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MEANING
An initial public offering (IPO) occurs when a company first sells common shares to investors
in the public. Generally, the company offers primary shares this way, although sometimes
secondary shares are also sold as IPOs.
Broadly speaking, companies are either private or public. Going public means a company is
switching from private ownership to public ownership.
Going public raises cash and provides many benefits for a company.
DEFINITION
An IPO (initial public offering) is a first and one-time only sale of publicly tradable stock
shares in a company that has previously been owned privately. An IPO is also sometimes known
as "going public." Technically, an IPO is the offering to sell but virtually all IPOs result in all the
stock offered being sold. IPOs are generally managed by companies that specialize in handling
IPOs and have experience in determining what the likely IPO offering price should be. If the IPO
manager determines that the stock will not sell at an offering price that is acceptable to the
company, the application for an IPO is usually withdrawn until a better time. As soon as all
shares of an IPO have been sold, the stock is now tradable through stock exchanges or
specialists that trade in the stock and the stock price may go up or down.
HISTORY
The term initial public offering (IPO) slipped into everyday speech during the tech bull
market of the late 1990s. Back then, it seemed you couldn't go a day without hearing about a
dozen new dotcom millionaires in Silicon Valley who were cashing in on their latest IPO. The
phenomenon spawned the term silicon ire, which described the dotcom entrepreneurs in their
early 20s and 30s who suddenly found themselves living large on the proceeds from their
internet companies' IPOs.
INVESTORS are still wary of equities in the 1990s, to blame are the excesses in the
primary market in the 1990s. Of the thousands of IPOs (initial public offerings) and offers for sale
made between 1994 and 1996, less than a hundred were from companies with track record.
Even in this shortlist, only a few managed to complete planned projects and deliver value to
investors. The rest just frittered the money away.
The primary market of the mid-1990s was merely used as a channel to move public
funds into private hands. The Securities and Exchange Board of India (SEBI) was late to wake
up to the excesses, but when it did, it improved the disclosure framework, tightened the
prerequisites for an IPO, and towards the end of the decade, introduced book-building.
( This route brought to market quality, wealth-creating IPOs such as Hughes Software, I-
flex solutions, Maruti, Bharti Tele-Ventures, TV Today and Divi's Labs, to name a few. Yet the
corporate sector has still not fully lived down the consequences of the excesses of the mid-
1990s.)
1. According to Thomson Financial, the bulk of the volumes came from the biggest IPO deal
so far this year — Reliance Power's $3 billion IPO on January 21, 2008.
2. On January 15, 2008, Reliance Power attracted $27.5 billion of bids on the first day of its
IPO, equivalent to 10.5 times the stock on offer, thereby, creating India's IPO record. Its
upper cut off price was Rs. 450. The proposed IPO was to fund the development of its six
power projects across the country.
3. Emaar MGF’s IPO, at $1.6 billion is estimated to be the second largest IPO in the world
so far this year, behind Reliance Power's $3 billion IPO.
4. Thomson Financial data reveals that India accounts for 49.1% of global IPO proceeds at
the moment, compared to just 3.7% same time last year. Significant, given that global IPOs
declined 36.1% over the last one year.
5. The Indian capital market has performed quite well in 2007. It raised US$8.3
billion through 95 Initial Public Offers (IPOs). According to the Ernst & Young report,
"Globalization - Global IPO Trend Report 2007" India was the fifth largest market in the
world in terms of the number of IPOs and the seventh largest in terms of the proceeds for
the year.
6. It was the real estate sector which took the maximum advantage of the bullish
stock market trends in 2007. According to the industry body Assocham, real estate players
raised the maximum amount of funds from the capital market through IPOs last year. Realty
firms picked up around 42.7% of the total funds generated through IPOs. Of the Rs.34,119
crore raised in the primary market in the period starting from January 1, 2007 to mid-
December, about Rs.14,591 crore was raised by the realty firms.
7. An initial public offering (IPO) is the first sale of stock by a company to the public.
FINANCIAL YEAR AMOUNT RAISED THROUHG IPO
2002-03 Rs 1039 crore
2003-04 Rs 17807 crore
2004-05 Rs 21432 crore
2005-06 Rs 23,676 crore
2006-07 Rs 24,994 crore
2007-08 Rs 52,253 crore
When shares are bought in an IPO it is termed primary market. The primary market does
not involve the stock exchanges. A company that plans an IPO contacts an investment banker
who will in turn called on securities dealers to help sell the new stock issue.
This process of selling the new stock issues to prospective investors in the primary
market is called underwriting.
When an investor buys shares from another investor at an agreed prevailing market
price, it is called as buying from the secondary market.
The secondary market involves the stock exchanges and it is regulated by a regulatory
authority. In India, the secondary and primary markets are governed by the Security and
Exchange Board of India (SEBI).
1. Primary offering:- New shares are sold to raise cash for the company.
2. Secondary offering:- Existing shares (owned by VCs or firm founders) are sold, no new
cash goes to company. A single offering may include both of these initial public offering.
SOME MOTIVATIONS
Making a public offering of stock ("going public") is a financing option for well-established
small firms. In addition to its potential of generating large amounts of growth capital, public
offerings also provide a way for owners to profit more immediately from their success and help
overcome some of the tax issues faced when passing the business to the next generation. When
business owners speak of going public, they are usually talking about an initial public offering
(IPO), in which stock is registered with the Singapore Stock Exchange (SGX) and offered to the
public through an investment banker or brokerage firm. Shares of the company are then traded
publicly on the stock market. Due to its expense, extensive filing requirements, and equity
considerations, relatively few small companies ever undertake an IPO. The decision to take a
company public in the form of an Initial Public Offering (IPO) should not be considered lightly.
There are several advantages and disadvantages to being a public company, which should
thoroughly be considered. This memorandum will discuss the advantages and disadvantages of
conducting an IPO and will briefly discuss the steps to be taken to register an offering for sale to
the public. The purpose of this memorandum is to provide a thumbnail sketch of the process.
The reader should understand that the process is very time consuming and complicated and
companies should undertake this process only after serious consideration of the advantages and
disadvantages and discussions with qualified advisors.
Advantages:
1. Increased Capital:-
A public offering will allow a company to raise capital to use for various corporate
purposes such as working capital, acquisitions, research and development, marketing, and
expanding plant and equipment.
2. Liquidity:-
Once shares of a company are traded on a public exchange, those shares have a
market value and can be resold. This allows a company to attract and retain employees by
offering stock incentive packages to those employees. Moreover, it also provides investors
in the company the option to trade their shares thus enhancing investor confidence.
3. Increased Prestige:-
Public companies often are better known and more visible than private companies,
this enables them to obtain a larger market for their goods or services. Public companies
are able to have access to larger pools of capital as well as different types of capital.
4. Valuation:-
Public trading of a company's shares sets a value for the company that is set by the
public market and not through more subjective standards set by a private valuator. This is
helpful for a company that is looking for a merger or acquisition. It also allows the
shareholders to know the value of the shares.
5. Increased wealth:-
The founders of the company often have the sense of increased wealth as a result of
the IPO. Prior to the IPO these shares were illiquid and had a more subjective price. These
shares now have an ascertainable price and after any lockup period these shares may be
sold to the public, subject to limitations of federal and state securities laws.
Disadvantages:
1. Time and Expense:-
Conducting an IPO is time consuming and expensive. A successful IPO can take up
to a year or more to complete and a company can expect to spend several hundreds of
thousands of dollars on attorneys, accountants, and printers. In addition, the underwriter's
fees can range from 3% to 10% of the value of the offering. Due to the time and expense of
preparation of the IPO, many companies simply cannot afford the time or spare the expense
of preparing the IPO.
2. Disclosure:-
The Securities and Exchange Commission (SEC) disclosure rules are very
extensive. Once a company is a reporting company it must provide information regarding
compensation of senior management, transactions with parties related to the company,
conflicts of interest, competitive positions, how the company intends to develop future
products, material contracts, and lawsuits. In addition, once the offering statement is
effective, a company will be required to make financial disclosures, public companies
required to file quarterly statements containing unaudited financial statements and audited
financial statements annually. These statements must also contain updated information
regarding nonfinancial matters similar to information provided in the initial registration
statement. This usually entails retaining lawyers and auditors to prepare these quarterly and
annual statements. In addition, a company must report certain material events as they arise.
This information is available to investors, employees, and competitors.
4. Regulatory Review:-
The Company will be open to review by the Securities and Exchange Commission
(SEC) to ensure that the company is making the appropriate filings with all relevant
disclosures.
6. Vulnerablility:-
If a large portion of the company's shares are sold to the public, the company may
become a target for a takeover, causing insiders to lose control. A takeover bid may be the
result of shareholders being upset with management or corporate raiders looking for an
opportunity. Defending a hostile bid can be both expensive and time consuming. Once a
company has weighed the advantages and disadvantages of being a public company, if it
decides that it would like to conduct an IPO it will have to retain a lead underwriter to sell the
securities, an attorney to assist in the preparation of a registration statement, and auditors to
prepare financial statements.
UNDERSTANDING “ISSUES”
This portion tries to cover the basic concepts and questions related to issues (issues in
the meaning of issuance of securities). The aim is towards understanding the various types of
issues, eligibility norms, exemptions from the same. The disclosure requirements regarding the
issuance of securities are covered in detail in the SEBI (Disclosure and Investor Protection)
Guidelines, 2000.
KINDS OF ISSUES
Primarily, issues can be classified as a Public, Rights or preferential issues (also known
as private placements). While public and rights issues involve a detailed procedure, private
placements or preferential issues are relatively simpler. The classification of issues is illustrated
below:
Public issues can be further classified into Initial Public offerings and further public
offerings. In a public offering, the issuer makes an offer for new investors to enter its
shareholding family. The issuer company makes detailed disclosures as per the DIP guidelines
in its offer document and offers it for subscription. The significant features are illustrated below:
4. Private placement:-
It is an issue of shares or of convertible securities by a company to a select group of
persons under Section 81 of the Companies Act, 1956 which is neither a rights issue nor a
public issue. This is a faster way for a company to raise equity capital. A private placement of
shares or of convertible securities by a listed company is generally known by name of
preferential allotment. A listed company going for preferential allotment has to comply with
the requirements contained in Chapter XIII of SEBI (DIP) Guidelines pertaining to preferential
allotment in SEBI (DIP) guidelines include pricing, disclosures in notice etc, in addition to the
requirements specified in the Companies Act.
5. Free-pricing abused:-
As controls over pricing of equity were abolished in 1992, prudence took a backseat
as companies set about raising funds at fancy prices; the pricing was justified with helpful
projections of profitability dished out even by ICICI, IDBI, IFCI, Kotak Mahindra and Enam
Securities, leave alone the plethora of lesser-known investment banking outfits. The earnings
projections were vastly out of tune with reality. There was no element of the risk of business
cycle built into them; in many cases, it appeared as if the price had been fixed, and the
revenue and earnings numbers generated to justify it.
That the IDBI's stock traded at the offer price for just a couple of days over an
eight-year period and, subsequently, well below that price, tells the tale of abuse of free-
pricing. Not surprisingly, this put investors off; they had patronised such IPOs in a big way as
the first few offers in the free-pricing mode — of IFCI, Bank of Baroda, Infosys and Satyam
Computer — delivered value. Corporate greed was penalised, as investor apathy ensured
that between 1998 and 2001, the number of IPOs/offers for sale could be counted on the
fingers of one hand.
.
6. A colossal misconception:-
This period was also witness to a popular notion that equity was the cheapest source
of the funding, as the premium element was perceived as carrying no cost. What companies
failed to recognize in this process — they were also encouraged by investment banks
seeking more IPO opportunities — was that their capital cost could only be the same as the
investor's expected rate return.
7. Capacity overhang:-
The primary market boom of the mid-1990s also ensured excess of a different kind: A
fad for capacity creation across a range of commodities, with the possible exception of
aluminum and copper. Cement and steel were good examples. Buoyed by high cement and
steel prices, and expectations of consistent double-digit growth in demand that was
attributed to liberalization of the economy, several firms set up cement and steel capacities.
Binani Zinc, Sanghi Polesyter and the Rajan Raheja group and the DLF group
(both cited backward integration to construction as the reason for their cement foray) set up
large-sized cement units. Jindal Vijayanagar, Essar Steel, Bhushan Steel, Ispat Industries
and Lloyds Steel completed the steel story. The effect of the overcapacity still exerts
pressure on profitability. For instance, in cement, a better balance between demand and
supply is expected only two years from now.
This binge effectively ensured that even in the small number of companies where
projects were implemented — without exception marked by time and cost-overrun —
investors have had nothing to show by way of wealth accretion. Only the IPOs of the past
two-and-half years have changed that. If the ongoing bullish phase is used to perpetrate
excesses, the consequences would not be any different. Corporate India needs to walk a
different path now, both for its sake as well as in the interest of investors.
IPO GRADING
IPO grading is the grade assigned by a Credit Rating Agency registered with SEBI, to the
initial public offering (IPO) of equity shares or any other security which may be converted into or
exchanged with equity shares at a later date. The grade represents a relative assessment of the
fundamentals of that issue in relation to the other listed equity securities in India. Such grading is
generally assigned on a five-point point scale with a higher score indicating stronger
fundamentals and vice versa as below.
IPO grade 1: Poor fundamentals
IPO grade 2: Below-average fundamentals
IPO grade 3: Average fundamentals
IPO grade 4: Above-average fundamentals
IPO grade 5: Strong fundamentals
1. IPO grading can be done either before filing the draft offer documents with SEBI or
thereafter. However, the Prospectus/Red Herring Prospectus, as the case may be, must
contain the grade/s given to the IPO by all CRAs approached by the company for grading
such IPO.
2. Further information regarding the grading process may be obtained from the Credit
Rating Agencies.
3. The company desirous of making the IPO is required to bear the expenses incurred for
grading such IPO.
4. A company which has filed the draft offer document for its IPO with SEBI, on or after 1 st
May, 2007, is required to obtain a grade for the IPO from at least one CRA.
5. IPO grade/s cannot be rejected. Irrespective of whether the issuer finds the grade given
by the rating agency acceptable or not, the grade has to be disclosed as required under the
DIP Guidelines.
6. However the issuer has the option of opting for another grading by a different agency. In
such an event all grades obtained for the IPO will have to be disclosed in the offer
documents, advertisements etc.
7. IPO grading is intended to run parallel to the filing of offer document with SEBI and the
consequent issuance of observations. Since issuance of observation by SEBI and the
grading process, function independently, IPO grading is not expected to delay the issue
process.
8. The IPO grading process is expected to take into account the prospects of the industry in
which the company operates, the competitive strengths of the company that would allow it to
address the risks inherent in the business(es) and capitalise on the opportunities available,
as well as the company’s financial position.
9. While the actual factors considered for grading may not be identical or limited to the
following, the areas listed below are generally looked into by the rating agencies, while
arriving at an IPO grad Business Prospects and Competitive Position.
i. Industry Prospects
Financial Position.
Management Quality.
Corporate Governance Practices.
Compliance and Litigation History.
New Projects—Risks and Prospects.
It may be noted that the above is only indicative of some of the factors considered in the
IPO grading process and may vary on a case to case basis.
10. IPO grading is done without taking into account the price at which the security is
offered in the IPO. Since IPO grading does not consider the issue price, the investor needs
to make an independent judgment regarding the price at which to bid for/subscribe to the
shares offered through the IPO.
11. All grades obtained for the IPO along with a description of the grades can be
found in the Prospectus. Abridged Prospectus, issue advertisement or any other place
where the issuer company is making advertisement for its issue. Further the Grading letter
of the Credit Rating Agency which contains the detailed rationale for assigning the particular
grade will be included among the Material Documents available for Inspection.
13. The grades are allocated on a 5-point scale, the lowest being Grade 1 and
highest Grade.
14. IPO Grading is intended to provide the investor with an informed and objective
opinion expressed by a professional rating agency after analyzing factors like business and
financial prospects, management quality and corporate governance practices etc. However,
irrespective of the grade obtained by the issuer, the investor needs to make his/her own
independent decision regarding investing in any issue after studying the contents of the
prospectus including risk factors carefully.
15. SEBI does not play any role in the assessment made by the grading agency. The
grading is intended to be an independent and unbiased opinion of that agency.
SEBI's proposal to make the IPO assessment available to investors is a step in the right
direction.
Though the move to make IPO assessment mandatory has drawn some critical
comments, the need for a tool to help investors make better-informed decisions and judge the
quality of issues hitting the market is undisputed.
ARRANGING AN IPO
1. Select Underwriter:-
Provides procedural, financial advice.
Ultimately buys issue from company (at “issue price”).
Ultimately sells it to public (at “offer price”).
3. Prepare Prospectus:-
Streamlined version of registration statement, for consideration by potential investors.
4. Set price:-
Road show:-
Talks organized to introduce company to potential investors, before the IPO.
Bookbuilding:-
“Book Building” means a process undertaken by which a demand for the securities
proposed to be issued by a body corporate is elicited and built up and the price for such
securities is assessed for the determination of the quantum of such securities to be issued
by means of a notice, circular, advertisement, document or information memoranda or
offer document.
Syndicate:-
Group of underwriters formed to sell a particular issue.
Spread:-
Difference between public “offer price” and price paid by underwriter (“issue
price”). Biggest part of underwriter compensation.
IPOs generally involve one or more investment banks as "underwriters." The company
offering its shares, called the "issuer," enters a contract with a lead underwriter to sell its shares
to the public. The underwriter then approaches investors with offers to sell these shares.
The sale (that is, the allocation and pricing) of shares in an IPO may take several forms.
Common methods include:
Dutch auction
Firm commitment
Best efforts
Bought deal
Self Distribution of Stock
Multinational IPOs may have as many as three syndicates to deal with differing legal
requirements in both the issuer's domestic market and other regions. For example, an issuer
based in the E.U. may be represented by the main selling syndicate in its domestic market,
Europe, in addition to separate syndicates or selling groups for US/Canada and for Asia.
Usually, the lead underwriter in the main selling group is also the lead bank in the other selling
groups.
Because of the wide array of legal requirements, IPOs typically involve one or more law
firms with major practices in securities law, such as the Magic Circle firms of London and the
white shoe firms of New York City.
Usually, the offering will include the issuance of new shares, intended to raise new
capital, as well the secondary sale of existing shares. However, certain regulatory restrictions
and restrictions imposed by the lead underwriter are often placed on the sale of existing shares.
Public offerings are primarily sold to institutional investors, but some shares are also allocated to
the underwriters' retail investors. A broker selling shares of a public offering to his clients is paid
through a sales credit instead of a commission. The client pays no commission to purchase the
shares of a public offering; the purchase price simply includes the built-in sales credit.
The issuer usually allows the underwriters an option to increase the size of the offering
by up to 15% under certain circumstance known as the greenshoe or overallotment option.
IPOs can be a risky investment. For the individual investor, it is tough to predict what the
stock or shares will do on its initial day of trading and in the near future since there is often little
historical data with which to analyze the company. Also, most IPOs are of companies going
through a transitory growth period, and they are therefore subject to additional uncertainty
regarding their future value.
DRAWBACKS OF IPO
It is true that IPO raises huge capital for the issuing company. But, in order to launch an IPO,
it is also necessary to make certain investments.
Setting up an IPO does not always lead to an improvement in the economic performance of
the company. A continuing expenditure has to be incurred after the setting up of an IPO by
the parent company.
A lot of expenses have to be incurred in the form of legal fees, printing costs and accounting
fees, which are connected to the registering of an IPO.
The rules and regulations involved to set up public offerings and this entire process on the
other hand involve a number of complexities which sometime require the services of experts
in relevant fields.
ELIGIBILITY CRITERIA
Net Tangible assets of Rs. 3.00 Crore in each of the preceding 3 years. And Track
record of Distributable profits at least 3 out of 5 preceding years and The Company has a
Networth of Rs. 1.00 Crore in preceding 3 years and the proposed issue should not exceed 5
times of its Pre-issue networth. Book building process and 50% of the offer to QIBs or 15%
participation in project by F/Is or Schedule Banks;10% of the Project cost from appraiser;10% of
the Issue to QIBs and Minimum post issue face capital of Rs.10 Crores or Market making for 2
years and Minimum number of allottees atleast 1000 Minimum number of allottees atleast 1000.
SEBI GUIDELINES
1. Filing of prospectus:-
Prospectus to be filed with SEBI Through Merchant Banker At least 30 days <
filing with ROC SEBI may suggest changes < 30 days SEBI to consider only after approval
from St.Ex Issuer is obligated ,SEBI is not obligated.
3. Dematerialization of shares:-
Agreement with Depository Present shares also to be in dmat public may opt either
physical or dmat shares.
4. “Qualified Institutional Buyer” shall mean:-
Public financial institution as defined in section 4A of the Companies Act, 1956.
Scheduled commercial banks.
Mutual funds.
Foreign institutional investor registered with SEBI.
Multilateral and bilateral development financial institutions.
Venture capital funds registered with SEBI.
Foreign venture capital investors registered with SEBI.
State industrial development corporations.
Insurance companies registered with the Insurance Regulatory and Development
Authority (IRDA).
Provident funds with minimum corpus of Rs. 25 crores.
Pension funds with minimum corpus of Rs. 25 crores).
5. IPO Grading:-
No IPO unless; (as on the date of filing the prospectus with ROC): Grading for IPO
has been obtained from at least one agency Grading and the rationale have been included in
the prospectus Grading expenses to be borne by the issuer.
8. Price Band:-
Price Band to be 20% Max price can be 20% above the floor price Board of directors
may be authorized to fix the price.
9. Denomination of shares:-
Denomination of the shares is not restricted In case the issue price is <Rs.500, the
Face Value shall be Rs.10/- The Face Value may be less, where the issue price is Rs.500 or
more. Full disclosure of the face value, in offer document.
CONCLUSION
IPO is used by a company to raise its funds. The extra amount obtained from public may be
invested in the development o f the company, although it costs a little to a company but it gives a
way to get more money for long term investments.
Book building
Introduction
To keep pace with the globalization and liberalization process, the government of India
was very keen to bring the capital market in line with international practices through
gradual deregulation of the economy. It led to liberalization of capital market in the
country with more expectations from primary market to meet the growing needs for funds
for investment in trade and industry. Therefore, there was a vital need to strengthen the
capital market which, it felt, could only be achieved through structural modifications,
introducing new mechanism and instruments, and by taking steps for safeguarding the
interest of the investors through more disclosures and transparency. As such, an important
mechanism named as Book building in the system of initial public offerings (IPOs) was
recognized by SEBI in India after having the recommendations of the committee under
the chairmanship of Y. H. Malegam in October, 1995. SEBI guidelines recognized book
building as an alternative mechanism of pricing. Under this approach, a portion of the
issue is reserved for institutional and corporate investors.
Book building process is a common practice used in most developed countries for
marketing a public offer of equity shares of a company. However, book building is a
transparent and flexible price discovery method of initial public offerings (IPOs) in which
price of securities is fixed by the issuer company along with the Book Running Lead
Manager (BRLM) on the basis of feedback received from investors as well as market
intermediaries during a certain period.
10. The prospective investors may revise their bids at any time during the bid period.
11. The BRLM on receipts of the feedback from the syndicate members about the bid
price and the quantity of shares applied has to build up an order book showing the
demand for the shares of the company at various prices. The syndicate members
must also maintain a record book for orders received from institutional investors
for subscribing to the issue out of the placement portion.
12. On receipts of the above information, the BRLM and the issuer company
determine the issue price. This is known as the market-clearing price.
13. The BRLM then closes the book in consultation with the issuer company and
determine the issue size of (a) placement portion and (b) public offer portion.
14. Once the final price is determined, the allocation of securities should be made by
the BRLM based on prior commitment, investor’s quality, price aggression,
earliness of bids etc. The bid of an institutional bidder, even if he has paid full
amount may be rejected without being assigned any reason as the Book Building
portion of institutional investors is left entirely at the discretion of the issuer
company and the BRLM.
15. The Final prospectus is filed with the registrar of companies within 2 days of
determination of issue price and receipts of acknowledgement card from SEBI.
16. Two different accounts for collection of application money, one for the private
placement portion and the other for the public subscription should be opened by
the issuer company.
17. The placement portion is closed a day before the opening of the public issue
through fixed price method. The BRLM is required to have the application forms
along with the application money from the institutional buyers and the
underwriters to the private placement portion.
18. The allotment for the private placement portion shall be made on the 2nd day from
the closure of the issue and the private placement portion is ready to be listed.
19. The allotment and listing of issues under the public portion (i.e. fixed price
portion) must be as per the existing statutory requirements.
20. Finally, the SEBI has the right to inspect such records and books which are
maintained by the BRLM and other intermediaries involved in the Book Building
Book building process
Regulatory Framework
The Book Building guidelines were first introduced by SEBI in 1995 (clarification XIII,
dated 12.10.95) for optimum price discovery of corporate securities. The SEBI, from time
to time modifies the guidelines in order to upgrading the existing mechanism. The SEBI
in its press release dated 7th September, 1998 prescribed the fresh guidelines for book
building mechanism after thorough modification and it was again modified in
2001(Circular No.2, dated 6.12.2001) and 2003(Circular No. 11, dated 14.08.2003).