Power Sector Ipos Seem To Be The Latest Buzz - July 31 , 2008

NEW DELHI: Power sector IPOs seem to be the latest buzz in government corridors following the trust vote. The power ministry is planning to list at least three central power companies over the next few months. While hydel major NHPC will be the first to hit the market sometime later this year, Damodar Valley Corporation (DVC) and North Eastern Electric Power Corporation (Neepco) would also come with public issues soon. The ministry is also planning to revive the follow-on public offer (FPO) of NTPC.

According to highly placed government sources, the ministry has favoured DVC’s proposal for a public offer which may be launched after the company floats its subsidiary. The company has already appointed consulting firm KPMG for exploring the various options through which the company can tap the capital market.

“The consulting firm will submit its report in the next two days, after which the company’s board will take a decision. Since DVC is a statutory company, the need was felt to set up a subsidiary company, which in turn could be listed,” a senior government official told ET.

The ministry has proposed that Delhi government may pick up 20% stake in the proposed subsidiary as DVC is set to become a major power supplier to the state. DVC is targeting a generation capacity of 11,000 mw by 2012, and Delhi is to get almost 20% or over 2,000 mw.

The government has also started the process of coming out with a public offer of Neepco. The government will first upgrade the company from the list of Schedule-B to Schedule-A and then come with a public offer. “The ministry of heavy industries has agreed to facilitate the process of its upgradation that is essential for the public offering. A proposal in this regard is already with the Department of Public Enterprises (DPE),” the official said. Neepco proposes to raise around Rs 400 crore to fund its projects.

Besides, the FPO of NTPC could also be revived. The finance ministry had earlier turned down the PSU’s proposal to raise nearly Rs 6,000 crore through a follow-on public offering as the government’s disinvestment policy does not favour dilution of equity in navratna companies. As per government estimates, over Rs 10 lakh crore of investment is required in the power sector during the 11th Plan.

MCX May Submit Fresh IPO Draft - July 31 , 2008

MUMBAI : The Multi Commodity Exchange (MCX) is expected to submit a fresh application to SEBI for its initial public offer as the validity period for its offering is set to end shortly.

“The Sebi approval for the IPO expires on August 11 and if the IPO is not listed then a fresh application has to be filed,” said a source close to the development on the sidelines of a conference.

The source said that the company can re-apply the very next day after the validity period of the earlier approval expires. But the fresh application has to be submitted within the current financial year. In case the company fails to do this, it would have to undertake a fresh audit, which would be a long-drawn process.

Companies that have received Sebi’s nod have to complete the process of listing within 90 days to avoid refiling their offer documents.

The other IPOs which Sebi had approved around the same time as MCX were that of UTI AMC and Reliance Infratel. While UTI AMC has decided to shelve its plans for now, there is no word on the IPO plans of Reliance Infratel.

In case MCX re-applies, it would be the only company in recent times to do so, an industry source said.

MCX expects to raise Rs 500-600 crore from the capital market, partly through issuing fresh equity and partly through dilution of the existing stake of shareholders. The issue price is expected to be close to Rs 600 per share.

According to the current draft prospectus, 60 lakh fresh shares would be issued, while existing equity holders would offload 40 lakh shares.

Of this, about 35 lakh shares of Financial Technologies (FTIL), one of the primary financiers of MCX, would be sold, bringing down its share in the company to 26% from the current 32%.

In February, FTIL had already sold 5% of its stake to New York Stock Exchange. At that time, the exchange was valued at $1.2 bn, or Rs 5,000 crore.

New Rules For IPO By SEBI - July 31, 2008

SEBI has finalized the guidelines for retail investors for investing in IPO in which they only have to pay to the extent of shares allotted to them and not 100% upfront advance for shares.

The payment system known as Application Supported by Blocked Amount (ASBA) that will require retail investors to bid at a cut-off price and to apply through self-certified syndicate banks (SCSBs), in which they hold accounts.

SEBI on Wednesday issued a circular that highlighted the eligibility criteria for an investor and also identified the roles and responsibilities of other intermediaries, registrars, merchant bankers and stock exchanges in the ASBA process.

Nu Teck India IPO Got Subscribed 0.14 Times - July 30 , 2008

Nu Teck India IPO got subscribed 0.14 times shares on the first day of offer on Tuesday. The offer would close on August 1.

The issue received bids over 6.07 lakh shares against 45 lakh shares on offer, as per the data available on the National Stock Exchange. The qualified institutional buyers got subscribed 27% while the non institutional portion did not receive any subscription and the retail portion was marginally subscribed.

The price band of the issue has been fixed between Rs 170 and 192. The public issue of 45 lakh shares of Rs 10 each, comprises of fresh issue of 3.5 lakh equity shares and an offer for sale of 10 lakh shares.

CRISIL has been assigned an IPO grade of 3 out of 5 for the issue.

The shares of the company would be listed on Bombay Stock Exchange and National Stock Exchange. The book running lead manager to the issue are SPA Merchant Bankers and India Info line.

The company intends to utilize the IPO proceeds to meet capital expenditure cost along with overseas acquisitions and augmenting the long term working capital requirement.

Serial Blasts Rock Bangalore

A woman was killed and at least six people were injured in a series of six low-intensity blasts carried out in eastern parts of the information technology capital this afternoon.

The woman, who was waiting at a bus shelter in Madivala on the Bangalore-Hosur road, was killed in the blast and her husband and another person were seriously injured, police said.

Bangalore was rocked by a major terrorist attack in December, 2005 when extremists opened fire in the famous Indian Institute of Science complex in which a Delhi IIT professor lost his life.

There were also blasts in other areas like Panthrapalya, Audugodi and Vittal Mallya Road within minutes of each other from the first blast at around 1330 hours.

Police Commissioner Shankar Bidari appealed to the people of the city to maintain calm and carry on with their normal life as police have been put on alert throughout the city.

He said timer device has been used in some of the blasts and explosives in quantity equivalent to one or two hand grenades have been used in some others.

Bidari termed it as an "act of miscreants" trying to disturb peace in Bangalore and appeared pre-planned. "We will get to the criminals and arrest them," he said.

Bomb disposal squads and forensic experts have rushed to the spot for investigations.

Chronology of some recent major bomb blasts in the country:

May 13, 2008: Eight serial blasts rock Jaipur in a span of 12 minutes leaving 65 dead and over 150 injured.

January 2008: Terrorist attack on CRPF camp in Rampur kills eight.

October 2007: 2 killed in a blast inside Ajmer Sharif shrine during Ramadan, in Rajasthan.

August 2007: 30 dead, 60 hurt in Hyderabad 'terror' strike.

May 2007: A bomb at Mecca mosque in Hyderabad kills 11 people.

February 19, 2007: Two bombs explode aboard a train bound from India to Pakistan, burning to death at least 66 passengers, most of them Pakistanis.

September 2006: 30 dead and 100 hurt in twin blasts at a mosque in Malegaon.

July 2006: Seven bombs on Mumbai's trains kill over 200 and injure 700 others.

March 2006: Twin bombings at a train station and a temple in Varanasi kill 20 people.

October 2005: Three bombs placed in busy New Delhi markets a day before Diwali kill 62 people and injure hundreds.

Somi Conveyor Beltings Trades Discount Over IPO Price - July 24, 2008

The stock debuted at Rs 37.65 which was also a high for the day so far during the day. At the debut price of Rs 37.65, the stock attracted 5% premium over the IPO price.

It hit a low of Rs 28.15. On BSE, 35.75 lakh shares changed hands in the counter.

The current price of Rs 28.50 discounts the company's nine months ended December 2007 annualised EPS of Rs 1.1 by a PE multiple of 25.90.

The fixed price IPO of Somi Conveyor Beltings was subscribed 1.92 times.

The company had entered the capital markets on 24 June 2008 with an issue of 62.27 lakh equity shares of Rs 10 each at a fixed price of Rs 35 (including a premium of Rs 25 per equity share) aggregating to Rs 21.79 crore.

The company is manufacturs rubber conveyor belts of various sizes used for industrial applications of material handling in various industries such as coal, lignite, iron ore, mining, cement, power, steel, fertilizer and sugar and it has also recently introduced food grade belts for tea gardens and salt industries.

The company proposes to utilize the net proceeds of the issue to part finance its Rs 35.09 crore project cost. The expansion and modernization project consists of setting up of new manufacturing unit, purchase of land and building for office use, meeting margin money requirement for enhanced working capital and meet the interest cost during the construction period.

The company, earning profits since last 5 years, had commenced production with an initial capacity of 36,000 meters per annum (MPA) and it has expanded to present operating capacity of 1,67,660 MPA.

Depending upon the width of the rubber conveyor belt the capacity utilization can be stretched up to 2,00,000 MPA.

The company reported a net profit of Rs 0.96 crore on sales of Rs 10.92 crore in nine months ended December 2007.

ARSS Infrastructure Projects IPO Rated CARE Grade 2 - July 23, 2008

MUMBAI: ARSS Infrastructure Projects Ltd’s proposed Rs 120-crore initial public offering has been assigned ‘CARE IPO Grade 2’ by rating agency CARE.

Grade 2 indicates ‘below average fundamentals’. The grading factors in the experience of promoters and management team of the company, healthy and diversified order book position, impressive client portfolio, satisfactory project completion track record, improving financial position & profitability, favourable outlook for the sector and continuous thrust being given by the government for infrastructure development.

SBI, taking active interest in the company by virtue of acquiring an equity stake, also supports the grading. However, the grading is constrained by relatively smaller size of the company, few pending litigations against the company and/or the promoters, limited geographical diversification, high fragmentation in the domestic construction sector leading to intense competition thereby impairing profitability and relatively low level of automation in the sector resulting in labour intensiveness. While the company is, by and large, in compliance with the regulatory requirement pertaining to corporate governance practices, it may be too early to comment on the same in view of company taking major initiative in this regard only in the recent past.

ARSS was incorporated on May 17, 2000 as ARSS Stones Pvt. Ltd. by Subhash Agarwal of Bhubaneswar and his three brothers, for executing construction projects in the railway sector. In the initial years, ARSS operated mainly in Orissa. It gradually expanded operations to other states, but to a limited extent, and diversified its activities to other construction segments such as development and construction of roads, highways, bridges and irrigation projects. The company also has crusher plants at four locations in different districts of Orissa for quarrying and crushing stones to produce various sizes of rock products required for execution of contracts. In January, 2008, SBI took a 7.97 per cent stake in the company.

The company is, by and large, in compliance with the applicable provisions of the listing agreement and clause 49 pertaining to corporate governance, although the entire initiative to this effect has been taken by the company only recently. There are few pending litigations against the company and also a criminal case against one of the promoters.