Professional Documents
Culture Documents
Executive Summery
IPO stands for initial public offer. An IPO is the first sale of common stocks by a
corporation to the public. IPO was done through fixed price process. But in with the
introduction of Book Building process for IPO in 2000 has given a transparent system to the
investors.
I have undertaken the project at ANANDRATHI (AR). Anand Rathi (AR) is a leading
full service securities firm providing the entire gamut (scope) of financial services. AR
provides a breadth of financial and advisory services including wealth management,
investment banking, corporate advisory, brokerage & distribution of equities, commodities,
mutual funds and insurance, structured products - all of which are supported by powerful
research teams. AR has opened its branch in Belgaum in 2006.Since 2006 it has delivered fair
& impressive services. At present ARs customer database is more than 7000.these customers
are loyal & are availing regular services from AR. It has got more than 700 DEMAT account
holders.
The project deals with why AR is preferred & what client expect from AR.
This
study takes into account of book building process which is resent mechanism followed for
IPO. It is also aims at undertaking what makes AR different from other DPs.
The project deals with investment decisions of individual investors with regard to IPOs
(Initial Public Offering) at ANAND RATHI, BELGAUM
The scope of the study is extended only to the existing customer of Anand Rathi and it
does not cover prospective customers.
The study will help the company to know the expectation of individuals from their
investment in IPOs.
The study will help the company to make strategies to improve their services to meet
investors expectation.
LIMITATIONS
Sample size was 100so, findings are based on these sample size.
During the survey, it was bit difficult to get the response of the clients due to market
volatility & some correction.
Existing IPO investor were take into consideration for survey.
METHODOLOGY
Methodology explain the methods used in collecting information to carry out the
project.
The steps taken are as follows
Define the research objective
The objective of my study is to understand Investor perception at ANAND
RATHI Belgaum.
Data collection Method.
To fulfill the objective of the study, I have taken in to consider which Primary
&
Secondary Data.
Primary Data.
To collect following data I have made use of following source.
a) Questionnaire survey & interaction with clients in the area of Belgaum to know
their perception & to fulfill the requirement of the objective.
b) Interaction with the Manager of ANAND RATHI, Belgaum Branch.
c) Interaction with the Staff of ANAND RATHI, Belgaum Branch.
Secondary Data.
Secondary data are collected from following source.
a) ANAND RATHI manual & internet.
b) www.bseindia.com
c) www.nseindia.com
d) Some magazines like Dalal street Fortune India etc.
Practical Approach
Through my in plant project, I have learn some of the practical aspects in the
organization.
a) Back office operation.
b) Front office operation.
c) Tele calling.
d) Handling clients query & client relations.
Industry Overview
Earliest records of securities trading in India are available from the end of eighteenth
century. Before 1850 there was business conducted in Mumbai in the share of bank and the
securities of east India Company, which were consider as securities for buying, selling and
exchange. The share of commercial bank, mercantile bank and bank of Bombay were some of
the prominent shares traded. The business was conducted under a sprawling banyan tree in
front of the town hall, which is known in the horniman circle park.
In 1850, the companies act was passed and that heralded the commencement of join
stock companies in India.
It was the American civil war that helped Indians to established broking business. The
leading broker, Shri Premchand Roichand designed and developed a procedure to be followed
while dealing in shares.
In 1874 the dalal street became the prominent place for meeting of the brokers to
conduct there business. The broker organized an association on 9th july 1875 known as native
share and stock broker association to protect the character, status and internet of the native
brokers. That was the foundation of the stock exchange, Mumbai. The exchange was
established with 318 members. The stock exchange, Mumbai did not have to look back as it
started raiding high ladder of growth.
The stock exchange is a market place, like any other centralize market where buyers
and sellers can transacted business in securities at given point of a time in a convenient and
competitive manner at the fairest possible prizes.
In Jan 1899, Mr. Jamse M MacLen, MP inaugurated the brokers hall. After the first
world war the stock exchange was housed properly at an old building near the Town hall
in1928, the present premises where acquired surrounded by Dalal street, Mumbai samachar
On the stock exchange hundred & thousands of trades take place every day. Buyers
and sellers are spread over a large geographical area. Due to these problems completing a
trade by paying cash to the seller & securities to buyer immediately on execution of trades on
an individually basis is virtually impossible. So the exchange allows trading to take place for
a specified period which is called trading cycle. A unique settlement number identifies each
trading cycle. Once the trading period is over, buyer broker pays money and seller broker
delivers securities to the CC/CH on a predefined day. This process is called as pay in. after
pay in securities are given to the buyer brokers and money is given to seller brokers by the
CC/CH. This process is called as pay out. This process pay in & pay out is called settlement.
Initially the trading cycle was of one fortnight, which was reduced to one week. The
transactions entered during this period, of a fortnight or one week, were used to be settled
either by payment for purchase or by delivery of shares certificates sold on notified days one
fortnight or one week of expiry of the trading. The settlement schedules are made known to
the members of the exchange in advance.
The weekly settlement period was reduced by daily settlement popularly known as
rolling settlement, in which each day is separate trading day. With effect from December
2001, t+% rolling settlement cycle was introduced for all equities where T is the trading day
and pay in & pay out for the settlement was done on the 5 th business day after the trade day.
For e.g. If T was Monday, the pay-in & pay-out were done o next Monday as Saturday &
Sunday are not counted as business days. T+5 cycles were further shortened to T+3
settlement cycle from April 1st 2002.
Company Profile
Anand Rathi (AR) is a leading full service securities firm providing the
entire scope of financial services. The firm, founded in 1994 by Mr. Anand Rathi, today has a
pan India presence as well as an international presence through offices in Dubai and
Bangkok. AR provides a breadth of financial and advisory services including wealth
management, investment banking, corporate advisory, brokerage & distribution of equities,
commodities, mutual funds and insurance, structured products - all of which are supported by
powerful research teams.
The firm's philosophy is entirely client centric, with a clear focus on
providing long term value addition to clients, while maintaining the highest standards of
excellence, ethics and professionalism. The entire firm activities are divided across distinct
client groups: Individuals, Private Clients, Corporate and Institutions and was recently ranked
by Asia Money 2006 poll amongst South Asia's top 5 wealth managers for the ultra-rich.
In year 2007 Citigroup Venture Capital International joined the group as a
financial partner.
Milestones
1994:
Started activities in consulting and Institutional equity sales with staff of 15
1995:
Set up a research desk and empanelled with major institutional investors
1997:
Introduced investment banking businesses
Retail brokerage services launched
1999:
Lead managed first IPO and executed first M & A deal
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2001:
Initiated Wealth Management Services
2002:
Retail business expansion recommences with ownership model
2003:
Wealth Management assets cross Rs1500 crores
Insurance broking launched
Launch of Wealth Management services in Dubai
Retail Branch network exceeds 50
2004:
Commodities brokerage and real estate services introduced
Wealth Management assets cross Rs3000crores
Institutional equities business re launched and senior research team put in place
Retail Branch network expands across 100 locations within India
2005:
Real Estate Private Equity Fund Launched
Retail Branch network expands across 200 locations within India.
2006:
AR Middle East, WOS acquires membership of Dubai Gold & Commodity Exchange
(DGCX)
Ranked amongst South Asia's top 5 wealth managers for the ultra-rich by Asia Money
2006 poll
Ranked 6th in FY2006 for All India Broker Performance in equity distribution in the
High Net worth Individuals (HNI) Category
Ranked 9th in the Retail Category having more than 5% market share
Completes its presence in all States across the country with offices at 300+ locations
within India
2007:
Citigroup Venture Capital International picks up 19.9% equity stake
Retail customer base crosses 100 thousand
Establishes presence in over 350 locations
Wealth management
Investment banking
Corporate Advisory
CLIENTS OR CUSTOMERS
Individuals
Private clients
Corporate and
Institutions
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AR Core Strengths
Breadth of Services
In line with its client-centric philosophy, the firm offers to its clients the entire
spectrum of financial services ranging from brokerage services in equities and commodities,
distribution of mutual funds, IPOs and insurance products, real estate, investment banking,
merger and acquisitions, corporate finance and corporate advisory.
Clients deal with a relationship manager who leverages and brings together the
product specialists from across the firm to create an optimum solution to the client needs.
Management Team
AR brings together a highly professional core management team that comprises of
individuals with extensive business as well as industry experience.
In-Depth Research
ARs research expertise is at the core of the value proposition that we offer to our
clients. Research teams across the firm continuously track various markets and products. The
aim is however common - to go far deeper than others, to deliver incisive insights and ideas
and be accountable for results.
Management Team
Firms senior Management comprises a diverse talent pool that brings together rich
experience from across industry as well as financial services.
The products/services of the Anand Rathi are as follows:
1. Individuals
(a) Private wealth management
Introduction:
Affluent individuals need sophisticated advice and strategic guidance to capitalize on
opportunities to preserve, grow and transfer their wealth. In addition, a desire exists within
wealthy families to simplify the management of multigenerational needs and lessen the
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Philosophy:
The Anand Rathi tries and understands clients financial needs; to offer them personal
advice and expert analysis that they need to make their assets go the Extra mile. Firms ability
to think far ahead and formulate a long-term strategy, coupled with long hours of practice and
research are the key drivers, which make investors wealth work harder for them.
The company believes that the key to build wealth lies in allocating assets across
various markets, financial instruments and industry sectors. Keeping this in mind the firm
leverage its expertise in scientific asset allocation, to help maximize returns and minimize
risks.
Process:
The firm realizes the need to simplify the complexities of the investment strategies
and it achieves this by offering highly customized private wealth management. The firms
Personalized Relationship Managers along with the expert team of analysts and advisors will
assist to investors in analyzing all their investment needs and advice those on specialized
solutions created exclusively for them.
The firm has excellent research team, who constantly screens the market for investment
prospects. The team provides support in fine-tuning the investment strategy & suggests how
to capitalize on these opportunities.
Products:
Mutual Funds
Depository Services
Commodities
Insurance Broking
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Research:
Its research expertise is at the core of the value proposition that they offer to its
clients. Research teams across the firm continuously track various markets and products. The
aim is however common - to go far deeper than others, to deliver incisive insights and ideas
and be accountable for results. AR research processes incorporate quantitative areas well as
qualitative analyses. This multi-pronged approach helps us to provide superior risk- adjusted
returns for our clients.
AR analysts provide objective and decisive research that is designed to enable clients to make
informed investment decisions.
The team covers entire spectrum of financial markets from equities, fixed income, and
commodities to currencies. They also cover the global markets, to give clients an unparalleled
macro-view of the investment opportunities across the globe
(b) Brokerage and distribution
Equity & Derivatives Brokerage:
AnandRathi provides end-to-end equity solutions to institutional and individual
investors. Consistent delivery of high quality advice on individual stocks, sector trends and
investment strategy has established us a competent and reliable research unit across the
country.
Clients can trade through us online on BSE and NSE for both equities and derivatives.
They are supported by dedicated sales & trading teams in its trading desks across the country.
Research and investment ideas can be accessed by clients either through their designated
dealers, email, web or SMS
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appropriate
asset
allocations
based
on
the
client's
risk
profile.
Depository services
AR Depository Services provides to investors with a secure and convenient way for holding
their securities on both CDSL and NSDL.
The firms depository services include settlement, clearing and custody of securities,
registration of shares and dematerialization. It offers to the investors daily updated internet
access to their holding statement and transaction summary.
Commodities:
Commodities broking - A whole new opportunity to hedge business risk and an attractive
investment opportunity to deliver superior returns for investors.
The firms commodities broking services include online futures trading through NCDEX and
MCX and depository services through CDSL. Commodities broking is supported by a
dedicated research cell that provides both technical as well as fundamental research. Its
research covers a broad range of traded commodities including precious and base metals, Oils
and Oilseeds, agriculture-commodities such as wheat, chana, guar, guar gum and spices.
In addition to transaction execution, the firm provides customized advice on hedging
strategies, investment ideas and arbitrage opportunities to clients.
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Risk Management
IPOs:
The firm is a leading primary market distributor across the country. Its strong performance in
IPOs has been a result of its vast experience in the Primary Market, a wide network of
branches across India, strong distribution capabilities and a dedicated research team the firm
has been consistently ranked among the top 10 distributors of IPOs on all major offerings. Its
IPO research team provides clients with in-depth overviews of forthcoming IPOs as well as
investment recommendations. Online filling of forms is also available.
(c) NRIs
Introduction:
AR is the perfect gateway to the wealth of investment opportunities in India for Non-Resident
Indians. With it will dedicated NRI desk in India and Relationship Managers investors own
country, investors get the best of both worlds - real understanding of their investment needs
as well on-the-ground expertise.
It provides the following services for NRIs.
2. Institutions
(a) Institutional Equities
Introduction:
The Institutional sales and trading team provides cutting edge market information and
investment advice to clients, coupled with excellent execution capabilities. A highly
experienced and reputed team of equity analysts supports the sales team. There is an
extensive focus on research on companies, sectors and macro-economy. The institutional
equity team tracks nearly 250 large and mid-sized companies to give clients an unparalleled
breadth of ideas.
It also provide Investment Advisory Services for institutional clients in India and overseas for
investment in the Indian equity markets
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finally
negotiating
with
the
prospective
lenders
buyers.
The team has also built an impressive track-record in debt restructuring based on its superior
understanding
of
business
needs
and
relationships
with
key
lenders.
The Corporate Finance team has handled assignments in businesses like paper, hospitality,
telecom, textiles and sugar.
Services:
Investment Banking:
Merchant Banking:
A highly experienced equity capital markets team, a pan-India distribution presence and a
high level of quality and integrity in executing client's transactions has enabled us to provide
tangible value to the firms clients' businesses. The firm brings quality independent advice
and excellent execution capabilities to create landmark transactions for clients. The firms
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Raising Cost-effective debt resources in Rupee and Foreign Currency for Projects,
Working Capital and Specific needs.
Distribution Capacity
Strong pan- India distribution network, with presence at over 130 locations across
India.
Leading distributor of equity related products including IPOs & mutual fund
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MAJOR COMPETITORS
The major players in online trading other than Sharekhan are;
5paisa.com
Kotakstreet.com
IndiaBulls.com
ICICIdirect.com
HDFCsec.com
Motilal Oswal
5paisa:
Company profile:
India infoline was founded in 1995 and was positioned as a research firm.
In the year 2000 e-broking was started under the brand name of 5paisa.com. Apart from
offering online trading in stock market the company offers mutual funds online.
It also act as a distributor of various financial services ie GOI securities, Fixed deposits,
Insurance.
Kotakstreet:
Kotakstreet is the retail arm of Kotak securities. Kotak securities ltd is a joint venture
between Kotak mahindra bank and Goldman Sachs. Kotak Securities is a corporate member
of both the BSE and the NSE. It is also a depository participant with the National Securities
Depository Limited (NSDL) for trading and settlement of dematerialized shares.
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INDIA BULLS:
Company profile:
An India bull is a retail financial service company, present in 600 locations covering around
150 cities. It offers a full range of financial services and products ranging from Equities to
insurance. 450+ relationship managers who act as a personal financial advisors.
ICICI Direct:
Company profile:
ICICI Web Trade Ltd (IWTL) maintains ICICIdirect.com IWTL is an affiliate of ICICI Bank
Ltd and the website is owned by ICICI bank ltd.
HDFC Securities:
Company profile:
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Motilal Oswal:
Company profile:
Motilal Oswal Securities Ltd is a brokering house promoted by Motilal Oswal financial
services. Their services include equities, derivatives, e-broking, portfolio management,
mutual funds, commodities, IPOs and depository services. The company was founded in
1987 as a small sub-broking unit, with just two people running the show. Focus on customerfirst-attitude, ethical and transparent business practices, respect for professionalism, researchbased value investing and implementation of cutting-edge technology have enabled us to
blossom into an almost two thousand-member team. The retail business unit provides equity
investment solutions to more than 1, 61,000 investors through 1017 outlets spanning 375
cities and 24 states.
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SEBI(Regulator)
Stock Exchanges
Custodians
Mutual Funds
Merchant Bankers
Financial Institutions
Non-Banking Institutions
Investors
Depository Participants
Merchant Bankers
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Brokers
Agents
1. Primary Market:
A market were the issuers access their prospective investors directly for funds
required by them generally either for expansion or for meeting the working capital needs this
process is called disintermediation where the funds flow directly from investors to issuers.
Securities
COMPANY/ISSUER
INVESTORS
Funds
Primary market comprise of market for new issues of shares and debentures, where
investors apply directly to the issuer for allotment of shares/debentures and pay application
money to the issuer. Primary market is one where issuer contacts directly to the public at
large in search of capital. It also helps limited companies as well as Government companies
to issue their securities to the new/existing share holders by making public issue/rights issue.
Issuers issue capital by expanding their capital base and this enables them to finance their
growth plans or meet their working capital requirement etc. after the public issue, the
securities of the issuer are listed on a stock exchange(s) provided it complies with
requirements prescribed by the stock exchange(s).
Activities in the primary market:
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Collection of money.
Minimum subscription
Record keeping
2. Secondary Market:
In the secondary market the investors buy/sell securities through stock
exchanges. Trading of securities on stock exchange results in exchange of money and
securities the investors.
Secondary market provides liquidity to the securities on the exchange(s) and this activity
commences subsequent to the original issue. For example, having subscribed securities of
a company, if one intends to sell the same, it will have to be done in secondary market.
Similarly one can buy the securities of a company from the secondary market.
A Stock Exchange is the single most impotent institution in the secondary market for
providing a platform to the investors for buying and selling of securities through its
members. In other words the Stock Exchange is place where already issued securities are
bought and sold by the investors. Thus secondary market activities is different from the
primary market in which issuer issue securities directly to the investors
Activities in the secondary market
Trading of securities
Risk management
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INTRUDUCTION TO IPO
The first offering of the companies shares to the public. The shares offered may
be the existing one held privately, or the company may issue new shares to the public. A
formal public offer consist of an invitation to the public for subscription of the equity shares,
preference shares or debentures has to be made by a company highlighting the details such as
future prospectus, financial viability and analyze the risk factor so that an investor can take an
informed decision to make an investment for this purpose, the company issue a prospectus in
case of public issue and a letter of offer in case of right issue which is essentially made to its
existing share holders this document generally known as offer document. It has information
about business of the company, promoters and business collaboration, management the board
of directors, cost of the project and the means of finance, status of the project, business
prospectus and profitability, the size of the issue, listing, tax benefits if any and the names of
underwriters and the managers to the issue etc. According to companies act(section 68B)
every listed public company, making an initial offer of any security of Rs.10 crores and above
has to issue it only in dematerialized form
1. Application for allotment.
2. BOIDs for verification.
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Process Flowchart
2.
Issuer/ RTA
3.
CDSL
4.
5.
6.
BO
1.
30
Other costs: should not to exceed 2% to 5% for equity issue, and 1% to 2% for
debentures issue in addition to mandatory costs.
The floatation of new issues is generally made by the following methods:
1. public issue through prospectus
2. private placement
3. offer sale
4. rights
Pre-issue formalities:
Project reports and validity and feasibility report
Formalities for satisfying the companies act, SEBI act, and SC act.
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Arrangement for issue by agreement for common share certificate form, draft
prospectus, printing stationery, registrar to the issue, banker, brokers etc.
SEBI Norms
Some of the norms prescribed for unlisted and listed companies are as under:
An unlisted company may make an initial public offering of equity shares or any other
security which may be converted into or exchanged with equity shares at a later date, only if
it meets all the following conditions:
1. The company has net tangible assets of at least Rs 3 crore in each of the preceding three
full years (of 12 months each), of which not more than 50 percent is held in monetary assets.
2. The company has a track record of distributable profits in terms of Section 205 of the
Companies Act, 1956, for at least three out of immediately preceding five years
3. The company has a net worth of at least Rs 1 crore in each of the preceding three full years
(of 12 months each)
4. In case the company has changed its name within the last one year, at least 50 percent of
the revenue for the preceding one full year is earned by the company from the activity
suggested by the new name; and
5. The aggregate of the proposed issue and all previous issues made in the same financial year
in terms of size does not exceed five times its pre-issue net worth as per the audited balance
sheet of the last financial year.
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Discuss with the company's management and visit the company's operating locations,
if required.
Communicate the grade to the company along with an assessment report outlining the
rationale for the grade assigned.
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Public issues can be further classified into Initial Public offerings and further public
offerings. In a public offering, the issuer makes an offer for new investors to enter its
shareholding family. The issuer company makes detailed disclosures as per the DIP
guidelines in its offer document and offers it for subscription. The significant features are
Initial Public Offering (IPO) is when an unlisted company makes either a fresh issue
of securities or an offer for sale of its existing securities or both for the first time to the
public. This paves way for listing and trading of the issuers securities.
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SEBI has laid down eligibility norms for entities accessing the primary market
through public issues. There is no eligibility norm for a listed company making a rights issue
as it is an offer made to the existing shareholders who are expected to know their company.
There are no eligibility norms for a listed company making a preferential issue.
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For Public issue offer documents of which are submitted to SEBI, for its observations:
a. Recommends an issue
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Book Building
39
The Process:
The Issuer who is planning an IPO nominates a lead merchant banker as a 'book
runner'.
The Issuer specifies the number of securities to be issued and the price band for
orders.
The Issuer also appoints syndicate members with whom orders can be placed by the
investors.
Investors place their order with a syndicate member who inputs the orders into the
'electronic book'. This process is called 'bidding' and is similar to open auction.
On the close of the book building period the 'book runner evaluates the bids on the
basis of the evaluation criteria which may include
Price Aggression
Investor quality
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Generally, the numbers of shares are fixed; the issue size gets frozen based on the
price per share discovered through the book building process.
Book Building is a good concept and represents a capital market which is in the
process of maturing.
In case the issuer chooses to issue securities through the book building route then as per SEBI
guidelines, an issuer company can issue securities in the following manner:
BIDDING PROCESS
The issue being made through the 100% book building process wherein up to 50%
of the net issue to the public shall be available for allocation on the proportionate basis to the
QIB bidders .further not less than 35% of the net issue to the public shall be available fro
allocation on proportionate basis to the retail individual bidder and not less than 15% of the
net issue of the public shall be available for allocation on a proportionate basis to non
institutional bidders, subject to valid bids being received at or above the issue price.
Bidders are required to submit their bids through the syndicate. However the bids
by QIBs shall be submitted only to the BRLMs or Syndicate members duly signed them in
this regard. In case QIB bidders, the bank in consultation with the e BRLMs may reject Bids
at the time of acceptance of the bid cum application form provided that the reason for
rejecting the same shall be provided to such bidder in writing. In case of bids under the non
institutional portion, bids under the retail portion and bids under employees reservation
portion, bids would not be rejected except on the technical grounds listed in this red herring
prospectus
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Investors should note that allotment to all successful bidders will only be in the
dematerialse form. Bidders will not have the option of getting allotment in physical form. The
equity shares, on allotment, shall be traded only in the dematerialized segment of the stock
exchange.
Companies, Corporate Bodies and Societies, registered under the applicable laws in
India.
NRIs and FII are on repartition basis or non-repartition basis subject to applicable
laws.
The option of 75% Book Building is available to all body corporate that are otherwise
eligible to make an issue of capital to the public. The securities issued through the
book building process are indicated as 'placement portion category' and securities
available to public are identified as 'net offer to public'. In this option, underwriting is
mandatory to the extent of the net offer to the public. The issue price for the
placement portion and offers to public are required to be same.
In the 100% of the net offer to the public, entire issue is made through Book Building
process the number of bidding centers, in case of 75% book building process should
not be less than the number of mandatory collection centers specified by SEBI. In
case of 100% book building process, the bidding centers should be at all the places
where the recognized stock exchanges are situated
The
It provide a fair, efficient & transparent method for collecting bids using latest
NSE
system
offers
nation
wide
bidding
facility
in
securities
Costs involved in the issue are far less than those in a normal IPO
The IPO market timings are from 10.00 a.m. to 3.00 p.m. On the last day of the IPO, the
session timings can be further extended on specific request by the Book Running Lead
Manager.
Placing of issue.
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He should render at all times high standards of services, proper care in all his
dealings and a high quality of professional judgment
Trading Members:
The Book Running Lead Manager will give the list of trading members who are
eligible to participate in the Book Building process to the Exchange. Members have to submit
a one time undertaking to the Exchange. Eligible trading members have to give in the
prescribed format details of the user IDs that they Would like to use.
Subscribers:
Subscribers can approach any of the approved trading members for submitting bids in
the NEAT IPO system. On line transaction registration slip are generated automatically after
entering the bids in to the system which acts as proof of the registration of each Bid option.
Bid:
A bid is the demand for a security that can be entered by the syndicate/sub-syndicate
members in the system. The two main components of a bid are the price and quantity.
Bidder:
The person who has placed a bid in the Book Building process.
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.
Floor Price:
The minimum offer price below which bids cannot be entered The Issuer Company in
consultation
with
the
Book
Running
Lead
Manager
fixes
the
floor
price.
Merchant Banker
An entity registered under the Securities and Exchange Board of India (Merchant
Banker) regulation 1999.
Syndicate Member
Syndicate Members are the intermediaries registered with the Board and permitted to carry
on activity as underwriters. The Book Running Lead Managers
To the issue appoints Syndicate Member
Order Book
It is an 'electronic book' that shows the demand for the shares of the company at various
prices.
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The post issue activities including management of escrow accounts, coordinate noninstitutional allocation, intimation of allocation and dispatch of refunds to bidders etc are
performed by the LM. The post Offer activities for the Offer will involve essential follow-up
steps, which include the finalization of trading and dealing of instruments and dispatch of
certificates and demat of delivery of shares, with the various agencies connected with the
work such as the Registrar(s) to the Offer and Bankers to the Offer and the bank handling
refund business. The merchant banker shall be responsible for ensuring that these agencies
fulfill their functions and enable it to discharge this responsibility through suitable
agreements with the Company. A merchant banker is required to do the necessary due
diligence in case of QIP mechanism.
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Name of
the issue
Date of
Issue
Issue Date
Price Price
of
Range (Rs.) Listing
Roman
Tarmat
Limited
DLF
Limited
12/06/07
to
19/06/07
11/06/07
to
14/06/07
Rs.150
to
Rs.175
Rs.500
to
Rs.550
Vishal
Retail
Limited
Nelcast
Limited
BSE
NSE
BSE Gain/
Loss
NSE
Gain/Loss
175
9-Jul07
319.85
319.20
82.77
82.4
525
5-Jul07
573.95
574.7
9.32
9.47
11/06/07 Rs.230
to
to
13/06/07 Rs.270
270
4-Jul07
780.60
782.80
189.11
189.11
04/06/07 Rs.195
to
to
08/06/07 Rs.219
219
27Jun-07
182.15
181.70
-16.83
-17.03
27.05
27.05
42.37
42.37
Meghmani
Organics
Limited
04/06/07
to
07/06/07
Rs.17
to
Rs.19
19
28Jun-07
Decolight
Ceramics
Limited
24/05/07
to
29/05/07
Rs.45
to
Rs.54
54
19Jun-07
35.45
35.65
-34.35
-33.98
18/05/07 Rs.290
to
to
23/05/07 Rs.315
315
13Jun-07
563.80
565.20
78.98
79.43
15/05/07 Rs.171
to
to
18/05/07 Rs.190
190
5-Jun07
401.20
401.30
111.16
111.21
Time
Technoplast
Limited
Nitin Fire
Protection
Industries
Limited
50
Above chart shows that post IPO performance good in the market. Out of 8 IPO Vishal retail
Ltd shown excellent performance. Only 2 companies are shown bad performance in market.
51
Analysis
1. How are you made aware of about new IPO's?
Frequenc Percent
Valid
Cumulative
Percent
27.0
y
27
27.0
Percent
27.0
Family &
12
12.0
12.0
39.0
Friends
Brokers
52
52.0
52.0
91.0
Internet
9.0
9.0
100.0
Total
100
100.0
100.0
Valid Advertisement
52
50
52
40
30
27
20
Count
10
12
9
0
Advertisement Family & Friends
Brokers
Internet
Interpretation: This above chart shows that 52% of the clients aware of IPO through Brokers.
Because of Broking firms are creating more awareness through his executives. 27% of the
clients are aware through Magazines, News papers & TV etc. 12% & 9% of the clients are
getting awareness through Family & Friends respectively.
Percent
Valid
Cumulative
Percent
Percent
53
Valid
11.0
Satisfactor
17
17.0
17.0
28.0
y
Good
41
41.0
41.0
69.0
Poor
31
31.0
31.0
100.0
Total
100
100.0
100.0
Excellent
54
40
41
30
31
20
17
Count
10
11
0
Excellent
Satisfactory
good
Poor
Interpretation: In order to know the clients, were asked how they recognize IPO as
Investment Avenue. It was found that 41% clients recognize it as good, 31% clients are not
preferred, 17% satisfied and only 11% clients recognize it as excellent. Clients feel that IPO
investment is good in this volatile market, and as per 31% clients due to much loss has
incurred. According to them recent IPOs are not impressive & are aggressively priced.
3. What factors do you consider while bidding in IPO's and investing in it?
55
Percent
Industrial
11
11.0
11.0
Percent
11.0
Outlook
Company
38
38.0
38.0
49.0
earnings
Issue price
37
37.0
37.0
86.0
14
14.0
14.0
100.0
Total
100
100.0
100.0
Valid
background &
40
38
37
30
20
14
Count
10
11
0
Industrial Outlook
Company backgroud &
Issue price
All of the above
What factors do you consider while bidding in IPO's and investing in it?
Interpretation: Here 38% & 37% of the clients consider company background and issue price
respectively. Because they perceive that IPO was risky so they always consider the company
background and issue price before biding in issue. So they want to know company
56
Percent
Valid
Cumulative Percent
Percent
Valid Below 10000
10000 to
33
33.0
33.0
33.0
23
23.0
23.0
56.0
18
18.0
18.0
74.0
26
26.0
26.0
100.0
100
100.0
100.0
20000
20000 to
60000
more than
60000
Total
57
33
30
26
23
20
Count
18
10
Bellow 10000
20000 to 60000
10000 to 20000
Interpretation: In this we conclude that 33% of the clients are investing below 10000.
Because investing in IPO is more risky. So high percentage of clients are investing bellow
10000 and some of clients means 26% investing more than 60000.because they all are high
risk takers. 23% & 18% clients are investing 10000 to 20000 and 20000 to 60000
respectively.
58
Percent
Valid
Finance
31
31.0
31.0
31.0
Entertainment
17
17.0
17.0
48.0
Sugar
23
23.0
23.0
71.0
Other
29
29.0
29.0
100.0
Total
100
100.0
100.0
& media
40
30
31
29
23
20
Count
17
10
Finance
Sugar
Other
59
Interpretation: In this order 31% clients said that investing in Finance sector is good and 29%
clients said other sector are good (Real estate, oil, power, Automobile, Cement And IT etc) so
it say that investing in finance sector is safest. 17% and 23% clients preferred entertainment
& media and sugar respectively.
Cumulative
Percent
35
35.0
35.0
35.0
Gained loss
19
19.0
19.0
54.0
Neither profit
46
46.0
46.0
100.0
100
100.0
100.0
nor loss
Total
60
46
40
35
30
20
Count
19
10
Gained profit
Gained loss
Interpretation: when clients were asked experience having invested in IPO, it was found that
46% clients said that neither profit nor loss and 35% clients said profit. So it means that
clients are getting profit from investment. Only 19% clients said that loss . Finally it shows
that IPO performing Good.
61
Valid Excellent
Percent
Valid
Cumulative
Percent
Percent
8.0
8.0
8.0
Good
37
37.0
37.0
45.0
Better
44
44.0
44.0
89.0
Poor
11
11.0
11.0
100.0
Total
100
100.0
100.0
50
44
40
37
30
20
Count
10
11
8
0
Excellent
Good
Better
Poor
62
Interpretation: Here 44% of respondent agreed that its performing Better and 37% of
respondent agreed that its performing Good and 11% & 8% respondent said that good and
excellent respectively. Because currently IPO performing moderate in market and clients are
getting more returns from there investment.
Percent
Strongly Agree
32
32.0
32.0
Percent
32.0
Agree
Partly
38
17
38.0
17.0
38.0
17.0
70.0
87.0
Disagree
Strongly
9
4
9.0
4.0
9.0
4.0
96.0
100.0
disagree
Total
100
100.0
100.0
Agree/Disagree
63
30
32
20
17
10
Count
9
4
0
Strongly Agree
Partly Agree/Disagre
Agree
Strongly disagree
Disagree
Interpretation: We already find in first question that clients are more aware of IPO through
Brokers and here also they perceived that 38% clients agree that take help of brokers while
investing in IPO.32% clients strongly agreed. So it shows that brokers are giving well
investment tips to the clients. 17%, 9% & 4% clients partly agreed /disagreed, Disagreed,&
Strongly disagreed respectively.
64
Findings
1. In my survey I found 52% & 27% of investors are aware through Brokers and
Advertisement, 21% of investors is aware through Internet & Family and Friends. The
majority of the respondent aware through Brokers.
2. 31% of investors have a poor perception about Investment Avenue as IPOs and they
are dissatisfied
3. 75% of respondents consider company earnings,& issue price as a necessary factors
while investing in IPOs.
4. The survey reveals that 31%& 29% of investors prefer finance IT as investment
sector; where as 23% of the respondents have selected sugar for their investment.
5. 56% of investors have invested below 20000 and 26% of investors invested more than
60000 and 18% of investors moderately invested.
6. After conducted survey, 44%, 37%, & 8% of investors concluded in better good &
excellent, where as 11% says poor performance.
7. In my survey I found that most the investors have taken the help of brokers while
investing in IPOs.
65
Recommendations
1. The brokers have to conduct conference, seminars, and workshops to investor
get more knowledge of IPO. They will interact about there knowledge with his
family and friends. It helps to increase investor.
2. TO ward off poor perception of Investors Company needs to provide expert
tips.
3. Apart from 14% of investors, rest respondents are considering only one factor
that may be company earnings, industry outlook & issue price so there may be
chance of loss so they have to look upon all aspects while investing in IPOs.
4. The investor has to more concentrate on booming sector while investing IPO.
5. They have to conduct investor meet regularly to identify the investor
problems. Its help broking firms to also.
6. Provide Stock Direct specialty to clients.
66
Conclusion
The study aimed at identifying investor decisions with regard to IPOs, so I have concluded
that majority of the respondents are satisfied with IPOs performance and they are having
good investment decisions, so brokerage firm has to consider these impediments
for
improvement of investment decisions among investors. And investors are moving towards IT
sector for investment as it is known for upward moving, it offering good enticements for the
investors. Hence Anand Rathi has great potential market in Belgaum to make an aware about
IPOs.
IPO is when an unlisted company makes either a fresh issue of securities or an offer
for sale of its existing securities or both for the first time to the public. At present book
building method is used for IPO.
All most all investors know about the IPO but when we talk of investment in it they told
better to investment. But for some following reason they hesitated.
Retail investors who are now has to pay 100% of the money while applying and
blocking of their money up to allotment and if allotment is not done they have to wait
again to get back their money back.
They are not sure that they will be allotted shares are not.
Current IPOs are aggressively priced.
Because of these reasons IPOs are not performing good.
67
Bibliography
Websites:
www.bseindia.com
www.nseindia.com
Other Reference:
Internet,
68
Annexure
QUESTIONNAIRE
Sir/ Madam,
I am pleased to introduce myself Santosh B Dandigadasar student of MBA 2 nd
semester
studying at KLESs IMSR Hubli. I have been assigned a project work entitled A
comparative study of investment decisions of individual investor with regard to IPOs at
ANAND RATHI Belgaum. Hence I request you to co-operation to in this regard. Please
spend your precious time and your opinion from the following Note: Please tick in () the
appropriate box.
Respondent profile
Name:
Address:
Gender:
Age:
Male
15-25
Female
25-45
45-55
Occupation: Salaried
55-65
Business man
Professional
c. Brokers
d.
Internet
2. How do you recognize IPO as Investment Avenue?
a. Excellent
b. satisfactory
c. Good
d. Poor
69
c. Issue Price
b. 10000 to 20000
c. 20000 to 60000
c. Sugar
d.
Other specify
6. What was your experience having investing in IPOs?
a .Gained profit
b. Gained loss
b. Good
c. Better
d. Poor
b) Agree
c) Partly agree/disagree
d) Disagree
e) Strongly disagree
Thanking you
70
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