Zero QIBs for Tarapur Transformers IPO

There were zero bids from the QIB category for the Tarapur Transformers IPO, while the retail investor category was subscribed 0.79 times on the opening day of this offering, which received a ‘Grade 1’ from CRISIL

Tarapur Transformers Ltd, which opened for subscription yesterday, has received zero bids from the qualified institutional buyer (QIB) category while the retail investor category was subscribed just 0.79 times as on 27 April 2010.

The non-institutional investor quota was subscribed 4.17 times (53.20 lakh bids from the reserved quota of 12.75 lakh shares).

Tarapur Transformers Ltd is into manufacturing, rehabilitation, up-gradation, and refurbishment of transformers. It manufactures transformers up to 220 kilovolts (KV) and has an installed manufacturing capacity of 1,839.40 megavolt ampere (MVA) & repairing capability of 1,800MVA per annum.

The company posted a net profit of Rs2.15 crore for the year ended March 2009 compared to Rs1.51 crore in FY08 with a total income of Rs24.01 crore and Rs10.68 crore respectively. The earnings per share (EPS) for the year ended 31 March 2009 stand at Rs2.16. At a floor price of Rs65, its price to earnings (PE) ratio is 30.09 for the same period. The company has taken loans to the tune of Rs18.81 crore payable to various banks which constitute 88.42% of net worth of the company as on 31 December 2009. The company reported negative cash flows to the tune of Rs7.47 lakh in FY05, Rs2.09 lakh in FY06 and Rs124.97 lakh in FY08. In FY09, its cash flow was positive at Rs9.68 lakh.

The issue opened on 26 April 2010 and closes on 28 April 2010. The company plans to raise Rs55.25 crore-Rs63.75 crore by issuing 85 lakh shares with a price band of Rs65-Rs75 per share.

The IPO money will be utilised for expansion and modernisation of its Pali unit, to finance incremental working capital, acquisition of business, marketing and corporate-branding expenses.

Ratings agency CRISIL has assigned an ‘IPO Grade 1’ to the issue. Comfort Securities Pvt Ltd is the lead book-running manager.

Market watchdog SEBI has issued a letter to the promoter company Bilpower Ltd to opt for a consent order by paying an amount of Rs1.75 lakh for violation of Regulations 6 (2) and 6(4) for fiscal 1997 and Regulation 8 (3) for fiscals 1998, 1999, 2000, 2001 and 2002 with relation to the SEBI (SAST) Regulations, 1997.
 

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SEBI asks Zenet Software to cough up Rs31 crore; bars it for one year

The market regulator has held Zenet Software guilty in the IPO scam for manipulating the demand for shares in the RII category of IPOs and distorting market integrity

Market regulator Securities and Exchange Board of India (SEBI) has barred Zenet Software Ltd from the securities markets for one year and also asked the company to disgorge Rs30.88 crore, including interest, in the initial public offering (IPO) scam. 

The case relates to the IPOs for 12 companies made during 2003 to 2005. After noticing certain irregularities in the transactions in the shares that were issued through the IPOs before their listing on the stock exchanges, SEBI, on 27 April 2006, issued an ad interim ex-parte order.

The order, which itself was a show-cause notice, directed certain persons, including Zenet Software, Tauras Infosys Ltd (Tauras), Excell Multitech Ltd (Excell), Seer Finlease Pvt Ltd (Seer) and Sujal Leasing and Finance Pvt Ltd (Sujal) (collectively referred to as ‘noticees’) not to buy, sell or deal in the securities market, including in IPOs, directly or indirectly, till further directions.

MS Sahoo, whole-time member, SEBI, in an order dated 23 April 2010, said: “I find that the noticees financed the key operators (KOs) to make applications under the retail category of 12 IPOs and received the shares on allotment from the KOs as per the prior understanding with them. By doing this, they deprived the retail individual investors (RIIs) of their legitimate share in the allotment in the IPOs and made unlawful gains of Rs22.39 crore to the detriment of the RIIs. The noticees, therefore, manipulated the demand for shares in the RII category of IPOs and distorted the market integrity. I, therefore, conclude that the noticees employed fraudulent, deceptive and manipulative practices to corner the shares meant for RIIs in 12 IPOs stated in tables above, and made unlawful gains by selling the shares so cornered."

After completing the investigation, SEBI issued five separate notices to the companies named above. In the show-cause notices (SCNs), it was alleged that the noticees acted as financiers to two key operators (KOs), namely, Roopalben Panchal (Roopal) and Sugandh Estates and Investment Pvt Ltd (SEIPL) to enable them to apply for shares in the retail category in 12 IPOs. The companies were IL&FS Ltd (ILFS), IDFC Ltd (IDFC), FCS Software Solutions Ltd (FCS), Gateway Distriparks Ltd (Gateway), Shoppers Stop Ltd (Shoppers), Datamatics Technologies Ltd (Datamatics), Nandan Exim Ltd (Nandan), Yes Bank Ltd (YBL), SPL Industries Ltd (SPL), National Thermal Power Corp Ltd (NTPC), Dishman Pharmaceuticals Ltd (Dishman) and Tata Consultancy Services Ltd (TCS).

In the mean time, Tauras, Excell, Seer and Sujal amalgamated with Zenet in terms of a scheme of amalgamation approved by the Gujarat High Court.

It is alleged that the KOs transferred the shares received on allotment in these IPOs to the demat accounts of the noticees. They either transferred the corresponding refunds received from the issuers to the noticees or retained the same for making applications in the subsequent IPOs. Thus, the noticees, in collusion with the KOs, employed fraudulent, deceptive and manipulative practices to corner the shares meant for retail individual investors (RIIs) in 12 IPOs. They collectively made an unlawful gain of Rs21.94 crore on sale of the shares so cornered.

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Heavy mettle: Here come the Russians!

Russian steelmakers are eyeing the Indian market. Top Russian steelmakers like MMK are interested in joint ventures with Indian companies

Russian companies plan to prove their mettle in the Indian steel market. Major Russian steel companies including Magnitogorsk Iron & Steel Works (MMK) are looking for joint ventures in the country.

MMK, one of the largest enterprises in the Russian steel sector, is already on the lookout for an Indian steel company for a joint venture. Novolipetsk Steel, Severstal Russian Steel and the Evraz Group are the other major steelmakers in Russia.

Severstal is Russia’s largest steel producer. Certain sections of the media have said that Severstal plans to sell one of its units in Italy to Tata Steel or ArcelorMittal. In 2005-06, the same company was looking for a partnership with Arcelor, while Arcelor later partnered with Mittal Steel.

The Evraz Group has a strong presence across the various verticals of the steel & mining businesses in Russia. In FY2009, the group’s crude steel production was 15.3 million tonnes (MT).

Novolipetsk Steel is among the four largest steel companies in Russia. The company recorded 10.6MT steel production and sales in FY2009. For 2010, the company’s total crude steel production is expected to grow 10% year-on-year to over 11.6MT. No definite Indian company has been identified for the joint venture.

However, these companies are believed to be looking out for end-to-end steel companies, not just steel product suppliers. Most end-to-end steel companies in India belong to big corporate houses and may not be willing to enter into a joint venture with another player. Thus it remains to be seen if the Russians succeed in finding Indian partners.

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