs 4.5 crore in modernization of current facility in the city,"said, RJL managing director Sumit Shah on sidelines of the launch of their exclusive store of International brand Lucera. In Mumbai the store was launched by Renaissance Venture Private Limited (RRVPL), a 100 per cent subsidiary of RJL.Company has plans to open 25 outlets in next 18 months in major cities including, Mumbai, Delhi, Kolkata, Chandigarh, Pune, Hyderabad, Ludhiana.For its retail outlets company will focus on silver jewellery and 60 per cent of its jewellery in the newly opened store is in silver."Taking a call from rising gold prices and placing jewellery as an accessory, our collection is majorly in sterling silver, 18 karat gold and diamonds," he said.The company is 100 per cent export oriented entity majorly supplying to US markets.Renaissance has filed draft prospectus for its initial public offer (IPO) with the Securities and Exchange Board of India.The company intends to offer 35.10 lakh equity shares of Rs 10 each at a price to be fixed through the book-building route.

Cambridge Tech plans Rs 35cr IPO

2006-05-27T01:53:00.000-07:00

Cambridge Technology Enterprises Ltd, a Hyderabad-based IT services provider, is poised to enter the capital market with its maiden issue to meet its expansion plans, reports The Hindu Business Line.

The CFO, Mr Ramesh Reddy, said Cambridge, a SEI CMM Level 5 process company, has identified services oriented architecture as its main technology offering for enterprises globally.The company simplifies enterprise technology architecture, thereby saving on enterprise costs and maintenance.

The company has also identified some target for acquisition and the issue would part-fund this expansion strategy. The company also plans to file a draft red herring prospectus with the SEBI by early June.The company was carved out after the US operations were acquired by Unique Solutions and later renamed CellXchange.The company was formed with funding from Internet Business Capital Corporation; Mr Bhasker Panigrahi and Mr Krishna Nandyala are core promoters. They expect to raise Rs 30-35 crore from the IPO.

Deccan Aviation IPO subscribed 1.23 times

2006-05-27T01:51:00.000-07:00

Deccan Aviation inital public offer, IPO has been subscribed 1.23, as per the NSE website on 26 May 2006.

Qualified Institutional Buyers, QIBs, portion has been subscribed 1.0899 times. The Non Institutional Investors has been subscribed 1.1535 times and the retail portion has been suscribed 1.4565 times.

Deccan Aviation IPO was the first Indian IPO to ever get extended. The issue opened on the doomed day of May 18, when the Sensex crashed over 800 points. It was meant to close on May 23, but the date was extended till May 26. The price band was also changed marginally, from Rs 150-175 per share to Rs 146-175 per share.

Deccan Aviation's IPO consists of 2.45 crore equity shares.The equity shares of the company are proposed to be listed on the NSE and the BSE.

The company proposes to utiltise the funds in setting up a training centre at Bangalore, setting up a hangar facility for base and medium-level maintenance checks at Chennai; and setting up infrastrucuture at airports.MD at Deccan Air, GR Gopinath had said that the company had received requests from the retail, institutional and other investors to do so. He further added, "As people were in a shock, they did not have enough time to evaluate the investment opportunity. So we thought we should give this opportunity to more number of people to offer their bids."

Surbhi Chawla of Angel Stock Broking feels that in the case of Deccan Aviation, the valuations were a bit stretched and its time of entry was unfortunate. The market had been volatile, which went against the issue. Chawla futher adds that with the intense competition, and the Aviation Turbine Fuel (ATF) prices rising, till the time the company expands to a certain limit and completes its fleet expansion, it would not be profitable.She also feels that at the new price of Rs 146-175 it would make much difference and the actual price should have been much lower than Rs 146.

Deccan Aviation, a Bangalore based company operates Air Deccan, a low - cost commercial passenger airline and Deccan Aviation, a private helicopter and airplane chartering service in India. Air Deccan which began operations in Aug, 2003 was the first Indian airline to follow a no - frills, low - cost passenger airline business model. The business strategy focuses on offering low fares to attract cost conscious middle class and corporates, selecting new routes and reducing costs. Such a strategy seems to have worked well so far, as the airline has managed to corner a market share of 16% in three years of its operations. Deccan Aviation, India’s largest private heli - charter company provides heli - services for company charters, tourism, medical evacuation, off-shore logistics etc.

Ahluwalia Contracts files DRHP with Sebi

2006-05-26T08:11:00.000-07:00

Ahluwalia Contracts (India), having experience in providing end to end turnkey construction solutions, has filed its draft red herring prospectus, DRHP, with the securities and exchange board of India, Sebi, for a public issue of 31,25,000 equity shares of Rs 10 each for cash at a premium to be decided through the book building process.

Of the total equity shares being offered, 29,68,750 equity shares are net offer to the public, while the balance 1,56,250 shares are reserved for eligible employees of the company. The issue would constitute 19.93% of the fully diluted post issue paid up capital of the company, while the net offer to the public would constitute 18.94 % of the fully diluted post issue paid up capital of Ahluwalia Contracts (India) Ltd.

At least 50 % of the net offer to the public shall be allocated on a proportionate basis to Qualified Institutional Buyers, QIBs; upto 15% of the net offer to the public shall be allotted on a proportionate basis to non-institutional investors and upto 35% of the net offer to the public shall be available for allocation on a proportionate basis to retail bidders.

The equity shares proposed to be listed on the NSE and the BSE, besides the Delhi, Calcutta and Jaipur Stock Exchanges where the existing equity shares of the company are listed.SBI Capital Markets and UTI Bank have been appointed as the book running lead managers for the issue.

Follow-on issue to aid Ghaziabad steel plant: Rathi Udyog

2006-05-25T23:39:00.000-07:00

Rathi Udyog has come out with a follow on public issue. Chief Executive of Rathi Udyog, Udit Rathi, says that part of the issue would be for the stainless steel project at Ghaziabad, and a part would be for the backward integration project coming up in Orissa.
Excerpts from CNBC - TV18’s exclusive interview with Udit Rathi:

Q: You are intending on raising about Rs 98 crore, the purpose of which is the expansion plans that you have in the pipeline?
A: It is basically a stainless steel project at Ghaziabad, which has already been commissioned. So part of the issue would be for that and we have already commissioned that. It is also for a backward integration project coming up in Orissa, which is going to be supplying raw materials to our existing operations in Ghaziabad.

Q: How much savings would you have once this project comes up in terms of cost?
A: There will be substantial savings on account of raw material and its quality. Obviously financial savings are going to be substantial.

Q: Have you been able to tie up raw materials for your Orissa plant, given the kind of fluctuation that we are seeing in the commodity space ? Can we expect your margins to rise close to about 14% over the next year and a half ?
A: I cannot actually comment on any specific number, we are still in the silent mode. But yes we have signed an MoU with the government of Orissa for location of captive iron ore mines. This is subject to various compliances with them and the sponge iron route which also uses Indian coal, it does not require the coking coal that is an advantage. Orissa is rich in iron ore. I do not see any issue in securing raw materials as such.

Q: In terms of volume growth, what can we expect from Rathi Udyog?
A: We recently got into stainless steel, which is going to substantiate our bottomlines. The operating margins are better and the backward integration project is a regular source of raw materials . As far as the volumes are concerned this project is more to substantiate the bottomline and to get into value added products of stainless steel, which have already been commissioned.

Q: If we look at the price band it is about Rs 50-Rs 55, which is below your current market price of Rs 70. Why has the price issue made within this range because if you take a look at price to earnings, it is below the average of the industry.
A: It is to give substantial amount to the investors on the table. It is a follow on public offer and it had to be at some discount. It is basically for the investors to get good returns.

Prime Focus IPO; QIB portion fully subscribed

2006-05-25T23:38:00.000-07:00

The Qualified Institutional Buyers, QIB, portion of Prime Focus, initial public offer, IPO, is fully subscribed on the very first day of the opening of the issue today. The number of bids received totalled 12,62,772 in all categories.

The company’s 100% book building public issue of Rs 115 crore opened today with a price band of Rs 450-500 per equity share of Rs 10 each. The issue closes on May 31, 2006. Centrum Capital and ICICI Securities are the BRLMs for the issue.

Adlabs Films is a strategic investor in Prime Focus and has 4.66% of the existing equity capital. Other investors include Reliance Capital, who holds about 14.53% stake in Prime Focus, apart from Rakesh Jhunjhunwala and Rekha Jhunjhunwala, who holds 8.5% stake.

Prime Focus is India’s integrated end-to-end post production and visual effects service house. It has recently acquired a 55% stake in UK based VTR group, a media service company and a leading post-production group. The UK acquisition is part of company’s proposal of setting up studios in US, Dubai and Hyderabad.

Green signal for FIIs in realty IPOs

2006-05-25T23:31:00.000-07:00

In a move that could open up the flow of foreign investment in the real estate sector, the commerce and industry ministry has said that foreign institutional investors (FIIs) can take part in the pre-IPO placement of real estate companies. Since FIIs are already allowed to subscribe to shares offered through IPOs by real estate companies, the move opens up the sector in a big way.

The Department of Industrial Policy and Promotion (DIPP), part of the commerce and industry ministry, feels that investments made by FIIs during a pre-IPO placement is not categorised as foreign direct investment (FDI). Therefore, the restrictions imposed on FDI flow into real estate through Press Note 2 of ’05 will not apply to such investments.

"In view of the above, guidelines notified vide Press Note 2 (’05 series) are applicable to the investment made only under the FDI route, and are not applicable to investment by FIIs. Consequently, investments made by registered FIIs during the IPO or during a pre-IPO placement would not attract the provisions of Press Note 2 (’05 series)," the DIPP said in a recent communication to DLF which is planning to launch an IPO next month.

According to Press Note 2, FDI in real estate is allowed only if the project concerned adheres to certain restrictions including minimum project size in terms of land and built-up area. Therefore, FDI norms for real estate suit only specific projects rather than real estate companies which take up various types of projects.

While DIPP has allowed FII investment in pre-IPO placements too, the final decision on the issue would rest with RBI and Sebi. So far no real estate company has made placements with FIIs, though many of them have lined up IPOs.

Investments by FIIs in IPOs of real estate companies were also questioned initially but clarity has been arrived at after DLF sought the DIPP’s views on the issue. Parasvnath Developers, another real estate company planning an IPO, had also sought clarification from the DIPP.

Apart from informing both the companies that FII investment is allowed in their IPOs, the department informed RBI about the details. While the clarification sought by Parasvnath was only about the IPO, DLF had urged the department to clarify if FIIs can invest in pre-IPO placements too. The affirmative reply from DIPP is likely to help other real estate companies like Ansals which are planning IPOs.

Naya Issue: PRIME FOCUS LTD

2006-05-25T02:07:00.000-07:00

Type of Issue:Book Built
Issue Opens:25 May, 2006
Issue Closes:31 May, 2006
Issue Size:2,000,000 (No. of Shares)

Solid growth prospects, but aggressive pricing
Prime Focus (PF) is one of India’s techno-creative leading end-to-end post-production and visual effects services house. The company offers a comprehensive spectrum of services ranging from visual effects, digital film lab (digital intermediate, high-resolution film scanning and film recording), telecine, editing, and motion control to High Definition (HD) production. Currently, it holds 85% of all films undergoing process. PF caters to the commercials, features film and television segments.

Adlabs Films is a Strategic Partner, holding 482,000 shares (3.8% to 3.9% of the post equity capital) of Rs 10 each of PF. Incidentally the effective cost of acquisition for Adlabs Films was Rs 96.80 per share. Their relationship extends into business alliance agreement wherein the terms give PF a non-transferable, non-exclusive right and license to use the Name/Brand of Adlabs Films in consideration of royalty of Rs 12,80,000/- per annum.

PF operates at Santacruz, Mumbai, Royal Palms, Goregaon and Raghuvanshi Mills, Lower Parel, Adlabs premises at Goregaon, Mumbai & Vijaya Labs, Chennai. Most of the premises are owned by the company, some by its directors and couple of them by Adlabs. The company employs 273 personnel with 141 creative staff & 132 non-creative staff.

PF has acquired 55% of the share capital of VTR Plc, listed on the London Stock Exchange, totaling to 13,491,561 ordinary shares of 5 pence @ 35 pence per ordinary shares, amounting to a purchase price of GBP 4.7 million with GBP 4.2 million in cash & GBP 0.50 million in equipment. Currently, its shares are trading at 28.5 pence in London Stock Exchange, which is at about 19% discount to the PF’s purchase price. VTR Plc provides services to the media industry with 20 years of post-production experience and is involved in post-production and graphic design for broadcast, commercials and promos sectors. The main focus on the acquisition is to enter in the UK market, London a key advertising market.

The Issue proceeds are to be utilized to finance the following: -

1. domestic expansion (service commencement April 2007)
2. acquire existing studio in Los Angeles, the main business center for film-based production (service commencement April 2007)
3. London studio (service commencement April 2007)
4. set up studio in Hyderabad to tap south market (service commencement September 2006)
5. fund long term working capital
6. set up studio in Dubai (service commencement July 2007)
7. issue expenses.

Strengths
* PF is the market leader in the post-production visual effects, especially for films, except in the Southern Region. Now the company also plans to enter the Southern region market as well, by setting up a studio in Hyderabad.
* The Indian Entertainment Industry stands at Rs 20,000 crore currently and is expected to grow at the rate of 18% per annum. The average budget for postproduction and visual effects is expected to be 15-25%. PF which provides a wide range of post production and visual effect services under one roof will be able to secure a sizeable piece of the pie with only 2-3 players offering such services under one roof.
* Setting up shop in Los Angeles, London & Dubai will enable the company to explore the international markets as also to explore the possibilities of outsourcing of services.

Weakness
* The collection period for PF is 90 days that gets stretched to 120 days that in turn leads to high receivables. Bad debt write off accounted for Rs 1.13 crore (5.61% of sales) as on March 31, 2004, Rs 0.89 crore (2.85% of sales) as on March 31, 2005 and Rs 0.84 crore (2.87% of sales) as on December 31, 2005. However, bad debts totaling to Rs 0.63 crore were recovered during the period ended December 31, 2005.
* On a consolidated basis, VTR Plc (subsidiary of PF), reported 18% fall in turnover to GBP 9.59 million in the six months ended February 2006. During this period, the performance deteriorated and the company reported loss after tax of GBP 0.52 million compared to a profit to GBP 0.30 million in corresponding previous period. The consolidated net worth of the company stood at GBP 4.66 million (GBP 6.15 million corresponding previous period).
* PF has to report consolidated numbers from the current fiscal. The losses of VTR Plc will eat into the profits of the stand-alone entity. The net profit for the nine months ended Dec’05 of PF is Rs 11.04 crore, while the net loss of VTR Plc for the six months ended Feb’06 is Rs 4.03 crore! Hence, much depends on the ability of PF to quickly turnaround VTR Plc and benefit from synergy in operations, which it believes to be immense.
* The mega expansion plans slated by the company will start realizing gains only in 2007-08 since the time frame for commencement of services in all location except the Hyderabad studio is proposed to be April 2007.

Valuation
The nine months annualized EPS of (stand alone) PF is Rs 10.43 / 10.22, which discounts the offer price by 48 times at the higher end and by 44 times at lower end. There is no other listed player for comparison, the biggest unlisted player being Prasad Studio. However, the Entertainment Industry PE taken as a basket is 54.3, but this again is not comparable taking into account the services rendered and the size of the company, which is at the moment mid-sized. Also, ballooning losses of VTR Plc will bring down the consolidated EPS.

The year end for both VTR and PF are different, and they have disclosed unaudited results for different periods, with the former having disclosed results for the six months ended February 2006 while the latter has disclosed the results for the nine months ended December 2005. Assuming steady stream of revenues and profits, based on the latest available financials of both the companies, we find that the consolidated P/E to be in the range of 65 to 74 times (depending on the offer price) the annualised consolidated earnings, which appears to be on a higher side.

On the positive side, the company has a basket of services covering the entire range of post-production and visual effects, and claims to be a market leader in India, except in South. With entertainment sector set to witness accelerated pace of growth, by virtue of its leadership and expansions, PF is ideally placed to optimally capitalise on the growth. But it is equally critical for the company to quickly turnaround VTR Plc and derive operational and business synergies therefrom, lest it’s consolidated profits will not reveal its operational prowess. In this context, the offer price in the range of Rs 450 to 500 per share, appears stiff.

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Unity Infraprojects IPO subscribed 2.37 times

2006-05-24T22:36:00.000-07:00

Unity Infraprojects entered the capital market, with a public issue of Rs 34.43 lakh equity shares of Rs 10 each for cash, at a premium, which is to be decided through the book-building process.

The issue has been subsscribed 2.37 times, as per the NSE website at 9 pm May 25.The qualified institutional buyer, QIB, has been subscribed 3.27 times. The retail portion has been subscribed 1.94 times.The issue closed on May 24. The price band was fixed between Rs 651-732.

The company intends to use the net proceeds of the fresh issue to purchase capital equipment, prepay debt, invest in build operate-transfer (BOT) projects, fund working capital requirements and for general corporate purposes.

The issue comprises fresh issue of 27.68 lakh equity shares for Rs 10 each and an offer for sale of 6.75 lakh equity shares of Rs 10 each by Mr Avarsekar and other board members.

The company planned to reserve one lakh equity shares for permanent employees of the company and a balance of 33. 43 lakh equity shares would form the net issue to public. The sole book running lead manager to the issue is DSP Merrill Lynch .

Unity Infraprojects is one of India's leading engineering and construction companies. It provides integrated engineering, procurement and construction (EPC) services for civil construction and infrastructure sector projects.

New product line to start by Dec-end: Bluplast

2006-05-24T05:22:00.000-07:00

Bluplast, which manufactures plastic products is coming out with an IPO. The company is generating only 3-5% from exports and is trying to focus more on the local market.

The company’s MD Kamlesh Jain says that by December end it will launch its new product line. It is also expanding its existing capacities.

Excerpts from CNBC-TV18's exclusive interview with Kamlesh Jain:
Q: You are into two businesses: plastic wares and wood composite? What kind of business prospects are you looking at; and what kind of investment are you planning to make?
A: Wood composite will be a completely new product for the Indian market. This is the replacement of wood directly. This is a value added product. So the future is good for this product.

Q:A word on your organic business of manufacturing plastics. You have made a statement that you are doing it through an injection moulding process. What kind of competitive advantage does this give to you vis-à-vis your competitors?
A: This is a common technology and everybody is using it. We have a countrywide network and have a range of products. That is the main thing.

Q: In terms of branded products you have said that you sell under your own brand. Do you have a substantial amount of market share? Can you tell us which is your strongest product?
A: In the product range we have that is, casserole, tiffin, water bottles and other products like buckets, water tubs, the overall revenues are good.

Q: How are you trying to adjust to raw material cost pressures?
A: That is affecting our industry as a whole.

Q: Are you taking any measure at Bluplast to control that?
A: We are helpless. We cannot do anything because this is completely driven by petroleum prices.

Q: What is the amount of revenue generated from exports?
A: We are generating only 3-5% from exports. We are concentrating mainly on the local market.

Q: When do you hope to add this new product line? How much will it contribute to your topline and bottomline?
A: By end of December we would be able to start the production of the new line. We are also expanding in our existing facility. So by December both the projects will be ready.

Q: After this issue there will be an excessive dilution of the promoters’ stake. Is that really a concern?
A: That was a problem. We have tried to solve it but because of the project size actually we could not manage.

MasterCard may tap market with $2.6-bn IPO this week

2006-05-23T22:17:00.000-07:00

After four decades of private life, MasterCard is expected to make its initial public offering (IPO) this week, and despite some bumps, analysts see a solid debut for the world’s No 2 credit-card association.The deal has been in the making for nearly a year and could be the largest US stock flotation since May ‘04, when Genworth Financial, an insurer spun off by General Electric, issued 146m shares in an IPO that raised $2.83bn.

The New York-based MasterCard, which trails Visa, will offer up to 61.5m shares in the IPO, a 46% stake that could be worth $2.6bn.“This is going to be a strong offering and we expect it to do well in the after-markets,” said David Menlo, president of IPOFinancial.com, an independent research firm based in Millburn, New Jersey. “It’s the creme de la creme.

It’s just a hard indicator as far as what’s happening with our economy right now... Spend, spend, spend,” Menlow said.If the IPO prices at its forecast midpoint of $41.50, MasterCard would have an initial market capitalisation of about $5.6bn, including all Class A and Class B shares.MasterCard is expected to price at around 11 times annualised earnings, which is low, so there could be a jump in the IPO after-market. “It has a lot of `hair on it’,” Francis Gaskins, president of independent research firm IPO Desktop, said in a note.

“Longer-term investors are buying into the structural growth of its markets, especially overseas,” Gaskins said. The company posted a $126.7m profit for the quarter ending March 31, nearly 36% higher than the year-earlier period, according a filing with the US Securities and Exchange Commission.

MasterCard also said it had sales of $738.5m during the quarter, up nearly 12% from a year ago.MasterCard, which is owned by some 1,400 banks that issue its cards, serves nearly 25,000 financial institutions in 210 countries and territories, according the filing.The company plans to use all but $650m of the proceeds to redeem Class B shares. What is left over will be used to defend against legal and regulatory challenges, expand geographically and into higher growth segments of the payment industry, the prospectus said.

Citigroup Global Markets Inc. and Goldman Sachs are the lead underwriters on the deal.MasterCard and the banks that issue its cards are facing lawsuits accusing them of conspiring to set fees that merchants pay to banks at an artificially high level.

If MasterCard is found liable in any litigation, it could force the company to alter its pricing structure or business practices, both of which could hamper its profitability, the company warns in the prospectus.

The company also said it expects to post a significant second-quarter and full-year loss because it is donating about 10% of the stock from the share sale and $40m in cash to a charitable foundation in Canada.The organisation is being set up to support educational programs that prepare children for life in the global economy and develop entrepreneurship in disadvantaged areas.MasterCard customers could also be facing higher lending fees after ratings agency Standard & Poors said it plans to lower the company’s debt rating following the IPO.Then there is the issue of trailing its larger rival, San Francisco-based Visa, which remains a nonpublic association of member financial institutions.

“It’s in a space when not being a leader certainly counts against you,” said Tom Taulli, an independent analyst and author of “Investing in IPOs,” of Newport Coast, California. “Visa is the king of the hill in this area and it’s hard for a company like MasterCard to become the dominant player ... I would be surprised if it had a big jump on the first day.”

Global vectra files DRHP with Sebi

2006-05-23T22:15:00.000-07:00

Offshore helicopter transportation company Global Vectra helicorp (GVH) has filed draft red herring prospectus with Sebi for the initial public offer of the company.

GVH proposes to enter the capital market with an offer of 35 lakh equity shares of Rs 10 each for cash at a premium to be decided through 100 per cent book building process, the company said here on Wednesday.The issue constitutes of 25 per cent of the fully diluted post issue of equity capital of the company, it said.Of the total offer, the company will be issuing 28 lakh fresh equity shares and the balance of seven lakh are on offer for sale by one of the promoters, Azal Azerbaijan Aviation Ltd, which is a Vectra group of company, it said.

GVH, which owns 12 Bell 412 helicopters, is serving the oil and gas exploration sector in the country by providing helicopter transportation to offshore oil platforms located 50-100 nautical miles from the Indian coastlines.

Air Deccan extends IPO closing by 3 days

2006-05-23T21:54:00.000-07:00

IPO price range widened to Rs 146-Rs 175.Deccan Aviation which runs the low cost airline Air Deccan has extended its initial public offering (IPO) by three days to 26 May as bids are still being received from qualified institutional buyers. The company has decided to widen the price band for the IPO to Rs 146-Rs 175 from the earlier Rs 150-Rs 175.

Allcargo Logistics issue opens on June 1

2006-05-23T08:41:00.000-07:00

Logistics service provider in Multimodal Transport Operations Allcargo Global Logistics Limited is entering the market on June 1 to part finance its Container Freight Station (CFS) projects, prepayment of loan and general corporate expenses, including acquisitions.

"The total size of the Initital Public Offer (IPO) is Rs 150 crore. While Rs 15 crore would go for prepayment of loan taken from Yes Bank."Rs 66 crore is required to fund the balance of CFS project coming up at Chennai and Mundra and an Inland Container Depot at National Capital Region," Allcargo Chairman and Managing Director S K Shetty told reporters on Tuesday.

The company is entering with a public issue of 2.07 million equity share of Rs 10 each through book building process. The price band has been fixed at Rs 625 to Rs 725 per equity share.The issue closes on June 6.

According to company Chief Operating Officer Ashit Desai, the Chennai and Mundra CFS would come up by first quarter of 2007, while NCR ICD would be ready by end of 2007.
The total cost for CFS Chennai is Rs 31 crore, of which Rs 7.9 crore has been spent up to April 15. Balance fund required is Rs 23 crore, he said.CFS at Mundra costs Rs 27.78 crore of which Rs 4.8 crore has been spent.Another Rs 22.9 crore is needed. In case of ICD at NCR, total cost is Rs 21 crore, Desai added.

Prime Focus plans IPO of Rs 115cr

2006-05-22T02:30:00.000-07:00

Prime Focus Limited, India's leading post-production company for television and films, has drawn out plans for an initial public offer, IPO, of Rs 115 crore (Rs 1.15 billion) and has filed its draft red-herring prospectus, DRHP, with Sebi.

Prime Focus has acquired a 55% stake in UK-based VTR Group, the £20 million media service company, for approximately £4.7 million. This UK acquisition is part of the IPO objective. The proceeds from the IPO will also be utilised to set up a new Rs 10 crore (Rs 100 million) studio in Hyderabad and another Rs 10 crore (Rs 100 million) studio in Dubai.

Reliance Capital holds about 14.53% stake in Prime Focus, while Adlabs has about 4.66% stake in Prime. Additionally, Rakesh Jhunjhunwala and Rekha Jhunjhunwala hold about 8.5% stake with the balance held by promoters and friends.

Slow take-off for Air Deccan IPO

2006-05-18T23:12:00.000-07:00

The initial public offering (IPO) of Deccan Aviation managed to receive bids for just 1.44 per cent of the total issue on its opening day today.

The poor response — one of the lowest in the recent past — was a fallout of twin factors: the bloodbath on Dalal Street today and the system of compulsory payment of margin money by the qualified institutional bidders (QIBs) applying for IPOs.

According to the data released by the National Stock Exchange, the combined applications received by both the BSE and NSE stood at 3.55 lakh shares. The aviation company is offering 2.45 crore equity shares through the book-built issue.

Merchant bankers associated with the issue were, however, not perturbed by the poor show. “It's only expected that no investor would like to lock in funds in the current volatile market. It makes sense for them to bid towards the closure of the issue,” one of them explained.

Bankers also pointed out the outlook of the issue was bright. “The road shows of the issue abroad received good response,” a merchant banker said.Several analysts pointed out the response to the QIB portion today was one of the worst ever seen in the recent past.

“The QIBs had been putting in their bids towards the closure of the issue ever since Sebi made the payment of margin money compulsory. However, this issue, perhaps, received the lowest ever response on day one from them,” an analyst said.

Normally, retail investors participate in the last three days of any IPO. Of the 3.55 lakh bids received, 3.09 lakh bids have been made at the cut-off price. The issue is priced between Rs 150 and Rs 175. It closes on May 23.

The company proposes to raise Rs 368.19-429.55 crore through this issue.The issue will constitute 25 per cent of the fully diluted post-issue paid-up capital of the company. Enam Financial Consultants Private and ICICI Securities are book-running lead managers for the issue.
Source:Business Standard

DD, AIR may enter capital market

2006-05-18T23:05:00.000-07:00

The government is likely to clear the path for public broadcaster Prasar Bharati (PB) to raise capital from the market, in order to become financially independent.

The Group of Ministers (GoM) in its first meet on Thursday deliberated on the issues. Firstly, to take the necessary steps for allowing PB to borrow capital from the market. And secondly to allow smooth transition of government owned DD and AIR assets to PB ’s direct control. PB is currently being funded by loans and grant-in-aid. Its annual losses are over Rs 5,500 crore.

The GoM is likely to endorse the view of allowing PB to borrow capital from the market and all the physical assets should be moved under its direct control,”sources said.The GoM is also likely to give its consent to the ministry’s recommendations of empowering Prasar Bharati to fulfill its manpower requirement directly. At present, Prasar Bharati directly employs over 5,000 personals while over 40,000 DD and AIR’s staff are government servants.The GoM is also likey to clear a financial assistance package for PB to improve the service conditions of the existing employees as well as to attract future talent, sources added.

After-shocks may cut retail interest in new IPOs

2006-05-18T22:51:00.000-07:00

Thursday’s stunning crash could crimp the efforts of lead managers to secure an overwhelming response to some of the IPOs that have already opened and those which are likely to open over the next month.

Analysts and merchant banking sources said that oversubscription levels could be affected and the response of the retail investor would also be muted if the market continues to fall. The impact is likely to be greater on the retail and HNI categories of investors. Of late, the retail investor has become more discerning and the retail portion of IPOs tends to get fully subscribed only on the last one or two days.

Deccan Aviation and Gangotri Textiles were the two issues that opened on Thursday. Another issue opening on Friday is Unity Infrasprojects. A sharp drop in the market could see the retail and HNI subscriptions getting affected, says an analyst with a leading domestic brokerage. Institutions shouldn’t get too scared but some of the fringe investors could drop out of the IPO process.

The oversubscription level that has been seen for some of the recent issues — 40-50 times — could also come down if the fall sustains. “Impact on retail sentiment is more likely and retail subscriptions could be affected.

Financial institutions are in a position to take a longer term view,” says Vineet Suchanti, managing director, Keynote Corporate Services, the co-book running manager for the GTL issue. Some of the large forthcoming public issues include the likes of DLF, Parsavnath, Development Credit Bank, GMR, and Gammon Infrastructure. The first two are real estate players while the last two are infrastructure plays.

A sustained fall could see a drop in the price expectations of the IPOs. The current price band for Air Deccan is reportedly well below what the promoters were originally expecting.

The same could now happen to some of the other issues, particularly where the valuations are based on very optimistic assumptions of future growth. IPO issuances usually account for a big chunk of the total portfolio equity investment. Last year, India attracted a total of $12.5bn of portfolio investment, which was expected to come down to about $8bn in the current year.

Naya Issue: RATHI UDYOG LTD

2006-05-18T22:37:00.000-07:00

Type of Issue:Book Built
Issue Opens:19 May, 2006
Issue Closes:25 May, 2006
Issue Size:10,000,000 (No. of Shares)

Multiplying equity 4.5 times
Rathi Udyog (RUL), part of the Delhi-based P. C. Rathi group, manufactures long steel products at its Ghaziabad facility in Uttar Pradesh. The installed capacity is 1,25,000 tonnes per annum of rolled products and 40,000 tonnes of stainless and alloy steel.

The Rs 98-crore follow-on issue of RUL is to part-finance the expansion at its Ghaziabad unit and set up an integrated steel plant at Sambalpur, Orissa, to produce 1,50,000 tonnes of sponge iron and 1,50,000 tonnes of steel billets along with a 20-MW captive power plant. Commercial production at the Orissa facility is expected to commence from October 2006, while expansion at the Ghaziabad facility is over.

The cost of these undertakings is estimated at Rs 277.77 crore. The expansion will be funded through term loans of Rs 179.77 crore. The balance is to be funded through the issue proceeds.

Strengths
* Demand may be generated for construction-grade steel on account of the infrastructural development activities expected in the National Capital Region (NCR). The Commonwealth games in this region will require infrastructure in the form of new stadiums, hotels, resorts, expressways, overbridges, shopping complexes, and hospitals. Furthermore, the extension of the Delhi metro rail and the modernisation of the international airport of Delhi are expected to boost demand.
* Of the issue size of Rs 98 crore, promoters’ contribution will be Rs 40 crore (nearly 41% of the issue) at the issue price.

Weaknesses
* RUL faces competition from other companies within the Rathi group, which manufacture similar products under the same brand name.
* RUL has yet to obtain captive mines of iron ore and coal, which are necessary to make the project competitive.
* The proportion of income from the sale of manufactured products as a percentage of total income has sharply decreased from 81% in FY 2001 to 61% in FY 2005 and further to 55% in the nine months ending December 2005.
* With low capital requirement and easy availability of low-cost technologies, entry barriers for this business are very low, unlike flat products. Besides, there are too many players in the organised and unorganised segments.
* RUL had received many notices from Sebi and the Delhi Stock Exchange for non-compliance of various regulations in the past and had to pay penalties.

Valuation
The 52-week high/low of RUL has been Rs 261.5 (26 August 2005) and Rs 43.05 (07 July 2005). In just one-and-a-half months (July-August 2005), the scrip shot up over six times. The current market price is Rs 83. Post-issue, the equity will jump from Rs 4.7 crore to over Rs 22 crore. At a price band of Rs 50– 55, PE works out to be 11.4x to 11.6x FY 2006 earning on post-diluted equity, whereas the sector TTM PE is 7.9, with many frontline steel companies trading below 10 PE.

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To View Prospectus Click Here

JRG Sec lists at Rs 55 on BSE

2006-05-17T23:40:00.000-07:00

JRG Securities has listed on the stock exchange above its issue price at Rs 55 on the BSE. The stock was issued at Rs 40 per share.On the BSE, at 10.08 am, the share is quoting at Rs 44.75, with volumes 5,45,154 shares. It has touched an intraday high of Rs 55 and an intraday low of Rs 43.10.The share's BSE ID is 532745. It was subscribed 4.47 times.

JRG Securities had entered the capital market with intial public offer, IPO of 36.25 lakh equity shares with a face value of Rs 10 and premium of Rs 30.The issue was meant to mobilise Rs 14.50 crore (Rs 145 million) for the up-gradation of the existing IT infrastructure, establishment of 30 new regional offices and for overseas expansion, Giby Mathew, Executive Director of JRG said.This would probably the first time that FIIs, Mutual Funds, banks and Indian institutions have shown so much interest in such a small issue.

Naya Issue: UNITY INFRAPROJECTS LTD

2006-05-17T23:07:00.000-07:00

Type of Issue:Book Built
Issue Opens:19 May, 2006
Issue Closes:24 May, 2006
Issue Size:3,343,000 (No. of Shares)

High on valuation
Mumbai-based Unity Infraprojects (UIP), with operations in eight states, provides integrated engineering, procurement and construction (EPC) services for civil and infrastructure projects. The company’s expertise includes (a) civil construction projects (commercial and residential buildings, mass housing projects & townships, industrial structures, IT parks, corporate offices, transportation terminals including airports and railway stations, stadiums and sports complexes, hotels, hospitals, universities, education complexes); (b) transportation engineering projects (roads, bridges, flyovers, subways); and (c) irrigation and water supply projects (dams, tunnels, lift irrigation projects, sewerage schemes).

Apart from design–build projects, UIP also undertakes projects on turnkey basis, providing a range of specialised construction and operational services including electrical, fire prevention and control, plumbing and air-conditioning.

The proceeds from the current issue will be used for (i.) investment in capital equipment; (ii.) prepayment/ repayment of debt; (iii.) investment in build-operate-transfer (BOT) projects; and (iv.) funding working capital margin requirement.

Strengths
* UIP’s order book (including unfinished and uncertified portions of commenced projects) was Rs 1171.85 crore, i.e. 4.4 times FY 2005 revenue on 31 December 2005. Sectoral breakup stood at: 50% civil construction (of which 74% were government related projects, 36% construction of private corporates); 32% irrigation projects; and 18% transportation projects.UIP has further added contracts worth Rs 219.39 crore in the period from 1 January 2006 to 8 May 2006.
* UIP has commissioned a ready-mix concrete plant and an interlocking concrete paver block plant in FY 2006. This kind of a backward integration will help the company in procurement of raw materials for its construction activities.

Weaknesses
* The income-tax department has opened UIP’s assessment for scrutiny and issued statutory notice for assessment year 2003-04 against its joint ventures Backbone Joint Venture and Thakur Mahatre Unity for Rs 5.62 crore and Rs 7.52 crore, respectively.

Valuation
UIP has issued six lakh equity shares at Rs 490 per share (premium of Rs 480) on 24 March 2006 to institutional investors.At the offer price band of Rs 651- Rs 732, UIP’s PE works out to 72.8- 81.9 x FY 2005 EPS on a post-issue equity and 40.0 – 45.0 x 9-month FY 2006 annualised earning on the post-issue equity of Rs 13.37 crore.
TTM PE for the construction sector is abnormally high at 49.9. UIP is a much smaller company compared to the many listed companies.

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Naya Issue: GANGOTRI TEXTILES LTD

2006-05-17T22:58:00.000-07:00

Type of Issue:Book Built
Issue Opens:18 May, 2006
Issue Closes:23 May, 2006
Issue Size:11,956,520 (No. of Shares)

Erratic track record
Gangotri Textiles (GTL) is one of the leading players in open-ended (OE) spinning in the organised segment. Its 5,904 rotors produce yarn with a count ranging from 2s and 20s for consumption in the home textiles segment. The 17,376 spindles produce fine count yarn, ranging from 14s to 40s, for hosiery manufacturers. The 1,000 pieces of men’s trousers per day that are manufactured are sold under the brand name, Tibre. It has installed 2 X 1.65-MW wind mills.

The Rs 351-crore project of GTL covers expansion-cum-integration of facilities in spinning, weaving, processing, garmenting and installation of windmills. The company plans to add 19,200 spindles to produce 2/30’s polyester-cotton yarn (to be commissioned by January 2007) and 31,200 spindles to produce 2/40’s cotton yarn (to be commissioned by October 2007) at a cost of Rs 73.76 and Rs 77.46 crore, respectively. The company proposes to set up a weaving and processing capacity of 51,000 meters per day at a cost of Rs 128.83 crore (to be commissioned by October 2006). Its modern facility to produce 3,000 pieces of men and women garments will cost Rs 7.83 crore (to be commissioned by October 2006). The installation of 6 X 1.65MW wind mills will requires Rs 59.12 crore.

GTL recently announced a strategic alliance with Switzerland-based Trailer for joint marketing and branding for its brand Tibre, both in Europe and Asia

Of the Rs 351-crore expansion, Rs 273 crore will be financed through debt, Rs 55 crore through public issue, and the balance through internal accruals, promoter’s contribution and subsidies.

Strengths
* With the current expansion, GTL will be able to extend its presence in weaving, which was the missing link between spinning and garmenting.
* In FY 2005, yarn contributed nearly 92% to the overall sales. However, going forward, this share will reduce to around 40% and the balance will be come from fabrics (around 30-35%) and garments (around 20-25%) enjoying much better margin.

Weaknesses
* GTL aims to sell 30% of its fabric capacity in the export market, which is a new segment for the company and may take time to establish.
* The present debt-equity ratio is around 3.4, which is considered to be relatively high. Similarly, the debt-equity ratio for the expansion project is also around 3.5.
* The past performance is not consistent. For example, the net profit declined 95% from Rs 5.32 crore in FY 2001 to Rs 0.26 crore in FY 2002. Though it increased for two consecutive years, the net profit halved to Rs 3.25 crore in FY 2005. The profit has bounced back in the first nine months ended December 2005 to Rs 6.28 crore, but sales were 21% lower.

Valuation
The market price crossed the upper band in April 2006 and is currently traded around Rs 60. At the offer price band of Rs 41-Rs 46, the post-issue equity works out to be between Rs 16.37 crore and 17.10 crore. EPS for TTM ending December 2005 is around Rs 2.4. PE is between 18 to 19 times at the lower and the upper price band. The Textiles-Cotton/Blended industry average is around 14 times.

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Naya Issue: DECCAN AVIATION LTD

2006-05-17T22:48:00.000-07:00

Type of Issue:Book Built
Issue Opens:18 May, 2006
Issue Closes:23 May, 2006
Issue Size:24,546,000 (No. of Shares)

A long way to break even
Deccan Aviation (DAL) operates Air Deccan, a no-frills, low cost, scheduled commercial passenger airline in India, and Deccan Aviation, a private helicopter and airplane chartering service in India. Air Deccan follows a two aircraft-type fleet strategy with the business model based on a point-to-point route system, single class seats, low fares, and simple operations and cost reduction. It mainly targets customers using other means of transport and selects routes not catered to or underserviced by other airlines.

On 31 March 2006, Air Deccan had a fleet size of 29 aircraft: 11 Airbus A320 (180 seats) and 18 ATR Turbo props (48 and 72 seats), 26 on operating lease and three on hire purchase. It has a schedule of 226 flights daily, flying on 85 routes to 52 destinations and held a market share of 14.2%. Deccan Aviation, the charter service division, had a fleet size of 10 helicopters and two fixed-wing aircraft: nine owned and three on operating lease.

DAL has placed orders for 96 aircraft, scheduled for delivery by December 2012. It has entered into operating lease agreements for 11 aircrafts and hire-purchase arrangements for four aircraft. As per the schedule, 19 aircraft are to be received in FY 2007, 13 in FY 2008, 15 in FY 2009, 18 in FY 2010, 21 in FY 2011, 10 in FY 2012 and nine in FY 2013. The company has loan agreements with SREI Infrastructure Finance for financing the purchase of two helicopters.

On 22 April 2006, DAL entered into an agreement with Bennett, Coleman and Company to advertise in the group’s print properties for four years for Rs 22.5 crore with an option to spend up to 11% of the annual advertising commitment in its non-print media.

The funds from the issue are proposed to finance the setting up of a training center at Bangalore, a hangar facility for basic and medium-level maintenance checks at Chennai, infrastructure at airports, market development initiatives, and debt repayment.

Strengths
* The domestic air travel grew at a compounded annual growth rate (CAGR) of 15.67% from FY 2002 to FY 2005 and 23.7% up to January 2006. Air Deccan, currently holding a 16% market share, will benefit from the addition of 96 aircrafts by 2012, with 19 additions in FY 2007. With the use of ATRs, it can explore more airports, seizing the first mover advantage. With a single class, the company is able to offer more seats.
* Currently, the maintenance of ATRs is carried at a leased hangar in Hosur, and major checks on Airbus are done at overseas facilities. Once the hangar at Chennai is completed by December 2007, DAL will be able to reduce its maintenance cost.
* The distribution of Air Deccan tickets is through the internet-based CRS system, which is much cheaper than the GDS system used by major players.
* The turbo prop ATR attracts lower sales tax on the turbine fuel against other types of aircraft. It also enjoys lower navigation fees. No landing fees are payable for aircraft with fewer than 80 seats at domestic airports controlled by the National Airport Division of the Airport Authority of India (AAI).
* DAL is selling advertising space on the exterior as well as the interior of aircraft including storage bins, headrests, and tray tables, which yields additional revenue.

Weaknesses
* In the period ended 30 November 2005, DAL had a negative operating margin of 11.8%, resulting in an operating loss before lease rent of Rs 56.38 crore and an adjusted bottom line loss of Rs 117.94 crore. The losses have been increasing over the past couple of years.
* DAL is focusing on penetrating into smaller airports where no other player has entered. But the infrastructure problems at these airports are obstacles to smooth operations.
* The on time service record of Air Deccan is poor. In FY 2006, 92% of its flights actually flown arrived or departed up to one hour of their scheduled time. The industry standard is much better. The cancellation figures are also higher.
* With all airlines increasing their fleet size, the demand for pilots and other technical staff will increase, leading to higher attrition levels as well as higher employee costs.
* Competition is increasing with players like Spicejet, GoAir, Paramount Airways, Indian, and Jet Airways ramping up their fleet size.
* Fuel expenses account for more than 35% of the costs of an aircraft and the incessant rise in oil and air turbine fuel (ATF) prices are not only forcing companies to hike fuel surcharge affecting demand, but have to also absorb part of the rise affecting the margin.

Valuation
The market capitalisation to sales ratio of DAL is about 1.93 times (approximately taking average price band) as against Jet Airways, which is 1.89 times and SpiceJet’s 3.28 times.

DAL will take a couple of years to report net profit. However, revenue will grow fast, capitalising on the favourable industry scenario and expansion in the fleet size. But investors at the offer price of Rs 150- Rs 175 in a loss-making airline will be more vulnerable to negative triggers such as terrorist attacks, accidents, fuel price rise, litigations, and economic slowdown.

There is another angle to this company. Core promoters (Capt. G R Gopinath and associates) will hold only around 22.5% of the equity after the issue. Currently aviation industry is highly fragmented, with a couple of heavy-weight ambitious players sniffing around. Foreign carriers are also interested to enter the Indian market, if government permits. If any of these players start taking an interest in Air Deccan, shareholders may not have to wait for profits to see their scrips taking wings.

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NEWS

2006-05-17T22:45:00.000-07:00

Rathi Udyog fixes price band for its FPO
Rathi Udyog, manufacturer of steel products for use in construction industry, has fixed the price band of Rs 50-55 for its follow-on public offer, which will hit the market on May 19, to raise Rs 58 crore.The overall issue size is of Rs 98 crore, out of which the promoters will buy shares worth Rs 40 crore.

The company, in its board meeting held today, has decided the price band of Rs 50-55 per share, the company informed the Bombay Stock Exchange.The funds to be raised from the public offer are meant to to be primarily utilised to set up a steel plant in Orissa, which is a part of its Rs 277 crore expansion plan.

"As part of our backward integration plan, we are setting up a steel plant at Sambalpur, Orissa, to manufacture sponge iron and steel billets at a cost of about Rs 210 crore," the company's Chief Executive Udit Rathi told reporters here.The expansions would also be partly funded through debts. "We have already tied up about Rs 180 crore worth term loans with the banks," Rathi said.Of the aggregate follow-on public issue of Rs 98 crore, which closes on May 25, the promoter's contribution would amount to Rs 40 crore and the net issue would be Rs 58 crore."The demand drivers for the company are real estate and infrastructure sectors," Rathi said.

The capacity of the Orissa plant, which is likely to commission by October 2006, would be 1.5 lakh tonnes per annum of sponge iron and same quantity of steel billets.
It would also install 20 MW captive power plant there.Rathi Udyog's share price today closed at Rs 97 on BSE, up 1.3 per cent.Besides, Rathi Udyog has already executed the Rs 36 crore expansion plan at its existing facility in Ghaziabad, Uttar Pradesh to increase its rolling capacity to 1.25 lakh tonnes per annum.The company has also diversified in stainless steel and has set up a plant at Ghaziabad with a production capacity of 40,000 tonnes per annum.The total income of the company stood at Rs 301 crore in 2005-06 and net profit was Rs 8 crore.

Fitch sees slower growth for banks hit by IPO scam
Credit rating agency Fitch has said that banks against which RBI has taken regulatory action on the IPO scam would see slower growth if their branch licences are delayed.

In a statement issued here on Wednesday, Fitch said: “The immediate fallout on banks’ financials or funding access does not appear to be significant, but there could be long-term implications. If the RBI delays or curtails new branch licences to any of these banks, it would affect their growth and put them at a competitive disadvantage.”

However, Fitch feels that it may be reasonable to assume that the regulator would expect to be convinced on improved control standards during their annual inspections at these banks over the next six months.

The rating agency has said that the recent episode has also highlighted some issues facing the industry. “A few systemic shortfall, however, persist, including the absence of a unique identification number for all citizens and a fledging credit information bureau that has only recently taken off,” Fitch said in a statement issued here.

At the same time, it said that systems and controls among Indian banks have improved significantly during the last three years on the back of investments in technology and risk management. Some of the new private banks and foreign banks have an edge over government banks in terms of segregation of the business and credit functions and use of credit rating and scoring models.

KYC guidelines for banks were issued by RBI from time to time and were last updated in November ’04 to incorporate “anti money laundering” standards. Banks were asked to be compliant by December ’05. Most of the IPO applications under investigation, were made between June ’03 and September ’05, but involve a very small proportion of the total savings account or depository account held by the banks.

“While it would be premature to conclude that the problem is systemic or suggest that standards were slackened to accommodate growth, banks are nevertheless now sensitive to the manipulations made and carry a heightened sense of need to increase awareness on these issues within the organisation and tighten inspection and audit processes,” the rating agency said.

Sebi: existing system for IPOs to continue

2006-05-16T07:41:00.000-07:00

Market regulator Sebi said on Tuesday that it has no plans to revise the existing system for Initial Public Offerings (IPOs), under which quotas are provided for various class of investors.
"SEBI has no plans to do away with the existing systems for Initial Public Offerings," it said in a formal statement.

Source:ET

Zenith Birla files draft for Rs 131 cr

2006-05-15T22:35:00.000-07:00

Steel pipe manufacturer Zenith Birla (India) has filed its draft prospectus with the market, for a public isuue of Rs 131 cr.Zenith is raising funds primarily to set up additional facilities for manufacture of mechanical tubes for application in the auto components sector and also for augmenting the working capital requirement for its existing operations, it said in a release on Monday.IDBI Capital Market Services and Keynote Corporate Service are the lead mangers of the issue.

Bluplast to raise Rs 35 cr through IPO

2006-05-15T22:34:00.000-07:00

Plastic products manufacturer Bluplast Industries will raise around Rs 35 cr from its proposed initial public offer to expand capacity of its Daman plant.The company has received Sebi acknowledgement for its proposed IPO of 1.10 crore equity shares of Rs 10 each at a price of Rs 32 per share. Out of this, it has reserved 10 lakh equity shares for its permanent employees and the net public issue size is one crore equity shares.Bluplast is expanding its capacity of injection moulded household products at Daman from 5,400 MTPA to 9,000 MTPA and setting up facilities to manufacture 4,900 MTPA of high value PVC-wood composite profiles and sheets, a release said here today.

Naya Issue:DS Kulkarni Developers Ltd.

2006-04-24T20:15:00.000-07:00

Type of Issue:Book Built
Issue Opens:25 April, 2006
Issue Closes:03 May, 2006
Issue Size:5,500,000 (No. of Shares)

Background
D S Kulkarni Developers Ltd. (DSKDL), incorporated in 1991, is carrying on business as developers in housing industry in Pune and Mumbai.The company is actively engaged in construction of residential and commercial projects. Residential segment accounts for 90% revenues of the company.The company had gone public in year 1993 and is listed on the BSE and NSE.Since its inception company has completed twenty-three projects, twenty-one in Pune and two in Mumbai. The group has so far completed projects of more than one crore sq. ft.DSKDL is ISO 9001:2002 quality system certified by ISC Pty. Ltd. Sydney, Australia for quality management at all offices and construction sites.The company is coming out with a public offer of 55, 00,000 equity shares of which promoters participation is of 6,40,155 equity shares, 1,10,000 equity shares are reserved for employees. Hence net offer to public is of 47,49,845 equity shares. The proposed issue will constitute 50% of the fully diluted post-issue paid capital of the company.

Objects of the issue
* To finance residential and commercial real estate development projects with an investment of Rs.555.23 crore.
* To meet general corporate purposes.

Strengths
* DSKDL has strong order book position. The company has confirmed 39 lacs sq. ft. of projects in hand with a cost of Rs. 55523 lacs.
* The company has expertise in the most upcoming segments of the construction industry. DSKDL has a team of 40 skilled and 160 semi skilled people to support at various stage of project implementation.
* Total income of the company has grown at a CAGR of 20.62% since 2002 while net profit has grown at a CAGR of 60% since 2003 after declining from Rs. 287 lacs in year 2002 to Rs. 143 lacs in Year 2003.
* The company operates within construction Industry which is witnessing high growth fuelled by the government's habitat policy to remove housing shortage and to provide home for everyone by 2012. Over Rs. 400,000 crore of investment is expected to be made up to 2012 to meet this target.

Weakness
* Prices of key raw materials like steel, cement and bricks are firming up. This may have negative impact on profitability of the company.
* The company has high Debt/Equity ratio of 2.86. The interest coverage ratio is 2.5 times. The company has total debt of Rs. 7010 lacs as on December 2005.
* The company had generated negative operating cash flows of Rs. 1762 lacs and Rs. 2275 lacs in FY 2004 and 2005 respectively.
* Construction industry is highly fragmented industry with small as well big developers operating within the industry. Competition posed by these players can have a negative impact on its revenue.

Peer group Analysis :

Financial Year 2005

COMPANY	NPM (%)	OPM (%)	EPS (Rs.)	Debt/Equity Ratio (times)	BV Per Share (Rs)	RONW (%)	ROCE (%)	Interest Cover (Times)
Ansal Buildwell Ltd	1.35	8.38	1.50	1.12	26.69	5.64	2.65	1.55
Vipul Infrastructure	0.93	2.79	0.76	1.52	11.75	6.51	2.58	4.54
Mahindra Gesco	8.35	21.26	2.52	0.90	39.06	6.47	4.50	3.40
MSK Projects	5.82	10.79	3.82	0.30	37.08	10.30	7.88	4.35
D.S Kulkarni	10.41	17.90	3.35	2.87	19.89	16.82	4.34	2.50

Valuations
* Return on net worth increased from 7.75% in March'04 to 16.82% in March'05. Current net worth of the company as on Dec'05 is Rs. 3349 lacs.
* Post issue annualized EPS based on Dec'05 earnings is Rs. 7.21. The book value per equity share of face value of Rs. 10/- each based on Dec'05 is 20.30.
* The shares are being offered in the price band of Rs. 250/- to Rs. 275/-. Post issue P/E multiple ranges from 34.65 to 38.14. Industry average P/E is 30.9.
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NAYA ISSUE:JRG Securities Ltd

2006-04-17T18:53:00.000-07:00

Type of Issue:Public
Issue Opens:17 April 2006
Issue Closes:21 April 2006
Issue Size:3,625,000 (No. of Shares)

Background
The company was incorporated as JRG Associates Pvt. Ltd. in the year 1994. It got converted into Public limited in the year 2003 and subsequently changed its name to JRG Securities Ltd. (JRGSL).The company is into the business of broking on the Indian equity and commodity markets, distribution of Mutual funds and direct broking of life and non-life insurance.JRGSL offers various services including Internet and Phone based trading, depository services, commodity trading on the leading exchanges such as MCX, NMCE, NCDEX and IPSTA, personalized portfolio management services and financial advisory services to its clients. Company is empanelled with top ten mutual fund houses in India under its mutual fund operations.JRGSL is the first broking company in the country to offer the facility to trade commodities on the leading exchanges in India through specific mobile phones through special mobile trading service initiated with the help of Financial Technologies India Ltd. and Nokia.

Objects of the issue :
* Technology upgradation of existing I.T infrastructure.
* Establishment of 30 new regional offices in India.
* Formation of a subsidiary company and a limited liability company in Dubai.
* To meet issue related expenses.

Strengths :
* Company has membership of the premier derivative and commodity exchanges in the country. This allows JRGSL to offer its clients trading facilities in these investment classes, under one roof.
* Company has developed the new technology to trade in commodities called Mtrade.Using Mtrade JRGSL's clients can trade on the commodity exchanges in real time using their Nokia mobile phones. This service gives company a competitive edge over others.
* JRGSL is going for massive expansion from 12 regional offices to 42 regional offices and proposes to increase its branch network to 1,500 by 2008. Successful execution of these will allow company to increase its revenue significantly.
* Continuing up-trend in the capital market, favorable economic condition and government inclination for more liberal and transparent financial markets will allow brokerage firms to continue to enjoy good margins.

Weakness :
* JRGSL is a Cochin based brokerage company and most of its operations concentrated in south India. Company may face difficulties in attracting new customers in north India where it is planning to open offices.
* JRGSL is into highly competitive business with several numbers of well-established brands in the industry like Indiabulls, Kotak, Geojit and Sharekhan. Going further, company could face margin pressure.
* JRGSL has contingent liability, which is not acknowledged as debts of Rs. 7.25 crores (82% of total net worth) as of September 30, 2005, if these contingent liabilities materialize, company's financial condition could be adversely affected.
* Brokerage business is depending on the volatility in the share market and economic conditions; high volatility and economic downturn, which may affect the business of the industry.
Peer Group Comparison :

Financial Year 2005

COMPANY	NPM (%)	OPM (%)	EPS (Rs.)	Book Value Per Share	RONW (%)	P/E*
Geojit Financial Services Ltd.	19.34	40.91	5.73	20.28	35.1	12.85
Allianz Securities	13.87	27.64	4.26	10.58	44.6	6.47
Arihant Capital	36.44	58.83	3.86	16.02	22.1	10.38
JRG Securities Ltd.	14.72	30.36	6.71	16.45	40.78	37.73

Annualized P/E on the basis of September’s earnings

Valuation :
* The company's total income increased at a CAGR of 45% to Rs. 10.04 crores in FY05 from Rs. 2.27 crores in FY01. While the net profit of the company increased at a CAGR of 25% to Rs. 1.47 crores in FY05 from Rs. 0.66 crores in FY01.
* Company's net worth as on 30th September 2005 stood at Rs. 8.81 crores and Book value per share for the same period was Rs. 10.85.
* Post issue annualized EPS of the company on the basis of September's earnings stood at Rs.1.06. The shares are being offered at a price of Rs. 40 with a P/E multiple of 37.73.
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Naya Issue: Reliance Petroleum Limited

2006-04-10T22:33:00.000-07:00

Type of Issue:Book Built
Issue Opens:13 April, 2006
Issue Closes:20 April, 2006
Issue Size:450,000,000 (No. of Shares)
Issue Price: Rs 57-62 per equity share of Rs 10 each

Background
Reliance Petroleum Ltd (RPL) was formed to set up a greenfield petroleum refinery and polypropylene plant in the Special Economic Zone (SEZ) in Jamnagar , Gujarat . The refinery will be located adjacent to the existing refinery of Reliance Industries Ltd (RIL). RPL will be a 80% owned subsidiary of RIL.

Objectives of the Issue
RPL will use the issue proceeds to set up a refinery that will have a capacity to process 580 kilo barrels of crude oil per stream day and also a 0.9 million tonnes per annum polypropylene plant. The project is estimated to cost Rs 27,000 crore and the IPO will part-finance the project. The project is scheduled to commence commercial operations by December 2008.

Points to consider
Economy growth to boost demand
The world economy is expected to grow at a CAGR of 3.9% per annum in terms of GDP on a purchasing power parity basis between 2002 and 2005. The company is expected to benefit as there is a close relation between demand for petroleum products and economic activities. Currently, the world is facing an imbalance between demand and supply of different refined petroleum products. Regional product imbalances have also created attractive opportunities for complex oil refiners capable of supplying lighter products like gasoline and diesel fuel.

'Reliance' a strong name
RPL is promoted by RIL, India ’s largest private sector company in terms of market capitalisation. RIL is the only private sector company from India to feature in the Fortune 500 list. The company will use RIL’s resources and project execution expertise to establish efficient and profitable operations.

High refinery margins
The company would derive significant advantages owing to higher complexity of its refinery. The refinery has been designed to have a Nelson Complexity Index of 14.0, which would make it amongst the most complex refineries in Asia . The higher complexity levels will enable the company process heavier and sourer crude oils at lower cost, and still achieve superior yields of higher value products such as gasoline, aviation fuel and diesel. This significant flexibility would enable it take advantage of price differentials between lighter and sweeter crude oils and heavier and sourer crude oils which have widened considerably in recent years. The existing RIL refinery has exceeded Singapore refining margins by $2-3/bbl for last few years. The new RPL refinery will be more complex than RIL’s and may get higher premium over the Singapore margins due to shortage of refining capacity.

Downside risk hedged
The company has sold 45 crore shares to institutions for a price of Rs 60 per share. RIL is also buying 90 crore shares at the price of the IPO. Thus the downside risk is hedged for the retail investors.

Refinery to start after 3 years
RPL expects to leverage the advantage of managing large projects and start operations in 36 months when the average lead time period for such products internationally is around 48-54 months. However, many external and internal factors in a project of such a large magnitude may lead to cost and time overruns for the company.

Project Schedule

Milestone	Expected Completion Date	Months From Zero Date
Start of the Project/Zero Date		1-Dec-05
Technology Selection/Project Scope	Jan-06	Completed
Completion of Basic Engineering	May-06	6
Order placement for critical equipment	May-06	6
Completion of Detailed Engineering	Sep-07	22
Completion of Civil work	Nov-07	24
Completion of Equipment Erection	Jan-08	26
Mechanical Completion	Aug-08	33
Ready for Start Up (RFSU) All areas	Sep-08	34
Commencement of operations	Dec-08	36

Financials
The company has not started operations and hence there are no financials. The company expects to begin commercial operations by December 2008. The refinery is set up in SEZ and includes tax benefit, simplified import and export procedures, exemption from customs and excise duties which would benefit the bottomline.

Valuations
The issue is being offered at a price band of Rs 57-62. The issue is reasonably priced based on the market cap/ refinery capacity of Kochi Refineriers, HPCL and BPCL. We recommend investors to invest with a long-term horizon of minimum of three years. However, considering the buoyancy in refining margins and established record of the promoters along with the recent investment by the institutional investors at around Rs 60 per share one can look forward to applying to the issue to derive listing gains.

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Naya Issue: PLETHICO PHARMACEUTICALS LTD

2006-04-09T04:17:00.000-07:00

Type of Issue:Book Built
Issue Opens:10 April, 2006
Issue Closes:17 April, 2006
Issue Size:3,666,666 (No. of Shares)

Objectives of the Issue
The company expects to raise Rs 110 crore from the public issue to part finance:
*The up-gradation of its Kalaria plant to make it UK MHRA compliant.
*Setting up a WHO GMP (World Health Organisation Good Manufacturing Practices) compliant plant in Jammu & Kashmir and land to be used for organic farming of important herbs.*Setting up a R&D and formulation and development centre.
*Acquiring stake in domestic herbal/OTC/nutraceutical company or a brand.
*Setting up its corporate office in Mumbai.
*The working capital needs.

Background
Plethico Pharma was established in 1985. It produces a wide range of products such as anti-malarial, anti-tubercular, anti-asthmatics, antibiotics, Naiads, Nutraceutical, anti-invectives, anti-bacterial, etc. It has a diversified portfolio of over 400 formulations in over 39 therapeutic segments. The company has two fully integrated manufacturing units located near Indore , which serve as the backbone of the entire operations. These facilities are being upgraded as to meet UK MHRA requirements. It is also a major producer of herbal products, which contributes substantially to the financial numbers.

The company has a presence in over 45 countries with strategic tie-ups and a strong marketing and global distribution network in Russia/CIS region, Africa , South America , Middle East and South East Asia which account for around 70% of its exports. The company has chalked out an ambitious plan for focused marketing in East Europe , Middle East and South East Asia . It follows the “branded generic” model for marketing allopathic formulations in India . This model has been replicated in the semi-regulated markets spanning Asia , Africa , South America and Russia/CIS regions. Plethico has a 250 strong marketing team with about 150 of them employed in markets outside India .

Investment Arguments

Industry Outlook
The company generates about 50% of its revenue from herbal products. About 21% is generated from allopathic medicines and the rest comes from the contract manufacturing business. The global market for herbal products is pegged at around US$60 billion. The largest market (46%) for these products is Europe , while North America and Asia account for 18% share each. In Europe , Germany and France are the largest markets with a 22% share. Due to the nascent market for herbal products, growth in North America is likely to be very high. In ethical segment, the outlook looks promising. In fact, the pharma industry is in a transformation phase and the regulatory environment is likely to crystallize in 2006.

Most players are augmenting R&D capacities and exploring new avenues to face the challenges of product patent era and to encash on the low-cost advantage of India . Contract Research and Manufacturing Services (CRAMS) is the new buzzword in the Indian pharma Industry. CRAMS is high-margin business with immense opportunities. The companies are in the expansion mode for achieving global scale in order to handle bulk orders from MNCs.

These expansions are likely to start yielding results from 2006 onwards. Moreover, mergers and acquisitions are likely to gather momentum with large players acquiring smaller ones. R&D-focused select companies such as Marksans Pharma, Glenmark Pharma, Dr Reddy’s Lab, Orchid Chemical have new products in different phases of clinical trials. In addition, MNCs are changing their strategy and are likely to introduce new-patented products in the country in coming quarters. We believe that 2006 to witness revival of investors interest in pharma stocks.
Upgrading plant for UK MHRA approval
Looking at the market size of Europe and the growth happening there, the company plans to upgrade its plant as per the UK MHRA requirement. Approval from the UK MHRA would lead the company to enter the UK markets.

Exports to CIS nations a push
Plethico Pharma identified Commonwealth of Independent States (CIS) nations as a thrust area for exports. CIS nations have relatively easy FDA rules and have strong demand potential. Besides these, there is relatively low back up for manufacturing facilities. This generates good demand for Plethico’s products. Around 68% of its total revenue is derived from exports and nearly 70% (Rs 107 crore of Rs 153 crore of total exports in 2005) of exports come from CIS nations. It has acquired a marketing and distribution chain in the CIS, which has subsidiaries in Ukraine , Kazakhastan , Moldova , Azerbaijan and Kyrghystan.

Targeting a big splash in the pharma segment
The company is targeting to re-enter the markets with big bang into the Indian pharma segment after its non-compete agreement with Shreya Life Sciences expires in 2007-08. It is building up portfolio of medicine in lifestyle segments such as sports medicines and over the counter products. The company intends to enter with better molecules, better distribution and stronger financials. Nutraceutical, herbal drugs, energizers and confectionery along with allopathic drugs are expected to be the growth driver for the company in years to come.

In early 2003, Plethico sold its entire drug portfolio to Shreya Life sciences for about Rs 105 crore as the tuberculosis and anti-malarial drugs were getting commoditised due to government’s interference on pricing thereby eroding margins. The company utilized the proceeds from the asset sales to enter the CIS & African countries. The restructuring led the company to increase the margins from 20% in FY03 to around 26% in FY05. In FY07, the company is targeting a turnover of Rs 310 crore and a net profit of Rs 85 crore.
Setting up plant in J&K
The company is putting up a plant to manufacture tablets, capsules, ointment and liquid orals in Jammu & Kashmir. The plant can cater to both domestic & international markets as international regulatory authorities would be making inspection of the cGMP plant at Jammu . The plant would enjoy fiscal incentives of 0% excise for 10 years, 1% CST up till 2009 and 100% income tax exemption for 5 years, which would further add to the bottom line of the company. The plant is likely to go on stream by the end of 2007 and we expect the full benefit to come from FY08 onwards. As the existing financial leverage is low, we believe that the margins would move up further from existing 26% after this plants goes on stream.
Backward integration to strengthen the backbone
As a part of the capex, the company is spending on organic farming of important herbs, which would backward integrate its operations. As the company is also setting up a plant in Jammu, the transportation cost of herbs is likely to come down as currently it source these herbs from Himachal Pradesh and Jammu & Kashmir to its plant at Indore. The development of the land and organic farming would help it to roll out new products as the company plans to tie up with the research laboratories there.

Investment Concerns
Revenue profile skewed
The company gets over 50% of its revenue from herbal products. Also the revenue of the company is highly dependent on single geography.

Financial Performance
The company closes its books every September. For the year ended September 2005, it recorded total revenue s of Rs 224.48 crore and net profit of Rs 56.13 crore. For the first quarter ended December 2005 it posted sales of Rs 64.21 crore and net profit of Rs 18.54 crore.

Valuation
Plethico Pharma is tapping the market with a public issue priced in the band of Rs 280 to Rs 300. The company would raise Rs 110 crore if it allots the shares at lower end of the price band. In this case, the number of equity shares would go up by 39 lakh shares. At the upper price band, the number of equity shares would go up by 37 lakh shares. On the diluted equity base, the EPS of the company for the FY06 works out to Rs 21.60 at the lower band and Rs 21.70 at the upper end. At the lower band, the EPS discounts the price by 13 times while at the upper band the EPS discounts the price by 13.8 times. At this price, the issue looks attractive as compared to its peers. Investors can subscribe to the issue.

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Naya Issue: LOKESH MACHINES LTD

2006-04-07T02:29:00.000-07:00

Type of Issue:Book Built
Issue Opens:07 April, 2006
Issue Closes:13 April, 2006
Issue Size:3,000,000 (No. of Shares)

Lokesh Machines Ltd. (Lokesh) was incorporated in1983 and started its commercial production from 1986.Lokesh is in the manufacturing of CNC machines.The current operations of the company can be categorised into CNC lathes, vertical machine centers (VMC), horizontal machining centers (HMC), special purpose machines (SPM) and auto components. The company also caters to foreign market and has orders for Italy, Germany and Japan. At present, the company has a facility for machining and supply of 1,20,000 each of cylinder blocks and cylinder heads per annum, which is being utilized for supplies to Mahindra and Mahindra Ltd.The key customers of the company include Mahindra & Mahindra Ltd., Bharat Forge Ltd., Ashok Leyland Ltd. and Everest Kanto Cylinder.

Object Of The Issue :
* Setting up the facility for machining and supply of cylinder blocks and cylinder heads for commercial vehicles for Rs.2,098.5 lakhs
* Modernization Project for upgradation of the existing facilities for manufacture of machines and machine tools for Rs.1,829.26 lakhs
* To meet working capital needs and issue expenses of the company for Rs.773.32 lakhs.

Strengths :
* Lokesh has entered into an agreement with Ashok Leyland Ltd. to supply cylinder block and cylinder heads for commercial vehicles for a period of three years. The company is setting up an additional facility for machining and supply of 40,000 each of cylinder blocks and cylinder heads per annum. The entire facility will be utilized to execute the said agreement with Ashok Leyland Ltd. with effect from February 1, 2006.
* The company intends importing state of the art mother machines to augment and upgrade the capacities and capabilities of the equipment currently available. This will enhance the competence of the company to manufacture with machines of greater versatility and effectiveness
*The company is making efforts to enhance export revenue. In financial year 2006, 25 machines (375,000 euro) were exported. The company has confirmed export orders for 42 machines for the financial year 2007, valued at approximately Euro 630,000.
* Revenue and Net profits of the company has grown at a CAGR of 28.6% and 110.3% respectively from FY2001 to FY2005.
* The Company's current aggregate order booking condition as on February 28, 2006 is around Rs.3,118 lakhs. Revenue reported for seven months ending October 2005 is Rs.4,053.94 lakhs.
* The domestic market for CNC lathes is expected to grow at a CAGR of 32.4% till FY2007 in terms of revenues. CAGR for HMC, VMC, SPM in terms of revenue for the same period are 30.2%, 31% and 19.4% respectively. Indian automotive industry is registering a growth rate of above 20% per annum.

Weaknesses :
* Lokesh's basic raw material is mild steel constituting around 60% to the total cost. Steel is a highly price intensive industry. Current trend reflects firming up of steel prices in global and domestic markets. The same would increase the cost of raw material for the company.
* The company faces competition from the unorganized sector. The competition comes mainly in the segments of SPMs and CNCs. HMT Ltd., Lakshmi Machine Works, Ace Designers Ltd. are the competitors in domestic market.
* The company is in a business that involves long manufacturing cycle. Realization of revenues is delayed causing pressure on working capital requirement. Debtors to sales ratio for FY2005 and seven months ending October 2005 are 24.37% and 47.8% respectively.

Peer Group Comparison
For FY2005

Company	NPM(%)	PE	EPS(Rs)	Debt/Equity	Book Value(Rs)	RONW(%)
Lokesh	8.66	37-41	5.9	1.91	23.17	25.69
Avery India	3.77	24.3	2.8	0	33.1	6.06
Batliboi	8.63	25.3	5.4	0.41	17.9	23.53

Valuation
The company has reported a Net Profit of Rs.522.48 lakhs for the year ending March 2005, an increase of 452% over previous years net profit. Net profit margin was 8.66% for FY2005 as against 2.52% for FY2004. Inventory for FY2005 was Rs.2378.91 lakhs.
Sales of the company registered a growth of 60.8% in FY2005.The same was Rs.6,035.18 lakhs as against Rs.3,753.17 lakhs in FY2004. EPS for FY2005 is Rs.5.9. Post issue EPS based on October 2005 results is Rs.3.4. PE for a price range of Rs.130 to Rs.140 is in the range of 37-41. Industry PE is 23.4.

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Naya Issue: Sun TV Ltd

2006-04-03T03:46:00.000-07:00

Type of Issue:Book Built
Issue Opens:03 April, 2006
Issue Closes:07 April, 2006
Issue Size:6,889,000 (No. of Shares)

Sun TV was launched in 1993 by Kalanithi Maran and was one of India’s first regional satellite television channels. It is the principal radio and television broadcaster in Tamil Naidu and Kerala, and has, thereby, become one of the leaders in the television business in India.Sun TV’s multi-system cable operation, SCV, has been hived off to Kal Cables Private Limited, a group company.

Sun TV offers four Tamil language channels including its flagship Sun TV, and two Malayalam channels including Surya TV. Approximately 75% of the programmes broadcast are produced in-house, and the remaining acquired from independent producers. Its other Tamil channels include Sun News, a 24-hour Tamil movie channel KTV, and a 24-hour music channel Sun Music. Surya TV and Kiran TV, its two Malayalam channels, have programming format similar to its Tamil channels.

Sun TV’s radio business comprises three 24-hour radio stations in Chennai, Coimbatore and Tiruvenveli in Tamilnadu, and Visakhapatanam in Andhra Pradesh through its affiliate Udaya TV. The existing as well as the 41 new licenses obtained by the company under the new FM Phase II policy will in future be operated by subsidiaries Kal Radio and South Asia FM.

The IPO will raise Rs 603 crore at the top end of the price band. The proceeds of the issue will be used to beef up its two subsidiaries Kal Radio and South Asia FM, launch three more regional television channels and construct its own corporate office. Investments will also be made in setting up studio facilities and up-linking infrastructure, purchasing new equipment and upgrading the existing ones for its Radio Business.

The issue will constitute only 10% of the fully diluted post-issue paid-up capital.

Strengths
* When it comes to couch potatoes, Chennai tops the list. People in Chennai watch television for an average of 19 hours a week or approximately 162 minutes a day, compared with people in Delhi who watch TV for 15 hours a week, Mumbai 15.7 hours and Kolkata 16.1 hours, according to a Television Audience Measurement (TAM) survey. Around 90% of the viewers in Chennai watch only regional channels such as Sun TV and Vijay TV. Sun TV’s top show, ‘Kolangal’, fetch unheard of television rating points (TRPs) in the range of 23 and 26. TRPs for Star Plus's best shows vary between 15 and 20.
* Sun TV’s four Tamil channels held a combined audience share of 71.2% in the nine months ended December 2005 compared with a 5% share of its closest competitors in the Tamil Naidu region. The company’s two Malayalam channels hold a combined market share of 32.1% compared with a combined 25.9% market share of its closest competitors in Kerala. Thus, Sun TV enjoys a dominating presence in these states and can command premium rates and a lion’s share of electronic advertisement revenue.
* Flagship Sun TV channel is becoming a pay channel in the coming months at a subscription rate of Rs 20 per subscriber per month, which will open up a new growth avenue. In the short term, however, it can adversely affect its audience share and advertisement revenue.
* Sun TV is the only company to start making profit in its radio business from the first year of operations due to its dominating position. In the nine months ended December 2005, the radio business contributed around 9% to the top line of the company.

Weaknesses
* Sun TV has made an investment of Rs 177.36 crore in procuring 41 FM licences to operate in 45 (including the existing four) cities across India, and intends to invest around Rs 213.42 crore to develop and launch these new FM stations. While the company has a strong brand name and sustainable growth in the southern region, it does not have any presence in the other parts of India, specially in the north and east. Scope for synergies is also limited.
* The three new regional channels that Sun TV is going to launch by 2007, at an estimated cost of Rs 113.38 crore, will reduce the margin in the short term. No details of these have been given. Their gestation period will be longer if they are launched in any other part of the country but the south.
* The group has preferred to retain the related media and publication businesses in unlisted entities. The listing company’s business will be television broadcasting in two states and operating FM radio stations around the country.

Valuation
Zee TV is the nearest comparable company to Sun TV. Zee TV’s revenue model includes other businesses besides broadcasting television. Currently, Zee Telefilms is trading around 32 times its FY 2005 EPS. On the basis of its nine-month annualised EPS of Rs 4.7, it is trading at PE of around 50. However, the PE reflects its recent restructuring proposal and the temporary dip in this year’s earning.

From FY 2003-05, Sun TV has shown a steady financial performance, with its revenue and net profit recording a CAGR of 10% to Rs 290.31 crore and Rs 77.97 crore in the year ended March 2005. In the nine months ended December 2005, the company has already surpassed both the top line and bottom line of FY 2005. With a growth in revenue of 12% to Rs 243.31 crore and a 2,100 basis-point expansion in the operating profit margin, the net profit grew by 78% to Rs 102.36 crore in the nine months ended December 2005.

Ahead of IPO, promoters paid themselves a dividend of Rs 185 crore and withdrew the entire cash balance as of March 2005. Now the IPO is to raise finances for new FM radio and TV channels, which are bound to pressurize the very high margin of Sun TV.
On a post-issue equity of Rs 68.8 crore and face value Rs10, FY 2005, EPS works out to Rs 11.3. Based on this, PE stands at 77.2 and 64.41 at the price band of Rs 875 and Rs 730. However, on an annualised nine-month EPS of Rs 19.8, PE works out to around 44 and 37 at the upper and lower price band, respectively. While visibility from the new businesses is not clear, the existing business has enough growth potential in a favourable economic environment. With only 10% equity being issued and foreign and domestic funds ready to pay premium valuations for quality media stocks, the pricing could not have been cheaper.

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