Retail investors steer clear of Emmbi Polyarns & DB Realty IPOs; flop debut on BSE

Retail investors and employees have given a ‘thumbs down’ to both the IPOs; DB Realty listed at an 8% discount while Emmbi Polyarns shed 59% on its debut

The Emmbi Polyarns Ltd and DB Realty Ltd (DBRL) IPOs (initial public offers), which listed on the NSE and BSE today, received a poor response from both retail investors and employees. DBRL got 36% subscription out of 9,615,358 shares reserved under the retail investor category while Emmbi Polyarns managed to get 45% subscription out of the retail quota of 3,333,400 shares. The employees of Emmbi Polyarns were also not attracted to the stock which saw only 0.6% subscription out of 50,000 shares reserved under the employee category. 

The DBRL issue was open from 29th January 29 to 2nd February. The IPO was assigned a ‘Grade 2’ rating by CRISIL, indicating below average fundamentals.

DB Realty opened at Rs430 and ended the day at Rs455.40 on the BSE. Its issue price was Rs468, which means it opened at a discount of 8%. Similarly, Emmbi Polyarns opened at Rs45.50 and plunged to Rs28.60 on the BSE, down 59%.

The Emmbi Polyarns IPO opened on 1st February2010 and closed on 3rd February. Credit Analysis and Research Limited (CARE) had assigned a ‘Grade 2' rating for this issue.

DB Realty Limited (DBRL) is a real-estate development company focusing on residential, commercial, retail and other projects, such as mass housing and cluster redevelopment in Mumbai.
Emmbi Polyarns Limited is engaged in the manufacture and sale of FIBC (jumbo bags), woven sacks and various woven polymer-based products like container liners, protective irrigation system, canal liners, flexi tanks, car covers, etc.

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    Sideways movement to continue

    Indian investors continued to stay cautious ahead of the Union Budget as share prices slumped towards the end of the day

    Indian markets moved sideways throughout the day as railway minister Mamata Banerjee announced a populist railway Budget for 2010-2011. However, the market slumped towards the end of the day. The market sentiment continued to remain cautious ahead of the Economic Survey and the Union Budget 2010-11 which will be tabled in Parliament on 25 February 2010 and 26 February 2010, respectively. The Sensex declined 30 points from the previous day’s close to 16,256 while the Nifty closed at 4,859, down 11 points. The market is expected to remain highly volatile tomorrow with the focus being on the derivatives expiry.

    Rollover in Nifty futures from February 2010 series to March 2010 series stood at about 35% at the end of Tuesday’s trading. Rollover in Mini Nifty futures was about 32% and the market-wide rollover was about 43%. The trend will stay sideways until the Union Budget is tabled in Parliament.

    At 12:00 hrs IST, the Sensex was trading down six points from the previous day’s close at 16,281; but at 14:00 hrs IST, the Sensex was trading at 16,294, up eight points.

    At the end of the day, index heavyweight Reliance Industries (RIL) remained flat after petroleum minister Murli Deora reportedly stated on Tuesday that oil and natural gas producers, including RIL, need not share the marketing margin they charge from their clients with the government.

    Parenteral Drugs (India) gained 3% after the company signed a pact with a Kenyan firm to form a joint venture company for manufacture and supply of pharmaceutical formulations for the entire African continent McNally Bharat Engineering Company bagged an order worth Rs5.80 crore. The stock was down 1%.

    Gateway Distriparks gained 1% after a foreign fund bought 0.59% stake in the logistics firm.

    REpower Systems AG, a subsidiary of Suzlon Energy, and French company Akuo Energy SAS have signed three agreements for the supply of 25 wind turbines. The Suzlon stock was down 1%.

    Mamata Banerjee kept passenger fares as well as freight rates unchanged in the Railway Budget presented today. The freight rate for foodgrains and kerosene was cut by Rs100 per wagon. The railway minister said that the service charge on air-conditioned fares will be cut. Ms Banerjee said the time was ripe for private partnership in Indian Railways, but clarified that the railways would not be privatised. She said that clearance to private investment would be provided within 100 days to speed up projects. Ms Banerjee appealed to business houses to join hands for building partnerships with the Railways. She said a special task force will be set up for early clearance of projects. She added that the need of the hour was to invite domestic investments through public-private partnership.

    During the day, Asia’s key benchmark indices in Hong Kong, Japan, Indonesia, South Korea, Singapore and Taiwan fell by 0.56%-1.48%, while China rose 1.33%.

    As per media reports, Japan’s shipments abroad advanced 40.9% from a year earlier, the biggest increase since February 1980.

    On Tuesday 23 February 2010, in the US markets, the Dow Jones Industrial Average was down 101 points while the S&P500 and the Nasdaq Composite declined 13 points and 29 points, respectively.

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    Now, Hyundai faces a total recall of its new Sonata

    The Korean carmaker is halting sales of its top-selling vehicle in the US and South Korea owing to concerns about sticking door locks. However, this will not affect Hyundai’s India sales, say analysts.

    First, it was Japan’s Toyota and Honda, then India’s Maruti, and now Korean chaebol Hyundai is facing a total recall of its recently launched ‘2011 Sonata sedan’ cars due to concerns about sticking door locks.

    Acting on a handful of customer complaints, Hyundai Motor intends to carry out a voluntary recall of its new Sonatas produced in Korea and the US to replace some front-door latches, the company said in its official statement. 

    However, this will not affect Indian sales of the vehicle, as it’s a different model. “This will not impact sales of Sonata in India, as the YF Sonata model being sold in the US and South Korea is a new one, while in India the Sonata Transform is sold,”  said Hyundai’s spokesperson Rajiv Mitra.

    Automobile dealers and analysts also do not believe that the problems with the new Sonata model launched in the US will affect Hyundai’s sales in India, especially because of the low volume of Sonata car sales in the domestic market. “Sonata hardly contributes to the Indian volumes, as the Indian market is concentrated more on small vehicles, so sales will not be affected” an analyst from a brokerage said.

    The Sonata is Hyundai's largest-selling vehicle, with global sales of 120,028 cars in 2009. The 2011 Sonata model went on sale only two weeks ago. There are currently only about 5,000 cars in the US inventory, and about 1,300 cars have been sold. In India, Hyundai sold 500 imported Sonata cars in 2009.
    According to a report by, Hyundai spokesman Miles Johnson was quoted stating that the problem involves a lock malfunction that occurs when front-seat passengers try to open their doors from the inside while depressing the lock button at the same time. When that happens, the interior door handles don't return to their original positions, trapping the passenger until the lock button is pressed again.

    Mr Johnson also stated that Hyundai has become highly sensitive to product issues amidst a series of high-profile congressional hearings involving its Japanese competitor Toyota Motors.

    Analysts in India believe that owing to these global issues, exporters are becoming more cautious about product quality. “They are themselves reviewing product quality and checking safety norms that apply in different markets,” the analyst said.

    The recall will affect YF Sonatas produced in Korea until 6th December, which is around 46,000 units, and those produced at Hyundai Motor Manufacturing in Alabama (HMMA) and sold to customers until 16th February, which are nearly 1,300 units, the company said.

    “Since the launch of the Sonata in Korea last September, Hyundai Motors discovered a mechanical problem with its front-door latches which, in very rare instances, will not close properly. To avoid a possible occurrence of the problem, Hyundai has been applying modified parts to some of its Korean and US production models,” the company said.
    The company says that it will officially notify Korea's ministry of land, transport and maritime affairs in Korea and the National Highway Traffic Safety Administration (NHTSA) in the US of the voluntary recall this week.
    Johnson said Hyundai engineers were trying today to determine whether the malfunction even warranted notification to the National Highway Traffic Safety Administration, which governs product recalls.

    Consumers are happy with Hyundai’s decision to recall. Paul Landerman blogged on Autoweek

    “That's awfully sweet of Hyundai, given the light at Toyota's dissatisfaction.” Another blogger said “Pretty sad when the Koreans can get it right. Maybe Toyota can learn from them”.

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