Study On Performance of Initial Public Offer (IPO) in Indian Capital Market

BHAVAN’S INSTITUTE OF MANAGEMENT
MYSORE
“A STUDY ON THE PERFORMANCE OF IPO's IN THE
INDIAN CAPITAL MARKET”

- - - AT INDIA INFOLINE
BY
AMITH KUMAR G
BIMM ID: PGPMO8 “05”
Submitted in the partial fulfillment of the requirements of the
MBA degree course of BHAVANS INSTITUTE OF MANAGEMENT
PROJECT GUIDES:--
INTERNAL GUIDE PROF. PRAVEEN BHAGAWAN

BHAGAW
EXTERNAL GUIDE Mr. MANI MARAN
BHAVAN’S INSTITUTE OF MANAGEMENT, MYSORE

2008-2009
BHAVANS INSTITUTE OF MANAGEMENT,

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CERFITICATE
THIS IS TO CERTIFY THAT MR. AMITH KUMAR G HAS PREPARED

INTERNSHIP REPORT TITLED “A
A STUDY ON THE PERFORMANCE OF
IPO's IN THE INDIAN CAPITAL MARKET”
MARKET UNDER THE GUDIANCE OF
PROF. PRAVEEN BHAGAWAN.
THE DRAFT HAS BEEN THROUGHLY REVISED

REVISED ON THE BASIS OF
THE RECOMMENDATIONS
MENDATIONS OF THE PANEL OF EXAMINERS AND THE
REVISION HAS BEEN ACCEPTED BY THE INTERNAL GUIDE. THE
STUDENT CERTIFIES THAT NO PORTION OF THIS REPORT HAS
BEEN PLAGIARIZED OR COPIED OR QUOTED WITHOUT THE
PERMISSION IN ANY FORM. THIS REPORT HAS NOT BEEN
SUBMITTED
UBMITTED TO ANY OTHER INSTITUTE / UNIVERSITY FOR ANY
OTHER DIPLOMA / DEGREE.
INTERNAL GUIDE MR.PRAVEEN BHAGAWAN STUDENT AMITH KUMAR G
DATE AUGUST 10,2009 DATE
RESIDENT DIRECTOR MR. NARSISMURTHY DIRECTOR MR.KRISHNAMURTHY
DATE DATE

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ACKNOWLDGEMENT
IT IS MATTER OF HONOUR
HONOUR TO EXPRESS MY GRATITUDE TOWARDS
TOWAR ALL
THOSE WHO GUIDED ME DIRECTLY OR INDIRECTLY IN COMPLETING
COMPLETING THIS
PROJECT REPORT. I WOULD LIKE TO SPECIALLY THANK,
Mr. M.PRABU,, FOR GUIDING

GUI ME AND FOR ALL SUPPORT AND FACILITIES
PROVIDED, THROUGHOUT THIS PROJECT
PROF. PRAVEEN BHAGAWAN,

BHAGAWAN FOR GIVING VALUABLE GUIDANCE
DANCE TO ME
THROUGHOUT THIS PROJECT,
MR. MANI MARAN FOR PROVIDING VALUABLE DATA SOURCE,

INFORMATION & GIVING ME AN OPPORTUNITY TO DO THE RESEARCH
PROJECT AT INDIA INFOLINE CHENNAI, AND ABOVE ALL I THANK
ALMIGHTY FOR HIS BLESSINGS FOR THE COMPLETION OF THIS
ENDEAVOUR.
DATE JULY 3, 2009
PLACE CHENNAI
STUDENT NAME AMITH KUMAR G
SIGNATURE

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COMPANY GUIDE’S CERTIFICATE
THIS IS TO CERTIFY THAT MR. AMITH KUMAR G IS A STUDENT OF PGPM

PROGRAMME OF BHAVANS
BHAVANS INSTITUTE OF MANAGEMENT – MYSORE
(BIMM). HE HAS CONDUCTED A STUDY ON “A
“A STUDY ON THE
PERFORMANCE OF IPO's IN THE INDIAN CAPITAL MARKET”
MARKET IN INDIA
INFOLINE FROM MAY 15TH, 2009 TO JULY 3RD, 2009.
THE STUDENT HAS HAD PRELIMINARY AND INTERMITTENT DISCUSSIONS

DURING THE PROJECT PERIOD. I CERTIFY THAT THE PROJECT IS
PREPARED UNDER MY GUIDANCE.
DATE: JULY 3RD, 2009

PLACE: CHENNAI
NAME OF THE MANAGER MR. MANI MARAN
DESINATION BRANCH MANAGER
COMPANY NAME INDIA INFOLINE
PLACE CHENNAI

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***** ::: TABLE OF CONTENTS ::: *****
SI NO PARTICULARS
1 EXECUTIVE SUMMARY
2 INDUSTRY PROFILE
2.1 ** INTRODUCTION
3 ABSTRACT
4 OBTECTIVE OF THE STUDY
5 SCOPE OF THE STUDY
6 LIMITATION OF THE STUDY
7 COMPANY PROFILE
7.1 ** INTRODUCTION
7.2 ** VISION
7.3 ** MISSION
7.4 ** MILESTONES
7.5 ** ORGANIZATION STRUCTURE
7.6 ** MANAGEMENT OF THE COMPANY
7.7 ** KET STRENGTHS
7.8 ** CORPORATE INFORMATION
8 FIANANCE DEPARETMENT OF INDIA INFOLINE LTD
9 MARKETING DEPARETMENT OF INDIA INFOLINE LTD
10 HR DEPARETMENT OF INDIA INFOLINE LTD
11 RECENT AWARDS & ACCOLADES

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;’;’;’;’ RESEARCH REPORT CONTENTS ;’;’;’;’
SI NO PARTICULARS
1 INTRODUCTION TO IPO
2 IPO MARKET IN INDIA – OVERVIEW
3 IPO MARKET IN INDIA – REGULATION
4 CREDIT RATING IPO - IS IT MANDTORY
5 CREDIT RATING AGENCIES
6 PRIMARY AND SECONDARY MARKET
7 BUYING IPO PROCESS
8 ISSUE PERIOD
9 ALLOMENT STATUS
11 IPO REFUND
12 IPO – ADVANTAGES
13 IPO – DISADVANTAGES
14 IPO PROCESS ( ISSUER’S PRESPECTIVE )
15 IPO PROCESS ( INVESTORS PERSPECTIVE )
16 RECENT TRENDS
12.1 ** NHPC IPO FACT SHEET
12.2 ** ADANI POWER IPO FACT SHEET
18 IPO SCAMS OVERVIEW

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13.1 ** ITS CAUSES
19 PUBLIC ISSUE CALENDER WISE SUMMARY
20 PUBLIC ISSUE FINANCIAL WISE SUMMARY
21 SWOT ANALYSIS
22 CONCLUSION
23 GLOSSARY
24 BIBLOGRAPHY
25 WEBLIOGRAPHY

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### LIST OF TABLES IN THE REPORT ###
SI NO PARTICULARS
VISION ELABORATED
SHARE PRICE OF IIL IN BSE , NSE ON MARCH 31, 2009
FINANCIAL PERFORMANCE OF IIL FOR THE YEAR 08-09

08
SNAPSHOT OF STAND ALONE PERFORMANCE OF IIL
CONSOLIDATED FINANCIAL PERFORMANCE OF IIL
COMPARING REVENUES FROM THE YEAR 2005-2009

2005
COMPARING EBIDTA FROM THE YEAR 2005-2009

2009
COMPARING PAT FROM THE YEAR 2005-2009

2005
IPO GRADING
RATING SYMBOLS & THEIR MEANING
IPO PROCESS ( ISSUERS PESPECTIVE )
IPO PROCESS ( INVESTORS PERSPECTIVE )
IPO’s DURING JAN - MARCH
COMPARISON OF IPO’s IN Q1’07 & Q1’08
PUBLIS ISSUE – CALENDER WISE
PULBIC ISSUE – FINANCIAL YEAR WISE

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****L
****LIST
IST OF CHARTS IN THE REPORT ****
SI NO PARTICULARS
ORGANIZATION STRUCTURE
ORGANIZATION STUDY (INDIA INFOLINE)
IIL SHARE PRICE VERSUS BSE SENSEX
IIL SHARE PRICE VERSUS NSE S&P

S&P CNX NIFTY
BUSINESS DIVISIONS
BROKING --- INDUSTRY OPTIMISM
CREDIT & FINANCE --- INDUSTRY OPTIMISM
INSURANCE --- INDUSTRY OPTIMISM
WEALTH ASSET MANAGEMENT – INDUSTRY OPT.
IPO’s VERSUS SECONDARY ISSUES
IPO’s DURING Q1’07 & Q1’08
NUMBER OF ISSUES FROM 2004-2009

2004
NUMBER OF ISSUES ( FINANCIAL YEAR WISE )
CURRENT IPO REACTIONS

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EXECUTIVE SUMMARY
The MBA course offered by the BHAVANS INSTITUTE OF
MANAGEMENT, MYSORE has its own unique syllabus which
requires its MBA students to undertake an internship with any of the
leading business houses for a period ranging from 6 to 8 weeks
during the first year holidays. The purpose of this internship is to
enable the students to appreciate and understand the nuances of
the practical world vis-à-vis

vis vis the theoretical inputs with those of
practical exposure and come out with creative solutions/ ideas in
enhancing the business. In practical fulfillment of MBA degree of
BIMM I took up
p an Organizational study at India Infoline Chennai. I
have experienced the heat of work for almost three months and it
was really a great exposure in the corporate world. I have learned a
lot regarding the workings of various departments and mainly the
finance
nance and it was really great working for someone.

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& * @ $ % @ ^ * }#
*** INDUSTRY PROFILE ***

*
# } * ^ @ % $ @ * &

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INTRODUCTION
Change is the only constant in today’s capital markets. New
products and services are created everyday and they impact
consumers, financial service provider’s delivery systems and
regulations. This change presents a constant challenge for a
publication devoted
dev to the capital markets.
The equity trading is the buying and selling of equities i.e.
good, product, raw material at the prevailing price rate for
immediate settlement. The exchange of equities will not be in
physical. It is a speculative market i.e.

i.e. the increase or
decrease of prices of the equities can be enjoyed in the way of
profit or loss. When there is the monetary flow in the
transactions, the emotional feeling will be impact on this
activity. The equities are traded in the exchanges. The
exchanges
anges are the free market where forces that influences
price are brought together in open auction.

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Some of the major equity exchanges around the globe are
NASDAQ, NSE, SENSEX, BSE, and NIKKIE. Spot equities
trading are done based on the future price.
These transactions are not bound to any particular exchange
or national boundaries, but are speculative

speculative in nature. A small
risk Premium/ discount are offered on the prevailing futures
rate, which vary minute to minute depending upon the market
Psychology and supply/ demand gap whenever a quote is
requested for, two quotes are offered by the dealer i.e. a bid
rate or sell rate and an ask rate or buy rate.
Indian stock exchanges have evolved in the last couple of
years. Gone are the days when one would see brokers
shouting to place the orders to other jobbers or brokers.

broker Once
upon a time, brokers used to killing on the commission they
used to earn on new issues just by lending their name
through “BROKERS TO THE ISSUE”.

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There were hundreds of new issues tapping the market in just
one week, making it tough to track which

which has one active
exchange but today almost all the exchanges barring BSE &
NSE are finding it tough to remain float.
The Indian primary market has come a long way particularly
in the last decade after deregulation of the Indian economy in
1991-92.
92. Both the primary and secondary markets have had
their fair share of reforms, structural cum policy changes time
to time. The most commendable being the dismantling of the
Controller of Capital Issues (CCI) and introduction of the free
pricing mechanism. This changed

changed the whole facet of Initial
Public Offering (IPO) market.
But in last ten years or so, the scenario has changed for the
better. Online trading is a reality with much better
transparency than the previous system. We have SEBI which
has a better grip over

over the market nuisance that was there in
the past.

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ABSTRACT
The study “A study on the performance of IPOs in the
Indian capital market”

market has been carried out at India Infoline
Securities,
ities, Chennai. India Infoline Securities is a growing firm
in the field of Equity trading. They have major client base and
working grateful to their clients.
The major objective of the project is to study about
the overview of Indian equity

equ market and the procedure to
raise the IPO's to list in the Indian stock exchange and to
analyze the recent trends of the IPO's with their advantages
and disadvantages in the last couple of years for the traders
in equity
y market.
Secondary data for the study was collected from
going through the various records of the company such as
business standards magazines,

magazines websites,, articles etc.

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OBJECTIVE OF THE STUDY
To know the Organization

ization structure of the India Infoline
To know the functions of various department such as
Finance, Marketing,
arketing, Human
uman resource management.
To understand the work culture of India Infoline
To develop necessary interpersonal and managerial skills
To gain well rounded view of management operations.
To gain firsthand experience from industry.
To make an assessment of the organization in the industry.
To find out marker share of the company, it’s positioning of
the company.

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SCOPE OF THE STUDY
The scope is limited to the extent of the place, time. The
Organization
rganization and their information collected during the
project. It is done as a part of academic study. The scope of
the study limited to information supplied by the department
head and information collected by standing order and
settlement knowledge gained by the student the study of the
course. The study is confined only to India Infoline Chennai.

Chennai

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LIMITATION OF THE STUDY
The study is not proposed to be an expert study as it was
done by a student for the purpose of a partial fulfillment of
the course in the plant training, which is an integral part, in
completion and reward of MBA. The study was conducted in a
short span of eight weeks, so the findings cannot be
generalized for all times. Some of the information’s being
confidential was not included

included in the study. The scope of the
study, by and large is very vast. It is very difficult to satisfy
all the areas. Therefore an attempt is made to cover as much
as possible.

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& & & & & & & & & &
** COMPANY PROFILE **
& & & & & & & & & &

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IT’S ALL ABOUT MONEY, HONEY!

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INTRODUCTION
India Infoline was originally incorporated on October 18,
1995 as Probity Research and Services Private Limited at
Mumbai under the Companies Act, 1956 with Registration No.
11 93797. They commenced their operations as an
independent provider of information,

information, analysis and research
covering Indian businesses, financial markets and economy,
to institutional customers. They became a public limited
company on April 28, 2000 and the name of the Company
was changed to Probity Research and Services Limited. The
name
e of the Company was changed to India Infoline.com
Limited on May 23, 2000 and later to India Infoline Limited on
March 23, 2001.
In 1999, they identified the potential of the Internet to cater
to a Mass retail segment and transformed our business model
from providing information services to institutional customers
to retail customers.

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India infoline is a Pan-India financial services organization
across 1361 business locations and a presence in 428 cities.
Our global footprint extends across geographies

geographies with offices in
New York, Singapore & Dubai. We are listed on the BOMBAY
STOCK EXCHANGE (BSE) & NATIONAL STOCK EXCHANGE
(NSE).
India infoline offers a wide range of services & product
comprising broking, wealth management, credit & finance,
insurance, asset management & investment banking.
India Infoline are registered with the BSE and NSE for
securities trading, MCX, NCDEX and DGCX for commodities
trading, CSDL & NSDL as depository participants. India
Infoline are registered as a category I merchant banker and
are a SEBI registered portfolio manager. They also received
the FII license in IIFL Inc. IIFL securities pte ltd received
approval from the monetary authority of Singapore to carry
out corporate advisory and dealing in securities operations.

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Two subsidiaries-
subsidiaries India Infoline Investment Services & Money
Credit Limited are registered with RBI as non-deposit

non deposit taking
Non-banking financial services companies. India Infoline
Housing Finance ltd, the housing finance arm, is registered
with the National Housing Bank.
In May 2000, the name of Company was changed to India
Infoline.com Limited to reflect the transformation of their
business over a period of time, we have emerged as one of
the leading business and financial information services
provider in India. Their broking services was launched under
the brand name of 5paisa.com through their subsidiary, India
Infoline Securities Private Limited and www.5paisa.com

www.5paisa.com, the
E-broking
broking portal, was launched for online trading in July 2000.
It combined competitive brokerage rates and research,
supported by Internet technology besides investment advice
from an experienced team of research analysts, they also
offer
er real time stock quotes, market news and price charts
with multiple tools for technical analysis.

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Acquisition of Agri Marketing Services Limited (Agri)
In March 2000, they acquired 100% of the equity shares of
Agri Marketing Services Limited, from their owners in
exchange for the issuance of 508,482 of their equity shares
Agri was a direct selling agent of personal financial products
including mutual funds, fixed deposits, corporate bonds and
post-office
office instruments. At the time
time of our acquisition, Agri
operated 32 branches in South and West India serving more
than 30,000 customers with a staff of, approximately 180
employees. After the acquisition, they changed the company
name to India Infoline.com Distribution Company Limited.

Limit
Facilities
India Infoline’s main offices are located in
approximately 4,000 square feet of office space located in
Mumbai, India and the Branches collectively occupy an
additional 10,000 square feet of office space located
throughout India. India Infoline fixed a price band between
Rs 70 and Rs 80 for its forthcoming public issue.

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The company came out with public issue of 1.18 crore
shares with a face value of Rs 10 through the book building
route the issue is slated to open on April 21 and close on
April 27. Enam Financial Consultants Private Ltd would be
the sole book running lead manager to the issue while
Intime Spectrum Registry Ltd is the registrar to the issue.
India Infoline public issue

i gets 6.6 times oversubscription
Entering into the internet pioneer in online trading:
Company saw an opportunity to expand client base, from a
few hundred to several millions and also to complete the
value chain. In early 1999, when internet penetration in India
was at its infancy and the future unknown, company took
hard decision of killing their business model and embracing
the internet.
Company discontinued
discontinued delivery of reports in printed form and
made available quality research at the click of a mouse. Thus,
was born www.indiainfoline.com.The

www.indiainfoline.com.The site has emerged as the
most popular company by site on Indian business and finance.

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India Infoline
nfoline is a stop financial services shop, most respected
for quality of its advice, personalized service and cutting-edge

cutting
technology. It is among the largest; most diversified and de-

de
risked financial services

services players in India today
INDIA INFOLINE’S PEDIGREE
Started in 1995 as an independent business research
and information services provider and now involved
into a one stop financial services provider
Managed by component professionals with impeccable
track record
record and with a deep understanding of the
Indian financial services space
INDIA INFOLINE’S PRODUCT OFFERINGS
Broking (retail & institutional, equities and commodities)
Credit and finance
Asset management
Wealth management
Insurance distribution
Investment banking

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INDIA INFOLINE’S PRESENCE
Headquarters in Mumbai, India
Pan-India distribution network
(607 branches, 151 franchisees)
In 346 cities; international presence
In Dubai, New York and Singapore
Listed in BSE & NSE
COMMENCED OPERATION
In the year 1995
PROMOTER’S HOLDINGS
33.4 %
As on March 31, 2008
FII Holding
27.5 %

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India Infoline team
14000+
India Infoline clients

300,000+
INDIA INFOLINE’S PORTAL
www.indiainfoline.com, the company’s flagship portal, is recognized

www.indiainfoline.com,
as the most comprehensive information resource centre with an
incisive analysis of Indian business, finance and investments.
INDIA INFOLINE’S MEMBERSHIP

M
# NSE, BSE (securities trading)
# MCX, NCDEX and DGCX (commodities trading)
# NSDL and CDSL (depository participant)
# Registered as a category-1
category 1 merchant banker.
# SEBI- registered Portfolio Manager.
# India Infoline Investment Services ltd And Moneyline
credit Ltd are registered with RBI as non-deposit

non deposit
accepting non- Banking financial companies

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VISION
To become the most respected company in the financial
services space.
VISION ELABORATED FROM THE PERSPECTIVE

OF VARIOUS CONSTITUENCIES
TABLE - 1
Employees Customers Shareholders Society
Best place to deliver value de-Risked Governance

work in business
Rewarding delightful sustained innovation

Career experience growth
High
Personal integrity & global
returns
development transparency respect

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MISSION
To become a full-fledged
fledged services company known for its quality of
advice, personalized service and cutting-edge

cutting edge technology
INDIA INFOLINE’S MILESTONES
In the year 1995
Incorporated as an equity research and resulting firm with a client
base that includes leading FIIs, banks, consulting firms and
corporate
In the year 1999
Restructured the business model to embrace the internet;
Launched www.indiainfoline.com;; mobilized capital
from reputed private equity investors
In the year 2000
Commenced the distribution of personal financial products;
Entered life insurance distribution as a corporate agent;
Acknowledged by Forbes as “best of the web” & must read for investors
Launched online equity trading

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In the year 2004
Acquired commodities
comm broking license;
Launched portfolio Management Service;
In the year 2005
Listed on the Indian stock markets
In the year 2006
Acquired membership of DGCX;
Launched banking services;
In the year 2007
Formed a Singapore subsidiary;
Rose over USD 300

30 mn in the group;
Launched a proprietary trading platform;
Included as institutional equities team from the incumbent leader;
Launched consumer finance business under the “Moneyline” brand;

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In the year 2008
Launched wealth management services under the “IIFL Wealth” brand;
Set up India infoline private equity fund;
Received the insurance broking license from IRDA;
Received the venture capitalist license;
Received in-principle
principle approval to sponsor a mutual fund;
Received ‘best broker-India’

broker award from FINANCE
ANCEASIA;
‘Most improved brokerage-

brokerage India ‘award from ASIAMONEY;
In the year 2009
Received registration for a housing finance company from the national
housing bank;
Expanding geographical presence to 100 key locations in 2008-09;

2008
Leverage India Infoline’s

Infoline’s existing distribution network to expand reach.
Innovation in distribution channels to increase awareness and volumes.
Introduce new products to match diverse credit needs;
Focused on maintaining portfolio quality by catering to the mid prime and
prime customer segments having proven credit performance;
Improve customer servicing through multiple touch points;
Continuous investments in technology to simplify processes and system;

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ORGANIZATION STRUCTURE

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ORGANIZATION STUDY OF THE INDIA INFOLINE

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NFOLINE GROUP
INDIA INFOLINE
It comprising the holding company, its wholly-owned

wholly
subsidiaries, straddle the entire financial services space
with offerings ranging from
Equity research,
Equities and derivatives trading,
Commodities trading,
Portfolio Management Services,
Mutual Funds,
Life Insurance,
Fixed deposits,
Government bonds
other small savings instruments to loan
products and Investment banking

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INDIA INFOLINE LTD
Listed in both the leading stock exchanges in India,
viz. the Bombay stock exchange {BSE} and the
national stock exchange {NSE}
It is also the member of both the exchanges.
It has signed in the businesses of Equities Broking,
Wealth Advisory Services, and Portfolio Management
Services
It offers broking services in the cash & derivatives
segments of the NSE as well as in the BSE.
It has been registered with NSDL and CDSL as a
depository participant.

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INDIA INFOLINE MEDIA & RESEARCH SERVICES
LIMITED.
It executes the equities research which is acknowledged by
none other than Forbes as “Best of the Web” and “A must
read for inventors in Asia”

Asia
India Infoline's research is available not just over the internet
but also on international wire services like Bloomberg.
INDIA INFOLINE COMMODITIES LIMITED
Engaged in the business of commodities broking
with the requisite skills and technologies to allow us offer
commodities broking as a contra-cyclical

contra cyclical alternative to
equities broking memberships with the MCX and NCDEX,
two leading Indian

Indian commodities exchanges, and recently
acquired membership of DGCX
Multi-channel
channel delivery model, making it among the select
few to offer online as well as offline trading facilities.

facilities

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INDIA INFOLINE MARKETING AND SERVICES
ERVICES
It is the holding company of India Infoline insurance services
limited & India Infoline insurance brokers limited.
India Infoline Insurance Services Limited is a registered
Corporate Agent with the Insurance Regulatory and
Development Authority (IRDA). It is the largest Corporate
Agent for ICICI Prudential Life Insurance Co Limited, which
is India's largest private Life Insurance Company. India
Infoline was the first corporate agent to get licensed by
IRDA in early 2001.
India Infoline Insurance Brokers Limited

Limited India Infoline
Insurance Brokers Limited is a newly formed subsidiary
which will carry out the business of Insurance broking. We
have applied to IRDA for the insurance broking license and
the clearance for the same is awaited. Post the grant of
license,
nse, we propose to also commence the general
insurance distribution business.

business

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INDIA INFOLINE OUTLET OFFERS
Online
ne BSE & NSE executions(NEAT & BOLT terminal)
NEAT -- National Exchange Automated Trading
BOLT -- BSE On Line Trading
Commodities trading
t
Depository services – Demat & Remat format
IPO’s and mutual fund distribution
Derivatives trading ( futures & options )
Personalized advice
Live market information
Daily market research and market information
Fairly trading call based on technical analysis
PRODUCTS AND SERVICES

S
Online And Offline Trading
Equity Trading
Commodity Trading
Insurance
Mutual Funds
Postal Savings
Market Data And Fund Statistics

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QUALITY ASSURANCE POLICY
We are committed to being the Leader in providing World
Class Products & Services which exceed the expectations of
our customers achieved by teamwork and a process of
continuous improvement.
improvement
To effectively meet the customers’ requirements
and Endeavour to achieve total customer satisfaction.
To gain
gain the consistent faith and confidence of
customers and potential customers regarding the
quality of services rendered.
To pursue excellence through continuous
improvement in all areas & distinguish ourselves by
the quality of services.
BUSINESS PHILOSOPHY
PHILO
• Ethical practices & transparency in all our dealings
• Customers interest above our own
• Always deliver what we promise
• Effective cost management

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MANAGEMENT
ANAGEMENT TEAM OF INDIA INFOLINE
Mr. Nirmal Jain
Chairman & Managing Director
India Infoline ltd
Nirmal Jain, MBA (IIM, Ahmedabad) and a Chartered
and Cost Accountant founded India’s leading financial
services company India Infoline Ltd. in 1995, providing
globally acclaimed financial services in equities and
commodities broking, life insurance

insurance and mutual funds
distribution, among others.
Mr. Nirmal Jain began his career in 1989 with Hindustan
Lever’s commodity export business, contributing
tremendously to its growth. He was also associated with
Inquire-Indian
Indian Equity Research, which he co-founded
co in
1994 to set new standards

standards in equity research.

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Mr. R Venkatraman
Executive Director
India Infoline
nfoline ltd
R Venkatraman, co-promoter
co promoter & Executive Director of
India Infoline ltd., is a B. Tech (electronics

electronics & electrical
communications engineering, IIT Kanpur) and an MBA
(IIM Bangalore)
Bangalore He joined the India Infoline board in
July 1999.
He previously held senior managerial positions in ICICI
ltd, including ICICI securities ltd, their investment
banking joint venture with J P Morgan of USA and with
BZW and Taib capital corporation ltd.
He was also Assistant Vice president with G E Capital
Services India Limited in their private equity division,
possessing a varied experience of more than 16 years in
the financial services sector.

sector

MANAGEMENT MYSORE
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CORPORATE INFORMATION (MANAGEMENT TEAM)
Mr. Nirmal Jain

Chairman & Managing Director
Mr R. Venkataraman
Executive Director
Mr Sat Pal Khattar

Non Executive Director
Mr Nilesh Vikamsey
Independent Director
Mr Kranti Sinha
Mr A.K. Purwar
Committee of Board
Audit Committee
Mr Nilesh Vikamsey, Chairman
Mr Sat Pal Khattar
Mr Kranti Sinha

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Compensation/ Remuneration Committee
Mr Kranti Sinha, Chairman
Mr Nilesh Vikamsey
Mr Sat Pal Khattar
Share Transfer and Investor Grievance Committee
Mr Kranti Sinha, Chairman
Mr Nirmal Jain
Mr R. Venkataraman
Chief Financial Officer
Mr Kapil Krishan
Company Secretary
Mr Nimish Mehta
Core Management team
Mr Bharat Parajia
MD, IIFL (Asia) Pte Ltd

MANAGEMENT MYSORE
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Mr Apul Nayyar
CEO, Moneyline Credit Ltd
Mr Karan Bhagat
CEO, IIFL Wealth Management Ltd
Mr H. Nemkumar
President, Institutional Equities
Mr Aniruddha Dange
Head of Research, Institutional Equities
Mr Vasudev Jagannath
Head of Sales, Institutional Equities
Mr Ajit Menon
President, Investment Banking
Mr Donald D'Souza
President, Investment Banking
Mr R. Mohan
Chief Compliance Officer

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Chief Operating Officer
Mr Sanjeev Sandh
Chief Internal Auditor
M/s Sharp & Tannan Associates
Chartered Accountants Internal Auditors
M/s Kalyaniwalla & Mistry
Chartered Accountants Registrar and Share Transfer Agents
Intime Spectrum Registry Ltd
C-13,
13, Pannalal Silk Mills Compound,
L.B.S. Marg, Bhandup (West),
Mumbai - 400 078
Registered Office
Building No. 75, Nirlon Complex,
Off: western express highway,
Goregaon (East), Mumbai - 400 063

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FINANCIAL DEPARTMENT OF INDIA INFOLINE
Table shows the monthly high, low quotations of shares traded at

BSE, NSE for the current year march 31, 2009

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India infoline ltd share price versus BSE Sensex
India Infoline share price vs

v NSE S&P CNX
NX Nifty

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A snapshot of the financial performance of the company and its
major subsidiaries for the financial year 2008-09
2008 09 is as follows,

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A snapshot of the stand-alone
stand alone financial performance of IIL,

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A snapshot of consolidated financial performance is as under,

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RETROSPECTS IN 2007 – 2008
PROFITABILITY
610-Basis
Basis point increase in EBIDTA margin from 33.2%
in 2006-07
07 to 39.3% in 2007-08.
2007
70 basis point increase in net margin from 26.9% 2006-

2006
07 to 27.6% in 2007-08
2007
25.3% return on average capital employed n 2007-08

2007
compared to 28.7 in 2006-07

2006
SHAREHOLDER VALUE
Enhanced basis earnings per share from Rs 16.3 in
2006-07
07 to Rs 35.6 in 2007-08
2007
A final dividend of Rs 6 per share translating to a payout
ratio of 25.1% in 2007-08

2007 against Rs 3 per share in
2006-07
Proposed 1:5 stock splits.

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Like the six different bright colors of the Rubik’s cube, India
Infoline has six distinct business groups – all an integral part of
financial services. Each of the individual businesses has bright
growth prospects and together they from the cube of financial
services

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BUSINESS DIVISION -- PERFORMANCE HIGHLIGHTS 2008-2009
200
BROKING
Market share of equities on the NSE increased from 3.4% in 2007-08

2007
to 3.76% in 2008-09;
2008
Customer base for retail equities increased 35.8% to .6% mn;
Published in--depth
depth & thematic reports on INCH (India & China),
politics, rural India, infrastructure, soft commodities, utilities.

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CREDIT & FINANCE
Proactively suspended personal loans & mortgages business from
Sept.2008. while personal loans business is still suspended, the mortgages
business is restarted;
Revenue at Rs 2654.1 mn against 1937.5 mn in 2007-08;

08;
Registered the housing finance subsidiary with NHB;

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MANAGEMENT MYSORE
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INSURANCE
Received insurance broking license
Forged alliances with major insurance co. for the distribution or life & non-
non
life insurance products;
Altered the product mix in favor of traditional products endowment prod.

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WEALTH & ASSET MANAGEMENT
Introduced the ‘family office’ platform;
Raised Rs 1.8 bn in the largest single day debenture listing;

listing
Received in principle approval for setting up a mutual fund;
Established the infrastructure & knowledge

knowledge capital for offshore asset
Management services.

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Comparing the REVENUES from the year 2005-2009

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Comparing the EBIDTA from the year 2005 – 2009

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PROFIT AFTER TAX) for the year ended 2005-2009
Comparing the PAT (PROFIT 2005

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MARKETING DEPARTMENT -- INDIA INFOLINE
DIVERSIFIED
ADDRESSING ALL THE CUSTOMERS SEGMENTS

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DIFFERENTIATED
CREATING A UNIQUE MARKET POSITION
MANAGERIAL DEPTH
Promoted by first generation entrepreneurs
Management team unmatched in terms of professional’s
credentials, experience as well as academic background.
TECHNOLOGY EDGE
Widely acclaimed proprietary trading platform
Effectively harnessed technology to facilitate

facilitate processes &
provide superior customer experience

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DISTRIBUTION REACH
Present at 1361 business locations
Effectively cover 428 cities across India
WELL CAPITALIZED
Net worth approximately Rs 15.4 bn (USD 306.5 mn) with
negligible debt
Well-funded
funded to not just weather but take advantage of
downturn
PEOPLE EDGE
Team India Infoline is driven by pride and reward of
ownership
To think and work like an owner is part of organization’s
DNA

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HUMAN RESOURCE DEPARTMENT OF IIL
Human resources
The nature of your company’s business requires trained and
skilled professionals. Your company has been extremely
successful in attracting & relating highly qualified
professionals, with impeccable professional’s track record, by
offering them a challenging

challenging work environment, coupled with
competitive compensation including stock ownership.
‘ownership mindset’ is the basic tenet which drives your
company’s human resource policy and all your company’s
employees behave and work like owners and this enables
them
m to unleash their inner entrepreneurial energy without
compromising on team work and ethics.
Financial services are a knowledge intensive sector where
employee skills form a critical aspect in service delivery. Your
company has developed comprehensive in-house

in house training

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modules to make sure that all employees understand your
company’s vision, purpose & imbibe the ethos of the
organization. Emphasis is laid ‘on the job’ trainings where an
experienced and senior person mentors the junior executives.
A human resource enterprise resource planning software is
being implemented that will enable tracking of employee level
productivity as well as create a scientific basis of performance
appraisals. The total employee strength of your company & its
subsidiaries
s was 8015 as on March 31. 2009.
The total employee strength of the company & its subsidiaries
stood at 14105 on March 31, 2008. This is in line with the
growth in our businesses including retail equities broking,
credit insurance, besides the building up of specialized teams
for our institutional equities, investment banking & wealth
management verticals.

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India infoline significantly strengthened its human resources
team during the year under review by hiring the experienced
HR professionals for the

th senior level.
Besides, giving the scale and pace of the various businesses,
members of the HR team are now posted at zonal offices
across the country in addition to the corporate office.
With the owner mindset being the one of the tenets of the
organization,
ization, it is our continuous endeavour to unleash the
entrepreneur within each employee. Towards this end, the
culture at your company is one of responsibilities &
concomitant empowerment at all levels. This has aided us a
lot in attracting ad retaining talent

talent across business. We have
identified training s one of the core focus areas under the
human resources domain. Extensive modules have been
developed in-house
house to educate new entrants about the culture
and skill-sets
sets required for their jobs at India Infoline.
Info A
continuous training program (CTP) has also been developed to
provide regular need based training inputs to the employees.

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RECENT AWARDS AND ACCOLADES

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* * Research report * *

MANAGEMENT MYSORE
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MANAGEMENT MYSORE
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Introduction
ntroduction to INITIAL PUBLIC OFFERING (IPO
IPO)
Meaning of IPO
IPO in India means the new offer of a company's shares to
the public in the country's capital markets. Initial Public Offer
(IPO) in India is done through various methods like method of
book building, method of fixed price or a mixture of both.
IPO (initial public offering)

offering) is, as it sounds the first sale of a
company’s share to the public and listing of the shares on a
stock exchange. IPO is considered to be one of foremost
option with the company to invite the share capital from the
public through the public issue. It is often repeated cliché in
business that for a company to survive it must grow. It must
grow its market share. It must grow the customer base. In UK
IPO's are often referred as floatation’s. Many companies need
more cash than provided by an IPO. They return to the stock
market in secondary offerings or right issues.

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A SHORT NOTE ON INITIAL PUBLIC OFFER (IPO)
(IPO IN
INDIA:
Initial Public Offering (IPO) in India means the selling of the
shares of a company, for the first time, to the public in the
country's capital markets. This is done by giving to the public,
shares that are either owned by the promoters of the
company or by issuing new shares.
During an Initial Public Offer (IPO) the shares are given to the
public at a discount on the intrinsic value of the shares and
this is the reason that the investors buy shares during the
Initial Public Offering (IPO) in order to make profits for
themselves. A merchant banker is nominated as a book
runner by the Issuer of the IPO.
The company that is issuing

issui the Initial Public Offering (IPO)
decides the number of shares that it will issue and also fixes
the price band of the shares. All these information are
mentioned in the company's

company's red herring prospectus.

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During the company's Initial Public Offering (IPO)
(IPO) in India, an
electronic book is opened for at least five days. During this
period of time, bidding takes place which means that people
who are interested in buying the shares of the company make
an offer within the fixed price band.
SEBI guidelines defines

defines Book Building as "a process
undertaken by which a demand for the securities proposed
to be issued by a body corporate is elicited and built-up

built
and the price for such securities is assessed for the
determination of the quantum of such securities to be
issued by means of a notice, circular, advertisement,
document or information memoranda or offer document".
Book Building is basically a process

process used in Initial Public Offer
(IPO) for efficient price discovery. It is a mechanism where,
during the period for which the IPO is open, bids are collected
from investors at various prices, which are above or equal to
the floor price. The offer price is determined after the bid
closing date.

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As per SEBI guidelines, an issuer company can issue securities
to the public though prospectus in the following manner:
100% of the net offer to the public through book
building process
75% of the net offer to the

the public through book
building process and 25% at the price determined
through book building. The Fixed Price portion is
conducted like a normal public issue after the
Book Built portion, during which the issue price is
determined.
The concept of Book Building

Building is relatively new in India.
However it is a common practice in most developed countries
Once the book building is closed then the issuer as well as the
book runner of the Initial Public Offering (IPO) evaluates the
offers and then determines a fixed price. The offers for shares
that fall below the fixed price are rejected. The successful
bidders are then allotted the shares.

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IPO MARKET IN INDIA – OVERVIEW
The IPO Market in India is on the boom as more and
more companies are issuing equity shares in the capital
market. With the introduction of the open market economy, in
the 1990s, the IPO Market went through its share of policy
changes, reforms and restructurings. One of the most
important developments was the disassembling of the
Controller of Capital Issues (CCI) and the introduction of the
free pricing mechanism.
This step helped in developing the IPO Market in India,
as the companies were permitted

permitted to price the issues. The Free
pricing mechanism permitted the companies to raise funds
from the primary market at competitive price.

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IPO MARKET IN INDIA – REGULATIONS
The Central Government felt the need for a governed
environment pertaining to the Capital market, as few
corporate houses were using the abolition of the Controller of
Capital Issues (CCI) in a negative manner.
The Securities Exchange Board of India (SEBI) was
established in the year 1992 to regulate the capital market.
SEBI was given the authority of monitoring and regulating
the activities of the bankers to an issue, portfolio managers,
stockbrokers, and other intermediaries related to the stock
markets.
The effects of the changes are evident from the trend of the
resources of the primary capital market which includes rights
issues, public issues, private placements and overseas issues.

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CREDIT RATING IPO - IS IT MANDATORY
Earlier,, an unlisted company making IPO of equity
shares was given the option by SEBI to obtain grading for the IPO
from one or more credit rating agencies. Since May 1, 2007, it has
become mandatory for the issuer to obtain credit rating of an IPO.
The grade represents a relative assessment

assessment of the fundamentals of
the issue in relation assessment issue in relation to other listed
equity shares in India. The credit rating agencies would assign a
grade to the IPO. The grading is an independent & unbiased opinion
of the agency. The purpose

purpose of the grading is to help retail investors
take informed decisions as they do not have means to access the
IPO like other groups of investors. The grade id generally assigned
on 1 to 5 scales where higher score indicates stronger fundamental.
IPO GRADING
GRADE FUNDAMENTALS
1 POOR
2 BELOW AVERAGE
3 AVERAGE
4 ABOVE AVERAGE
5 STRONG

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IPO GRADING AGENCIES
There are four SEBI-registered

SEBI registered credit rating agencies in India
CRISIL
ICRA
CARE
FITCH RATING INDIA
RATING SYMBOLS AND THEIR MEANING
LONG TERM INSTRUMENTS
CRISIL ICRA CARE FITCH MEANING
AAA LAAA CARE AAA AAA (Ind) HIGHEST SAFETY
AA LAA CARE AA AA (Ind) HIGH SAFETY
A LA CARE A A (Ind) ADEQUATE SAFETY
BBB LBBB CARE BBB BBB (Ind) MODERATE SAFETY
BB LBB CARE BB BB (Ind) INADEQUATE SAFETY
B LB CARE B B (Ind) HIGH RISK
C LC CARE C C (Ind) SUBSTANTIAL RISK
D LD CARE D D (Ind) DEFAULT

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MIDDLE TERM INSTRUMENTS

FAAA MAAA CARE AAA TAAA (IND) VERY STRONG
FAA MAA CARE AA TAA (IND) STRONG
FA MA CARE A TA (IND) SATISFACTORY
CARE BBB MODERATE
CARE BB ADEQUATE
CARE B TB (IND) INADQUATE
CARE C TC (IND) DOUBTFUL
CARE D TD (IND) DEFAULT
SHORT TERM INSTRUMENTS

P-1 A1 PR1 F1 (IND) VERY STRONG
P-2 A2 PR2 F2 (IND) STRONG
P-3 A3 PR3 F3 (IND) ADEQUATE
P-4 A4 PR4 F4 (IND) MINIMAL
P-5 A5 PR5 F5 (IND) DEFAULT

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Members
ers who are benefited in an IPO
• The vendor
• The company
• The investor
Company
Maximize profits
Keep investors happy
Broad & stable ownership base
Raise company profile
Facilitate future financings
Initial public Investor

offering
Maximize share
performance
Acquire shares in
attractive co.
Vendor
Maximize proceeds
Maximize value of
remaining shares
Involving in successful deal

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PRIMARY AND SECONDARY MARKET
The term primary offerings or primary issues and secondary
offerings or secondary issues are often used to classify the
recipient of the proceeds. There are two mediums for
investors to acquire shares from the primary & the secondary
markets. In the primary market, securities are bought by way
of public issue directly from the company. In the secondary
market, shares are traded among investors.

invest
During the 1990s, the global volume of IPO's rose from
around $11 billion in 1990 to $155 billion in 1999. The
following year, 2000, saw another record, with $176 billion
raised for companies coming to the market for the first time.
The pace of flotation

flotation slackened dramatically in 2001, as the
global technology bubble burst, leaving bankers, lawyers,
accountants and other advisors to fight over the fees from a
‘mere’ $175 billion of offerings. When one considers that the
fees and the commission’s payable on most of the IPO’s range
from 2 to 7% of the proceeds one shouldn’t feel sorry.

sorry

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IPO fees are generally the highest in the USA. The New York
stock exchange reported in early 2001: “Wall street
investment banks earned an average fee of 6.67%

6.67 of deal
proceeds
roceeds for underwriting IPO's in 2000, down from 6.83 %
in1999.
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0 50000 100000 150000 200000 250000 300000
IPO's secondary issues
x – Axis measured n terms of million $
y – Axis number of years

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The Going Public process, what is it and is it Right for Your
Business?
Once a private company becomes publicly traded, it will

register securities so that it can make an offer and sell them to the
investing public. This is the biggest difference in operational status
of a private vs. public company: The public company can offer its
stock to the public at large, whereas the closely held private
company is restricted to private venues, such as friends and family
members. This is a very important consideration since most
companies that go public are interested in raising capital.
Furthermore, investment bankers and broker-dealers
broker rs prefer to deal
with a public company. A well ran private company with a healthy
bottom line, quarter after quarter, is an excellent candidate to go
public and attract outside investment capital.
Is There an Easier, Better Way to Go Public?
The easiest way for most companies to go public is to get

listed on the Pink Sheets. Going public via the Pink Sheets is an
excellent first step for smaller companies to become publicly traded
entities. Here are some further advantages:
• There are no reporting requirements

• There is no time in business requirement
• No revenue or earnings requirements
• No minimum asset requirement

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BUYING IPO – OVERVIEW
Before Buying IPO one must be sure what an IPO is. When an
existing company or a brand new company issue shares for
the public to buy in the capital market for the first time, the
process is called Initial Public Offering (IPO). With this the
shares of the company gets listed in the stock exchange. It is
also referred to as going public as the company approaches
the public for the funds. All companies need to raise funds for
various operations and one of the best options is raising funds
through issue of shares.

shares. The investors are interested as they
earn dividends from the shares.
IMPORTANT CONSIDERATIONS IN BUYING IPO
While buying IPO, the investors must be careful about
choosing the company as there are numerous number of not-

not
so-good
good companies. The investors
investors must keep your eyes and
ears open. It is advised that the investors seek help from
professionals in this field rather than handling critical
decisions on their own.

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ISSUE PERIOD
Subscription for the public issues remains open for at least
three working days and not more than 10 working days.

days In
case of book built issues, period for which bidding is open for
three to seven working days, which is extendable by three
days in case of a revision in the period band.
IPO ALLOTMENT STATUS
After the closure of the issue, the bids received are
aggregated under different categories like firm allotment,
QIBs, NIBs, Retail, etc. The oversubscription ratios are then
calculated for each of the categories as against the shares
reserved for each of the categories in the offer document.
Within each of these categories, the bids are then segregated
into different buckers based on the number of shares applied
for. The oversubscription ratio is then applied to the number
of shares applied for and the number

number of shares to be allotted
for applications in each of the buckets is determined. This
process is followed in case of proportionate allotment.

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In case of allotment for OIBs, earlier it was subject to the
discretion of the post-issue

post lead manager, but now
ow it is done
on a proportional basis. Initial Public Offering pools
investments and utilizes it in building or expansion of the said
company. The shares held by such investors give them the
rights of the company and to its future profits. The process
which involves determination of the issue size and type, offer
price and best time of introduction into the market is called
"underwriting". The underwriting is generally done by the
investment bankers. These underwriting firms or investment
bankers are allotted some specified numbers of shares to sell,
which
hich is called as IPO Allotment Status.
In other words, IPO Allotment Status can also be defined as
the number of stocks which an investment banker is
permitted to sell to the general investor before the share is
being traded on an exchange. The excess shares

shares are then
allotted to other investment bankers which are eligible to sell
such shares. In India, the main governing body that
determines such eligibility criteria and the IPO Allotment
Status is the Securities and Exchange Board of India (SEBI).

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IPO REFUND
IPO Refund is disbursed by the merchant bankers to the
applicants of Initial Public Offerings. In India, these IPO
Refunds are generally made through electronic clearing
services for pre-designated

pre numbers of centers.
The clearing houses that are also involved with the process of
IPO Refund are controlled by the apex bank of India, The
Reserve Bank of India. The directives on the IPO Refund
money are issued by the Securities and Exchange Board of
India (SEBI). The directives

directives on the IPO Refund money are laid
down as per the "Disclosure and Investor Protection
Guidelines, 2000" formulated by the Securities and Exchange
Board of India (SEBI). These IPO Refunds are also made by
direct credit and real time gross settlement (RTGS),

(RTGS), as per
the laid down eligibility criteria of the applicant. For
applications, which are made? Completely in the
dematerialized form, the relevant details of bank account of
the IPO applicant are taken from depositories.

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BUYING IPO - ADVANTAGES
The Advantages of IPO are numerous. The companies are
launching more and more IPO’s to raise funds which are
utilized for undertakings various projects including expansion
plans. The investors can seek the primary market for buying
IPO. At an IPO, shares can be

be bought directly from the
company issuing it. Investors may also buy shares in the
secondary market, which is the Stock Exchange, by the help
of the brokers.
Buying IPO is advantageous as the price of the shares are
cheaper, but later on the prices go up

up when the shares are
listed in the Stock Exchange as they are listed at a premium.
Once the price goes up one can sell those shares or retain
them in case the company is growing rapidly and have acute
chances of performing very well in the future. This can

ca
increase the price further or help in earning fat dividends. The
IPO helps the investors to take part in the prosperity of the
company. The increase in the price of the shares after listing
is the main advantage of buying IPO in the primary market.

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Major advantages of IPO
IPO has a number of advantages. IPO helps the company to create
a public awareness about the company as these public offerings
generate publicity by inducing their products to various investors.

investors
• The increase in the capital: An IPO allows a company to
raise funds for utilizing in various corporate operational
purposes like acquisitions, mergers, Working capital,
research and development, expanding plant and
equipment and marketing.

marketing
• Liquidity: The shares once traded have an assigned
market value and can be resold. This is extremely
helpful as the company provides the employees with
stock incentive packages and the investors are provided
with the option of trading their shares for a price.
• Valuation:
tion: The public trading of the shares determines a
value for the company and sets a standard. This works
in favor of the company as it is helpful in case the
company is looking for acquisition or merger.

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• It also provides the share holders of the company
compan with
the present value of the shares.

shares
• Increased wealth: The founders of the companies have an
affinity towards IPO as it can increase the wealth of the
company, without dividing the authority as in case of
partnership.
• It increases the capitalization for the issuing company
• It creates a market value on a company’s stock.
• The Company directors and shareholder can retain

reta their
stock and use it for varied activities
• The
he business will have greater access to
to the capital
markets for future capital inflow
• In general terms, a company’s valuation and debt-to-
equity ratio will improve after going public, making it
possible for the company to receive much better terms
from lenders.

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DISADVANTAGES OF IPO
It is true that IPO raises huge capital for the issuing company.
comp
But, in order to launch an Initial Public Offering (IPO), it is
also necessary to make certain investments. Setting up an
IPO does not always lead to an improvement in the economic
performance of the company. A continuing expenditure has to
be incurred
d after the setting up of an IPO by the parent
company.
A lot of expenses have to be incurred in the form of legal fees,
printing costs and accounting fees, which are connected to the
registering of an IPO. Such expenses might cost hundreds of
US dollars.. Apart from such enormous costs, there are other
factors as well that should be taken into consideration by the
company while introducing an IPO.
Such factors include the rules and regulations involved to set
up public offerings and this entire process on

on the other hand
involve
nvolve a number of complexities which sometime require the
services of experts in relevant fields.

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Some companies hire experts to do the needful to ensure a
hassle-free
free execution of the task. After the IPO is introduced,
the expenses become a routine in every activity involved.
Besides, the CEO of the company would have to spend a lot of
time in handling the SEC regulations

regulations or sometimes he hires
experts to do the same. All these aspects, if not handled with
efficiency, prove to be some major drawbacks related to the
launch of IPO’s. The launch of IPO also brings about
shareholders of the company.
Shareholders have ownership

ownership in the company. The primary
owners of the company or the people holding maximum
authority in the company cannot take decisions all by
themselves once an IPO has been launched and shareholders
have been formed. The shareholders have an active
participation
n in every decision that is being taken even if they
do not hold 50 percent share of the company. They have their
individual demands to be met as they own a certain
percentage of stakes in the company.

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The SEC regulations require notifications from the
shareholders of the company, meetings, and also approvals
from them while making important business decisions.
A major risk with shareholders is that, they can sell off their
stocks any time they want, in case they see the price band of
the stakes of that

that company is going down. This will lead to a
further drop of the value of shares in the market which in turn
will decrease the overall value of the company.
The typical expenses associated with taking a
company public include fees for legal and
accounting services
The
he SEC (Securities and Exchange Commission)
quarterly and yearly reporting requirements are a
burden for most companies, if trading on the
OTCBB,
CBB, NASDAQ, etc

MANAGEMENT MYSORE
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IPO PROCESS (ISSUER’S PERSPECTIVE)
Functions Carried out by
Decision to issue shares Issuer
Appointment of intermediary’s Issuer
Opening of bid Issuer / investment banker / banker
Agreement to finalize Issuer with intermediaries
Issuerr / investment banker / legal

Draft red herring prospectus
advisor
Appointment of intermediary’s Issuer
Refund of money Issuer / investment banker / banker
offer closure Issuer / investment banker / banker

MANAGEMENT MYSORE
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IPO PROCESS (INVESTORS’ PERSPECTIVE)
Functions Carried out by
Announcement of IPO by through media / related people /

the company friends & relatives
Draft red herring prospectus comes through the appointment merchant,

Market with applications forms Bankers,, lead managers etc.
After
fter taking the decision to purchase to the collecting members or to the
submission of duly filled up forms bank directly
along with the payment instrument
Bank credits the account & sends Records reconciled with the bank
the form to the registrar for sorting &
data entry the records
Opening of the bid and offer closure check through media / related
people / friends & relatives
Ask for the share allotted or refund

Allotment
llotment & refund process start
in case of partially allotted

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RECENT TRENDS
In the last quarter of FY 2007-08,

2007 08, several large equity
offerings, including those from reputable business
houses, have struggled to hit their targets. India's stock
markets have been volatile, reacting to fears of a
widening global credit crunch and fears of a U.S.
recession. Let's have a glance of IPO’s in the Indian
primary market during Jan-March,

Jan 2008.
Fund raising by Indian companies has seen a sharp drop
in the last quarter of financial year 2007-08.

2007 This is
evident from an analysis of data presented

presented in the above
table.

MANAGEMENT MYSORE
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Table 1: IPO's during Jan-March
Jan 2008 in India
IPO's
Period
Numbers Amount (Rs. In Crores)
January 2008 9 13,948
February 2008 4 1,893
March 2008 4 493
Flash back of Some Cases during Q4, 2007-08
The first casualty of the Indian IPO bubble was, on February
7, 2008, Wockhardt Hospital pulled out its Rs. 676 crore IPO.
The price band of the book-built

book built issue was lowered from Rs.
280-310
310 to Rs. 225-260.
225 260. The last date for subscription was
extended.
But qualified institutional buyers, including foreign investors,
mutual funds and hedge funds, applied for only 0.06% of their
quota in the Wockhardt issue. The non-institutional

non institutional portion
(Mainly for high net-worth

net worth individuals or HNIs) was subscribed
0.0048 times.

MANAGEMENT MYSORE
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Even the retail part saw demand for barely more than half the
pie. It was an unmitigated disaster and the first time in recent
memory that an IPO from a respected business house has
flopped in India.
Close on its heels, real estate company Emaar MGF, a joint
venture between the Dubai-based

Dubai based Emaar group and MGF
Development of New Delhi, also had to withdraw its IPO in the
face of low demand. The Rs. 6,500 crore issues started with a
price band of Rs. 610-690.

610 690. It was brought down to Rs. 530-
530
630 in two trenches. The last date of subscription was
extended by three days, but to no avail.
The Bombay Stock Exchange Sensitive Index, Sensex,
touched 21,207 on January 10, an all-time

a time high. Barely a
month later, on February 10, had it fallen to 16,608, a five-

five
month low?
Wockhardt and Emaar MGF were bad enough for investor
sentiment. But the overvalued Reliance Power IPO was the
most high profile sufferer.

MANAGEMENT MYSORE
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This was an issue from
from the Ambani stable; word on the street
is that the Ambani have always made money for their
investors. At Rs. 11,500 crore, it was India's largest-ever

largest IPO
the Reliance Power IPO was eventually oversubscribed 73
times and raised $190 billion. Some $100 billion

billion of this came
from foreign funds. This constitutes one-and-a-half

one half times the
total foreign institutional investor (FII) money coming into the
country since 1992. "When Reliance Power lists early
February, it will be among the 10 top listed companies in

i
India," Anil Ambani, the younger son of Reliance founder the
late Dhirubhai Ambani, told a press conference shortly after
the IPO closed. "If we assume it lists at the issue price of Rs.
450, the market capitalization for the group will be around
$100 billion."
It was not to be. Reliance Power ended its first day on the
markets at Rs. 372, Millions lost money. The Sensex dropped
863 points in sympathy. The myth of Ambani invincibility was
shaken. Clearly, it didn't help the Reliance Power IPO that
February
ry 2008.

MANAGEMENT MYSORE
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A Comparison of Q1'07 & Q1'08
Table 2: IPO’s during Q1'07 & Q1'08 in India:
IPO’s
Period
Numbers Amount (Rs. In Crores)
Q1'07
April 4 703
May 6 456
June 10 11,914
Total 20 13,073
Q1'08
April 1 14
May 4 307
June 8 1,572
Total 13 1,509

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IPO’s witnessed a sharp decline in collections during the June
2008 quarter. Corporate rose just over Rs 1,509 crore from
IPO’s,, indicating a fall of 88.45% from the year-ago

year levels.
The data on number of IPO’s that were issued are not
encouraging either.
In contrast to 20 IPO’s issues in the Q1'07, only 13 IPO’s were
floated in the June 2008 quarter. This is also the lowest
number of IPO’s hitting the primary market in any of the June
quarters in the past four years.

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Indian companies were also shy of raising money through the
FPO route. Not a single FPO hit the market during the June
2008 quarter compared with two FPOs during the year-ago

year
quarter. Poor investor response to primary issues and steeper
valuations are major

major reasons why companies did not approach
the market for the second time.
It is not only the number of IPO’s and FPOs that have
declined, but debt and private placement offers have also
seen a steep fall. There were only 76 companies making
private placement
placeme of debt vis-à-vis 147 in the June 2007
quarter. In terms of value, the collection through this route
was 44% lower at Rs 14,095.6 crore.
Even though the picture was gloomy for IPO’s,

IPO’s FPOs and
private equity funds, there was a moderate growth in funds
raised
aised through rights issues during the June 2008 quarter.
The two rights issues that were floated during the quarter
collected Rs 438 crore, reflecting a 20% rise over the year-

year
ago levels. This is a welcome trend.

MANAGEMENT MYSORE
Page | 102
ISSUE DETAILS
Issue opens : August 7, 2009
Issue closes : August 12, 2009
Issue size : 167.23 crore equity

e shares
Fresh issue : 111.82 crore equity shares
Offer of sales by government : 55.91 crore equity shares
Of which employee reservation : 4.19 crore equity shares
Net issue : 4.19 crore equity shares
Face value : Rs 10 each
BREAK UP OF NET ISSUE TO PUBLIC :

QIBs portion : 98.12 crore equity shares
Retail portion : 16.35 crore equity shares
Non – institutional portion : 49.06 crore equity shares
Price band : Rs 30-36

30 per share

MANAGEMENT MYSORE
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COMPANY BACKGROUND
National hydroelectricity power corporation (NHPC) is a
hydroelectric power generating company dedicated to the
planning, develpoment & implementation of an integrated &
efficient network of hydroelectri projects in India. It carries all
the work relating to the development of hydroelectric
projects.
VALUATION
NHPC is a premier hydropower utility. The co. currently has an
installed capacity aggregating to 5,175 mw and its looking to
be a 20-gigawatt
gigawatt utility by 2020.it comes with inherited risks
& require a a long gestation period. The operating cost of its
project is significantly lower than that of the conventional
thermal power stations.
IPO GRADING:
The issue has been graded by ICRA as IPO Grade 3, indicating
average fundamentals.
fundamentals. The IPO Grade 3 assigned by ICRA
factors in the strengths of the proposed projects arising from
their location in power

MANAGEMENT MYSORE
Page | 104
Adani power IPO fact sheet
ISSUE DETAILS
Issue opens : July 28. 2009
Issue closes :July 31, 2009
Issue size : 301,652,031

30 equity shares
Fresh issue : 100 % book building process
Net issue : 13.47% of the post issue paid up capital of co.
Face value : Rs 10 each
The equity shares of the company are proposed to be listed on the
National
tional Stock Exchange (NSE) & Bombay Stock Exchange (BSE).
The IPO of Adani Power was fairly priced."The

priced."The NPV (Net
Present Value) works out to Rs 84 per share. Add to this the
cash of Rs 12.5-14
12.5 14 per share raised from the public issue, the
fair value per share is close to Rs 100 per share,"

MANAGEMENT MYSORE
Page | 105
The issue witnessed huge investors' interest and was
subscribed 21.64 times. It received bids for more than 538
crore shares as against the issue size of 301,652,031

301 52,031 shares.
The company is likely to list its shares around August 20,
2009.
IPO GRADING:
The issue has been graded by ICRA as IPO Grade 3, indicating
average fundamentals. The IPO Grade 3 assigned by ICRA
factors in the strengths of the proposed projects arising from
their location in power.

power
VALUATION:
Qualitatively, the co. is likely to benefit from the strong linkages of
the Adani group I the power sector, locational advantages, SEZ co-
co
producer stats related tax and other benefits & long term power
off-take
take arrangements aggregating 4,744 mw. However, long
gestation period together with execution of projects on time could
be a cause of concern.

MANAGEMENT MYSORE
Page | 106
IPO MINI OFFERING
Any business can go public with our Mini IPO program.
You can sell stock directly to investors. Private companies
are very limited they can only raise money

money from a few
people who are friends and family. However, if you file a
registration statement with the SEC Securities and
Exchange Commission, and follow other guidelines, you
can even advertise your offering. Imagine being able to
advertise online or on TV or radio.
This allows you go public without having to depend on an
Investment Bank. Yes, we can and will introduce you to
sources of capital including our network of Investment
Bankers and financial groups. But this allows you to be
able to compete with the big firms when trying to raise
capital.

MANAGEMENT MYSORE
Page | 107
IPO SCAMS - OVERVIEW
IPO Scams are well structured game played by the absolute
opportunists consisting of intermediaries, financiers and bank
employees, who make a lot of money by controlling shares
meant for retail investors in Initial Public Offer (IPO), as the
per the statement of the

the Securities Exchange Board of India.
In the last few years, the capital market in India went through
a rapid transformation.
The increased use of information technology and the
integration of financial markets have stepped up the risk
profile of the capital

cap market.
The two major IPO scams in the Indian Capital market were
the Harshad Mehta scam in the year 1992 and the Ketan
Parekh scam in 2001.

1. The IPO Scams opened up the latent
loopholes in the Indian capital market.

MANAGEMENT MYSORE
Page | 108
IPO SCAMS - CAUSES
• Two of the most common factors of the major IPO
scams in India were the tacit consent of the banks and
the poor surveillance techniques.
• The Depository Participants must be provided the proof
of identity and proof of address as a routine check for
the opening
ning demat accounts. This was not followed.
• Numerous dematerialized accounts and bank accounts
had been opened under false names and the IPO
applications were made in non existing names.
IPO SCAMS - HOW IT WAS DONE?

DONE
• At first bank accounts were opened up in fictitious or
"benami" names, which allowed these fictitious account
holders to open demat accounts.
• The master account holders, the person who had executed
the planning acts as an intermediary on behalf of the
financiers.
• The shares acquired at the IPO’s were disposed on the date
of listing at a premium to get more than the amount of
money invested.

MANAGEMENT MYSORE
Page | 109
The banks played an important part by means of opening
bank accounts and giving loans to the fictitious entities for the
purpose of earning fee incomes.
IPO’s are the key stone in the financial structure of the
venture industries. But the recent paucity of IPO’s has caused
alarm for the venture industry & has intensified a continuing
shakeout among the venture capitalist firms. It promises to
be good times ahead for early bird investors. If the current
government has its way, we might go from a complete dreath
of IPO’s & follow on issues to a flood of new paper hitting the
market with the government being a large owner of equities
both in listed and unlisted space the numbers are staggering.
Dalal Street likes noise & India could stand apart with some
very good paper hitting the market but the most important
will be what this move does for the government. The
performance of Indian market depends upon a lot how the
government goes ahead with reform plan.

MANAGEMENT MYSORE
Page | 110
ONE OF THE MAJOR SCAMS IS:
SEBI has agreed to dispose of pending proceedings against Mr
Gautam Zhaveri for his involvement in the IPO scam of 2003-

2003
04, following settlement of the case through a consent order.
Mr Zhaveri, who applied for the consent order, paid Rs 2.7
crore towards settlement, including a disgorgement amount of
Rs 2.36 crore, settlement charges of Rs 23.6 lakh,
compounding charges of Rs 9 lakh and legal charges of Rs 1
lakh.
The applicant (Zhaveri) had been proceeded against for
irregular dealings in shares issued through IPOs, and for
cornering shares meant for retail investors, making unlawful
profits from the shares upon their listing.

MANAGEMENT MYSORE
Page | 111
SEBI had banned the applicant
applicant from dealing in the securities
market; initiated adjudication proceedings against him,
prosecution proceedings in the ACMM court in Mumbai under
the Companies Act; and a protest petition before the CBI
court for non-filing

filing of chargesheet against the applicant.
applicant.
SEBI’s consent order disposes of all these pending
proceedings. SEBI will file an application for withdrawal of its
protest application at the CBI special court, and shall not
oppose compounding of prosecution in the ACMM court, the
regulator said in its consent order.
SEBI said it would also drop proceedings against Pratik Stock
Vision Pvt Ltd in the matter of carry forward transactions in
the shares of Global Tele-systems

Tele systems Ltd in 2000-01.
2000 The
applicant offered to settle the case, offering Rs 1.25 lakh
towards settlement charges.

charges

MANAGEMENT MYSORE
Page | 112
PUBLIC ISSUES - CALENDAR WISE SUMMARY
Year No. of issues Issue amount (crore)

(crore
2004 25 13121.47
2005 53 9989.52
2006 73 19852.46
2007 100 34179.11
2008 37 16904.42
2009 3 324.
324.4
100
90
80
70
60
50
40
z
30
20
10
0
2004 2005 2006 2007 2008 2009
no. of issues

MANAGEMENT MYSORE
Page | 113
FINANCIAL YEAR WISE SUMMARY
As shown in the table during the economic boom there
were much more IPOs. During 2007-2008

2007 2008 the share market
witnessed its highest number of IPOs in past one decade.
Year No. of issues Issue amount (crore)

(crore
2004-2005 23 13,749
2005-2006 76 10,936
2006-2007 76 28,504
2007-2008 84 42,595
2008-2009 21 3582
2009-2010 3 324.4
90
80
70
60
50
40
30
20
10
0
2004-05 2005-06
06 2006-07 2007-08 2008-09 2009-10
no. of issues

MANAGEMENT MYSORE
Page | 114
CURRENT IPO REACTIONS
The diagram below depicts the list of companies which has
been filed on the stock exchanges on the date which has been
signed at the time of approval. With that of filed companies in
the stock exchanges there are some

some of the companies in the
picture which depicts the number of companies has been
postponed, withdrawn and opened simultaneously from

fro July
2007 to May 2009.

MANAGEMENT MYSORE
Page | 115
MANAGEMENT MYSORE
Page | 116
Strength Competitive
ompetitive advantage of the company
Weakness Internal
nternal constraints of the company
Opportunities Favorable conditions of the industry & other
external Environments
Threats Adverse or potentially

y adverse conditions of
the industry & other external environments
STRENGTH
Dedicated employees
Good research team
Strong Customer relationship
Superior brand name
Organization works online
Excellent infrastructure
Wide spread branches and brokers network

MANAGEMENT MYSORE
Page | 117
WEAKNESS
Lacking network
Not enough advertisement
Lacking promotion
Lacking for adopting the strategies
OPPORTUNITY
Galloping growth of Indian economy
Rising of FDI
Positive outlook of people towards financial products
Growing of IPO's
Positive outlook of people towards financial products
Growing consumer awareness about equity related product
THREATS
Politics
Volatile market
Market uncertainty
Galloping competition
Broad economic factors like inflation etc

MANAGEMENT MYSORE
Page | 118
CONCLUSION
Investment in India becomes more of a security necessity
than a business lifestyle. As the interest rates all over are
dropping, people are switching to other avenues which fetch
better results. The risk band that initially existed as been
eased out and people are on the outlook for new and better
stuff. In olden days, one could invest only in few companies,
but the present day gas given people to try a wide range of
companies. The act of speculation has considerably like India
Infoline done and people have become intelligent rather than
mere speculators.
It was a very fruitful experience working in India Infoline as a
trainee. It offered exposure to the wide range of investment
options available. The risk factors involved could be
understood easily. Not only did it give a learning experience
but also an idea

id on how could we invest in any particular
company by knowing their fundamentals background etc.

MANAGEMENT MYSORE
Page | 119
GLOSSORY
ABV... FULL FORM
IIL INDIA INFOLINE LIMITED

IPO INITIAL PUBLIC OFFERINGS
FIIs FOREIGN INSTITUTIONAL INVESTORS
NSE NATIONAL STOCK EXCHANGE
BSE BOMBAY STOCK EXCHANGE
NCDEX NATIONAL COMMODITIES AND DERIVATIVES EXCHANGES LTD
L
MCX MULTI COMMODITIES EXCHANGE
NSDL NATIONAL SECURITIES DEPOSITIRY LIMITED
CDSL CENTRAL DEPOSITORY SERVICES (INDIA) LIMITED
CCL CONTROLLER OF CAPITAL ISSUES
CRISIL CREDIT RATING INFORMATION SERVICES OF INDIA LIMITED
ICRA INVESTMENT INFORMATION & CREDIT RATING AGENY INDIA
CARE CREDIT ANALYSIS & RESEARCH
Q’1 QUARTER 1
Q’2 QAUTER 2
BN BILLLION
MN MILLION
PVT PRIVATE COMPANY
LTD PUBLIC LIMITED COMPANY

MANAGEMENT MYSORE
Page | 120
BIBLOGRAPHY
REFERENCE
Dalal Street Investment Journal’s
Stock Market Book: First Edition 2004
Copy right: Ramdeo Media Limited
ANNAUL GENERAL MAEETING REPORT
FOR THE YEAR ENDED 2007-2008

2007
FOR THE YEAR ENDED 2008-2009

2008

MANAGEMENT MYSORE
Page | 121
WEBILOGRAPHY
www.sebi.gov.in
www.ndtvprofit.com
www.ipo.com
www.monetcontrol.com
www.galatime.com
www.blonnet.com
www.bespoke.com
www.business.mapsofindia.com
www.bus
www.businessspeclator.com
www.epwrf.res.in/upload/Current_Statistics/c10822
www.epwrf.res.in/upload/Current_Statistics/c10822-
13.xls
www.ipohome.com
www.surakshit5.blogspot.com

MANAGEMENT MYSORE
Page | 122

Study On Performance of Initial Public Offer (IPO) in Indian Capital Market

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BHAVAN’S INSTITUTE OF MANAGEMENT

“A STUDY ON THE PERFORMANCE OF IPO's IN THE

INDIAN CAPITAL MARKET”

INTERNAL GUIDE PROF. PRAVEEN BHAGAWAN

EXTERNAL GUIDE Mr. MANI MARAN

BHAVAN’S INSTITUTE OF MANAGEMENT, MYSORE

BHAVANS INSTITUTE OF MANAGEMENT,

THIS IS TO CERTIFY THAT MR. AMITH KUMAR G HAS PREPARED

THE DRAFT HAS BEEN THROUGHLY REVISED

INTERNAL GUIDE MR.PRAVEEN BHAGAWAN STUDENT AMITH KUMAR G

DATE AUGUST 10,2009 DATE

RESIDENT DIRECTOR MR. NARSISMURTHY DIRECTOR MR.KRISHNAMURTHY

BHAVANS INSTITUTE OF MANAGEMENT,

Mr. M.PRABU,, FOR GUIDING

PROF. PRAVEEN BHAGAWAN,

MR. MANI MARAN FOR PROVIDING VALUABLE DATA SOURCE,

DATE JULY 3, 2009

STUDENT NAME AMITH KUMAR G

BHAVANS INSTITUTE OF MANAGEMENT,

THIS IS TO CERTIFY THAT MR. AMITH KUMAR G IS A STUDENT OF PGPM

THE STUDENT HAS HAD PRELIMINARY AND INTERMITTENT DISCUSSIONS

DATE: JULY 3RD, 2009

NAME OF THE MANAGER MR. MANI MARAN

DESINATION BRANCH MANAGER

COMPANY NAME INDIA INFOLINE

BHAVANS INSTITUTE OF MANAGEMENT,

BHAVANS INSTITUTE OF MANAGEMENT,

2 IPO MARKET IN INDIA – OVERVIEW

3 IPO MARKET IN INDIA – REGULATION

4 CREDIT RATING IPO - IS IT MANDTORY

5 CREDIT RATING AGENCIES

6 PRIMARY AND SECONDARY MARKET

7 BUYING IPO PROCESS

14 IPO PROCESS ( ISSUER’S PRESPECTIVE )

15 IPO PROCESS ( INVESTORS PERSPECTIVE )

12.1 ** NHPC IPO FACT SHEET

12.2 ** ADANI POWER IPO FACT SHEET

18 IPO SCAMS OVERVIEW

BHAVANS INSTITUTE OF MANAGEMENT,

19 PUBLIC ISSUE CALENDER WISE SUMMARY

20 PUBLIC ISSUE FINANCIAL WISE SUMMARY

BHAVANS INSTITUTE OF MANAGEMENT,

SHARE PRICE OF IIL IN BSE , NSE ON MARCH 31, 2009

FINANCIAL PERFORMANCE OF IIL FOR THE YEAR 08-09

SNAPSHOT OF STAND ALONE PERFORMANCE OF IIL

CONSOLIDATED FINANCIAL PERFORMANCE OF IIL

COMPARING REVENUES FROM THE YEAR 2005-2009

COMPARING EBIDTA FROM THE YEAR 2005-2009

COMPARING PAT FROM THE YEAR 2005-2009

RATING SYMBOLS & THEIR MEANING

IPO PROCESS ( ISSUERS PESPECTIVE )

IPO PROCESS ( INVESTORS PERSPECTIVE )

IPO’s DURING JAN - MARCH

COMPARISON OF IPO’s IN Q1’07 & Q1’08

PUBLIS ISSUE – CALENDER WISE

PULBIC ISSUE – FINANCIAL YEAR WISE

BHAVANS INSTITUTE OF MANAGEMENT,

ORGANIZATION STUDY (INDIA INFOLINE)

IIL SHARE PRICE VERSUS BSE SENSEX

IIL SHARE PRICE VERSUS NSE S&P

BROKING --- INDUSTRY OPTIMISM

CREDIT & FINANCE --- INDUSTRY OPTIMISM

INSURANCE --- INDUSTRY OPTIMISM

* INDUSTRY PROFILE *