Lehman bond holders may lose $100 bn

Bondholders of the beleaguered Lehman Brothers may lose USD 110 billion (about Rs five lakh crore) on account of decline in the asset-value of the fourth-largest investment bank in the US, media reports say.

The value of the bonds of Lehman Brothers witnessed a major fall after the investment bank filed for bankruptcy protection, the Financial Times report said adding, "further losses on its derivatives positions, which are still being unwound, could leave even less on the table for bond investors."

According to the ‘FT’ report, Loomis Sayles Vice-Chairman Dan Fuss has said, "I don't know how this will play out for bondholders, but I doubt if its going to be good."

Loomis Sayles has a small holding in Lehman bonds.

The losses would have a far-reaching effect on ordinary investors, ‘FT’ said as Lehman bonds were widely held by investors such as pension funds and mutual funds. Meanwhile, those who sold protection against a default or Lehman bankruptcy will possibly recover 18 cents on the dollar when the contracts settle in a complicated auction October 10, the report added.

Before Lehman filed for bankruptcy, its 110 billion- dollar of senior bonds were quoted around 95 cents on the dollar. Bond prices then plunged to 35 cents a week ago. They are now trading at about 18 cents to the dollar. Quoting Kathleen Shanley of Gimme Credit, an analyst from a credit research firm, ‘FT’ said, "Lehman bonds are trading in the high teens, which reflects the bankruptcy filing, in which a large number of creditors are competing for a shrinking pool of assets of uncertain value".

Last week, Lehman inked a deal to sell the North American investment banking business to Barclays for 1.75 billion dollar. "Even though approval of the deal was rushed through court, lawyers for Lehman Brothers said asset values then dropped to 47.4 billion dollar from about 70 billion dollar," the report said.

In its bankruptcy filing, Lehman listed total debts of USD 613 billion, making it the largest ever US bankruptcy with USD 128 billion in debt securities, including USD 110.69 billion unsecured debt, USD 17.6 billion in unsecured, subordinated obligations, the media report said. Further, FT quoted creditors as saying that Lehman can be involved in the government's plan to set up a 700 billion-dollar fund to buy distressed mortgage assets.

So far, there had been no formal discussions among the creditors about this, said a person involved in the bankruptcy case.

Source: financialexpress.com

BSNL union feedback positive on IPO: Telecom Min

 Telecom Ministry says that BSNL union feedback is positive on IPO, but has some reservations, reports CNBC-TV18

Source: Moneycontrol.com

Without an IPO, it would not be a growth story: Avesthagen

Dr Villoo Morawala-Patell, plant biologist and PhD from the University of Louis Pasteur, set out to harvest her science at the marketplace on an unusual platter of agriculture, nutrition and medicine.

Her Bangalore-based company, Avesthagen Ltd, is singly or jointly developing unique, scientifically proven, plant products for modern malaises: cancer and metabolic disorders; crackers and bars to ward off diabetes, heart diseases and obesity; TB-detecting biochips, even bioplastic. Some global who’s-who keep it company; $40 million worth funds have come in from private equities – the Tata and Godrej groups. As infrastructure, production and market demands soar, the 600-people-strong Avesthagen has felt the need for fresh capital – hazarded at Rs 200-250 crore – and is on the verge of going public. Dr Patell, its Chairperson and Managing Director, speaks about her IPO, business strategy and a grand health plan. Excerpts:

You are about to tap the capital market. What could you tell us about it at this stage? You are said to hold around 35 per cent stake.

The public issue is in aggressive movement. My stake is something like 32 per cent. Of course, there will be equal dilution across the board. I cannot discuss more than that.

Why a public issue?

I have to brave the IPO or I can’t reach the market!

[Without an IPO,] It would not be a growth story. I don’t want to wait 20-25 years for the company to become big. By 2015, we have to establish as a sizeable company that is playing globally from here. I want to compete with the best in the world. Amgen and Genentech were great science-led biotech companies and took on big pharma. That is how we need to do it.

[The IPO] is for infrastructure, manufacturing and people. If an acquisition comes up and accelerates our product and market development, we would look at it. Primarily it is to finish off the manufacturing, start global marketing; for our new [Rs 160-crore] campus; for the second phase of biopharma manufacturing and expansion of the seeds business. The market looks bleak. Public issues have been pulled back. Aren’t you apprehensive?

I’m excited by today’s market, which is the market for Avesthagen to enter. Whether I fail or win is not [the issue]. We have designed the model for the new world. I’m not afraid, I’m prepared for the consequences.

Food, farming, pharmaceuticals: which is the real Avesthagen?

Life sciences conglomerates like Johnson & Johnson, Novartis, Pfizer also have a whole play into agriculture, pharma and nutrition. If in the ’60s and the ‘70s chemistry was in all these areas, Avesthagen is attempting a biology model.

Actually ours a holistic model taking care of the entire spectrum of human life and health. Our Science and Innovation group works on medicinal plants, food plants, bacteria, mammalian cell lines and human biodiversity. There is a big area of creativity that will result in different types of products for today, tomorrow and the day after. In biopharma. we are looking at [proteins to fight] cancer, autoimmune disorders and ageing. The ultimate goal of our two main projects [Biopharma and Bionutrition] is to integrate agriculture with health.

How close to the market are the products?

The first [pharma] pipeline is of biosimilars. With Cipla, we have created a pipeline of eight. Four molecules have been cleared by the RPGM [the regulatory panel for genetically modified products] and two will be entering pre-clinical trials shortly.

The first product will be out by the end of 2009 and two a year will follow. The second pipeline is AvesthaGenome [a Rs 120-crore project on the Parsi community’s genealogy] which will have new proteins, with new entities feeding it. We are partnering with French company ShigaMediX on [a vaccine for] TB and the human papilloma virus [that causes cervical cancer.]

What would be your manufacturing strategy?

We have positioned ourselves for the global biosimilars market by buying a German company [contract manufacturer Siegfried Biologics] and by building a 200-litre cGMP facility here.

We will make the manufacturing happen in areas where we will buy out or lease out. Except for the biopharma facility which we are building, because there aren’t such facilities in the world. Where is the missing link?

We need marketing muscle. We will have to build it ourselves except where we are partners – as with Cipla or Danone. All our products are sitting in fancy stores. I was thinking of the kirana store and the masses.

We may also look at totally novel ways of marketing. To be sitting on mainstream shelves, you have to create a niche or advertise like mad. There may be smarter ways of doing it, like Hutch or Google did.

If I brand and market them properly, each of my ingredients will potentially become a $200-300-million product in the next five years. We should have a way of taking technology quickly to the consumer. We recently launched avesthawellbeing.com. You can order online for [herbal ingredient] TeeStar; or for Amlapure . I want to integrate the whole predictive-preventive-personalised range online.

You have around a dozen collaborations. Have you found the right fit?

We are looking for new alliances. In each category, we will build newer collaborations at different levels.

The coming in of big partners like Nestle and Danone validated our model. . Most of these companies wanted to attach to us pretty early-for access to new products, ; technology, lab, ideas. Where the products would be ready in 3-5 years, we are with Danone, Vilmorin & Cie, Biomerieux, Godrej and Cipla.

With Danone, we are doing two products including R&D, clinicals and co-branding; and in yoghurt. We delivered eight molecules for diabetes to Nestle.

All the [nutritional] actives are ready to be licensed. It’s to be worked out [among] three to four big international companies, reports The Hindu Business Line.

Source: Moneycontrol.com

CARE assigns IPO Grade 2/5 to Gemini Engi-Fab

CARE has come out with a research report on Gemini Engi-Fab. It has assigned IPO Grade 2/5 to the company's IPO. GEFL proposes an IPO of 55,00,000 equity shares of face value of Rs 10 each, at a price which will be determined through the book building process.

CARE's report on Gemini Engi-Fab's IPO: 

CARE has assigned ‘CARE IPO Grade 2’ to the proposed (Initial Public Offer) IPO of Gemini Engi–Fab Limited (GEFL). CARE IPO Grade 2 indicates below average fundamentals. CARE assigns IPO grades on a scale of Grade 5 to Grade 1, with Grade 5 indicating strong fundamentals and Grade 1 indicating poor fundamentals. CARE’s IPO grading is an opinion on the relative assessment of the fundamentals of that issuer. GEFL proposes an IPO of 55,00,000 equity shares of face value of Rs 10 each, at a price which will be determined through the book building process.

The grading factors in promoters’ experience in fabrication and engineering industry, long track record in operations,  favourable industry scenario for fabrication and salvaging of equipment, multi-product capability of company, strong growth in order book, good profitability margins in past financial years, sanctioning of term loan by the bankers for the proposed expansion project and expected  improvement in technical capabilities of the company post expansion .

However, the grading is constrained by GEFL’s relatively small size of operations, dependence on IPO proceeds for the proposed project completion, unorganized and highly competitive industry in which the company operates, moderate corporate governance practices, low entry barriers, dependence on few customers and limited experience of management in executing large projects. The grading is also constrained by risks associated with proposed deployment of funds from the IPO in setting up new manufacturing units.

“Gemini Engi-Fab Private Limited” was incorporated as a private limited company on January 12, 1998 and later converted into a public limited company “Gemini Engi-Fab Limited” (GEFL) in January 2007. Promoted by the members of the Panchal family, the company is in the business of manufacturing and salvaging of process equipment through fabrication for various process industries. GEFL manufactures spares, channel heads, tube sheets and tube bundles for refineries. It also manufactures heat exchangers for refineries and dairy plants, pressure vessels, storage vessels, tanks, heat exchangers, distillation and absorption columns. The company has also entered into salvaging of equipment in 2006-07.

The company currently has a weight handling capacity of 27 tonnes. The existing workshop of the company is located at Umbergaon in Valsad and it proposes to build a new workshop near its existing facilities with higher technical capabilities so as to move up the value chain.

The proceeds from the proposed issue of shares are intended to be deployed for setting up a new manufacturing workshop at Umbergaon, meeting working capital requirements, general corporate purposes and issue expenses. As per the organizational structure of GEFL, Mr. Dalpatram J. Panchal, Chairman & Executive Director, is supported by a team of senior executives headed by Mr. Rakesh Panchal, Managing Director of GEFL.

The company has three legal cases pending against it as on July 07, 2008. They include a case in relation to payment of back wages of Rs.1.84 lakh, another case in relation to transfer of duty paid goods from one industrial plot to another owned by GEFL without the permission of Central Excise Authorities and the third case of compounding applications filed by GEFL with the Company Law Board (CLB) in relation to non increment of paid-up capital upto one lakh and non appointment of company secretary during the period October 2007 to February 2008.

With an increase in the manufacturing facility and due to manufacturing of specialized equipment, salvaging and trading operations during the period FY 2005-08, the company has reported a CAGR of 74.21% for the above period. In future, the demand for the fabrication and salvaging from various sectors is likely to provide good growth opportunities to the company therefore, the growth projected and the margins expected appear reasonable considering the track record of the company. Post IPO, the company will be moving up the value chain and competing against established players.

Source: Moneycontrol.com

Softline mulls IPO to fund expansion

Softline Software Services is set to expand its operations in India and some markets overseas. Engaged in sale of software products for the last 17 years, Softline last year forayed into software services. The company is considering an IPO to partly fund its expansion.

The founder, Chairman and Chief Technology Officer, Softline, Mr Hasnain Ali Khan, told Business Line that the company is also in the process of launching some more products later this year in the accounting, enterprise resource planning and warehouse management areas. Last fiscal, the company closed with revenues of Rs 40 crore and expects a growth of over 50 per cent this fiscal. “To part fund the company expansion plan, we are in the process of finalising plans to raise about Rs 100 crore through an IPO by June 2009,” Mr Khan said.

The proceeds of the IPO are aimed at creating a larger campus in Hyderabad and also meet the company expansion plans in new overseas markets and for marketing requirements. The company operates out of 18 centres, of them 4 are located in India at Hyderabad, Mumbai, Delhi and Bangalore. It has 500 employees, of whom 200 are overseas , especially West Asia.

Last year, the company entered Singapore and Malaysia and added a US centre, with the objective of providing services to compliment the company products designed mainly for small and medium enterprises, reports The Hindu Business Line.

Source: Moneycontrol.com

GSPC IPO likely by Jan; plans to raise $1 Bn

GSPC is likely to come out with an IPO by January 2009 and is planning to raise USD 1 billion through this IPO, reports CNBC-TV18 quoting NewsWire18.

The company may divest up to 15% stake in IPO.

GSPC is a parent company of listed Gujarat State Petronet.

Source: Moneycontrol.com

Oil India public offer plans on track

The stock market volatility is unlikely to defer public sector undertaking Oil India Ltd’s (OIL) initial public offer (IPO) schedule of November. Sources said while the price band for the proposed IPO is expected to be in place by third week of October, the company’s IPO is likely to hit the market on November 10.

However, an eye is being kept on the market, industry sources told Business Line adding that "OIL has strong fundamentals and we don’t expect any change in IPO plans."

STAKE SALE

OIL has already filed its draft prospectus with SEBI for an IPO of up to 2.64 crore equity shares to raise over Rs 1,500 crore. Besides, the company has also entered into an understanding with PSU oil marketing companies – Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation – for selling 10 per cent equity stake in the ratio of 2:1:1, respectively.

The OMCs will acquire the stake at a price equivalent to the issue price of the equity shares that are proposed to be offered by OIL to the public in accordance with the book building method.

OIL had got the Cabinet nod for fresh equity of 10 per cent of its paid-up capital through IPO along with a proposal of issuing additional one per cent of its paid-up capital to the employees of the company. Disinvestment of 10 per cent in favour of State-owned OMCs, coupled with an IPO is expected to reduce the effective Government stake in the company to about 78 per cent from the existing 98.13 per cent.

DOWNSTREAM ACTIVITIES

The IPO proceeds are expected to be used for exploration and development activities and diversification of existing business to downstream. However, it will not be used to fund existing or future participation, investment activities in Iran, Sudan, Myanmar or any other countries or persons that are subject to economic sanctions imposed by the US Government and administered by the US Export Administration Regulation and Office of Foreign Assets Control of the US Treasury Department.

This is mainly due to advice from the lead bankers JM Financial Consultants, Morgan Stanley India Company, Citigroup Global Markets and HSBC Securities and Capital Markets, sources said.

The company's current annual crude oil production is 3.5 million tonne showing a growth of 13 per cent, and natural gas production is 6.80 mmscmd. The production amounted to approximately 10 per cent and seven per cent of India’s total production of crude oil and natural gas respectively, reports The Hindu Business Line.

Source: Moneycontrol.com

S Kumar's retail arm to list by Sept-end

Brandhouse Retail, the retail division of S Kumar's is likely to be listed by September end or early October. Shareholders will receive one share of Brandhouse Retail for five shares of S Kumar's. At a conservative PE of 15-18 times, the price would work out to Rs 75-80 per share. S Kumar's has fallen from Rs 105 to Rs 65 after the demerger of S Kumar's. Earnings do not include Brandhouse Retail's numbers.

Promoters hold less than 50% in the company.

The shares have already been transferred to shareholders' account. This delay in listing is because FII holding has reached 30%. FIIs are allowed to hold 24% in multi-brand retailing. The company has deducted 6% proportional holding from FIIs and shifted it to a trust. About 6% will be held by an appointed trustee and will be sold in the open market within six months of listing.

Source: Moneycontrol.com

SEBI Interim Order in IPO scam

SEBI has confirmed the directions in the interim order passed in 2006 against Mr Dushyant Natwarlal Dalal and Puloma Dushyant Dalal in the matter of irregularity in IPOs in 2003-05. No direction was issued against Rasila Natwarlal and Natwarlal Thakordas as they were no longer alive and in respect of the demat account of the two deceased persons it was directed they would remain frozen till the passing of the final order in this case, since the said account were found to b e jointly held with Mr Dushyant Dalal, reports The Hindu Business Line.

Source: Moneycontrol.com

20 Microns IPO ends with 4.29 times subscription

Receives bids for 1.86 crore shares

The initial public offer of 20 Microns ended with 4.29 times subscription. The issue received bids for 1.86 crore shares, in which 1.33 crore bids were at the cut off price.

The qualified institutional buyers (QIBs) category was subscribed 0.90 times, The non institutional investors category was subscribed 1.97 times and the retail portion was subscribed 10.58 times.

The public issue of 43,50,632 equity shares of Rs 10 each, was in the price band of Rs 50-55 per share.

Through this IPO, the company plans to raise around Rs 9 crore to fund its expansion. Meanwhile, Gujarat Venture Capital Fund, which currently holds 43% stake in the company, will offload a part of its holding, reducing it to 19% of the post-issue equity.

The company intends to utilise the proceeds of the issue towards the current ongoing expansion plans of the manufacturing capacities at various locations, invest in the sub-micron particle sizes required by end-market and general corporate purposes.

The issue had been graded by the Credit Analysis and Research Limited (CARE) and has been assigned the IPO Grade 3, indicating Average Fundamentals. The equity shares are proposed to be listed on Bombay Stock Exchange (BSE) and National Stock Exchange of India (NSE).

Source: CapitalMarket.com

Avoid Chemcel Biotech IPO: SPA Securities

SPA Securities has come out with a research report on Chemcel Biotech's IPO. It has recommended investors to ignore the issue.

Chemcel Biotech has opened for subscription with its initial public offering (IPO) of 1,54,00,000 equity shares of Rs 10 each. The issue will close on September 12, 2008. The issue price is Rs 16.

SPA Securities' report on Chemcel Biotech's IPO:

Investment Positives:

Foray into bio-diesel industry: The current business of the company is cyclical in nature & the management feels that the growth in the next few years in the agrochemical business will be ~3-5% only. Also to mitigate the impact of the cyclical nature of the business, CBL intends to foray into bio-diesel industry which has good growth potential going forward. AP is the largest pesticide market: Andhra Pradesh is the largest pesticide market in India. CBL has a strong network of 18 distributors, 350 direct dealers & 550 retailers.

Investment Concerns:

Revenues from bio-diesel will come in FY 11: Though the sale of bio-diesel will start by Sept’09, but the total revenue contribution will be seen in FY11. Seasonality of the business: CBL currently records 70% of their revenues during Oct-Mar. Low capacity utilization: CBL’s capacity utilization stood at 30% for FY08. This is quite low given the fact that they have been in the industry for over a decade. CBL believes that post the IPO when once the working capital requirement is met; this shall go up to 70-75%.

Valuation:-

The stock is available at a P/E of 34x on its FY08 EPS of Re.0.47. Even on the EPS of FY11E, the stock is priced at a P/E of 12x. This appears to be very expensive in comparison to the peer group which is available at a P/E range of 4-7x based on FY08 EPS. The low capacity utilization is mainly due to high working capital required by the company and CBL being a small company is looking for funds in order to enhance their capacity utilization. The growth rate in the agrochemical business is expected to be low. The expensive valuation makes the issue less attractive for investment even though the fact that CBL is planning for diversification in the business in order to maintain its growth rate. Hence, we recommend to ignore the issue.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol.com

20 Microns IPO subscribed 0.82 times on day 3

Receives bids for 35.51 lakh shares

The initial public offer of 20 Microns was subscribed 0.82 times on the third day of its opening. The issue received bids for 35.51 lakh shares, in which 11.79 lakh bids were at the cut off price.

The public issue of 43,50,632 equity shares of Rs 10 each, is in the price band of Rs 50-55 per share. The issue closes 11 September 2008.

Through this IPO, the company plans to raise around Rs 9 crore to fund its expansion. Meanwhile, Gujarat Venture Capital Fund, which currently holds 43% stake in the company, will offload a part of its holding, reducing it to 19% of the post-issue equity.

The company intends to utilise the proceeds of the issue towards the current ongoing expansion plans of the manufacturing capacities at various locations, invest in the sub-micron particle sizes required by end-market and general corporate purposes.

The issue had been graded by the Credit Analysis and Research Limited (CARE) and has been assigned the IPO Grade 3, indicating Average Fundamentals. The equity shares are proposed to be listed on Bombay Stock Exchange (BSE) and National Stock Exchange of India (NSE).

Source: CapitalMarket.com

Avoid Chemcel Biotech IPO: Hem

Hem Securities has come out with a research report on Chemcel Biotech's IPO. It has recommended investors to ignore the issue.

Chemcel Biotech has opened for subscription with its initial public offering (IPO) of 1,54,00,000 million equity shares of Rs 10 each. The issue will close on September 12, 2008. The issue price is Rs 16.

Hem Securities' report on Chemcel Biotech's IPO:
Company’s distribution network consists of distributors and dealers through out the coastal region of Andhra Pradesh. Company has more than 18 distributors who help it in selling its products to end users through the chain of more than 350 dealers and 550 retailers. Company hold regular farmers meets at different places to educate and disseminate new methods of the plant protection with the help of its techno commercial marketing sales staff, dealers and distributors. With the help company’s distribution network & marketing team, company keep itself updated about the occurrence of a particular pest. Based on this information and experience, company reschedules its production and distribution. Company has established 24 depots wherein it maintain adequate stocks to make its products available at short notices. This strategy helps company in selling its products effectively.

Company has 34 products in its product portfolio which consists of different kind of insecticides and pesticides. Company manufactures various formulations comprising of liquids, granules and powder formulations. Company’s products are available in various sizes of packaging catering to the needs of small, marginal and large farmers. Company’s product range covers most of the crops and majority of plant infections that are grown in this region. Company provides end to end plant protection solutions to farmers through its distributors. Company’s product range helps it in attracting large distributors of agrochemicals to become its distributors.

Company faces substantial competition due to technological advances by competitors, such as other pesticide companies, agro-chemical and biotechnology companies. Also, if a competitor introduces a successful product, it could take years for company to develop a product, which could have a material adverse effect on company’s business, results of operations and financial condition as some of company’s competitors are large Indian companies or subsidiaries of multi-national companies that have, significantly greater resources than those available with company.

Agro chemical industry requires high working capital due to its seasonal nature and long credit period given to dealers and farmers. Thus, high inventories during off-season period and high receivables during poor monsoon put further pressure on working capital requirement.

Valuation:-
The company at a price of Rs 16 per share will have the p/e multiple of 33.85 on post issue eps of 0.47(Basis PAT FY’08). The company being the small player in agrochemical industry is exposed to the risk of heavy competition from other players in the same industry. The company on the one hand, is posting lower profit margins in comparison to its peers while on the other hand the high receivables of the company are detrimental to the financial performance of the company. The company’s higher equity base also lead to lower earning per share post issue and thus makes the issue expensive at present level. Hence, we recommend investor to ignore the issue.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol.com

20 Microns IPO subscribed 0.36 times on day 2

Receives bids for 5.60 lakh shares

The initial public offer of 20 Microns was subscribed 0.36 times on the second day of its opening. The issue received bids for 15.60 lakh shares, in which 4.60 lakh bids were at the cut off price.

The public issue of 43,50,632 equity shares of Rs 10 each, is in the price band of Rs 50-55 per share. The issue closes 11 September 2008.

Through this IPO, the company plans to raise around Rs 9 crore to fund its expansion. Meanwhile, Gujarat Venture Capital Fund, which currently holds 43% stake in the company, will offload a part of its holding, reducing it to 19% of the post-issue equity.

The company intends to utilise the proceeds of the issue towards the current ongoing expansion plans of the manufacturing capacities at various locations, invest in the sub-micron particle sizes required by end-market and general corporate purposes.

The issue had been graded by the Credit Analysis and Research Limited (CARE) and has been assigned the IPO Grade 3, indicating Average Fundamentals. The equity shares are proposed to be listed on Bombay Stock Exchange (BSE) and National Stock Exchange of India (NSE).

Source: Capitalmarket.com

Neutral report on 20 Microns IPO: Anand Rathi

Anand Rathi Securities has come out with a research report on 20 Microns' IPO. It has given a neutral rating to the issue.

20 Microns will open for subscription on September 8, 2008 with its public issue of 43,50,632 Equity shares of Rs 10. The price band has been fixed at Rs 50-55. The issue will close on September 11, 2008.

Anand Rathi Securities' report on 20 Microns' IPO:

20ML is a multi-product company which helps to protect it from reductions in demand for any one product type.

20ML’s mining resources and plants are strategically located in the states of Rajasthan, Gujarat, and Tamil Nadu. The manufacturing units of the company are well connected with national - highways and railways which helps the company in reaching to its customers economically.

20ML’s implementation of business planning tools, focus on technical support, field coaching and constant evaluation of product knowledge and training has helped in improving effectiveness and field force productivity. Customer segmentation has also helped to sharpen the focus on its key customers.

A demand under the Central Excise Act to the tune of Rs 107.29 million if decided against the company will adversely affect the financial conditions and the business of operations of the company.

Out of the total issue proceeds (at higher end of price band) of Rs 239.28 million, the offer for sale is Rs 147.16 million and thus the company will be receiving only Rs 92.12 million.

20ML faces competition from unorganized sector whose costs are lower due to exemption from excise duty. The players in the unorganized sector change their formulations to absorb some of the cheaper ground material to lower their cost of production and in turn reducing their pricing. Thus 20ML may be forced to reduce the prices of its offerings and services, which may reduce its revenues and margins and/or decrease its market share, which would adversely affect the business operations of the company.

Valuation:-

At the price of Rs50-55, the issue is priced at 13.6x-15x its FY08 EPS of Rs3.68 and at 15.4x-17.0x its FY08 FDEPS of Rs3.2. On comparison with its established peers which are comparatively larger in size, 20ML appears expensive. Taking into account the valuation and considering the risks associated with the investment concerns cited above, We are NEUTRAL to the issue

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Banks gear up for new IPO payment facility

Eleven banks participated in the mock test carried out by the Bombay Stock Exchange (BSE) for the new IPO payment facility recently permitted by SEBI.

The first IPO in which the facility will be used is that of 20 Microns, which opens on Monday.

This facility, called the Application Supported by Blocked Amounts (ASBA), allows banks to block IPO application money in the applicant’s bank account till the time of allotment of shares. Only that amount proportionate to the share allotment will be transferred from the account.

The markets regulator has said that ASBA will be operationalised from Monday. . This coincides with the opening of the IPO of 20 Microns, the first issue in which the ASBA process will be used by investors.

Interface tested

“BSE has successfully tested its interface with 11 banks for participation in the ASBA (Application Supported by Blocked Amounts) process,” said a BSE news release.

The 11 banks that participated in the mock test were Bank of Baroda, Corporation Bank, HDFC Bank, ICICI Bank, IDBI Bank, Indus Ind Bank, Kotak Bank, Punjab National Bank, State Bank of India, SBBJ and Union Bank.

The exchange is in the process of testing the interface with other banks that have evinced interest in participating in the ASBA process, BSE said. Using this interface, the banks participating in the IPO process would be able to upload the bids with respect to their customers, into the electronic book of the BSE, reports The Hindu Business Line.

Source: Moneycontrol.com

IPO market may witness slowdown

Uncertain market conditions may dampen the growth of domestic IPO market as increasing number of foreign funds are shying away from investing here and companies are postponing their fund raising plans through primary market, says a study.

FIIs and other relevant financial institutions, including retail investors, are gradually withdrawing their subscription from IPOs, given the current situation and are exploring other options such as bonds and mutual funds, a study by industry chamber Assocham said.

"FIIs are pulling out of IPOs because of high inflation, debt and bond market is growing for them phenomenally. The price band of IPO is also no longer attractive for retail investors," Assocham President Sajjan Jindal said.

The domestic stock market barometer Sensex, which touched a high of 21,077.53 points in January, has been witnessing a slump ever since and had plunged the year's low of 12,514.02 points in July.

"Under such circumstances, being optimistic about IPO market would not be realistic as fear factor is becoming more visible and pronounced against the primary market," Jindal added.

Domestic IPO market, which grew consistently at 20 per cent during 2003 to 2007, may expand 8-10 per cent in remaining period of the current fiscal despite vigorous efforts put in by merchant bankers as adverse market sentiments have gained grounds, the study said.

At least 74 companies, who were close to coming out with an IPO and collectively raising about Rs 44,000 crore are now awaiting better times, Assocham said.

Source: Financialexpress.com

RIL in world's 100 most respected cos list

Billionaire Mukesh Ambani-led Reliance Industries has made it to the annual list of world's 100 most respected companies compiled by the Wall Street Journal, topped by US-based healthcare products major Johnson & Johnson.

Ranked 83rd, RIL is the only Indian company on the list, although there are three more companies led by persons of Indian origin -- PepsiCo, ArcelorMittal and Citigroup.

J&J is followed by FMCG giant Procter & Gamble, Japanese auto maker Toyota Motor, legendary investor Warren Buffett-led Berkshire Hathaway and technology giant Apple in the top five positions.

While Berkshire has slipped from its first position last year, J&J has moved up from its second place in 2007 list.

Toyota has retained its third place, while Apple and P&G have improved on their previous year rankings.

Besides, Google (6th), Wal-Mart (7th), Coca-Cola (8th), PepsiCo (9th) and Nestle (10th) also figure among the top-ranked companies.

As part of the fourth annual survey, Wall Street Journal asked money managers to indicate the degree to which they respect or don't the 100 largest publicly traded companies, as measured by total market value.

According to the survey, 74 per cent respondents said they 'highly respect' J&J, 23 per cent said they 'respect', 3 per cent said 'respect somewhat' but none said they 'don't respect' the company making it top-ranked company.

About RIL, 4 per cent considered the company as highly respected, 17 per cent said they 'respect' it, 46 per cent responded saying they 'respect somewhat', while 11 per cent said they 'don't respect' the firm.

Source: Financialexpress.com

Austral Coke & Projects settles with 15% premium

At Rs 225.20 over issue price

Austral Coke and Projects ended at Rs 225.20 on BSE, a 14.89% premium over issue price of Rs 196

The counter saw volumes of 1.88 crore shares on BSE. The stock hit a high of 308.80 and a low of Rs Rs 206.

Austral Coke and Projects debuted today on BSE at Rs 206, a 5.10% premium over its issue price of Rs 196.

The company fixed the issue price at the top end of price band of Rs 164 to Rs 196. The IPO was subscribed 1.65 times. The issue opened on 7 August 2008 and closed on 13 August 2008.

Austral Coke manufactures low ash metallurgical coke. It is also in the business of equipment rental, refractory and textile trading. The company plans to use the IPO proceeds to finance its expansion. It is planning a 1,50,000 tonne per annum LAM coke unit and a 8 megawatt captive power plant through waste heat recovery. The project is coming up at Sindhudurg in Maharashtra.

The company also plans to utilize the funds for acquiring coal mines either in Indian or abroad and retire high cost debt.

Austral Coke had concluded pre-IPO placement of 27.4 lakh shares to Somerset India Fund at Rs 196 per share, aggregating to Rs 53.70 crore.

The company reported net profit of Rs 35.17 crore on sales of Rs 226.66 crore in eleven months period ended February 2008.

Source: Capitalmarket.com

20 Microns Ltd IPO gets 3/5 Grade by CARE

CARE has come out with a research report on 20 Microns. It has assigned IPO Grade 3/5 to the company's IPO. TML proposes an initial public offering of 43,50,632 equity shares (approximately Rs 26.10 crore).

CARE's report on 20 Microns' IPO:

CARE has assigned a ‘CARE IPO Grade 3’ to the proposed IPO of 20 Microns Ltd. (TML). ‘CARE IPO Grade 3’ indicates Average Fundamentals. CARE assigns IPO grades on a scale of Grade 5 to Grade 1, with Grade 5 indicating strong fundamentals and Grade 1 indicating poor fundamentals. CARE’s IPO grading is an opinion on the fundamentals of the issuer. The grade assigned to any individual issue represents a relative assessment of the ‘fundamentals’ of the issuer. TML proposes an initial public offering of 43,50,632 equity shares (approximately Rs 26.10 crore). The objective of the proposed IPO is to partly fund its ongoing expansion projects as well as provide an exit opportunity to Venture Fund, GVFL (Gujarat Venture Capital Fund 1995) which would be offloading 50% of its existing stake in TML.

The grading takes into account TML’s long and established track record in the micronised minerals industry, operating captive mines and geographical spread of its manufacturing facilities in a logistics intensive industry, diversified clientele and voluntary compliance with some of the provisions of clause 49 of the listing agreement since last five years. The grading is constrained by unsatisfactory financial performance in the recent past including availing of CDR (Corporate Debt Restructuring) package, competition from players in the organised as well as unorganised sector, increasing cost of fuel, IPO linked project and modest financial profile as reflected by high overall gearing and moderate profit margins, especially in a rising interest rate scenario. The grading is further constrained by subdued return on net worth and moderate level of EPS.

Baroda-based TML, incorporated in 1987, is one of the largest players in the organised sector of the white minerals industry in India. The micronised minerals produced by TML are used as functional fillers and extenders in paints (43% of sales for FY08 for TML), plastics (27%), paper & ceramics (11%) and other products (19%). The top three products viz. GCC (41%), china clay (24%) and talc (15%) contributed approximately 80% of total sales. Its clientele includes Asian Paints, Akzo Nobel Coatings, ICI Paints, Berger Paints, Pidilite, Finolex Cables, etc.

TML incurred losses in three consecutive years from FY03 to FY05 mainly on account of non-functioning of a major equipment at Bhuj due to earthquake in Gujarat in 2001 and high contracted rates of interest. Consequently, it had to avail CDR package. TML made a formal exit from the CDR in early 2008 by paying re-compensation amount.

TML proposes to expand capacities at its existing four locations and setup a new unit at Haldwani and manufacture higher value-added products at these facilities with particle size upto 0.7 micron. Total cost of project of approximately Rs 20 cr is proposed to be financed by way of project debt-equity ratio of 1:1. Disbursement of project term loan of Rs 10 cr is linked to successful completion of IPO.

The weighted average ROCE and RONW for the last three years were 13.18% and 15.69% respectively. Its EPS has increased gradually to a moderate level of Rs 3.64 per share in FY08. Also, the company has not paid any dividend to its shareholders during the past five years.

Total income of TML grew by 22.74% in FY08 compared to FY07 on account of a growth in manufacturing sales as well as trading sales by 17.5% and 34.1% respectively in value terms. PBILDT and PAT margin were comfortable at 14.08% and 4.22% respectively in FY08. TML’s long-term debt equity ratio remained moderate at 1.06 times. The overall gearing level, despite showing marginal improvement, was high at 1.85 times as on Mar.31, 2008.

Source: Moneycontrol.com

Resurgere Mines & Minerals spurts on debut

Settles at Rs 524.35 on BSE, a 94.20% premium over IPO price of Rs 270

Resurgere Mines & Minerals settled at Rs 524.35 on BSE, a 94.20% premium over initial public offer price of Rs 270. The counter clocked huge volumes of 3.31 crore shares on BSE.

Resurgere Mines & Minerals India debuted at Rs 272.05 on BSE, a marginal premium of 0.75% over its issue price of Rs 270. The stock hit a high and low of Rs 562.80 and Rs 272.05.

The current price of Rs 524.35 discounts its FY 2008 EPS of Rs 23.32, by a PE multiple of 22.48.

The company raised Rs 120 crore rupees through its 44.5 lakh share initial public offer (IPO) in a price band of Rs 263 and Rs 272 a share. The IPO was oversubscribed 1.16 times. The issue price was later fixed at Rs 270 per share. The issue opened for subscription on 11 August 2008 and closed on 13 August 2008.

Resurgere Mines & Minerals India is in the business of extraction, processing and sale of mineral products and exploration and development of mining assets. The product range includes various forms of iron ore such as Lump ore, Size ore, Calibrated Lump ore (CLO) and iron ore fines etc. and bauxite. The company sells all these products domestically except iron ore fines, which the company exports to China.

The company will utilise the proceeds of the initial pubilc offer for purchasing plant and machinery and purchase railway rakes to set up own logistics infrastructure facilities and funding working capital requirements.

The company reported 110.4% spurt in net profit to Rs 66.56 crore on 154.80% surge in net sales to Rs 418.57 crore in the year ended March 2008 over the year ended March 2007.

Source: Capitalmarket.com