Money Media India

How to Raise Capital (in India) Cost Effectively!

2010-01-21T05:39:00.001-08:00

ABM Capital Partners, a Delhi based consultancy firm has a proven method “IPO-CARE” to raise capital. We have a turnkey program developed especially for medium & small businesses in India. We can bring your company public, raise capital either before or after going public, and get you quoted on the BSE (Bombay Stock Exchange) and/or NSE (National Stock Exchange) typically within six months to a year for a very reasonable cost.

This method of capitalization is not for everyone, but should be considered carefully for those members in a position to take full advantage of it. Feel free to get additional information from our website, www.IPO-CARE.com, or contact me directly at ipocare@Gmail.com

A Roadmap to Success

2010-01-21T05:34:00.000-08:00

A Roadmap to Success

Golden Rule No. 1: There can be no roadmap to success!!!
Well, have I finished before we even started? Why! We were here to draw a roadmap to success and if there is no such thing then what is left to discuss?
I said that there is no roadmap to success because success is a relative term. It might mean a certain thing to me and an entirely different thing to you. However, one thing is certain, when one is successful, in whatever manner perceived by him / her, the world can see it. Power shows and so does success.
So if there is no roadmap to success, how to plan and make sure that you achieve it? There are a few key teachings, thoughts, ideas that can help you to draw your own roadmap. Yes, since success is relative and means different things to different people, the path to achieve it would also be different and would require to be drawn by each one of us for ourselves. We can only discuss the framework based on which we can structure our ideas. So let’s start. We already have the first golden rule. There is no fixed recipe to success. Everyone have to brew their own stew here.
Golden Rule No. 2: Be ready for failures.
As they say, “Success lies in winning the war, not every battle.” When you fight, you fight to win. But sometimes, it is inevitable to fail. Never underestimate your enemy or competitor. After all, they are also fighting to win. Even if you do fail, remember that this is not the end of life. Get up and fight again. What you need is not unmatched talent so that you will succeed in each match, but persistence and perseverance to ensure that you have a higher winning ratio.
Golden Rule No. 3: Look for good in people.
Sooner or later what you will get out of life is what you see and perceive it to be. What you expect is what you will get. You see the world to be dishonest, cunning and selfish, and these are the types of people you will meet. Expect them to be honest and helpful and so they would be. This might not hold true in 100% of the cases. But this is the rule of majority. You give out to the world what you expect in return. And when you give good, you will receive it back, and that would place you up on the ladder to success.
Golden Rule No. 4: Believe in the impossible.
Never limit yourself. If you don’t dream it, you would never achieve it. You can plan to start with smaller dreams that are relatively easier to achieve. When you see them turning into realities, it would give your confidence a boost and you will start dreaming of bigger and more impossible dreams, and ultimately that which seemed to be impossible would look like just another threshold to be crossed.
Golden Rule No. 5: Mind your tongue.
Basic lessons of etiquette are very useful in our plans to be successful. You would not be successful even if you are a billionaire but people see you as a rude, uncouth and unworthy human being. In fact, the way we talk is a reflection of our inner self which reflects in all spheres of life, be it education, business, personal relations or social standing. Words spoken by us are a window to the mind, and the way they are spoken is the key to success.
Golden Rule No. 6: Balance work and play.
All work and no play made jack a dull boy. Take some time out for yourself. Never let your hobbies die. I don’t say that don’t work hard. I say that you slog yourself each moment in the present in order to achieve a better tomorrow and when you achieve that tomorrow you realize that you have wasted away your entire life for a moment of achievement. You have overlooked millions of tiny success movements is order to relish this big one. What good would that success be? Do take a breath and smell the roses while you are on the road to the ultimate success.
Golden Rule No. 7: Be a self motivator.
Its great to hear words of wisdom when you are feeling low. Having a shoulder to cry upon, a backup friend, a guide by your side is incomparable. But you should remember that the world may not always be the same. The people who today are pillars of your strength might not be there with you tomorrow. Learn to be self-dependent. The most difficult decisions in life have to be taken alone. Even if people are there to advice you, you will take action only when your self allows you to. So be a self motivator. Read good self help books, listen to great people’s lectures, attend self-esteem and confidence building workshops. But remember that the greatest strength that you can derive from any source is your own mind, which will help you succeed in life.
Golden Rule No. 8: Be persistent – Don’t quit.
Often people give up all when they face a continuous series of disappointments. They seldom realize that they were just an inch away from success when they thought they’d had enough and left it. Never quit. Well, its easier said than done. Derive motivation from the proverbial ant which climbed the wall again and again even after falling innumerable times and finally made it to the top. Achievement is not a miracle. It takes years and years of persistent hard work and dedication for a student to become a doctor, engineer, artist, musician, actor, etc. Results appear when you have put in the required amount of labor.
Golden Rule No. 9: Stop worrying and start living.
Smile! It looks good on your face and it is contagious. When you smile you look appealing and people get attracted to you. When you smile your heart feels lighter and the world seems beautiful. Worrying about the outcome of your actions would never give you any solace. If the outcome has to be positive, there is no need to worry and if it has to be negative, it would not change no matter how much you worry about it. Remember that life is a beautiful opportunity. Keep doing efforts but never stop enjoying them. If you don’t smile in today and keep worrying for the future, your life would one day have passed in front of your eyes and it would be too late to live it again.
Golden Rule No. 10: Be down to earth.
Nothing succeeds like success. Successful people often tend to become proud and arrogant. They are the ones who have tasted easy success; or have inherited it; or if they have earned it themselves are unfortunate enough to not value it. Yes, that is correct. Success should not go to your head. Being successful is relative. I am more successful than you, you are more successful than someone else, and still someone else could be more successful than me. Define success for yourself. Is it having that specific position in your company, or is it owning a house in that particulars posh street, or is it having ‘x’ amount of net wealth. It could be anything to you. But once you achieve it, relish in it for a while and move ahead for accomplishing another goal. Don’t stay with your success for too long. If you don’t move, you tend to stagnate and rot. Movement and change is the law of life. Live your life as a continuous journey. Because success lies in the journey and not in the destination.

GVK Biosciences Joins ResearchPoint Global

2010-01-21T05:18:00.001-08:00

ResearchPoint Global (RPG) announces its newest member, GVK Biosciences (GVK BIO), an India-based, full-service Contract Research Organization (CRO). A leading CRO in Asia, GVK BIO provides RPG with access to an extensive network of experienced and proven investigative sites and country-specific regulatory, clinical and technical expertise.
As the growth of India’s participation in global clinical programs continues to increase at a rapid pace, RPG strategically sought to expand its reach to this region.

“Rural Insurance in India – Opportunities and Challenges”

2010-01-21T05:11:00.000-08:00

Rural India, contributing to 70% of the total population in India, is a largely untapped market. reports highlights the opportunities for insurance products in rural India as well as the current challenges. The report also gives a 360-degree view of the rural Indian market, which could be explicitly helpful to companies planning to tap this market.

IndiQuest Research Services has released its report titled, “Rural Insurance in India – Opportunities and Challenges” today. The report released, focuses on the potential of life and health insurance in the Indian rural regions.

During the past decade India has registered consistent economic growth which has catapulted prosperity in the country. This growth in the Indian markets - broadly divided as urban and rural-have attracted high levels of foreign investments. The investment influx propelled economic growth in the Indian urban regions leading to its rapid growth and subsequent saturation as well. The focus of companies across sectors, thus, is gradually moving to the urban markets counterpart, the Indian rural market.

HSIL Q3 EBIDA zooms 48%

2010-01-21T05:09:00.000-08:00

India’s leading sanitaryware and container glass manufacturer- HSIL Limited (formerly Hindustan Sanitaryware & Industries Limited) has reported a strong performance for third quarter ended December 2010. With Net Sales of Rs 216crores in Q3 2009-10,against Rs 160 crores in Q3 08-09, HSIL recorded an impressive 38 % growth and simultaneously a landmark achievement of crossing Rs 200 turnover in a quarter for the first time in its history.
For the quarter ending December 31, 2009, the company achieved EBIDTA of Rs. 38 crores, 48% higher than the corresponding period last year. The company’s PBT (Profit Before Tax) for the quarter stood at Rs. 15 crores, 37.6% up from last year’s Q3 Rs.10.9 crore. The Cash Profit for Q3 2009-10 stood at Rs. 27.7 crores, 63% up from the corresponding perdiod last year and the Profit After Tax (PAT)in comparison to previous year witnessed an ascent of 43%, at Rs. 9.97 crores.

SMS GupShup Secures $12Million Additional Funding

2010-01-21T04:45:00.000-08:00

Latest round led by Globespan Capital Partners and includes follow-on reinvestment from Charles River Ventures & Helion Venture Partners

Santa Clara, CA/Mumbai, India (January 20th, 2010) SMS GupShup, India's largest social network, announces today that they have closed funding for a $12 million round led by Globespan Capital Partners and additional financing from existing investors Charles River Ventures and Helion Venture Partners.
This funding will allow SMS GupShup to expand into new territories, and to roll out new features such as Mobile CRM solutions for small businesses and corporate brands. As one of the fastest growing ad-supported mobile communities in the world, SMS GupShup already enjoys a larger market share of users in India than any other online or mobile social networking site. The company also offers reply-all group messaging service in partnership with mobile carriers. The company is now poised to expand globally, starting with emerging markets that have high mobile adoption.
Launched in April 2007, SMS GupShup now serves 26 million users in over 2 million communities - double the number of communities supported just six months ago. These communities range from religious groups to sports teams to celebrities. Whether it's daily poems, traffic reports or tribal news, GupShup is the centerpiece of connectivity in India. Over 100 advertisers currently run on the network including local insurance provider ICICI Lombard and international brands like Puma, Microsoft and Cadbury.

Mahindra Lifespaces' PAT grows by 147% in Q3

2010-01-21T04:06:00.000-08:00

Mumbai, Maharashtra, January 21, 2010 Mahindra Lifespace Developers Limited (MLDL), the real estate and infrastructure development arm of the Mahindra Group, announced their Q3 results today. The Company reported an Operating income for Q3 F-10 of Rs.108.91 crores registering an increase of 96% compared to Rs.55.65 crores in Q3 F-09. The PAT for the quarter is at Rs.27.93 crores compared to Rs.11.31 crores in Q3 F-09.
The Operating income for the period ended December 2009 is at Rs.219.69 crores registering an increase of 64% as compared to Rs. 134.18 crores in period ended December 2008. The PAT for the period ended December 2009 before the impact of exceptional item is at Rs.58.61 crores registering an increase of 82% compared to Rs.32.26 crores in the period ended December 2008. The PAT for the period ended December 2009 is at Rs.55.69 crores compared to Rs.32.26 crores in the period ended December 2008.

High inflation: Token I-T exemption limit hike likely

2010-01-21T00:15:00.000-08:00

The government is exploring an increase in the income-tax exemption limit for individuals to compensate for the recent spike in inflation, but revenue considerations and the fact that the limit was hiked sharply in 2008-09 could force it to maintain status quo or give just a token hike.

The proposal has figured in discussions among policymakers as they debate ways to give some relief to households from rising prices. Retail inflation as measured by the consumer price index for industrial workers was 13.5% in November 2009. A decision is likely over the next three weeks as the budgetmaking process gathers pace.

“It (the decision) will depend on revenue considerations that are weighing high on policymakers’ agenda as the government is under pressure to signal a return to fiscal consolidation, a government official told ET. The fiscal deficit for the current year is pegged at a 16-year high of 6.8%.

The government had substantially hiked the exemption limit in the Union Budget 2008-09 followed by a token Rs 10,000 hike in the final budget for 2009-10, after the United Progressive Alliance came back to power last year. Over the four years to fiscal 2009-10, the exemption limit has risen at a compounded average growth rate of 12.5%, well ahead of the inflation in this period but less than the current inflation level. Food inflation is running at over 18% right now.

Source: The Economic Times

Franchising Companies take the IPO road in India

2010-01-20T23:48:00.000-08:00

To understand the dynamics of the Franchising Companies releasing their Initial Public Offering (IPO) in India, Francorp carried out a study on the 'Dominos IPO'. The analysis reflects the major trends on Quick Service Restaurants, Operating Plans, Industry Analysis and Pricing of Dominos. Francorp has executed the research as an initiative to educate their readers and investors on the undertakings of the industry. As a part of this initiative, Francorp also proposes to study other industries in detail and assessing their IPO plans.
The report elaborates the background of Dominos, which is now known as Jubilant Foodworks Limited, which is the Master Franchise for Domino's pizza stores across India and Sri Lanka. The Company changed its name from Domino's Pizza India Ltd. to Jubilant Foodworks Ltd. in September, 2009. However, the company will continue to use the brand name of 'Domino's Pizza' for marketing and other related purposes. Jubilant Foodworks has opened 274 stores in 55 cities in India and is looking forward to extend this number to 450, soon. The Company has 32% stake from JP Morgan and India Private Equity Fund (IPEF). Jubilant Foodworks had net sales of Rs. 2,806 mil in 2008 and Rs. 2,111 mil in 2007 whereas the profit after tax for the company was Rs. 67.5 mil and Rs. 77.5 mil in 2008 and 2007 respectively. The Company is going for Initial Public Offering and has filed DRHP with SEBI for approval.
A quick glance over the various parameters which have been covered in the analysis of the IPO are :.

Industry analysis on Quick Service Restaurants (QSR) category reveals that almost 25,000 pizzas are sold per day and offering such as 'Pizza in less than 30 minutes or no-charge' by Domino's make it one of the top players in this category. Consumers spend almost 11% of their pocket expense on fast-foods every year and world's second largest growing consumer economy doesn't seem to alter their spending even if the food inflation might hit 15-20% high in the coming time. However, Domino's has not shown any intention of increasing their product prices in near future.
Domino's on the other hand has 274 stores operating in Indian market out of which 70 stores went operative by August, 2009 itself. The Company plans to expand this number to 310 by March, 2010 and to 440-450 in more future. The fast food restaurant business has seen rise of 7-20 percent in 2009 and Domino's itself claims to expand its base by 10% in 2010. The Company saw 30% increases in its sale to lower segment of the economy through the launch of its 'Pizza for Rs. 35'. Jubilant Group eyes 45% market share in the market which is expected to grow to Rs. 6-7 bil. Dominos currently owns 42% of the market share. Jubilant Foodworks is looking to raise Rs. 3 bil through IPO to settle around Rs. 840 mil debt whereas the investors are looking for a vaulation worth Rs. 1.65 bil for their share. According to the CEO of Jubilant Foodworks, Mr. Ajay Kaul, the Company is working on getting food brands other than pizza in India in forseeable future. In the meantime, addition of 38 Dominos stores before March 31, 2010 is the primary target that the Company is handling.
Jubilant Foodworks is the first Master Franchisee to go for releasing IPO in India. They do not own the Dominos brand and therefore, cannot bring the requisite changes in it if required, by them. On the similar lines, the changes in market performance especially pertaining to the fast food service industry will directly affect the price of Equity shares of Jubilant Foodworks.
Jubilant Foodworks has planned to open its IPO in Jan 18 and will close the books on Jan 20, 2010. The price band will be decided in the coming week. It is expected to be around Rs. 155.

FRANCHISING all set for GROWTH IN 2010 with an 11 City Tour

2010-01-20T23:35:00.000-08:00

In its 12th year, Franchise India is credited for being the first and most successful company in franchise solutions. Supported by Indian Franchise Association and organized by Franchise India, Asia's largest integrated franchise and retail solution company, Franchise India Exhibitions are the "Opportunity Shows" showcasing domestic and global brands that offers a pool of out-of-box business ideas and best practises, delivering India's biggest business exchange.
Each year, Franchise India aims to bring together both emblematic business brands and innovative business concepts, for potential franchisees with a complete picture of what franchising offers in India and overseas. With multiple new concepts, ready to export franchising business opportunities and experts from the industry, the FROs have established itself as an international level exhibition for starting up a new business, and have become an ideal springboard for breaking into new markets. With successful recognition over the past 7 years, Franchise India Expo & Conferences have produced fantastic results for exhibitors, potential franchisees, visitors, speakers and the entire franchising industry - and that's what makes the platform unbeatable. The flood of visitors increases every year due to the growing number of exhibitors and the variety of concepts and opportunities to explore. Visitors get to meet with a wide range of well-established national and international franchised companies. In 2009, over 1,50,000 people attended 8 editions of FRO held in various cities of the country, with over 500 brands exhibiting from diverse business sectors.

Alternative Re-Capitalisation Funding for Listed Companies

2010-01-20T23:32:00.000-08:00

Private Investment in Public Equity (PIPE), a long established source of finance for public companies in the US, is now available to companies listed on stock exchanges across the Asia Pacific region. A PIPE fund, backed by some of the world's leading financial institutions, is making this flexible financing instrument available to companies listed on stock exchanges in the region with minimum market capitalisation of $50m (or equivalent). The fund will provide loan-for-equity finance available for drawdown at the borrowers' discretion. The PIPE deal is facilitated through UK-based global alternative funding advisors Equility Capital.
Equility's Australian associate in Melbourne, Richard Symon, said: "PIPE provides flexible finance which can be used for acquisitions, specific projects or kept as a reserve to exploit opportunities. The process usually takes no longer than six weeks from signing of the term sheet, and is a time and cost saving alternative to going to market with a rights issue. In the US, PIPE has come to be regarded as a mainstream instrument, although it has still to be adopted on such a wide scale in the rest of the world. "
PIPE in the US has developed into a $50bn market with the process evolving into a straightforward and efficient transaction, needing no more than the stock exchange and ticker code to generate an offer of funding and a term sheet, usually within days. The fund prefers companies operating in growth or emerging markets and regions, and each deal is assessed on its individual merits.

Entry of a German Sanitaryware brand to Indian Soil

2010-01-20T23:30:00.001-08:00

Duravit India Pvt. Ltd., the Indian subsidiary of the renowned German brand Duravit supplying living bathrooms the world over, set upon its ambitious course back in 2003, when it emerged on the Indian sanitary ware market for the first time. Characterized by the dominance of a few national players and countless regional ones, the Indian sanitary ware market back then had yet to warm up to imported brands that were steeped in design and promised a better quality of life.
As a tradition-rich company with headquarters in Hornberg, Germany, Duravit AG has had a decisive influence on the development of the sanitaryware branch. Much has changed since the company's foundation in 1817. The initial production of earthenware crockery gave way to the manufacture of sanitary ceramics. In the meantime, Duravit has become a pioneer when it comes to design and innovation in the bathroom segment.

Artheon Group announces JV with NorthStar Battery Company, Sweden

2010-01-20T23:28:00.000-08:00

Artheon Group ("Artheon") India, NorthStar Battery Company ("NorthStar") of Sweden and the MTS Group USA are pleased to announce they have entered into a joint-venture, Artheon Battery Company Pvt. Ltd, to manufacture and market storage batteries.
Artheon Battery Company Pvt. Ltd, located in Nashik (130Kms from Mumbai), will manufacture a complete line of lead-acid batteries serving both the domestic battery markets in India and the export markets around the world.

Stock Pick for 2010

2010-01-20T06:16:00.000-08:00

Selected PSU stocks, power, infrastructure and banking are the sector of 2010 and hopefully those sectors will outperform the bourses

The stock market in India is likely to extend its recent rally into 2010 but it is unlikely to repeat 2009's spectacular rise. It is expected that the Indian economy will do well as well the corporate earnings will do well but one shouldn't expect the market to rise sharply as was seen last year. The market will look forward to several issues that may dent the upward momentum. Issues like withdrawal of stimulus measures, bad monsoon, direct tax code implementation (as per the draft code) may pose an upper cap on the indices. But undoubtedly these issues won't hamper the long term bull market trend and it will march ahead in the long term. 2010 may not see a new high but there is high possibility of market crossing 20000 mark this year.

One has to be cautiously optimistic while picking stocks keeping in mind the recent market mayhem which taught every investors and traders that only companies with good fundamentals, strong balance sheet with low debt component and strong order book has only been able to withstand and overcome the crisis. One has to keenly watch the Government policy and their disinvestment decisions.
PSU stock will be the flavour of the season if the Government fulfills the promises. PSU stocks has already rallied to a great extent and one must not jump into any such stocks without judging the valuations else there will be high chance of burning their fingers. Midcap PSU bank stocks like Dena Bank, Uco Bank, Indian Overseas Bank, Allahabad Bank, Central Bank still have some steam left in them and if Q3 and Q4 results are promising they may rally further. NTPC, REC, BHEL, BEL are some good long term pick among the PSU arena.
Telecom is expected to under-perform the bourses in the medium term and any correction sooner or later will bring those stocks at attractive buy levels for a long-term investment decision. Bharti, Rcom and Idea should be keenly watched as a value pick for long-term investment only after decent correction.

Power and infrastructure will continue to do well despite high valuations among front liners. LT, CESC one must closely watch and can be bought on every dip with good potentiality of appreciation.
And last but not least, Reliance Industries must not be overlooked and it must be noted that despite its gas dispute issue it has all quality to give decent returns and must form a part of a long term portfolio.
Happy Investing!

Accounting professionals unite to help Indian corporates for IFRS transition

2010-01-20T06:10:00.000-08:00

Mumbai, January 20, 2010: The biggest names in the accountancy world come together for the first time to address issues involved in India's transition to IFRS at the Implementing IFRS conferences being organized by Get Through Guides (GTG) with ACCA (Association of Chartered Certified Accountants) as platinum sponsors. These conferences are to be held on 27, 28 and 29th January 2010 in Pune, Mumbai and New Delhi respectively and would be exclusive invitation-only events. Implementing IFRS would witness eminent speakers from distinguished financial bodies, renowned accounting firms and financial heads of domestic companies sharing their views on the systems and processes that companies in India need to implement to ensure a smooth transition to IFRS.
Ms. Vandana Saxena-Poria OBE, Chief Executive Officer, Get Through Guides believes that proper planning is the key to smooth transition to IFRS. According to Ms. Saxena-Poria, "Through these conferences, GTG wants to give a global as well as local view on issues involved in transition to IFRS. We have speakers from abroad - both from the IASB and ACCA, Ministry of Company Affairs, from industry and from the accounting profession. The purpose is to dispel the myths of how difficult transition is, learn from experiences abroad and help companies understand how to build their own internal roadmap for implementing IFRS. The key is in the planning and we aim to help kickstart the process."
Aziz Tayyebi, Financial Reporting Officer at ACCA, says, "As we enter 2010, the transition to International Financial Reporting Standards (IFRS) is imminent for many Indian companies. The change process from Indian Generally Accepted Accounting Principles (IGAAP) to IFRS needs to be planned carefully to ensure that costs and resources are not put under pressure. These events, organised by Get Through Guides, are extremely timely and relevant as they offer an insight for management into how IFRS will affect their decision making. But it is also important to ensure that staff are trained to implement IFRS successfully."
The Implementing IFRS Conferences aim to exchange views on a wide range of issues like measures being taken by the government authorities to facilitate IFRS transition, experiences of Indian companies which have already adopted IFRS, learnings from IFRS compliant European nations and implications of key standards like Financial Instruments and Revenue Recognition for India. The eminent panel of speakers would include Prabhakar Kalavacherla from International Accounting Standard Board (IASB), Aziz Tayyebi from Association of Chartered Certified Accountants (ACCA), Kumar Das Gupta from PwC, Vandana Saxena Poria from GTG and Rajesh Garg from Cadbury to name a few.

Infinite Computer IPO subscribed 43 times

2010-01-20T05:38:00.000-08:00

The initial public offer (IPO) of IT firm Infinite Computer Solutions witnessed robust demand from investors and has got subscribed nearly 43 times on the final day of issue on Wednesday, with most of the bids coming from high net worth individuals and institutional buyers. The issue received bids for 41.81 crore equities against 97.77 lakh shares on offer for public (42.7 times), as per the latest data available with the National Stock Exchange. The issue was subscribed 48.44 times in non institutional investors category, while in institutional-buyer category that includes high net worth individuals (HNIs), IPO got subscribed 106 times, the latest data with the NSE shows. The book running lead managers for the issue are SPA Merchant Bankers and India Infoline.

What brokerages have to say about Jubilant Foodworks IPO

2010-01-20T05:35:00.000-08:00

The initial public offer of Jubilant Foodworks that runs the fastfood retail chain under the Dominos pizza brand in India has opened for subscription on Monday.

New Delhi-based Jubilant Foodworks is a food service company having exclusive franchisee to run the international Domino’s brand of pizza stores in India, Nepal, Sri Lanka and Bangladesh. It proposes an initial public offer for sale of 1.9 crore shares and a smaller fresh issue of 40 lakh shares to raise Rs 305-328 crore. Rs 54-58 crore would accrue to the company in lieu of issue of new shares, while remaining would go to the promoters.

The company plans to use a part o the proceeds (Rs 32 crore) for repayment of existing high cost debts and the balance for meeting general corporate expenses. The total issue represents around 35% of the post-issue of the company. While there are no listed peers of this company, an analysis of its business indicates that the issue appears to be priced on the higher side.

The price band of the initial public offer has been fixed between Rs 135 to Rs 145 per equity. The issue closes on January 20. Here are what leading brokerages have to say about the IPO.
CURTESY: The Economic Times

Aqua Logistics IPO to open on Jan 25

2010-01-20T05:21:00.000-08:00

Aqua Logistics, a logistics and supply-chain company with domain expertise in pharma, automotives, power, retail, heavy engineering, telecom and sports and events, plans IPO to raise up to Rs 150 crore on January 25 (price-band between Rs 220-230 per equity share) for purchasing specialised equipment, expansion and establishment of offices as well as for proposed acquisitions. Aqua Logistics reported an income of Rs 214 crore and a PAT of Rs 9.83 crore in FY'09. The company has initiated talks for acquiring a Hong Kong-based company, to help it deal with Chinese parties.

Why Go Public?

2010-01-20T05:10:00.000-08:00

Taking a company public is the major financial reward. It brings glamour and prestige, and is one of the acknowledgments of success in business, but taking a company public is a complex process. It involves many different business disciplines and can be mysterious and confusing, even for those who have been through it several times. It's not surprising that entrepreneurs and their management teams are intimidated. Consequently, they seek helpful information from IPO consultants.
Making an Initial Public Offering (IPO) has many advantages for a company. 1. A source of long-term capital: Offering their stocks to the public, companies use a low-cost and long-term source relative to alternative financing methods. Through the IPO, a company may raise funds to finance its expansion plans, enhance its competitiveness or establish an improved financial structure. Apart from issuing and listing equity shares, a public company can raise additional capital by issuing and listing other types of securities, such as preferential shares, warrants, debentures and convertible debentures. 2. Liquidity and increased share price: Companies listed on a stock exchange are typically worth more than similar companies that are privately held. The information contained in an IPO prospectus and subsequent annual reports reduces the uncertainty around performance and hence increases the value of a business. In addition, investors are willing to pay a premium for liquidity. Private companies have limited or no liquidity in most cases. 3. Catalyst for attracting foreign partnerships: In a globalized economy, having a strong, complementary, strategic business ally adds to a company's competitiveness. A 'Public company' status attracts foreign investment and opens up opportunities for business expansion and modernization. 4. Management accountability and professionalism: Investor confidence, reflected to some extent in the level of stock prices, is a function of a company's standard of operations. The management of a public company must be accountable to its shareholders, who, in turn, play a role in ensuring that the company operates in an efficient manner. Shareholders benefit from improvements in a company's operational efficiency. 5. Management and employee motivation: Equity-based awards and ownership tend to be spread more broadly among management and employees in public companies compared to private companies. In addition, management and employees of public companies can see the results of their efforts in the share price more immediately. 6. Positive public image: Because Securities Exchange Board of India (SEBI) monitors listed companies, such companies share a positive public image. Generally, listed companies are thought of as financially healthy and having high standards of transparency and information disclosure. This public profile boosts a company's credibility, increases its bargaining power and reflects positively on its products and services. Many analysts believe there is considerable prestige attached to managing and working for a publicly listed company. 7. Access to alternative sources of capital: Another benefit as a result of a company going public is the ability to gain access to alternative sources of capital in the future. Public companies are often able to raise money for expansion more easily and at better rates than private companies of similar size. The public debt markets are more accessible to public companies than to companies without a listing. Moreover, going public generally improves a company's debt-equity ratio and may enable it to borrow on better terms in the future. 8. Ancillary benefits:a. The flotation process often forces a company's management to formulate and document a clear business strategy for the first time.b. This is typically beneficial to the future success of the business and in many cases is just what a private company required to truly grow from small to medium or from medium to large in size.c. The anticipation of public ownership leads many companies into improving their management and financial structure. Fast growing medium-sized companies often neglect the formal structures which will help them in their attempts to become larger and more profitable companies.
9. Shareholders' benefits: a. Increased liquidity: Listing on a Stock Exchange generally increases the liquidity of a company's securities. Shareholders find potential buyers more easily, as their stocks are more marketable. The market value of a listed company is easier to determine and its shares are acceptable as collateral for loans. b. Shareholder protection: To ensure that the benefits to investors are protected, SEBI issues rules and regulations governing securities trading and information disclosure. These rules and regulations ensure the transparency, adequacy and promptness of information disclosure and guarantee investors equal access to this information. c. Tax Advantages: Shareholders of listed companies have the following tax privileges: i. Long-Term capital Gains from the sale of listed shares are presently tax-exempted. ii. Short-Term capital Gains from the sale of listed shares are taxed at lower rates. iii. Dividend Income is presently Tax-Exempt.
Deciding whether to "go public" is one of the most important decisions a successful private company can make. "Going public" presents many attractive opportunities to a growing company and its founders. At the same time, the process can involve many issues which must be carefully considered. Making the right decision requires a thoughtful balancing of the relative benefits and burdens in each situation. There are costs involved that include both the direct costs, in time and money, of the flotation process as well as the opportunity costs of under-pricing the offering and subsequently the costs of increased disclosure to public shareholders.
Draw-backs of Going Public: 1. Increased disclosure: Companies are required by stock exchanges and regulators to disclose information on a regular basis so that investors and potential investors can make buy, sell or hold decisions. A much greater amount of information is required at the time of the IPO and is included in the offer document. 2. Costs of IPOs: Initial public offerings involve many costs like Investment bankers' commissions, lawyers and accountants fees, ancillary costs, such as public relations, printing, corporate advertising and others. In addition to the upfront costs, there are the costs of maintaining a quote on the stock exchange (stock exchange fees, management time, more extensive audits and reporting, etc.). 3. Dilution of control: Not all IPOs are for more than 50 per cent of the issuer's voting shares, in fact, the average is around 30 per cent. So although control is not lost through the IPO, if the company requires further equity to fuel its growth, existing shareholders will suffer dilution. 4. Perceptions of short-term growth: In order to meet investors' quarterly or semi-annual earnings expectations, a company may be forced off the long-term strategy that was in place prior to the IPO. Managers may feel compelled to follow strategies that support the share price in the short term, rather than over a long time horizon.