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ICAR to invest Rs2,300 crore on farm sector in 2010-11

Chennai: Looking to boost farm sector growth by more than 4%, the Indian Council of Agricultural Research (ICAR) has chalked out a Rs2,300 crore programme with a focus on research and making farming a popular livelihood option, reports PTI.

"Now every state is coming up well in the agricultural sector, with many touching close to about 2.8%.

However, our annual target agricultural growth rate is about 4%, and we will be spending Rs2,300 crore on in 2010-11," ICAR director general Dr S Ayyappan told PTI.

The initiatives under the programme include gearing up to meet new challenges in climate change, public-private partnership (PPP) projects and programmes to make more people take to agriculture as a livelihood.

"We are working deeply in all aspects in the country on climate change," he said.

The public-private partnership initiative will benefit both sectors, besides the farmers.

"More emphasis on innovation and interaction between the two sectors may result in more synergy among them," he said.

To lure more people to take up agriculture as livelihood, various initiatives like farmers' training and capacity building for more innovative agricultural practices have been chalked out. "We are also trying to bring them to higher stage by identifying innovators in each district and giving them awards at the national level," he said.

Besides, ICAR also conducts awareness campaigns among students on the agricultural sectors that have good prospects to encourage them to take up studies related to agriculture," Mr Ayyappan said.

Mr Ayyappan, who was here to attend a function organised by Tamil Nadu Veterinary and Animal Sciences University, said every project or product initiated by ICAR has been formulated after consultation with state governments and keeping the region specific needs in mind.

"We are also customising region-specific products," he said.

ICAR officials said the latest e-linkage facility is expected to help Krishi Vigyan Kendras (KVKs) develop fruitful partnerships between subject matter specialists of KVKs and researchers and farmers to share and upscale appropriate technologies, best practices and innovative ideas or experiences among stakeholders.


Avoid Gallantt Ispat’s IPO

The company faces competition from existing players and is in losses till date. It lays out 44 internal risk factors in its prospectus. Avoid!

Price: Rs50

Bid lot: 125 equity shares and in multiples thereof

No of shares: 81,00,000 equity shares

Issue size: Rs4,050 lakh

Issue duration: 22 September 2010 - 24 September 2010

Listing: BSE and NSE


Pre-Issue promoter and promoter group holding:

Post-issue details:

Public issue of 81,00,000 equity shares of Rs10 each for cash at a price of Rs50 per equity share including a share premium of Rs40 per equity share aggregating to Rs4,050 lakh comprising of 14,00,000 equity shares of promoter contribution aggregating to Rs700 lakh and net offer to the public of 67,00,000 equity shares aggregating to Rs3,350 lakh. The issue would constitute 30.26% of the fully post issue paid up capital of the company and the net offer to the public would constitute 25.03% of the fully diluted post-issue paid up capital of the company. Equity shares outstanding prior to the Issue are 1,86,66,297. Equity shares outstanding after the issue are 2,67,66,297.

Business model

Gallantt Ispat Ltd is engaged in manufacturing sponge iron, mild steel billets, re-rolled products (TMT bars) and wheat flour products. The objects of the issue are

1) To part finance the integrated steel plant consisting of the following modules at Sahjanwa, Gorakhpur, Uttar Pradesh

  •  Sponge iron plant with a capacity of 99,000 MTPA
  •  Mild steel billets with a capacity of 1,62,380 MTPA
  •  Re-rolled products with a capacity of 1,67,400 MTPA
  • Captive power plant with a generating capacity of 16MW

2) To part finance the Flour Mill Sahjanwa, Gorakhpur, Uttar Pradesh with a capacity of 1,80,000 MTPA.

3) Listing of securities on stock exchanges

Financial Snapshot:

The net worth of the company, as per restated financial statements as at 31 March 2010 is Rs9,655.76 lakh. It was Rs10,126.07 lakh as of 31 March 2009.

The profit and loss statement shows net loss after extraordinary items of Rs449.56 lakh as of 31 March 2010. It was Rs12.60 lakh as of 31 March 2009.

Diluted EPS: Year ended 31 March 2010 (2.41); year ended 31 March 2009 (0.10).

Price/Earning (P/E) ratio: The P/E ratio cannot be determined as the EPS for the period ending 31 March 2010 is negative. The P/E ratio for the industry is in the range of 4.4 to 96.6.

Book value of the equity shares of the company as of 31 March 2010 is Rs51.83 per equity share.

Analysts' notes on financials:

Rating agency FITCH has awarded grade 2/5 to the IPO indicating 'Below Average' fundamentals. The reports say the grading reflects the project delays and stabilisation issues faced by the company in its capex plan to set up an integrated steel and power plant. Although the company completed its capex for flourmill, mild steel (MS) billet plant, rolling and sponge iron plant in August 2010, there remain operational and stabilisation issues.

The company is yet to receive clearance for some licences and yet to place order for some machinery.

It is a poor quality IPO. The fundamentals of the company do not deserve any premium. It appears that the issue is being pushed in before 30th September, to escape the new SEBI rule, which makes mandatory for companies to incorporate the June quarter results, if the issue is planned after 30th September. Better to avoid the issue.

IPO Positives

a) Interest free loan.
b) Land on actual cost and concessional rates of registration.
c) Entry Tax exemption on plant & machinery, spare parts and capital goods.
d) Exemption of mandi tax of 2% on purchases of wheat.
e) Location advantage: The location of the site will be advantageous to the company in transportation of raw material as well as finished products.

IPO concerns

Internal Risk Factors: There are 44 internal risk factors specified in the prospectus. Here are the top six:

1. There are litigations initiated by and pending against promoters/group entities.

2. The company has taken land on lease from the Gorakhpur Industrial Development Authority (GIDA) on certain terms and conditions. In the event of any breach of the terms and conditions by the company, GIDA has a right to terminate the lease, by giving a notice thereof and to resume possession of the entire plot leased or part there of.

3. Company has incurred losses of Rs12.60 lakh and Rs449.56 lakh for the year ended 31 March 2009 and 31 March 2010. Inability to generate profits in the future would adversely affect business and financial performance.

4. Cash flow has been negative for some years. In the event that future cash flows continue to be negative it may hamper its ability to meet financial obligations.

5. Registration of logo/tradename "GALLANTT Building Tomorrow" is pending before the Trademark Registry, Kolkata, West Bengal. If any of the company's applications for registration are not accepted or if any order against it is passed in the oppositions filed, the company may lose the statutory protection available to it under the Trademarks Act, 1999 for such trademarks.  

6. The company is entering into a new line of business and expanding its capacity without firm commitments/orders.


The company's major competitors for are TMT Bars, KVS TMT, Kamadhenu Steel, Barnala Steels, Tata Steel, etc. The market in which the company operates for wheat flour products is also unorganised and fragmented with many small and medium-sized companies selling in the open market.

Concluding note

From the company facts and the competition it faces, both traders and investors need to be cautious about participation in this issue.



k a prasanna

6 years ago

Poor quality IPO. The fundamentals of the company do not deserve any premium. It appears that the issue is being pushed in before Sept -30, to escape the new SEBI rule, which makes mandatory for companies to incorporate the June quarter results, if the issue is planned after 30 Sept. CLEAR NO TO THE ISSUE. FIRST CHOICE IPO

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