Investor Issues
IPO processing time should be brought down to seven days: Bhave

There would be more efficiency in the listing process, if the time taken for processing an IPO application can be reduced

In a bid to bring in more efficiency in the primary market, market regulator Securities and Exchange Board of India (SEBI) on Wednesday said that it wants to bring down the time required for initial public offer (IPO) processing to seven days from 20 days at present over the next one year, reports PTI.
This would mean that the time taken for processing an application for an IPO will be lesser, which will bring in more efficiency to the listing process.
"The listing time should come down from 20 days to seven days. The primary market is somewhat inefficient compared to the secondary market," SEBI chairman CB Bhave said at a conference in Mumbai.
However, while doing so, the timely settlement of transactions will become the biggest bottleneck to the system, which needs to be addressed, Mr Bhave said.
SEBI has requested the Reserve Bank of India (RBI) to allow clearing entities to have an account with the central bank, Mr Bhave said.
With a view to bring in more transparency, SEBI had introduced Application Supported by Blocked Amount (ASBA) process in the IPO process and is looking at making it applicable to retail investors as well, Mr Bhave said.
The ASBA allows releasing an applicant's money only if the allocation is made. If ASBA process becomes popular, SEBI would like to reduce the IPO allotment period to five days, Mr Bhave had said earlier.
Earlier in August, the market regulator had issued a circular that said that changes in sections like any material development in risk factors, an aggregate increase of 5% or more of the shareholding of promoters, change of more than 10% in the estimated issue size or estimated means of finance, change of more than 10% in estimated deployment of funds, among others, as reasons required for fresh filing of draft offer document with the board. According to media reports, some merchant bankers felt that the directives from SEBI related to updations in the offer documents for initial public offerings, would make the process as tedious as filing a fresh offer document.
The move came after SEBI observed that in some cases material changes informed by merchant bankers resulted in major deviations from the draft offer document that was available in the public domain and called for fresh scrutiny and processing of the draft offer document by the SEBI board.
At present, it takes around two weeks for allocation of public issues and around three weeks for them to be listed after they close.

-Yogesh Sapkale [email protected]


The shine fades from wine

Winemakers see stocks piling up for want of takers due to the ongoing slowdown

Although Cyclone Phyan hit Nashik a week back and damaged a major portion of the grape crop under cultivation, consumers might not have to pay much for their bubbly in the coming months as last year’s recession has left unsold stock of wine at various wineries across Maharashtra.

The unsold wine stored in tanks will result in winemakers selling their produce at a lesser price. Sula Wines still has over 40%-50% of its wine lying unsold in its tanks, while Indus Wines has around 90% of its wine still in its inventory.

“Because of the recession and the terrorist attacks, the hospitality industry was hit hard. People stopped patronising hotels or visiting Mumbai. The food and beverage industry also took a hit with a result that our wines could not be sold,” said Violet D’souza, director, Indus Wines.

For winemakers, the season from Diwali to the end of the year is the peak season which sees maximum wine sales taking place.

The market for wine before 2007 was growing at 28%. However, since 2008, the market has dropped by 30%.

The problem facing the industry is not only reduction in sales and demand, but also the restricted marketing structure—both domestic and international—for Indian wine firms, according to Nasik Valley Grape Promotion Association president, Pradeep Panchpatel.

Adding to this, winemakers are a part of the agriculture industry, but are made to pay 20% sales tax as wine is considered as ‘hard liquor’ which impacts the annual bottom-line of various winemakers.
According to Sula Wines vice president Neeraj Agarwal, the prices of grapes will increase by at least Rs10/kg as there will be a shortage in the fruit output this year.

“The production cost will increase by about 10%-20% as the wines are still in our tanks. Holding cost will go up,” Mr Panchpatel said, adding that due to the cyclone the production of grapes will decrease.

Even with this scenario, winemakers will not increase prices of their product as their main objectives for this year is to promote the product, Mr Panchpatel added. This view is maintained by Indus Wines which has launched Mumbaai Dreamz, a low-priced wine category.

- Aaron Rodrigues [email protected]


New index launched for realty market

Liases Foras has launched Ressex, a real-estate sensitivity index that will capture trends in price, inventory, sales and demand in six cities.

Real-estate research firm Liases Foras has launched its Real Estate Sensitivity Index, or RESSEX, which will provide data on price, inventory, sales and demand changes in six cities—Mumbai Metropolitan Region, Pune, National Capital Region (NCR), Bengaluru, Chennai and Hyderabad.
This Index will increase transparency in real-estate transactions by providing timely, accurate and relevant data to investors, developers and financial institutions, said Pankaj Kapoor, founder and chief executive officer of Liases Foras.
“Ressex data are collected through primary surveys and include detailed micro-research of the six cities,” he said.
“This type of a tool was needed in the industry for a long time and we are working closely with Pankaj. It will bring more transparency in the market,” said Renu Sud Karnad, joint managing director of housing finance major HDFC.
Subscribers will be charged a quarterly fee of Rs25,000 for access to this website, while yearly access will cost Rs 75,000, Kapoor said, adding that a separate service will be launched for individual investors to select projects using analytical tools.
 The website provides calculators that allow the user to tweak various parameters such as prices, gestation period, location, etc. to compute key valuations like fair value, net present value and even Ressex futures.
“Developers will benefit a lot from such a sensitivity index because it will be easy for us to know which sector is enjoying more demand and work accordingly,” said Niranjan Hiranandani, managing director of real-estate developer Hiranandani Constructions.

Pallabika Ganguly, [email protected]


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