A total of 34 companies raised Rs34,150 crore through initial and follow-on public offers in the January-June 2010 period, while 22 companies collectively raised Rs11,421 crore in the corresponding period this year
New Delhi: A number of companies are hitting the stock market with public offers despite the volatile investor sentiment, with three companies slated to launch their initial public offers (IPO)s in the next two days, taking the total number to 12 this month, reports PTI.
The companies that plan to come out with IPOs this week include Flexituff International, a manufacturer of flexible intermediate bulk containers, information technology firm Taksheel Solutions and stock broking firm Indo Thai Securities.
In addition, transformer manufacturer M&B Switchgears' Rs90 crore IPO and financial service company Onelife Capital Advisors' Rs37 crore public offer opened for subscription today.
According to market experts, these are small-size IPOs and the amount involved is also not huge, so it will be interesting to see investors' response.
"These are small-size issues and the amount is also not massive and it will be interesting to see their response. I think these companies must have got some comfort from institutional investors," Destimoney Securities MD and CEO Sudip Bandyopadhyay said.
Geojit Financial Services research head Alex Mathew said, "Any company with sound fundamentals will get a good response from investors, even in bad market conditions."
Another leading expert, CNI Research CMD Kishor P Ostwal, said, "Market condition is very bad and I don't advise investors to subscribe to any issue and subscribe only when a state-owned firm comes out with a public offer."
Flexituff International's Rs100 crore initial public offer and Taksheel Solutions' Rs 80 crore IPO will open tomorrow, while Indo Thai Securities' Rs 32 crore stake sale will begin on Friday (30th September).
Notably, air charter company Swajas Air Charters' Rs37 crore initial share sale, which closed today, has failed to generate interest among investors.
In contrast, the stake sales of six entities-RDB Rasayans, Prakash Constrowell, PG Electroplast, TD Power Systems, SRS and Brooks Laboratories-earlier this month were oversubscribed by 2-3 times, which analysts termed a decent response amid the prevailing market conditions.
As many as 15 companies launched initial share offers in the month of September last year. This year, nine firms have already opened their IPOs for subscription in the current month and another three are in the pipeline.
The 30-share Sensex has declined by 1.76% in the month of September so far, closing at 16,524.03 yesterday.
It seems that the public's appetite for the stakes offered by Indian companies through share sale programmes is on the wane. IPOs and FPOs in the first six months of 2011 mopped up over Rs11,000 crore, just one-third of the year-ago levels.
A total of 34 companies raised Rs34,150 crore through initial and follow-on public offers in the January-June 2010 period, while 22 companies collectively raised Rs11,421 crore in the corresponding period this year.
Interestingly, 15 companies-including Anil Ambani Group firms Reliance Infratel and Jindal Power-have refrained from bringing out their IPOs so far this year despite obtaining the go-ahead from the Securities and Exchange Board of India (SEBI).
In 2010, Indian public and private sector companies raked in about Rs59,523 crore from the primary market. The total mop-up from IPOs and FPOs this year is expected to touch Rs90,000 crore. In 2009, there were a total of 20 IPOs, which raised close to Rs20,000 crore.
IRDA has taken a huge step forward for the insured with its clear-cut definition of a ‘policy break-in’. The insured have tremendous opportunity to request insurers to consider policy continuity even if it was considered as a break-in as per a mediclaim policy’s terms of agreement
The Insurance Regulatory and Development Authority (IRDA) has quietly changed the definition of mediclaim policy break-in, in the portability guidelines which may help many policyholders who paid the premium of mediclaim after the grace period, but within 30 days of policy-end date. In this case, the insured can request the insurer to consider it as a policy without break-in, due to the new liberal definition from IRDA.
By allowing up to 30 days after policy renewal date to be considered as a continuous policy, this move will prove to be beneficial for customers. IRDA should take the next logical step and change the break-in period from 15 days to 30 days in mediclaim policies—to avoid confusion and misinterpretation of the exact break-in period.
Shreeraj Deshpande, head-health insurance, Future Generali India Insurance Co Ltd told Moneylife, "IRDA had issued renewability of Health Insurance guidelines with effect from 31 March 2009, allowing a grace period of 15 days for renewal of health insurance policies. This grace period was to condone delay in renewal of health policies up to 15 days for the sake of allowing continuity for waiting periods as well as pre-existing disease (PED) cover. However, any loss occurring during the grace period would not be covered as there is no valid insurance contract during the grace period. In the Portability Guidelines made effective from 1 October 2011, the break-in period has been defined as 30 days for policies which are being ported from one insurer to the other—or from one plan of the insurer to another plan of the insurer."
According to Subrahmanyam B, vice president & head-health vertical, Bharti AXA General Insurance, "I feel that IRDA is defining the break-in policy with prospective effect and in respect of portability policies only. I would imagine that if it is our own renewal, the 15-day grace period would apply."
There seems to be confusion due to the new definition of break-in period for portability and there are good chances of the same being applicable for not just portability but also for mediclaim policies. According to the head underwriter of a private insurer who spoke to Moneylife preferring anonymity, "We have approached the General Insurance Council to seek (a) clarification. If IRDA sticks to the 30-day break-in period for portability consideration, then the mediclaim policy will also have to allow for a 30-day grace period."
In some cases, insurers did not consider it as continuous coverage even if premium was paid within the grace period. According to Rohan Dukle, director, Magus Corporate Advisors Pvt Ltd, "We have had claims which come up years after they are condoned (premium payment during grace period); the claims have been rejected since the policy period is broken in-effect. I have taken one such case to the Ombudsman, since the insurers, after having given a no-claim-bonus (NCB) which ratifies the condonation, still consider that there has been a break-in in the policy. You will notice that the definition by IRDA does not leave any room for doubt, but is a clear-cut definition."
He added, "This therefore is a huge step forward for the insured. The question that remains, however, is whether in the current instance, IRDA is stating what it feels is obvious, defining the same with prospective effect or defining the same with retrospective effect."
Apart from definition of policy break-in, IRDA has also quietly disallowed NCB at porting, even if the terms & conditions seem to allow NCB porting. The new insurer will charge premium on the full sum insured (including the bonus) which in effect makes NCB a lost cause.
IRDA has also failed to address another major issue, that is, the medical conditions developed by the policyholder with the old insurer. For instance, if a policyholder has no pre-existing diseases (PED) when the initial policy was taken, but has developed conditions over the next couple of years. If the policyholder wishes to port to a new insurer who has a standard four-year PED waiting period, the new insurer will make the policyholder wait for a couple of years to cover these conditions. These are considered PED with the new insurer even though they consider the time spent with the old insurer. In this case the policyholder would be better off with the old insurer as there is no PED and hence all the conditions are covered with no waiting period.
A Mangalore resident’s ticket-booking transaction was denied, though the amount was credited to IRCTC; despite repeated attempts, the issue is lying unresolved since the past eight months
Passengers have time and again complained about the ticket-booking system on the portal of the Indian Railways Catering and Tourism Corporation (IRCTC) Limited. Now there are some concerns over its refund mechanism for the failed transactions. The problem arises when the transaction fails and money is debited from the customer's bank account, be it through a debit or credit card, without the ticket being generated.
Now it appears that the complaints of non-refund of failed transactions remain unresolved. Take the case of Ramesh Shenoy, a Mangalore resident who has not been refunded for the failed transaction that took place eight months back.
On 20 January 2011, Mr Shenoy tried to book railway tickets for the Yashwantpur-Kanpur Express through IRCTC. Even after four attempts, his transaction failed, though the amount was debited from the bank account, which he holds with Canara Bank. Mr Shenoy, who is also a former banker, further investigated with the bank's Internet division, where it was confirmed that Rs8,328 had been credited to IRCTC, giving the details of the 'strings' from the 'switch log' of the Internet records.
He also checked his account on IRCTC using his username, but there is no evidence of IRCTC having received the credit for the operation.
"The details as in the Web (register) using my user ID reveal (details) about the transactions, but (there is) no evidence of credit having (been) received by IRCTC," Mr Shenoy told Moneylife.
Over eight months, Mr Shenoy has sent details about the failed transaction and contacted the customer care division of IRCTC numerous times, but nothing has been done so far. "I have sent emails, along with proof from the bank that the amount was credited to it (IRCTC). But there has been no reply from it and the issue remains unresolved."
"It should be possible for the Internet Division of IRCTC to trace the credits with the details of 'strings' provided by Canara Bank from the switch log, and arrange for the refund," he explained.
But Mr Shenoy is undeterred and he will continue his fight. He plans to file a Right to Information (RTI) application to trace the links of his credited amount from IRCTC. "It appears that the credits received by IRCTC must be in the suspense (account), awaiting details. Maybe an RTI query can reveal this."
Moneylife sent an email to IRCTC, which has acknowledged the complaint and agreed to pursue the matter. It remains to be seen if it will act on this confirmation.