Table of contents

IPO Procedure Appointment Procedure: 1. Meeting of Board of Directors 2. Appointing of Merchant Bankers- Specialized financial onsultanc! "ho looks after #nitial Pu$lic %ffering &. Appointing of 'egistrar and transfer agent done $! Merchant Bankers (. Banks- Appointed $! Merchant Bankers ). Appointing of *a"!er 'eal Procedure +. Book issued $! Merchant $ankers and su$mit it to S,B# "hich includes 'eason of #ssuing- no of Shares- .inancial ondition of the compan!- current Business- Management- /ro"th in Sectors and 'isk factor 0. Prospectus- #ssued to stock Market and registrars 1. Printing of .orms 2. Appointment of Brokers 13. Marketing 4 Ad5ertising 11. Brokers Meeting in a ompan! 12. 'oad Sho"s or meetings 1&. #P% starts &-0 da!s opened 1(. #P% closed Post #P% 1). collection of .orms 1+. %5ersu$scription or 6ndersu$scription 10. Allotement %f shares a. Pro data allotement $. lotter! s!stem 11. #ssue of share certificate a. *etter of allotement $. regret *eter 12. 'efund che7ue 23. *isting %f shares in 8S, or BSe

What is an IPO? IPO or Initial Public Offer is a way for a company to raise money from investors for its future projects and get listed to Stock Exchange. Or An Initial Pu lic Offer !IPO" is the selling of securities to the pu lic in the primary stock market. #ompany raising money through IPO is also called as company $going pu lic%. &rom an investor point of view' IPO gives a chance to uy shares of a company' directly from the company at the price of their choice !In ook uild IPO%s". (any a times there is a ig difference etween the price at which companies decides for its shares and the price on which investor are willing to uy share and that gives a good listing gain for shares allocated to the investor in IPO. &rom a company prospective' IPO help them to identify their real value which is decided y millions of investor once their shares are listed in stock exchanges. IPO%s also provide funds for their future growth or for paying their previous orrowings.
Who decides the Price Band? Company with help of lead managers (merchant bankers or syndicate members) decides the price or price band of an IPO. SEBI the reg!latory a!thority in India or Stock E"changes do not play any role in fi"ing the price of a p!blic iss!e. SEBI #!st $alidate the content of the IPO prospect!s. Companies and lead managers does lots of market research and road shows before they decide the appropriate price for the IPO. Companies carry a high risk of IPO fail!re if they ask for higher premi!m. %any a time in$estors do not like the company or the iss!e price and doesn&t apply for it res!lting !ns!bscribe or !nders!bscribed iss!e. In this case companies& either re$ises the iss!e price or s!spends the IPO. Who decides the date of the issue? Once '(raft Prospect!s& of an IPO is cleared by SEBI and appro$ed by Stock E"changes then it&s !p to company going p!blic to finali)e the date and d!ration of an IPO. Company cons!lt with the *ead %anagers +egistrar of the iss!e and Stock E"changes before decides the date.

What is the role of registrar of an IPO?

+egistrar of a p!blic iss!e is a prime body in processing IPO&s. ,hey are independent financial instit!tion registered with SEBI and stock e"changes. ,hey are appointed by the company going p!blic.

+esponsibility of a registrar for an IPO is mainly in$ol$es processing of IPO applications allocate shares to applicants based on SEBI g!idelines process ref!nds thro!gh ECS or che-!e and transfer allocated shares to in$estors (emat acco!nts. What is the role of Lead Managers in an IPO? *ead managers are independent financial instit!tion appointed by the company going p!blic. Companies appoint more then one lead manager to manage big IPO&s. ,hey are known as Book +!nning *ead %anager and Co Book +!nning *ead %anagers. ,heir main responsibilities are to initiate the IPO processing help company in road shows creating draft offer doc!ment and get it appro$e by SEBI and stock e"changes and helping company to list shares at stock market. What is Follow on public offering or FPO? .ollow on p!blic offering (.PO) is p!blic iss!e of shares for already listed company. What is the life cycle of an IPO prospectus?

)*raft Offer document) is prepared y Issuer #ompany and the +ook +uilding ,ead (anager of the pu lic issue. -his document is su mitted to SE+I for review. After reviewing this document either SE+I ask lead managers to make changes to it or approve it to go ahead with IPO processing. *raft document are availa le on SE+I%s we site in the section of $.eports /0 Pu lic Issues1 *raft Offer *ocuments filed with SE+I) at1 http122www.se i.gov.in2SectIndex.jsp3su 4sec4id567 )*raft Offer document) is usually a P*& file having information of an investor who needs to know a out the pu lic issue. It mainly contain information a out the company' its usiness' management' risk involve in applying to this issue' company financials and the reason why company is raising money through IPO. Stage 2: Offer Document Once the $*raft Offer document% cleared y SE+I' it ecomes )Offer *ocument). Offer *ocument is the modified version of $*raft Offer document% with SE+I suggestions. )Offer *ocument) is su mitted to the registrar of the issue and stock exchanges where Issuer #ompany is willing to list. Stage 3: Red Herring Pros ectus Once )Offer *ocument) gets clearance from Stock Exchanges' Issuer #ompany add Issue si8e and price of the issue to the document and make it availa le to the pu lic. -he issue prospectus is now called ).ed 9erring Prospectus).

What is the life cycle of an IPO? Below is the detail process flow of a /001 Book B!ilding Initial P!blic Offer IPO. ,his process flow is #!st for easy !nderstanding for retail IPO in$estors. ,he steps pro$ided below are most general steps in$ol$e in the life cycle of an IPO. +eal processing steps are more complicated and may be different. Please $isit SEBI website stock e"change website or cons!lt an e"pert for most c!rrent information abo!t IPO life cycle in Indian Stock market. /. Issuer Company IPO Process Initiali!ation /. 2ppoint lead manager as book r!nner. 3. 2ppoint registrar of the iss!e. 4. 2ppoint syndicate members. Lead Manager"s Pre Issue #ole Part $ /. Prepare draft offer prospect!s doc!ment for IPO. 3. .ile draft offer prospect!s with SEBI. 4. +oad shows for the IPO. %&BI ' Prospectus #e(iew /. SEBI re$iew draft offer prospect!s. 3. +e$ert it back to *ead %anager if need clarification or changes (Step 3). 4. SEBI appro$e the draft offer prospect!s the draft offer prospect!s is now become Offer Prospect!s. Lead Manager Pre Issue #ole Part ) /. S!bmit the Offer Prospect!s to Stock E"changes registrar of the iss!e and get it appro$ed. 3. (ecide the iss!e date 6 iss!e price band with the help of Iss!er Company. 4. %odify Offer Prospect!s with date and price band. (oc!ment is now called +ed 7erring Prospect!s. 5. +ed 7erring Prospect!s 6 IPO 2pplication .orms are printed and posted to syndicate members8 thro!gh which they are distrib!ted to in$estors. In(estor ' Bidding for the public issue /. P!blic Iss!e Open for in$estors bidding. 3. In$estors fill the application forms and place orders to the syndicate members (syndicate member list is p!blished on the application form). 4. Syndicate members pro$ide the bidding information to BSE:;SE electronically and bidding stat!s gets !pdated on BSE:;SE websites. 5. Syndicate members send all the physically filled forms and che-!es to the registrar of the iss!e. 9. In$estor can re$ise the bidding by filling a form and s!bmitting it to Syndicate member. <. Syndicate members keep !pdating stock e"change with the latest data. =. P!blic Iss!e Closes for in$estors bidding. Lead Manager ' Price Fi*ing /. Based on the bids recei$ed lead managers e$al!ate the final iss!e price. 3. *ead managers !pdate the &+ed 7erring Prospect!s& with the final iss!e price and send it to SEBI and Stock E"changes. #egistrar Processing IPO +pplications /. +egistrar recei$es all application forms 6 che-!es from Syndicate members. 3. ,hey feed applicant data 6 additional bidding information on comp!ter systems. 4. Send the che-!es for clearance. 5. .ind all bog!s application. 9. .inali)e the pattern for share allotment based on all $alid bid recei$ed. <. Prepare &Basis of 2llotment&. =. ,ransfer shares in the demat acco!nt of in$estors. >. +ef!nd the remaining money tho!gh ECS or Che-!es. Lead manager ' %toc, Listing /. Once all allocated shares are transferred in in$estors dp acco!nts *ead %anager with the help of Stock E"change decides Iss!e *isting (ate. 3. .inally share of the iss!er company gets listed in Stock %arket.

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What is the difference bet!een "loor Price and #ut$Off Price for a %oo& %uilding Issue? #ompany coming up with +ook +uilding Pu lic Issue decided a price and for the issue. -he price and usually contains an upper level and a lower level. &loor Price is the minimum price !lower level" at which ids can e made for an IPO. Investors can id for the +ook +uild IPO at any price in the price and decided y the company. In +ook +uild process retail investors have an addition option to choose )#ut/ Off) price for idding. #ut/off price means the investor is ready to pay whatever price is decided y the company at the end of the ook uilding process. .etail investor has to pay the highest price while placing the id at #ut/Off price. If company decides the final price lower then the highest price asked for IPO' the remaining amount is return to the retail investor. What is the difference bet!een retail in'estor( )on$institutional bidders and *ualified Institutional %idders +*I%,s-? nvestors can apply for shares in an IPO in : different categories1 ;.
#etail Indi(idual In(estor -#II. In retail indi$id!al in$estor category in$estors can not apply for more then +s one lakh (+s / 00 000) in an IPO. +etail Indi$id!al in$estors ha$e an allocation of 491 of shares of the total iss!e si)e in Book B!ild IPO&s. ;+I&s who apply with less then +s / 00 000 :? are also considered as +II category.

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/igh 0etworth Indi(idual -/0I. If retail in$estor applies more then +s / 00 000 :? of shares in an IPO they are considered as 7;I. 0on institutional bidders Indi$id!al in$estors ;+I&s companies tr!sts etc who bid for more then +s / lakhs are known as ;on?instit!tional bidders. ,hey need not to register with SEBI like +II&s. ;on?instit!tional bidders ha$e an allocation of /91 of shares of the total iss!e si)e in Book B!ild IPO&s. 1ualified Institutional Bidders -1IB"s. .inancial Instit!tions Banks .II&s and %!t!al .!nds who are registered with SEBI are called @IB&s. ,hey !s!ally apply in $ery high -!antities.

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>I+s are mostly representatives of small investors who invest through mutual funds' ?,IP schemes of insurance companies and pension schemes.
@IB&s ha$e an allocation of 901 of shares of the total iss!e si)e in Book B!ild IPO&s.

In a ook uilt issue allocation to .etail Individual Investors !.IIs"' @on Institutional Investors !@IIs" and >ualified Institutional +uyers !>I+s" is in the ratio of =A1;A1 A7 respectively.

>I+%s are prohi ited y SE+I guidelines to withdraw their ids after the close of the IPOs. .etail and non/institutional idders are permitted to withdraw their ids until the day of allotment. Ho! man. da.s is the issue o en?
(Information so!rce SEBI) 2s per Cla!se >.>./ S!bscription list for p!blic iss!es shall be kept open for at least 4 working days and not more than /0 working days. In case of Book b!ilt iss!es the minim!m and ma"im!m period for which bidding will be open is 4 ? = working days e"tendable by 4 days in case of a re$ision in the price band. ,he p!blic iss!e made by an infrastr!ct!re company satisfying the re-!irements in Cla!se 3.5./ (iii) of Chapter II may be kept open for a ma"im!m period of 3/ working days. 2s per cla!se >.>.3. +ights iss!es shall be kept open for at least 40 days and not more than <0 days.

Ho! man. da.s is the issue o en? +ook +uilding IPO remains open for = to 6 days and may extend for another = days in case of revision in price if issue remain unsu scri e in initially decided days. @um er of days issue remain open is decided y the issuer company and its issue lead manager. .ight issues remain open for minimum =7 day and no longer then B7 days.

http122www.chittorgarh.com2newportal2ipo4faC4detail.asp3a5;=

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*uestion /3: 0ns!er:

0s a retail in'estor I !ant to a l. more then Rs / la&hs in an IPO1 #an I in'est in )on$institutional bidder,s categor.? If .es then !hat are ad'antages or disad'antages of this? Des' a retail individual investor can id for more then .s ; ,akhs in an IPO y applying in %@on Institutional Investors% category. -here is no upper limit for idding amount in %@on Institutional Investors% category. 0d'antage: Dou can apply for more then .s ; ,akhs and may get much etter allocation then a retail idder. Disad'antage: @on/institutional idders have an allocation of ;AE of shares of the total

issue si8e in +ook +uild IPO%s' while retail Individual investors has =AE !remaining A7E is for >I+%s". As @on/institutional category has much smaller in si8e' issue usually oversu scri ed much higher !then in retail category" and less shares allocation.
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*uestion /2: 0ns!er:

Is it mandator. to ha'e P0) number to a

l. in an IPO?

Des' Since Fuly <77B' SE+I made PA@ num er mandatory for IPO applicants. &orms su mitted without PA@ num er or wrong PA@ num ers are considered as faulty application and they are not considered for IPO allotment. It%s highly recommended that you dou le check your PA@ num er information efore su mitting the IPO application form. If you are filling the IPO application through online stock roker' make sure he has correct information.
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*uestion /3: 0ns!er:

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*uestion /4: 0ns!er:

What information should I &ee after I submit the IPO a lication form? -his is a very important Cuestion for all IPO investors. If you are applying for an IPO' make sure you retain following information for future correspondence with the company or registrar of the issue.
/. 3. 4. 2pplication form photo copy Che-!e photo copy 2pplication n!mber in case of online IPO s!bmission
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*uestion

What is 56ar&et 7ot Si8e5 and 56inimum Order *uantit.5 for an IPO?

/9: 0ns!er: IPO %(arket ,ot% and %(inimum Order >uantity% are two important factors investor should know while idding for an IPO. (inimum Order >uantity' as name says' is the minimum num er of shares investor can apply while idding in an IPO. If investor wants to id for more shares' they can apply in multi les of IPO mar&et lot !lot Si8e or IPO id lot" of shares. ?sually !(arket ,ot : ,ower side of the issue price" values around .s AA772/ to .s B7772/. ;<am le: IPO: Power Grid #orporation of India ,imited IPO Public Issue Price: .s. ::2/ to .s. A<2/ Per ECuity Share 6ar&et 7ot: ;<A Shares 6inimum Order *uantit.: ;<A Shares Investor can apply in this IPO as elow1 At .s ::2/ H ;<A Shares H ; ,ot 5 .s AA772/ At .s ::2/ H ;<A Shares H < ,ot 5 .s ;;7772/ At .s ::2/ H ;<A Shares H ;I ,ot 5 .s JJ7772/ At .s A<2/ H ;<A Shares H < ,ot 5 .s ;=7772/ At .s A<2/ H ;<A Shares H ; ,ot 5 .s BA772/ At .s A<2/ H ;<A Shares H ;A ,ot 5 .s J6A772/
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*uestion /=: 0ns!er:

Does a

l.ing in an IPO guarantee me to get certain amount of shares?

)o' applying for shares in an IPO or actually idding for shares in an IPO doesn%t give any guarantee to get the shares. As it%s a idding process' allotment depend on num er of ids received in different categories' the price at which investor applied for shares etc. Once IPO closes' registrar of the issue collect all the idding information and prepares a $+asis of Allotment%. -his document provides information a out the ids received y verity of investors at different prices and the pattern of allotment.
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*uestion />: 0ns!er:

In'esting in IPO,s is much less ris&ier then directl. in'esting in stoc& mar&et1 Is that true? @ot really. +ut IPO%s are excellent way to enter in to some stocks. @ot all the IPO%s give good returns. &ew risks involve in applying in IPO%s are1
/. 3. 4. Stock list at lower then iss!e price. Iss!e o$ers!bscribed hea$ily and in$estor doesn&t get allotment. 2ny mishandling in processing ref!nd co!ld delay in getting the money back for shares not allocated.
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*uestion 2?: 0ns!er:

#an I a

l. in an IPO through multi le a

lications on same name?

@o' one person cannot apply multiple times through multiple applications for an IPO. It%s a rule and if you apply in an IPO though multiple applications with same name or same demat account or same PA@ @um er' all of your application will e rejected. If you would like to place order for multiple application' it works if you apply one each of your family mem er%s name. +ut again all eligi le family mem ers should have a demat account and a PA@ num er.

*uestion 22:What is %asis of 0llocation or %asis of 0llotment? +asis of Allotment or +asis of Allocation is a document pu lishes y registrar of an IPO to stock exchanges and IPO investors. -his document 0ns!er: provides information a out final price fixed for an IPO' issue su scription ! idding" information or demand of an IPO and share allocation ratio. -he IPO allotment information is categori8ed y num er of shares applied y an applicant. &or each such category detail idding information is provided in this document including num er of valid application received' total num er of share applied' ratio of the allotment and num er of shares

allocated to the applicants. .atio of the allotment is a critical field for IPO%s oversu scri ed multiple times. -his field tells how many applicants will receive single lot of shares among a certain num er of applicants. &or example' ratio ;1I means only one out of eight applicant received one lot of sharesK ratio value %&I.(% means all the applicants are eligi le to receive certain amount of share. #lick here to check +asis of Allotment of recently closed IPO.
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*uestion 23:#an I re'ise or cancel m. IPO a 0ns!er:

lication?

Book B!ilding IPOA Bes an in$estor can re$ise bided -!antity and price of an already applied Book B!ilding IPO anytime if the iss!e is still open for s!bscription. In$estor has to fill a re$ision form and gi$e it to the syndicate member.
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*uestion 22:Where do I get an IPO a 0ns!er:

/. 3.

lication form?

In$estor can get the IPO 2pplication .orms fromA ;earest stoc, bro,er office or .rom the syndicate member office of an IPO. Syndicate members are !s!ally banks or other financial instit!tions (i.e. SBI). *ist of syndicate members of an IPO are p!blished in IPO Prospect!s.

IPO application forms are availa le for free. &illed application can e su mitted to any stock roker office or syndicate mem er office.
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*uestion 23:#an a minor a l. in IPO? Some companies allow minors to id for their IPO and other doesn%t. So it depends on IPO to IPO. 0ns!er: -his information is usually provided under section )Who can a the IPO Prospectus. &or example1 Religare ;nter rises 7imited IPO ros ectus sa.s: Indian national%s resident in India who are majors' or in the names of their l.?) of

minor children as natural2legal guardians in single or joint names !not more than three" can id for this IPO. Po!er @rid #or oration of India 7imited IPO ros ectus sa.s: +idders are advised to note that Bids are liable to be rejected on' inter alia' the following technical grounds / +ids y persons not competent to contract under the Indian #ontract Act' ;I6<' including minors and persons of unsound mind etc. Investor has to disclose age of the applicant in IPO Application &orm.
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*uestion 24:Ti s to choose right IPO for in'estment1 #hecklist for anking on the right IPO. Pu lished y .uma *u ey from Premium Investments. 0ns!er: ;. -he issue si8e has to e ig' the igger the issue' the higher is the capa ility of the promoters. <. (oney egets more money' so if they have raised more money' e sure' they will e a le to earn more. =. A higher promoters stake is a must' instills a sense of responsi ility. :. A ackground check on the promoters capa ilities A. Si8e of projects in the pipeline' will indicate the scala ility of the company B. ,ast ut not the least' in ig companies' look for long term wealth creation and not speculative gains. #lick here to check the complte article.
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*uestion 29:#an a erson a l. in the non$institutional bidder categor. of an IPO? Des an individual investor can apply in @on Institutional Investors category of an IPO. 0ns!er: )Individual investors' @.I%s' companies' trusts etc who id for more then .s ; lakhs are known as @on/institutional idders. -hey need not to register

with SE+I like .II%s. @on/institutional idders have an allocation of ;AE of shares of the total issue si8e in +ook +uild IPO%s.) -here are few advantages and disadvantages for retail investor to apply under non/institutional category of the IPO. Advantage is that there is no upper cap on application amount. An individual investor can id for any amount in this category where there is limit of .s ;77%777 in .etail category. *isadvantage is that only ;AE of total shares are part of @on Institutional Investors category. -he .etail Individual Investors !.IIs" category has =AE of total shares availa le for investors. -his means that @on Institutional category oversu scri ed heavily and chances of getting allotment are much lesser.
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*uestion 2=:What is the minimum A ma<imum in'estment one could do in H)I categor.? Any id made y the .etail Investor in excess of .s ;'77'777 is considered in the 9@I category !@on Institutional Investors category of IPO". 0ns!er: -hus minimum investment amount for 9@Is in an IPO is .s ;'77'777 and the maximum investment amount is the max amount in the @on Institutional Investors of the IPO.
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*uestion 2>:#an I lace a bu. order during after hour session before the listing date of an IPO? @o' you can not place the uy2sell order for shares which are not yet listed in stock exchange. Shares can only e traded after they get listed on stock 0ns!er: exchange. .emem er that this is not the case in grey market or over the counter trades. Share holders can trader shares on personal asis efore they get listed in stock exchanges. As stock exchanges are not involved in these deals' they are not responsi le for any failure in the deal.
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*uestion 3?:Ho! one can a l. in IPO,s online? -o apply in IPO%s online an investor has to open an account with financial institution that provides this facility. 0ns!er: (ost of the anks and stock rokers allow its account holders to apply in IPOs online. &ew popular anks and rokers are I#I#I' 9*&#' .eligare' (otilal Oswal Securities etc. Dou can find more detail a out these rokers at1 http122www.chittorgarh.com2newportal2online/stock/ rokers/list.asp -here is almost none paperwork involves in applying IPO%s online. Please note that applying in IPO online doesn%t give you guarantee to receive the refund amount through E#S or direct deposit in your account. .efunds are processed y the registrar of the pu lic issues and its up to them to choose the way they want to refund your money ack which may include refund through cheCues. *uestion 32: Lhat is right issue or .I3 A pu lic company that wants to raise capital can opt for a Pu lic Issue or a .ights Issue. Oftentimes they opt for latter' followed y former. In a rights 0ns!er: issue' existing shareholders have the right to uy a specified num er of new shares of the firm at a specified price within a specified time. ?sually this price is elow market price. -he idea is to reward existing shareholders with an investment opportunity' which is perceived to e attractive. ,ong/term investors can purchase additional shares in right issue at lower than current market price and hold the stocks. &rom short/term investment prospective' one can sell the rights entitlement. Alternatively' the rights may e allowed to lapse. If a company is not in growth phase' rights issue tends to lower earnings per share and dividend yield. In such a scenario' offering rights !or pu lic issue' for that matter" may not e a prudent course of action. *eclaration date -his is the date on which the oard of directors announces to shareholders' and the market as a whole' that the company will pay a dividend' the Cuntum of dividend per share and the date on which it will e paid. *eclared dividend is an o ligation for a company. .ecord *ate is the date set y the company to determine' from the records' who are the holders of shares2 onds of the company. 9olders of securities

on that date' are entitled to dividend2interest. An investor must e listed as a holder of record to ensure the right of a dividend payout. Ex *ate is the date when existing shareholders are entitled to get dividends2 .ights Issue shares. If you uy a dividend paying stock one day efore the ex/dividend you will still get the dividend' ut if you uy on the ex/ dividend date' you won%t get the dividend. On its ex/dividend date' the price of a stock usually falls y an amount approximately eCual to the value of the upcoming dividend. #onversely' if the price stays same on that date' the share price is said to have risen y an amount eCual to declared dividend. *ate of payment !paya le date" is the date on which the company mails out dividends to holders of record. -he Investor1 #urrent Shares ;77M;77rs5;7777' right issue declare as ;1; offer price is .s A7' ;77MA75A777 so -otal Purchase price <77M;A75;A777.s At the day of Ex *ate the share price will e rs6A. So &irst day Investor will not get any profit. -he #ompany1 #ompany has ;77'777'777 Shares M ;77rs5 #apitali8ation of the stock is ;7'777'777'777 .s. After .ight issue #ompany 9as capitali8ation of the stock !;77'777'777 Shares M ;77 rs" N !;77'777'777 Shares M A7 rs " 5 ;A'777'777'777 If the company were to do nothing with the raised money' its Earnings per share !EPS" would e reduced y half. 9owever' if the eCuity raised y the company is reinvested !e.g. to acCuire another company"' the EPS may e impacted depending upon the outcome of the reinvestment.
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*uestion 33:Wh. does the retail Indi'idual In'estor RII bidding status is not getting u dated e'er. hour? IPO su scription detail or idding status for ook uilding IPO is provided y the stock exchanges when IPO is open for idding. @SE and +SE 0ns!er: we sites usually pu lish this information. Only part of idding status gets updated every hour and remaining information is made availa le at the end of the day. ?sually -otal +ids .eceived' -otal +ids .eceived at #ut/off Price and total num er of times issue is su scri ed information is updated every hour. -he detail idding status including category wise idding detail !i.e detail for >ualified Institutional +uyers !>I+s" / &oreign Institutional Investors

!&IIs"' *omestic &inancial Institutions !+anks2 &inancial Institutions!&Is"2 Insurance #ompanies"' (utual &unds' @on Institutional Investors / #orporates' Individuals !Other than .IIs"' .etail Individual Investors !.IIs" etc." is updated once in a day.
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*uestion 32:What are the ris& factors in'ol'e in a 0ns!er:

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l.ing in an IPO?

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*uestion 33:#an both the Boint demat account holders indi'iduall. a IPO? 0ns!er:
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l. for an

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*uestion 34:Wh. does ma<imum subscri tion 0mount for Retail In'estor is limited to Rs / la&h? 0ns!er:
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*uestion 39:What are the determining factors for the selection of an i o to in'est? 0ns!er:
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*uestion 3=:Ho! much ta< I ha'e to a. on returns +ca ital gains- for a articular IPO? If any #apital Asset !stock' property' precious metal etc" is sold or transferred' the profits arising out of such sale are taxa le as capital gains in 0ns!er: the year in which the transfer takes place.

#apital Assets are of two types i.e.' long term and short term. Shares' de entures and mutual funds are considered as ,ong/term capital assets when they are held for more than ;< months efore they are sold or transferred. If they are sold or transferred efore ;< months they are considered as short/term capital. *ifferent rates of tax apply for gains on transfer of the long term and short/ term capital assets. @ains on short$term ca ital asset are ta<ed as regular income1 If an investor sells IPO allocated shares with in ;< month of IPO Allotment' he comes under short/term capital gains. All such gains are taxed along with the investor%s regular income i.e tax on his salary etc. &or long term capital gains and more detail a out taxation in India visit1 http122incometaxindia.gov.in2general2computation.asp

%oo& %uilding

Book b!ilding is the process of price disco$ery. ,hat means there is no fi"ed price for the shares. Instead the company iss!ing the shares comes !p with a price band. ,he lowest price is referred to as the floor and the highest the cap. Bids are then in$ited for the shares. Each in$estor states how many shares s:he wants and what s:he is willing to pay for those shares (depending on the price band). ,he act!al price is then disco$ered based on these bids. *et me e"plain why this happens and how the IPO game works. 5he company will "disco(er" its price

Earlier the company determined a fi"ed price for the stock iss!e. ,he iss!e was marketed to the general p!blic thro!gh ad$ertisements and a media campaign. ,oday companies prefer a book b!ilding process. Book b!ilding is the process of price disco$ery. ,hat means there is no fi"ed price for the share. Instead the company iss!ing the shares comes !p with a price band. ,he lowest price is referred to as the floor and the highest the cap.

Bids are then in$ited for the shares. Each in$estor states how many shares s:he wants and what s:he is willing to pay for those shares (depending on the price band). ,he act!al price is then disco$ered based on these bids. Who can play the game? ,hree classes of in$estors can bid for the sharesA @!alified Instit!tional B!yersA @IBs incl!de m!t!al f!nds and .oreign Instit!tional In$estors. 2t least 901 of the shares are reser$ed for this category. +etail in$estorsA 2nyone who bids for shares !nder +s 90 000 is a retail in$estor. 2t least 391 is reser$ed for this category. ,he balance bids are offered to high networth indi$id!als and employees of the company.

/ow the game is played Indi$id!als who apply for the IPO p!t in their bids. ,he process is transparent. Bo! can check on the iss!e s!bscription at the BSE and ;SE Ceb sites. 2fter e$al!ating the bid prices the company will accept the lowest price that will allow it to dispose the entire block of shares. ,hat is called the c!t?off price. *et&s take an e"ample. ;!mber of shares iss!ed by the company D /00. Price band D +s 40 ? +s 50. ;ow let&s check what indi$id!als ha$e bid for. Bid ;!mber shares / 3 4 5 9 < = 30 /0 30 40 30 30 30 ofPrice share +s 50 +s 4> +s 4= +s 4< +s 49 +s 44 +s 40 per

,he shares will be sold at the Bid 9 price of 30 shares for +s 49. ChyE Beca!se Bidders / to 9 are willing to pay at least +s 49 per share. ,he total bids from Bidders / to 9 ens!re all /00 shares will be sold (30 F /0 F 30 F 40 F 30).

,he c!t?off price is therefore Bid 9&s price D +s 49. Bidders / to 9 get allotments at that price. Bidders < and = don&t get an allotment beca!se their bids are below the c!t?off price. 7ow to make bidding work for yo! Go for the higher price band. 2s a retail in$estor yo! don&t ha$e to specify an e"act price. %ake o!t a che-!e for the n!mber of shares yo! are applying for at the highest end of the price band. If yo! are applying for /0 shares the amo!nt wll be +s 500 (/0 " +s 50 ?? the higher end of the price band). On allotment the e"tra amo!nt paid will be ref!nded to yo!. Since the c!t?off price is +s 49 the /0 shares will cost yo! +s 490 (/0 " +s 49). ,he balance +s 90 will be ref!nded to yo!. /ow the allotment is done ,he bids are first allotted to the different categories and the o$er?s!bscription (more shares applied for than the shares a$ailable) in each category is determined. +etail in$estors and high networth indi$id!als get allotments on a proportional basis. 2ss!ming yo! are a retail in$estor and ha$e applied for 300 shares in the iss!e and the iss!e is o$er?s!bscribed fi$e times in the retail category yo! -!alify to get 50 shares (300 shares:9). Sometimes the o$er?s!bscription is h!ge or the iss!e is priced so high that yo! can&t really bid for too many shares before the +s 90 000 limit is reached. In s!ch cases allotments are made on the basis of a lottery. Say a retail in$estor has applied for 9 shares in an iss!e and the retail category has been o$er? s!bscribed /0 times the in$estor is entitled to half a share. Since that isn&t possible it may then be decided that e$ery / in 3 retail in$estors will get allotment. ,he in$estors are then selected by lottery and the iss!e allotted on a proportional basis among. ,hat is why there is no way yo! can be s!re of getting an allotment. /ow to ma,e an allotment wor, for you

P!t in bids in the names of yo!r family members. ,he problem is yo! will need to open demat acco!nts for them first. %ost reg!lar IPO in$estors try to calc!late how m!ch the iss!e will be o$er?s!bscribed and then p!t in their bids accordingly. .or instance if yo! want /0 shares and feel the retail portion of the iss!e will be o$er?s!bscribed three times yo! sho!ld bid for 40 shares. Bo! co!ld also apply separately in the high networth category if yo! ha$e the money.

ii. +llotment ,his is the process whereby those who apply are gi$en shares. 2ccording to the book b!ilding process three classes of in$estors can bid for the sharesA @!alified Instit!tional B!yersA @IBs incl!de m!t!al f!nds and .oreign Instit!tional In$estors. 2t least 901 of the shares are reser$ed for this category. +etail in$estorsA 2nyone who bids for shares !nder +s 90 000 is a retail in$estor. 2t least 391 is reser$ed for this category. ,he balance bids are offered to high net worth indi$id!als and employees of the company.

,he bids are first allotted to the different categories and the o$er?s!bscription (more shares applied for than shares a$ailable) in each category is determined. +etail in$estors and high net worth indi$id!als get allotments on a proportional basis. 2ss!ming yo! are a retail in$estor and ha$e applied for 300 shares in the iss!e and the iss!e is o$er?s!bscribed fi$e times in the retail category yo! -!alify to get 50 shares (300 shares:9). Sometimes the o$er?s!bscription is h!ge or the iss!e is priced so high that yo! can&t really bid for too many shares before the +s 90 000 limit is reached. In s!ch cases allotments are made on the basis of a lottery. Say a retail in$estor has applied for fi$e shares in an iss!e and the retail category has been o$er?s!bscribed /0 times. ,he in$estor is entitled to half a share. Since that isn&t possible it may then be decided that e$ery / in 3 retail in$estors will get allotment. ,he in$estors are then selected by lottery and the iss!e allotted on a proportional basis. ,hat is why there is no way yo! can be s!re of getting an allotment. ,o !nderstand the entire allotment process read Want to bid for shares? iii. 6raft Offer 6ocument

2ny company making a p!blic iss!e is re-!ired to file its prospect!s with the Sec!rities and E"change Board of India the market reg!lator. 2 prospect!s is the doc!ment that contains all the information yo! need abo!t the company. It will tell yo! why the company is coming is o!t with a p!blic iss!e its financials and how the iss!e will be priced. ,his is called a (raft Offer (oc!ment. ,his is first filed with SEBI which may specify changes if any to be made. Once the changes are made it is filed with the +egistrar of Companies or the Stock E"change. It m!st be filed with SEBI at least 3/ days before the company files it with the +oC: Stock E"change. (!ring this period yo! can check it o!t on the SEBI web site. i(. #ed /erring Prospectus ,his is a prospect!s that will ha$e all the information as a draft offer doc!ment e"cept details of the price or n!mber of shares being offered or the amo!nt of iss!e. ,hat is beca!se it is !sed in book b!ilding iss!es only where the details of the final price are known only after bidding is concl!ded. So a +ed 7erring prospect!s is an offer doc!ment !sed only in book b!ilding iss!es. 2ll iss!es these days are thro!gh the book b!ilding ro!te. (. 7nderwriters 2n !nderwriter to the iss!e co!ld be a banker broker merchant banker ( see below) or a financial instit!tion. ,hey gi$e a commitment to !nderwrite the iss!e. Hnderwriting means they will s!bscribe to the balance shares if all the shares offered at the IPO are not picked !p. S!ppose there is an iss!e is for +s /00 crore (+s / billion) and s!bscriptions are recei$ed only for +s >0 crore (+s >00 million). It is then left to the !nderwriters to pick !p the balance +s 30 crore (+s 300 million). If !nderwriters don&t pay !p SEBI will cancel their licenses. (i. Lead Manager I!st beca!se the prospect!s has been filed with SEBI it doesn&t mean it recommends the iss!e or g!arantees its contents.

,hat responsibility rests with the lead managers to the iss!e who are s!pposed to do d!e diligence on the iss!e. In plain lang!age that means certifying the iss!e is in accordance with the reg!lations proper disclos!res ha$e been made and the facts in the prospect!s are correct. ,hey are also called merchant bankers or in$estment bankers and are in charge of the iss!e process. ,heir f!nctions areA ,o act as intermediaries between the company seeking to raise money and the in$estors. ,hey m!st possess a $alid registration from SEBI enabling them to do this #ob. ,hey are responsible for complying with the formalities of an iss!e like drawing !p the prospect!s and marketing the iss!e. If it is a book b!ilding process the lead manager is also in charge of it. In s!ch a case they are also called Book +!nning *ead %anagers. Post iss!e acti$ities like intimation of allotments and ref!nds are their responsibility as well.

,he act!al work of drawing !p the list of allottees crediting the shares to their demat acco!nts and ens!ring ref!nds is done by the +egistrars to the Iss!e. ,hese are financial instit!tions appointed to keep a record of the iss!e and ownership of company shares. In the case of complaints like non?receipts of shares or ref!nds in$estors m!st complain to the lead managers who take !p the matter with the registrars. ,he names of all the lead managers and the registrar to the iss!e with their addresses phone n!mbers and e?mail addresses are displayed prominently on the co$er of e$ery prospect!s. On a closing note (on&t forget there are no g!arantees in s!bscribing to IPOs. ,he lead manager may ha$e certified the facts as disclosed in the prospect!s are right. Prominent financial instit!tions may agree to !nderwrite the iss!e. ,he iss!e may end !p being o$ers!bscribed. B!t the responsibility for in$esting in an iss!e rests fairly and s-!arely on yo! the in$estor. So make s!re yo! ha$e st!died the company and the iss!e thoro!ghly before yo! make the decision to in$est.

Ad5ertisement

Lead Managers

9he lead manager is appointed $! the compan! "hich desires to raise capital from the market. 9he lead manager performs the follo"ing acti5ities: Designing the instrument Pricing the issue 9iming the issue Marketing Preparing the offer document *isting Allotment:'efund Merchant Bankers Merchant Bankers facilitate the issue process. 'ole of Merchant Banker: Directing and co-ordinating the acti5ities "ith under "riters- registrars and $ankers. Assuring the in5estors of the soundness of the issue Promising companies:entrepreneurs:promoters to tap resources- ompl!ing "ith S,B# guidelines.

IPO%s in India are managed y IPO (anager%s. IPO (anager%s are financial organi8ations registered with stock exchanges and SE+I. -hey are categori8ed roadly as ,ead (anager%s' IPO .egistrar and Syndicate (em ers !or -he (em ers of the Syndicate".
$8 Lead Managers9

,ead managers are independent financial institutions appointed y the company going pu lic to manage the IPO. -hey are the main ody responsi le for most of the IPO processing. #ompanies planning for IPO !also known as Issuer #ompany" first approaches or appoint lead managers. ,ead managers examine company documents including financial documents' documents relating to litigation like commercial disputes' patent disputes' disputes with colla orators' etc. and other materials' in connection with the finali8ation of the draft red herring prospectus for the IPO. ,ead manages are responsi le to !rite the Red Herring Pros ectus +RHP- and get it approve y SE+I. SE+I contact lead managers for any irregularities or

lapses in .9P and ask them to clarify' add or review certain sections of the document. ,ead managers certifies to SE+I that all the disclosers made in *raft .ed 9erring Prospectus are true' correct' adeCuate and comply with SE+I guidelines to help investors in making a well/informed decision. Issuer #ompany with the help of lead manger' a oints under!riters or s.ndicate members for the IPO. ,ead managers are responsi le for examining the worth of underwriters and there capa ilities to uy the shares and assure the same to SE+I. In rief ,ead (anagerOs responsi ilities include' initiate the IPO processing' write draft herring prospectus and get it approve y SE+I' help company in selling the IPO Shares and road shows' help company in finali8e the issue price' issue opening P closing dates' listing date etc. ,ead (anagerOs are also known as +ook .unning ,ead (anager and #o/+ook .unning ,ead (anagers. Issuer #ompany can appoint more then one lead manager to manage ig IPO%s i.e. .eliance Power IPO came in Fan <77I had ;7 +ook .unning ,ead (anagers. Some of the popular lead managers in India &inancial (arket are1 *SP (errill ,ynch ,td' I#I#I Securities ,td' Almond8 Glo al Securities ,td' I, P &S Investmart Securities ,td' S+I #apital (arkets ,td' A+@ A(.O Securities !India" Pvt ,td' *eutsche ECuities India Pvt ,td' Enam Securities Pvt ltd' F P (organ India Pvt ,td' F( &inancial #onsultants Pvt ,td' Qotak (ahindra #apital #ompany ,td' (acCuarie India Advisory Services Pvt ,td' S+I #apital (arkets ,td' ?+S Securities India Pvt ,td etc.
)8 IPO #egistrar9

IPO .egistrars are independent financial institutions registered with stock exchanges and appointed y the company going pu lic for mainly to &ee record of the issue and o!nershi of com an. shares. .esponsi ility of a registrar at the time of IPO involves' processing of IPO applications' allocate shares to applicants ased on SE+I guidelines' process refunds and transfer allocated shares to investors demat accounts. Investors can contact the .egistrar to the Issue in case of any pre/Issue or post/Issue related pro lems such as non/receipt of letters of allotment' credit of allotted shares in the respective eneficiary accounts' refund orders etc.

Investor should provide following detail to the registrar for Cuick resolution of Cuires1 -he full name of the sole or &irst +idder' +id cum Application &orm num er' +idders *epository Account *etails' num er of ECuity Shares applied for' date of id form' name and address of the mem er of the Syndicate where the +id was su mitted and cheCue or draft num er and issuing ank thereof. @ame and contact information of IPO registrar is pu lished in the IPO forms' Issue prospectus ect.

Some of the popular IPO .egistrars in India &inancial (arket are1

$8 Lin, Intime India Pri(ate Limited IPO #egistrar )8 :ar(y Computershare Pri(ate Limited IPO #egistrar 48 Bigshare %er(ices P(t8 Ltd IPO #egistrar ;8 Cameo Corporate %er(ices Limited IPO #egistrar 28 &nam %ecurities Pri(ate Limited IPO #egistrar <8 +arthi Consultansts P(t Ltd8 IPO #egistrar =8 +n,it Consultancy Pri(ate Limited IPO #egistrar >8 Mond,ar Computers Pri(ate Limited IPO #egistrar 48 %yndicate Members -or 5he Members of the %yndicate.9

Syndicate mem ers are commercial or investment anks responsi le for underwriting IPO%s. Syndicate mem ers are usually registered with SE+I or registered as rokers with +SE 2 @SE Stock Exchanges. -hey work as intermediaries for Issuer #om an. and the bu.ers of the IPO stocks. Investors su mit their ids for IPO shares through Syndicate (em ers appointed y the Issuer #ompany. -hey are also known as 5The 6embers of the S.ndicate5. -he (em ers of the Syndicate circulate copies of the .ed 9erring Prospectus along with the id cum application form to potential investors. -hey are also responsi le for accepting the ids' payments and application forms for the pu lic issue.

After receiving the id for IPO Shares from an investor' Syndicate (em er enters idding detail into the electronic idding system and generates a -ransaction .egistration Slip !)-.S)" for each price and demand option and give the same to the idder. -he +idder can make the revision to the id any num er of times during the +idding Period. 9owever' for any revision!s" in the +id' the +idders should use the services of the same mem er of the Syndicate through whom he or she had placed the original +id. At the time of registering each +id' the mem ers of the Syndicate enters the following details of the investor in the on/line system1
o o o o o o o
;ame of the in$estor. In$estor Category J Indi$id!al Corporate ;+I .II or %!t!al .!nd etc. ;!mbers of E-!ity Shares bid for. Bid 2mo!nt. Bid c!m 2pplication .orm n!mber. Chether %argin 2mo!nt has been paid !pon s!bmission of Bid c!m 2pplication .orm. (epository Participant Identification ;!mber and Client Identification ;!mber of the beneficiary acco!nt of the Bidder.

-he (em ers of Syndicate deposit all the money received from investors to the Escrow Account opened y the Issuer #ompany. -he +id cum Application &orm along with other supporting documents are then send to the registrar of the issue for further processing.

31 @uidelines !;" Every pu lic company is reCuired to make an application to one or more recognised stock exchanges' efore issuing shares or de entures to the pu lic for su scription y the issue of a prospectus. RSection 73!1"S !<" &or the purpose of applying for dealing on the stock exchange' a listing application form must e filled in. !=" -he listing agreement is to e executed only when the stock exchange approves listing of shares. !:" Lhere a company applies to more than one stock exchange pursuant to a statement made in the prospectus' all the stock exchanges concerned must approve the listing. !A" A separate application shall e made for each kind of securities to e dealt in stock exchange and for every new issues. !B" Any allotment made on an application in pursuance of such prospectus shall' whenever made' e void' if the permission2listing has not een granted y the stock exchange or each such stock exchange to whom application for listing has een made efore the expiry of ten weeks from the date of the closing of the su scription lists. R Section 73!1A"S !6" It is very important to note that permission of all the stock exchange!s" as stated in its prospectus shall e o tained within ten weeks from the date of the closing of the su scription lists for allotment made y it to e valid. .efusal y any one of such stock exchanges to grant

permission would render the entire pu lic issue of shares void. R Rishyashringa Jewellery Ltd. v Stoc !"change !;JJB" IA #omp #as :6J !S#"S !I" -he approval of the State Stock Exchange must e o tained within ten weeks from the closing of the su scription list. ?nder section 6=!;A"' the company is reCuired to seek the approval of each and every stock exchange in which the shares are to e listed in terms of the prospectus. Lhere application has not een made or if made' permission has not een granted' all moneys shall immediately e repaid. !J" *elay in repayment eyond I days shall make directors lia le to pay interest at prescri ed rates. !;7" If the permission for listing of shares is granted y the Stock Exchanges then the company shall forthwith refund without interest the excess application moneys within I days from the day the company ecomes lia le to pay it. ,ia ility of a company to repay the excess money under section 6=!<A" arises on the expiry of ten weeks from the date of the closing of the su scription lists' and the interest egins to accrue thereon at the end of eight days therefrom. R Ray#ond Synthetics Ltd. v $nion of India !;JJ<" 6= #omp #as 6B< !S#"S

+bout Public Issues

Corporates may raise capital in the primary market by way of an initial p!blic offer rights iss!e or pri$ate placement. 2n Initial P!blic Offer (IPO) is the selling of sec!rities to the p!blic in the primary market. ,his Initial P!blic Offering can be made thro!gh the fi"ed price method book b!ilding method or a combination of both. ,here are two types of P!blic Iss!esA

I%%7& 5?P&

OFF&# P#IC&

6&M+06

P+?M&05

#&%&#@+5IO0%

Fi*ed Price Price at which Issues the sec!rities are offered and wo!ld be allotted is made known in ad$ance to the in$estors Boo, Building Issues 2 30 1 price band is offered by the iss!er within which in$estors are allowed to bid and the final price is determined by the iss!er only after clos!re of the bidding.

(emand for the sec!rities offered is known only after the clos!re of the iss!e

/00 1 ad$ance payment is re-!ired to be made by the in$estors at the time of application.

90 1 of the shares offered are reser$ed for applications below +s. / lakh and the balance for higher amo!nt applications.

(emand for the sec!rities offered and at $ario!s prices is a$ailable on a real time basis on the BSE website d!ring the bidding period..

/0 1 ad$ance payment is re-!ired to be made by the @IBs along with the application while other categories of in$estors ha$e to pay /00 1 ad$ance along with the application.

90 1 of shares offered are reser$ed for @IBS 49 1 for small in$estors and the balance for all other in$estors.

More +bout Boo, Building

Book B!ilding is essentially a process !sed by companies raising capital thro!gh P!blic Offerings?both Initial P!blic Offers (IPOs) or .ollow?on P!blic Offers ( .POs) to aid price and demand disco$ery. It is a mechanism where d!ring the period for which the book for the offer is open the bids are collected from in$estors at $ario!s prices which are within the price band specified by the iss!er. ,he process is directed towards both the instit!tional as well as the retail in$estors. ,he iss!e price is determined after the bid clos!re based on the demand generated in the process. 5he Process9 ,he Iss!er who is planning an offer nominates lead merchant ban,er-s. as "boo, runners"8 ,he Issuer specifies the number of securities to be issued and the price band for the bids8 ,he Issuer also appoints syndicate members with whom orders are to be placed by the in(estors8 ,he syndicate members input the orders into an "electronic boo,"8 5his process is called "bidding" and is similar to open auction8 ,he boo, normally remains open for a period of 2 days8 Bids ha(e to be entered within the specified price band8 Bids can be re(ised by the bidders before the boo, closes. On the close of the book b!ilding period the boo, runners e(aluate the bids on the basis of the demand at (arious price le(els8 ,he boo, runners and the Issuer decide the final price at which the securities shall be issued8 Generally the number of shares are fi*edA the issue si!e gets fro!en based on the final price per share8 +llocation of securities is made to the successful bidders8 5he rest get refund orders8

Buidelines for Boo, Building

+!les go$erning Book b!ilding are co$ered in Chapter KI of the Sec!rities and E"change Board of India ((isclos!re and In$estor Protection) G!idelines 3000. B%&"s Boo, Building %ystem BSE offers a book b!ilding platform thro!gh the Book B!ilding software that r!ns on the BSE Pri$ate network. ,his system is one of the largest electronic book b!ilding networks in the world spanning o$er 490 Indian cities thro!gh o$er =000 ,rader Cork Stations $ia leased lines LS2,s and Camp!s *2;S. ,he software is operated by book?r!nners of the iss!e and by the syndicate members for electronically placing the bids on line real?time for the entire bidding period. In order to pro$ide transparency the system pro$ides $is!al graphs displaying price $:s -!antity on the BSE website as well as all BSE terminals.

"i<ed Price Issues An issuer company is allowed to freely price the issue. -he asis of issue price is disclosed in the offer document where the issuer discloses in detail a out the Cualitative and Cuantitative factors justifying the issue price. -he Issuer company can mention a price and of <7E !cap in the price and should not e more than <7E of the floor price" in the *raft offer documents filed with SE+I and actual price can e determined at a later date efore filing of the final offer document with SE+I2.O#s. Price Disco'er. through %oo&building Process T+ook +uildingU means a process undertaken y which a demand for the securities proposed to e issued y a ody corporate is elicited and uilt up and the price for the securities is assessed on the asis of the ids o tained for the Cuantum of securities offered for su scription y the issuer. -his method provides an opportunity to the market to discover the price for securities. -he process is named so ecause it refers to collection of ids from investors' which is ased on a price range. -he issue price is fixed after the closing date of the id. A company planning an IPO2&PO appoints a merchant ank as a ook runner. A particular time frame is fixed as the idding period. -he ook runner then uilds an order ook that collates ids from various investors. Potential investors are allowed to revise their ids at any time during the idding period. At the end of idding period the order ook is closed and conseCuently the Cuantum of shares ordered and the respective prices offered are known. -he determination of final price is ased on demand at various prices. +ook uilding has ecome the preferred route of raising capital' as can e seen from the ta le elow. -hough there are fixed price issues' y amount' the ook uilding IPO2&POs dominate. DEA. %OOC%DI7DI)@ @O.O AM%68 & 9 IPOs ;'s.cror e< <77=/7: <77:/7A = "IE;D PRI#; TOT07

@O.O AM%68 = @O.O AM%689 & & ;'s.cror 9 IPOs ;'s.cror IPOs e< e< ;7 ))3.30 10.2 I 1)).21 1.1 12 &121.13 2& 1(++2.& 2

J 2+(1.3( 12.1 ;A 1()30.3 21.2 (

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O en %oo&building In ook/ uilt issues' it is mandatory to have an online display of the demand and ids during the idding period. -his is known as open ook system. !?nder closed ook uilding' the ook is not made pu lic and the idders have to take a call on the price at which they intend to make a id without having any information on the ids su mitted y other idders". As per SE+I' only electronic facility is allowed to e used in case of ook uilding. Price %and -he offer document may have a floor price for the securities or a price and within which the investors can id. -he spread etween the floor and the cap of the price and can not e more than <7E. In other words' it means that the cap should not e more than ;<7E of the floor price. -he company decides the price and in consultation with the investment ankers' and typically after undertaking a pre/marketing exercise with some leading >I+s. -he price and can have a revision. SE+I reCuires that any revision in the price and has to e widely disseminated y informing the stock exchanges' y issuing press release and also indicating the change on the relevant we site and the terminals of the syndicate mem ers. Lhen the price and is revised' the idding

period has to e extended for a further period of three days' su ject to the total idding period not exceeding thirteen days. "loor Price &loor price is the minimum price at which ids can e made. #ut$off Price In +ook uilding issue' the issuer is reCuired to indicate either the price and or a floor price in the red herring prospectus. -he actual discovered issue price can e any price in the price and or any price a ove the floor price. -his issue price is called T#ut off priceU. -his is decided y the issuer and ,( after considering the ook and investorsO appetite for the stock. SE+I I#*. .egulations <77J permit only retail individual investors to have an option of applying at cut off price. "inal Issue Price -he demand at various price levels within the price and is made availa le on the we sites of the designated stock exchanges during the entire tenure of the issue and once the issue closes' the final price is determined y the issuer and made known to the investors.

6inimum )umber of Da.s for !hich an IPOF"PO Subscri tion 7ist has to remain O en Except as otherwise provided in the SE+I I#*. .egulations <77J' pu lic issue shall e kept open for at least three working days ut not more than ten working days including the days for which the issue is kept open in case of revision in price and. In case the price and in a pu lic issue made through the ook uilding process is revised' the idding !issue" period disclosed in the red herring prospectus shall e extended for a minimum period of three working days' provided that the total idding period shall not exceed ten working days. -he pu lic issue made y an infrastructure company' satisfying the reCuirements in #lause <.:.; !iii" of #hapter II may e kept open for a maximum period of <; working days. Pure 0uction as an 0dditional %oo&building 6echanism SE+I has decided to introduce an additional method of ook uilding' to start with' for &POs' in which the issuer would decide on a floor price and may mention the floor price in the red herring prospectus. If the floor price is not mentioned in the red herring prospectus' the issuer shall announce the floor price at least one working day efore opening of the id in all the newspapers in which the pre/issue advertisement was released. >ualified institutional uyers shall id at any price a ove the floor price. -he idder who ids at the highest price shall e allotted the num er of securities that

he has ided for and then the idder who has ided at the second highest price and so on' until all the specified securities on offer are exhausted. Allotment shall e done on price priority asis for Cualified institutional uyers. Allotment to retail individual investors' non/institutional investors and employees of the issuer shall e made proportionately as illustrated in Schedule VI of SE+I I#*. .egulations <77J. Lhere' however the num er of specified securities ided for at a price is more than availa le Cuantity' then allotment shall e done on proportionate asis. .etail individual investors' non/institutional investors and employees shall e allotted specified securities at the floor price su ject to provisions of #lause !d" of .egulation <J of SE+I I#*. .egulations <77J. -he issuer may1/ !a" place a cap either in terms of num er of specified securities or percentage of issued capital of the issuer that may e allotted to a single idderK ! " decide whether a idder e allowed to revise the id upwards or downwards in terms of price and2or CuantityK !c" decide whether a idder e allowed single or multiple ids. "ast Trac& Issues In order to ena le well esta lished and compliant listed companies to access Indian primary market in a time effective manner through follow/on pu lic offerings and rights issues' SE+I introduced the concept of &ast -rack Issues !&-Is" in @ovem er <776. SE+I has relaxed certain reCuirements of &-Is such as reducing the average market capitali8ation of pu lic shareholding of the issuer to .s. A777 crore from .s. ;7777 crore' pegging the annuali8ed trading turnover to free float for companies whose pu lic shareholding is less than ;AE of the issued capital. In case the clause relating to composition of +oard of *irectors has not een complied with in one or more Cuarters' it need not e deemed as non compliance' provided the company is in compliance in this regard at the time of filing the offer document with stock exchange2 .O# and adeCuate disclosures are made in the offer document in this respect.