22 companies cancel IPOs due to sluggish markets

Fearing that the trend will impact corporates’ ability to raise funds to finance their expansion projects, the SMC Global Securities report said this may result in a slowdown in their capacity building and job creation

New Delhi: Owing to a sluggish trend in stock markets, at least 22 companies, mainly from real estate and power sector, have called off their initial public offers (IPOs) in the current fiscal, reports PTI.

“The bad mood of the capital market has led 22 companies to call off their IPOs during this fiscal. Even after getting approval from market regulator Securities and Exchange Board of India (SEBI), these companies could not open their IPOs within the valid period of one year from the date of approval due to the ongoing turmoil in the capital markets,” SMC Global Securities said in a report.

Among the 22 companies that cancelled their IPOs, a host of them belong to power and real estate sectors, including Sterlite Energy, Jindal Power, Avantha Power, Lodha Developers, Ambiance Real Estate, Kumar Urban Developers, Neptune Developers, BPTP and Raheja Universal.

Fearing that the trend will impact corporates’ ability to raise funds to finance their expansion projects, the report said this may result in a slowdown in their capacity building and job creation.

SMC noted that the trend in the IPO market may set panic in the mind of the private equity (PE) funds, unable to exit from their investments.

PE funds generally invest in promising but unlisted companies in the hope of a later exit through IPOs.

Some companies also announced IPO deferrals, including One97 Communications and Micromax, owing to the volatile market conditions, the report highlighted.

Lodha Developers’ Rs2,500-crore IPO could not meet its opening deadline of 20th January 2011 and thus expired.

In tandem with volatile investor sentiment, two companies Greatship (India) and IND-Barath Power Infra, whose IPO is to open for subscription this week may not hit the capital market, the report said.

The BSE benchmark Sensex has plummeted by over 21% in the year so far and touched a 52-week low of 15,765.53 on 26th August.

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BSE makes changes in Mid-cap, Small-cap indices

A total of nine scrips have been included in BSE Mid-cap index replacing 16 outgoing stocks, while 39 scrips will replace 41 shares on the small-cap index. The changes will be effective from 10th October, the exchange said

Mumbai: The Bombay Stock Exchange (BSE) on Monday announced changes in two indices—BSE Mid-cap and Small-cap—which will be effective from 10th October, reports PTI.

A total of nine scrips have been included in BSE Mid-cap index replacing 16 outgoing stocks, while 39 scrips will replace 41 shares on the small-cap index, a BSE release said.

Some of the major firms joining the mid-cap index include—Bajaj Corp, Eros International Media, Lanco Infratech and Jaypee Infratech.

Companies including Bombay Dyeing & Mfg Co, GTL Infrastructure, GTL, Spicejet and Petronet LNG have been excluded from the BSE Mid-cap index.

Dunlop India, Hindustan Organic Chemicals, Kirloskar Electric Company and Birla Power Solutions have been excluded from the BSE Small-cap index.

In the small-cap index, the new firms included IVRCL, Mahindra Lifespace Developers, Simplex Infrastructure, SRS, Usha Martin and Vardhman Textiles are some of the entities included in the index.

In addition, the exchange has revised the list of Group ‘A’, comprising of 200 scrips as part of periodic review.

BSE also said while Hindustan Copper and Opto Circuits have been excluded from BSE TASIS Shariah 50 list, Bata India, Biocon, CESC, Pidilite and VIP Industries would be part of the list now.

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Experts welcome decision to set up expert body on poverty

NAC member Harsh Mander said, “I welcome the assurance that in future, BPL poverty line criteria will be delinked while providing welfare schemes and government incentives.” He, however, added that there should be proper acceptance on adequate requirement of poor people

New Delhi: Welcoming the government’s decision to set up an expert committee to look into poverty estimates, former Union minister and noted economist YK Alagh said the new definition should take into account aspirations of the people, reports PTI.

“New poverty line must talk about aspirations of people.

Today, for the first time they (the government) have given up the Tendulkar Committee’s poverty line. I congratulate both the Planning Commission and the rural development ministry,” Mr Alagh told PTI.

The government, he hoped, would soon develop new concepts keeping in view the requirements of the ‘Aam Admi’.

Some members of Sonia Gandhi-headed National Advisory Council (NAC) also welcomed the government's announcement to set up a committee

Sources close to Aruna Roy, an NAC member, said, “We are happy that the government has given up the Tendulkar poverty line. That is a positive development.”

Another NAC member Harsh Mander said, “I welcome the assurance that in future, BPL poverty line criteria will be delinked while providing welfare schemes and government incentives.”

He, however, added that there should be proper acceptance on adequate requirement of poor people.

Meanwhile, NAC member NC Saxena said the government has taken no any new policy decision.

“Montek Singh issued his clarification today. No new policy decision was taken,” he said.

Highlighting the importance of poverty line, Mr Ahluwalia said the purpose of this is to give an absolute level of living that is able to trace over time whether development was taking people above this level.

“We always historically have the poverty line. We use it to measure whether growth is reaching below the poverty line or not and that monitoring would be done on the basis of poverty line,” he said.

Issue of benefits have never been exclusively linked to the poverty line because there are many benefits that are universal even in the case of Public Distribution System (PDS) at one time PDS was not linked to the poverty line, he added.

It is worth noting that the many benefits under various schemes are not linked to the poverty line. Some benefits at present are universal, e.g., free school education, mid day meals, ICDS and the employment guarantee under the MGNREGA, he said.

The proposed Food Security Bill is not universal but it extends the benefit of highly subsidised food grains to a much larger category than the below poverty line (BPL), that is, 41% instead of around 32%, and further to a general category which goes up to 75% of the rural population and 50% of the urban population.

The government has therefore responded to the need to protect more than the BPL, he said.

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