A

SUMMARY REPORT

ON

TRAINING UNDERTAKEN AT

SURESH RATHI SECURITIES

IN INITIAL PUBLIC OFFERING (IPO)

SUBMITTED IN PARTIAL FULFILLMENT

OF THE REQUIREMENT

Master of Business Administration (2018-2020)

Faculty of Commerce & Management Studies

Lachoo Memorial College of Science and Technology (Autonomous)

Submitted to - Submitted by -
Dr. VANDANA GUPTA NEELU CHANDAK
Assistant Professor
 DECLARATION

I am the student of Master of Business Administration - Semester III

(2018-20) hereby declare that I have completed this project on Comparative
study in intial public offering (IPO).

The information submitted is true & original to the best of my knowledge.

NEELU CHANDAK
MBA III SEM
 ACKNOWLEDGEMENT

I express my sincere thanks to my project guide Mr. MALAY JOSHI,

designation head of research support for guiding me right from the inception till
the successful completion of the project. I sincerely acknowledge him for
extending their valuable guidance, support for literature, critical reviews of
project and the report and above all the moral support he had provided to me
with all the stages of the project.
I would also like to thank the supporting staff of the Suresh Rathi group
for their help and cooperation throughout our project.
I am thankful to my parents and friends as they always motivate me and
help me directly or indirectly in my project work.

NEELU CHANDAK
 PREFACES

In the economy for tightening Business nuts and bolt of any company
industries or enterprises it is necessary to measure it market position in a certain
time interval with ever changing theories and the concept of market.
For this assessment we need the robust methodology of survey. Although
surveys do not reveal the absolute solution of any objectives, but it provides the
inclination towards a good output.
SURESH RATHI, a good share trading company in Indian market. In this
project, we compare the future of this company. Find the awareness level,
market potential of this company etc.
The preparation of this report provides you great pleasure in releasing our
work and market experiences in few pages which shows overall and
experienced knowledge and the practical approach about the style of a
professional and thing which we found various affecting to our marketing and
product image.
The project termed as “Stock Exchange & Online Share Trading at
Nirmal Bang” has made an effort to find out the issues concerning with the
SURESH RATHI SECURITIES PVT
 INDEX

SR. NO. TOPICS

1. INTRODUCTION OF SURESH RATHI

2. INTRODUCTION OF INITIAL PUBLIC OFFERING

3. PARAMETERS TO JUDGE AN IPO

FACTORS TO BE CONSIDERED BEFORE APPLYING FOR AN

4.
IPO

5. WHY MAY COMPANY NEED AN IPO

6. TYPES OF IPO

IPO ADVANTAGES AND DISADVANTAGES & SWOT

7.
ANANLYSIS
8. WHY GO PUBLIC?

9. IPO PROCESS IN INDIA

10. ROLE OF VARIOUS INTERMEDIARIES IN IPO

11. IPO MARKET IN INDIA

12. CONCLUSION
INTRODUCTION TO COMPANY:

Suresh Rathi Pvt. Ltd. is a Member of Stock Exchange Mumbai and was incorporated on
June 19, 1997 and it commenced business on December 29, 1997. Earlier Stock Broking
Business was done in the name of our erstwhile firm M/s Suresh R & Co. since 1989. The
company is in business of Stock Broking and allied activities and is providing services like
Equity Broking, Investor Guidance & Education, and Mutual Fund & IPO distribution. The
company is a Depository Participant of Central Depository Services Ltd, since June 1999
with a DP branch at Jodhpur & 6 other cities. CDSL’s ‘easiest’ facility has been recently
provided to facilitate the instructions through internet.
The company is also a Member of National Stock Exchange of India. It is also a
trading member in the Futures & Options Segment of NSE and Derivatives Segment of BSE.
Internet trading facility has also been made available for investors on BSE. Needless to
mention, our entire back- office operations are fully computerized, giving us that
technological edge to service the clients effectively. The company has Network of around 50
Business Associates all over Rajasthan and Mumbai. The company has experienced and
professional personnel managing effective risk control and operations.
Suresh Rathi is a Company includes the fields like Mutual Funds, Derivatives,
Equities, IPO, Depository, Insurance etc. the stock market also takes place to carry out the
functions of BSE and the functions of NSE i.e. Bombay Stock Exchange and National Stock
Exchange for trading of shares by investors in the company. Suresh Rathi opens demat
accounts through CDS (Central Depository Services) and also by NDS (National Depository
Services) of various potential customers. Suresh Rathi has various objectives by which it can
attract various investors in the city and formats the Daily Sales Report. It is also covered
through various competitors like Reliance Power, Indiabulls etc. Suresh Rathi is basically a
part of Stock Market where all its transactions are being carried out with proper efforts which
is performed by the persons working in the company.
At Suresh Rathi Securities Pvt Ltd (SRSPL) , we have a dedicated team of
experienced and professionals on the desk to cater services to our esteemed institutions. Our
experts for institutional desk are also strongly backed by our research analyst covering
multiple sectors and come out with new ideas across different segment of companies. We
frequently come out with reports on industry research and company research in large cap as
well mid cap segment. This strong backing by our research department helps to cater services
to our institutions by way of giving them detailed view on various sectors, companies and
markets.
Suresh Rathi Group is one of Leading Broking Firm in the country offers wide range of
Financial Services and Wealth Management Solutions to Retail & High Net Worth
Individuals and Domestic Financial Institutions with a track record of more than 36 years in
service to the investors.
The company has come a long way since 1981 in terms of acquiring various memberships
expanding on its product base.
Mr. Suresh Rathi, A chartered accountant by profession started his career in 1981 as a
financial consultant providing investment strategies. He is highly commended for work
ethics, information and transparency in dealings, thus providing highest levels of customer
satisfaction.
They have network spread over 50 cities with 120 business associates covering states like
Rajasthan, Maharasthra, Gujarat, Assam and Chhattisgarh. They are a Depository participant
at CDSL (Central Depository Services Ltd). Their entire back office operations are fully
computerized, giving technological service to clients effectively and making it easy for the
client to apply online.
Group Concerns are :
 Suresh Rathi Securities Pvt. Ltd

 Suresh Rathi Commodities Pvt. Ltd

 Suresh Rathi Finance Pvt. Ltd

 Suresh Rathi & Co.

Location:
Head / Corporate Office :
Mahesh Hostel Complex , Opp. Bombay Motors Chopasni Road
Jodhpur .

Registered Office :
11- 12 Mithila ‘A’ Wing , Opp. Jankalyan Bank
J B Nagar , Andheri (E)
Mumbai .

Objective of the study :

 To impart theoretical skills into practical work.
 To gain business work experience.

 To relate with different categories of people in a working environment.

 To gain exposure to the demand and challenges of the work place.

 To obtain/acquire knowledge.

 Gaining knowledge about the share market.

GUIDING PRINCIPLES AND CORE VALUES –

 Customer is king. Therefore customer interest is supreme.
 Ethical and transparent business practices.
 Respect for professionals, associates and business partners.
 Research based value investing.
 Cutting edge technology to ensure world class customer services.

MISSION
To be India's first Multinational providing complete financial services solution across the
globe

VISION
Providing integrated financial care driven by the relationship of trust and confidence.
INTIAL PUBLIC OFFERING (IPO)

Definition:
Initial public offering (IPO) is the process by which a private company can go public by sale
of its stocks to general public. It could be a new, young company or an old company which
decidestobelistedonanexchangeandhencegoespublic.

Companies can raise equity capital with the help of an IPO by issuing new shares to the
public or the existing shareholders can sell their shares to the public without raising any fresh
capital.

Initial public offering is process of selling securities to public in primary markets. It majorly
Raise a capital and it is a process is directed towards both institutionals and retail investors.

Initial public offering (IPO) or stock market launch is a type of public offering in which
shares of a company are sold to institutional investors and usually also retail (individual)
investors; an IPO is underwritten by one or more investment banks, who also arrange for the
shares to be listed on one or more stock exchanges. Through this process, colloquially known
as floating, or going public, a privately held company is transformed into a public company.
Initial public offerings can be used: to raise new equity capital for the company concerned; to
monetize the investments of private shareholders such as company founders or private equity
investors; and to enable easy trading of existing holdings or future capital raising by
becoming publicly traded.
After the IPO, shares are traded freely in the open market at what is known as the free float.
Stock exchanges stipulate a minimum free float both in absolute terms (the total value as
determined by the share price multiplied by the number of shares sold to the public) and as a
proportion of the total share capital (i.e., the number of shares sold to the public divided by
the total shares outstanding). Although IPO offers many benefits, there are also significant
costs involved, chiefly those associated with the process such as banking and legal fees, and
the ongoing requirement to disclose important and sometimes sensitive information.
Details of the proposed offering are disclosed to potential purchasers in the form of a lengthy
document known as a prospectus. Most companies undertake an IPO with the assistance of an
investment banking firm acting in the capacity of an underwriter. Underwriters provide
several services, including help with correctly assessing the value of shares (share price) and
establishing a public market for shares (initial sale). Alternative methods such as the Dutch
auction have also been explored and applied for several IPOs.

Largest IPOs
Company Year of IPO Amount Inflation adjusted

The Alibaba Group 2014 $25B $26 billion

SoftBank Group 2018 $23.5B $24 billion

Agricultural Bank of China 2010 $22.1B $25 billion

Industrial and Commercial Bank of China 2006 $21.9B $27 billion

American International Assurance 2010 $20.5B $24 billion

Visa Inc. 2008 $19.7B $23 billion

General Motors 2010 $18.15B $21 billion

NTT DoCoMo 1998 $18.05B $28 billion

Enel 1999 $16.59B $25 billion

Facebook 2012 $16.01B $17 billion

The Government of Saudi Arabia is considering IPO of Saudi Aramco and selling around 5%
of them. The IPO has been predicted by Forbes to have a price of $100 billion.

Largest IPO markets

Prior to 2009, the United States was the leading issuer of IPOs in terms of total value. Since
that time, however, China (Shanghai, Shenzhen and Hong Kong) has been the leading issuer,
raising $73 billion (almost double the amount of money raised on the New York Stock
Exchange and NASDAQ combined) the end of November 2011. The Hong Kong Stock
Exchange raised $30.9 billion in 2011 as the top course for the third year in a row, while New
York raised $30.7 billion. Indian Stock Markets are also emerging as a leading IPO market in
the world. As many as 153 initial public offers hit the Indian stock market in 2017 and raised
USD 11.6 billion.
General Terms involved in IPO:
Primary market: It is the market in which investors have the first opportunity to buy a
newly issued security as in an IPO.
Prospectus: A formal legal document describing the details of the company is created for a
proposed IPO, also making the investors aware of the risks of an investment. It is also known
as the offer document.
Over-Subscription: A situation in which the demand for shares offered in an IPO exceeds
the number of shares issued. Listing: Shares offered in IPOs are required to be listed on stock
exchanges for the purpose of trading. Listing means that the shares have been listed on the
stock exchange and are available for trading in the secondary market.
Green shoe option: It is referred to as an over-allotment option. It is a provision contained in
an underwriting agreement whereby the underwriter gets the right to sell investors more
shares than originally planned by the issuer in case the demand for a security issue proves
higher than expected.
Price band: Price band refers to the band within which the investors can bid. The spread
between the floor and the cap of the price band is not more than 20% i.e. the cap should not
be more than 120% of the floor price. This is decided by the company and its merchant
bankers. There is no cap or regulatory approval needed for determining the price of an IPO.
Listing: Shares offered in IPOs are required to be listed on stock exchanges for the purpose
of trading. Listing means that the shares have been listed on the stock exchange and are
available for trading in the secondary market.
Flipping: Flipping is reselling a hot IPO stock in the first few days to earn a quick profit. The
reason behind this is that companies want long-term investors who hold their stock, not
traders.
Parameters to judge an IPO

 Promoters Is the company a family run business or is it professionally owned?

Even with a family run business what are the credibility and professional

qualifications of those managing the company? Do the top level managers have

enough experience (of at least 5 years) in the specific type of business?

 Industry out look Is the company a family run business or is it professionally

owned? Even with a family run business what are the credibility and professional

qualifications of those managing the company? Do the top level managers have

enough experience (of at least 5 years) in the specific type of business?

 Business plan Check the progress made in terms of land acquisition, clearances
from various departments, purchase of machinery, letter of credits etc. A higher initial

investment from the promoters will lead to a higher faith in the organization.

 Financials Why does the company require the money? Is the company floating
more equity than required? What is the debt component? Keep a track on the profits,

growth and margins of the previous years. A steady growth rate is the quality of a

fundamentally sound company. Check the assumptions the promoters are making and

whether these assumptions or expectations sound feasible.

 Risk Factors The offer documents will list our specific risk factors such as the

company’s liabilities, court cases or other litigations. Examine how these factors will

affect the operations of the company.

 Key names Every IPO will have lead managers and merchant bankers. You
can figure out the track record of the merchant banker through the SEBI
website.
 Pricing Compare the company’s PER with that of similar companies. With
this you can find out the P/E Growth ratio and examine whether its earning
projections seem viable.
 Listing You should have access to the brokers of the stock exchanges where
the company will be listing itself.
Factors to be considered before applying for an IPO:
There are certain factors which need to be taken into consideration before applying for Initial
Public Offerings in India:

 The historical record of the firm providing the Initial Public Offerings
 Promoters, their reliability, and past records
 Products offered by the firm and their potential going forward
 Whether the firm has entered into a collaboration with the technological firm
 Project value and various techniques of sponsoring the plan
 Productivity estimates of the project
 Risk aspects engaged in the execution of the plan.
Why may company need an IPO?

To meet short-term requirements, the company may approach banks, lenders or may even
accept fixed deposits from the public/shareholders. To meet its long-term requirements, funds
can be raised either through loan from lenders, Banks, Institutions etc., (which carry financial
burden) or through the issue of capital. Capital can be raised through private placement of
shares, public issue, rights issue, etc. Public Issue means raising funds from the public.
Promoters of the company may have plans for the company that may require infusion of
money. The main purpose of the public issue, amongst others, is to raise money through the
public and to get its shares listed at any of the recognized stock exchanges in India.

The following may be some other reasons for a company to go public:

 Raising funds to finance capital expenditure programs like expansion, diversification,

modernization, etc
 Financing of increased working capital requirements
 Financing acquisitions like a manufacturing unit, brand acquisitions, tender offers for
shares of another firm, etc
 Debt financing
 Exit route for exiting investors.

Types of IPO:
I. Fixed Price Offering
Under fixed price, the company going public determines a fixed price at which its shares are
offered to investors. The investors know the share price before the company goes public.
Demand from the markets is only known once the issue is closed. To partake in this IPO, the
investor must pay the full share price when making the application.

The traditional method of doing IPOs is the fixed price offering. Here, the issuer and the
merchant banker agree on an ―issue price‖. Then the investor has a choice of filling in an
application form at this price and subscribing to the issue. Extensive research has revealed
that the fixed price offering is a poor way of doing IPOs. Fixed price offerings, all over the
world, suffer from `IPO under pricing'. In India, on average, the fixed-price seems to be
around 50% below the price at first listing; i.e. the issuer obtains 50% lower issue proceeds as
compared to what might have been the case. This average masks a steady stream of dubious
IPOs who get an issue price which is much higher than the price at first listing. Hence fixed
price offerings are weak in two directions:
  dubious issues get overpriced and
 Good issues get under priced.

II. Book Building Offering

Under book building, the company going public offers a 20% price band on shares to
investors. Investors then bid on the shares before the final price is settled once the bidding
has closed. Investors must specify the number of shares they want to buy and how much they
are willing to pay. Unlike fixed price, there is no fixed price per share. The lowest share price
is known as the floor price, while the highest share price is known as the cap price. The final
share price is determined using investor bids.

A mechanism period for which the IPO is open, bids is collected from investors at various
prices which are above or equal to the floor price (the minimum price). The final price of the
share is determined after the bid closing date, based on certain evaluation criteria.
The SEBI (Disclosure and Investor Protection) Guidelines, 2000, define the term `book-
building' in a rather complex language as "a process undertaken by which a demand for the
securities proposed to be issued by a body corporate is elicited and built-up and the price for
such securities is assessed for determination of the quantum of such securities to be issued by
means of a notice, circular, advertisement, document or information memoranda or offer
document.''

Book building process is a common practice used in most developed countries for marketing
a public offer of equity shares of a company. However, Book building acts as scientific as
well as flexible price discovery method through which a consensus price of IPO‘s may be
determined by the issuer company along with the Book Running Lead Manager (i.e.
merchant banker) on the basis of feedback received from individual investors as well as most
informed investors (who are institutional and corporate investors like, UTI, LICI, GICI, FIIs,
and SFCI etc). The method helps to make a correct evaluation of a company‘s potential and
the price of its shares.
In simple terms, book-building is a mechanism by which the issue price is discovered on the
basis of bids received from syndicate members/brokers and not by the issuers/merchant
bankers.
IPO Advantage and Disadvantage

Advantages

Increased Capital

A public offering will allow a company to raise capital to use for various corporate purposes
such as working capital, acquisitions, research and development, marketing, and expanding
plant and equipment.

Liquidity

Once shares of a company are traded on a public exchange, those shares have a market value
and can be resold. This allows a company to attract and retain employees by offering stock
incentive packages to those employees. Moreover, it also provides investors in the company
the option to trade their shares thus enhancing investor confidence.

Prestige Increased

Public companies often are better known and more visible than private companies, this
enables them to obtain a larger market for their goods or services. Public companies are able
to have access to larger pools of capital as well as different types of capital.

Valuation

Public trading of a company's shares sets a value for the company that is set by the public
market and not through more subjective standards set by a private valuator. This is helpful for
a company that is looking for a merger or acquisition. It also allows the shareholders to know
the value of the shares.

Increased wealth

The founders of the company often have the sense of increased wealth as a result of the IPO.
Prior to the IPO these shares were illiquid and had a more subjective price. These shares now
have an ascertainable price and after any lockup period these shares may be sold to the
public, subject to limitations of federal and state securities laws.

Disadvantages

Time and Expense

Conducting an IPO is time consuming and expensive. A successful IPO can take up to a year
or more to complete and a company can expect to spend several hundreds of thousands of
dollars on attorneys, accountants, and printers. In addition, the underwriter's fees can range
from 3% to 10% of the value of the offering. Due to the time and expense of preparation of
the IPO, many companies simply cannot afford the time or spare the expense of preparing the
IPO.
Disclosure

The SEC disclosure rules are very extensive. Once a company is a reporting company it must
provide information regarding compensation of senior management, transactions with parties
related to the company, conflicts of interest, competitive positions, how the company intends
to develop future products, material contracts, and lawsuits. In addition, once the offering
statement is effective, a company will be required to make financial disclosures required by
the Securities and Exchange Act of 1934. The 1934 Act requires public companies to file
quarterly statements containing unaudited financial statements and audited financial
statements annually. These statements must also contain updated information regarding
nonfinancial matters similar to information provided in the initial registration statement. This
usually entails retaining lawyers and auditors to prepare these quarterly and annual
statements. In addition, a company must report certain material events as they arise. This
information is available to investors, employees, and competitors.

Regulatory Review
The Company will be open to review by the SEC to ensure that the company is making the
appropriate filings with all relevant disclosures.

Falling Stock Price

If the shares of the company's stock fall, the company may lose market confidence, decreased
valuation of the company may effect lines of credits, secondary offering pricing, the
company's ability to maintain employees, and the personal wealth of insiders and investors.

Swot Analysis :

Strengths:

 Wide range of financial products and focus on premium traders

 Emphasis is on efficient execution of traders
 Strong private equity operations
 Have over 120 Business Associates
 Financial products and services such as Wealth Management, Broking &
Distribution, Commodity Broking, Portfolio Management Services, Institutional
Equities, Private Equity, Investment Banking Service.

Weakness:

 Only Restricted to Northern part of India.

 Lack of advertising causes low awareness amongst investors.
Opportunities:

 Earning Urban Youth looking for investments.

 Educating people about the benefits of investments to increase target audience.

 Expanding Business.

Threats:

 Stringent Economic measures by Government and RB Competitors like

Indiabulls, Motilal Oswal, Sharekhan etc.

Why go public?

Basically, going public (or participating in an "initial public offering" or IPO) is the process
in which a business owned by one or several individuals is converted into a business owned
by many. It involves the offering of part ownership of the company to the public through the
sale of debt or more commonly, equity securities (stock).

Going public raises cash and usually a lot of it. Being publicly traded also opens many
financial doors:
 Because of the increased scrutiny, public companies can usually get better rates when
they issue debt.

 As long as there is market demand, a public company can always issue more stock.
Thus, mergers and acquisitions are easier to do because stock can be issued as part of
the deal.

 Trading in the open markets means liquidity. This makes it possible to implement
things like employee stock ownership plans, which help to attract top talent.

Being on a major stock exchange carries a considerable amount of prestige. In the past, only
private companies with strong fundamentals could qualify for an IPO and it wasn't easy to get
listed.

The internet boom changed all this. Firms no longer needed strong financials and a solid
history to go public. Instead, IPOs were done by smaller startups seeking to expand their
businesses. There's nothing wrong with wanting to expand, but most of these firms had never
made a profit and didn't plan on being profitable any time soon. Founded on venture capital
funding, they spent like Texans trying to generate enough excitement to make it to the market
before burning through all their cash. In cases like this, companies might be suspected of
doing an IPO just to make the founders rich. This is known as an exit strategy, implying that
there's no desire to stick around and create value for shareholders. The IPO then becomes the
end of the road rather than the beginning.
How can this happen? Remember: an IPO is just selling stock. It's all about the sales job. If
you can convince people to buy stock in your company, you can raise a lot of money.

IPO PROCESS IN INDIA

Companies typically go public to raise huge amount of capital in exchange for securities.
Once a private company is convinced about the need to become a public company, it kick-
starts the process of IPO. Companies which want to go public follow a process that
exchanges adhere to. The IPO process is quite complicated.

So, what are steps to tread to make an initial public offer? One should note that the entire IPO
process is regulated by the ‘Securities and Exchange Board of India (SEBI)’. This is to check
the likelihood of a scam and protect investor interest.

 Step 1: Hire an investment bank

 Step 2: Register with SEC
 Step 3: Draft the Red Herring document
 Step 4: Go on road show
 Step 5: IPO is priced
 Step 6: Available to public
 Step 7: Going through with the IPO

Step 1: Hire an investment bank

A company seeks guidance from a team of under-writers or investment banks to start the
process of IPO. More often than not, they take services from more than one bank. The team
will study the company’s current financial situation, work with their assets and liabilities and
then they plan to cater to the financial needs. An underwriting agreement will be signed
which will have all the details of the deal and the amount that will be raised, the securities
that will be issued. Though the under-writers assure on the capital they will raise, they won’t
make promises. Even the investment banks will not shoulder all the risks involved in the
money movement.

Step 2: Register with SEC

The Company and the under-writers together file the registration statement which comprises
of every fiscal data and business plans of the company. It will also have to declare how the
Company is going to utilize the funds it will raise from the IPO and about the securities of
public investment.
If the registration statement has compliance to the stringent guidelines set by the SEC, which
ensures that the company has disclosed every detail a potential investor should know, then it
gets a green signal.
Else it is sent back with comments. The company should then work on the comments and file
for registration again.

Step 3: Draft the Red Herring document

An initial prospectus which contains the probable price estimate per share and other details
regarding the IPO is shared with the people who are involved with the IPO. It is called a red
herring document because the first page of the prospectus contains a warning which states
that this is not a final prospectus. This phase tests waters for the IPO among the potential
investors.

Step 4: Go on road show

Before the IPO goes public, this phase happens over an action-packed two week. The
executives of the Company travel around the country marketing the upcoming IPO to the
potential investors, mostly QIBs. The agenda of the marketing includes presentation of facts
and figures, which will drum up the most positive interest.

STEP 5: IPO is priced

Based on whether company wants to float a fixed price IPO or Book Building Issue, the price
or price band is fixed. A fixed price IPO will have a fixed price in the order document, and
the book building issue will have a price band within which an investor can bid. Number of
shares that will be sold is decided. The Company should also decide the stock exchange
where it be going to list their shares. The Company asks the SEC to announce the registration
statement effectual so that purchases can be made.

Step 6: Available to public

On a planned date, the prospectus and application forms are made available to public online
and offline. People can get a form from any designated banks or broker firms. Once they fill
in the details, they can submit them with a cheque. Or they can submit it online as well. SEBI
has fixed the period of availability of an IPO to public, which is usually 5 working days.

Step 7: Going through with the IPO

After the IPO price is finalized, the stakeholders and under-writers work together to decide
how many shares will every investor receive. Investors will usually get full securities unless
it is oversubscribed. The shares are credited to their demat account. The refund is given if the
shares are oversubscribed. Once the securities are allotted, the stock market will start trading
the Company’s IPO.

ROLE OF VARIOUS INTERMEDIARIES IN IPO:

Intermediary‘s help corporations design securities that will be attractive to investors, buy
these securities from the corporations, and then resell them to savers in the primary markets.

Merchant Bankers/ Lead Manager:

Merchant bankers play an important role in issue management process. Lead managers have
to ensure correctness of the information furnished in the offer document. They have to ensure
compliance with SEBI rules and regulations as also Guidelines for Disclosures and Investor
Protection. To this effect, they are required to submit to SEBI a due diligence certificate
confirming that the disclosures made in the draft prospectus or letter of offer are true, fair and
adequate to enable the prospective investors to make a well informed investment decision.
The role of merchant bankers in performing their due diligence functions has become even
more important with the strengthening of disclosure requirements and with SEBI giving up
the vetting of prospectuses. Their functions are:

 To act as intermediaries between the company seeking to raise money and the
investors. They must possess a valid registration from SEBI enabling them to do this
job.
 They are responsible for complying with the formalities of an issue, like drawing up
the prospectus and marketing the issue.
 If it is a book building process, the lead manager is also in charge of it. In such a case,
they are also called Book Running Lead Managers.
 Post issue activities, like intimation of allotments and refunds, are their responsibility
as well.

Underwriters:
Underwriters are required to register with SEBI in terms of the SEBI (Underwriters) Rules
and Regulations, 1993. In addition to underwriters registered with SEBI in terms of these
regulations, all registered merchant bankers in categories I, II and III and stockbrokers and
mutual funds registered with SEBI can function as underwriters. Part III gives further details
of registration of underwriters. In 1996-97, the SEBI (Underwriters) Regulations, 1993 were
amended mainly pertaining to some procedural matters.

Bankers to an Issue:

Scheduled banks acting as bankers to an issue are required to be registered with SEBI in
terms of the SEBI (Bankers to the Issue) Rules and Regulations, 1994. These regulations lay
down eligibility criteria for bankers to an issue and require registrants to meet periodic
reporting requirements. Part III gives further details of registration of bankers to an issue.
Portfolio managers:

Portfolio managers are required to register with SEBI in terms of the SEBI (Portfolio
Managers) Rules and Regulations, 1993. The registered portfolio managers exclusively carry
on portfolio management activities. In addition all merchant bankers in categories I and II can
act as portfolio managers with prior permission from SEBI. Part III gives further details of
the registration of portfolio managers.

Registrars to an Issue and Share Transfer Agents:

Registrars to an issue (RTI) and share transfer agents (STA) are registered with SEBI in
terms of the SEBI (Registrar to the Issue and Share Transfer Agent) Rules and Regulations,
1993. Under these regulations, registration commenced in 1993-94 and is granted under two
categories: category I - to act as both registrar to the issue and share transfer agent and
category II - to act as either registrar to an issue or share transfer agent. With the setting up of
the depository and the expansion of the network of depositories, the traditional work of
registrars is likely to undergo a change.
 IPO Market in India
The IPO Market in India has been developing since the liberalization of the Indian
economy. It has become one of the foremost methods of raising funds for various
developmental projects of different companies.

IPO Market in India - Overview

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

This step helped in developing the IPO Market in India, as the companies were permitted to
price the issues. The Free pricing mechanism permitted the companies to raise funds from the
primary market at competitive price.

IPO Market in India - Regulations

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

IPO Market In India - Glimpses

 The IPO Market in India experienced a boom in its activities in the year 1994.
 In the year 1995 the growth of the Indian IPO market was 32 % .
 The growth was halted with the South East Asian crisis.
 The markets picked up speed again with the introduction of the software stocks.

Conclusion:

One should always remember that although IPO is an opportunity to get into a good company
from the beginning but as IPOs happen once for each company, they are presented in a way
to get maximum attention. That is why avoid the hype and get into an IPO for a good
investment.