Quota system in IPOs may go
Mumbai: February 28, 2006 The quota system in the initial public offers (IPOs) may soon be done away with if one becomes alive to the hints that have emanated from the Economic Survey released on Monday.

The survey said: "While the full investigation is still underway, this experience (the recent IPO scam) emphasises the need to shift away from a system of quotas to a non-discretionary price discovery through a unified auction, in a framework which is close to price discovery of the secondary market."

Currently, 35 per cent of the shares on offer in primary offerings are reserved for retail investors. Qualified institutional bidders (QIBs) are eligible for 50 per cent of the net issue, with 5 per cent of the QIB portion reserved for the domestic mutual funds. The rest is for non-institutional bidders.

Investigations by the market regulator the Securities and Exchange Board of India has revealed investors placing multiple bids in the IPO auctions, in order to benefit from the quota that has been made available to individual investors.

Emphasising the need for improvements in the securities market architecture to step up investments, the survey outlined "removing the problem of multiple bids by individuals seeking to profit from the quota for retail investors at the discretion of merchant bankers or the government by considering a pure auction for price discovery at the IPO, in much the same manner as the secondary market functions," and, "strengthening the investigation and surveillance process, so as to have a steady stream of success in enforcing rules, and punishing wrongdoers, with well-prepared and well-argued cases that are upheld by the courts" as significant measures.

The survey also said the IPO market has made enormous progress in the recent years, moving away from fixed-price offerings to price discovery through a screen-based auction.
Back to News Review index page  

Mahindra Financial fixes IPO price at Rs200
Mumbai: Mahindra & Mahindra Financial Services (MMFSL) has priced its shares at Rs200 each. The company's IPO that closed on February 24 was oversubscribed nearly 27 times.

The original price band for the issue of two crore shares of Rs10 each, for cash at a premium decided through the book-built process, had been fixed at Rs170-200 a share.

The offer was composed of fresh issue of one crore shares and the rest being sale by existing shareholders, mainly Mahindra & Mahindra Ltd (M&M). M&M has now earned close to Rs200 crore by diluting its equity holding in MMFSL from
89.8 per cent to 67 per cent.

The company said there were 2.9 lakh applications and the total demand for the
Rs 400-crore issue was around Rs10,000 crore. The company recently obtained board approval for a $200-million FCCB issue, which it would make after getting required shareholder permission.
Back to News Review index page  

GVK lists at premium of 13 per cent
Mumbai: GVK Power and Infrastructure opened on the Bombay Stock Exchange (BSE) at Rs350, a premium of 12.9 per cent on the bid price, and on the National Stock Exchange (NSE) at Rs376.

Thereafter it fluctuated between Rs304.55 and a high of Rs400 on BSE before closing at RS315.55. The stock touched a high of RS388 on NSE before closing at 311.30. About 1.03 crore shares were traded on the BSE while on NSE 1.6 crore shares were traded.

The issue was subscribed 20 times over.
Back to News Review index page  

Kirloskar Systems to acquire 7.18 stake in Kirloskar Oil engines
Kirloskar Systems will acquire 7.18 per cent stake in Kirloskar Oil Engines from Better Value Holdings (the latter held 13.48 per cent shares of Kirloskar Oil Engines before the transfer).

The mode of acquisition is by way of market transaction. The date of the proposed acquisition is March 06, 2006 to March 14, 2006 through the Stock Exchange. The proposed acquisition will be based on the market price of the shares. The shareholding of Kirloskar Systems after the acquisition will rise to 7.23 per cent stake of Kirloskar Oil Engines Ltd the company informed the stock exchange.
Back to News Review index page  

JK Cement share priced at Rs148
Mumbai: J K Cement has fixed the issue price of Rs148 per share for its two crore equity shares of Rs10 each. The company entered the capital markets for the issue in price band from Rs145 to Rs155 per share.

The issue was subscribed 1.8 times while the QIB portion was subscribed 2.99 times, company said in a release.
Back to News Review index page  

Government gets Rs1475 crore dividend from NTPC
New Delhi: NTPC has presented a dividend cheque of Rs1475.93 crore, share of the government of India, to Union Minister of Power Shushilkumar Shinde. NTPC has paid the highest ever interim dividend of Rs1649.09 at 20 per cent on the paid up capital of the company for the financial year 2005-06, a company release said.

This is the 12th consecutive year that NTPC has paid dividend to Government of India, it added.

Power Secretary R V Shahi and other senior officials of Ministry of Power and NTPC were present on the occassion.
Back to News Review index page  

JK Paper gives interim dividend
Mumbai: Paper manufacturer JK Paper has declared an interim dividend of 14 per cent for the year 2005-2006. The board of directors have recommended an interim dividend of 14 per cent that is, Rs1.40 each on equity shares of Rs10 per share, the company informed the Bombay Stock Exchange.
Back to News Review index page