A closer look at the classification of investor response throws some light on why Tips has decided to issue shares at the floor price of Rs 325, especially when the company has received an average bid price of Rs 350.

Tips has received bids for 28.94 lakh shares from institutional investors as against 18 lakh shares offered to them, an oversubscription of 1.61 times.

While retail investors have bid for 6.75 lakh shares against the reserved 4.5 lakh shares, an oversubscription of 1.5 times. At the same time, non-institutional investors have bid for 76.31 lakh shares against the offer of 4.5 lakh shares, an oversubscription of 16.96 lakh shares. It appears that Tips received overwhelming response from those class of investors (read non-institutional investors) with whom the company has some kind of business relationships.

For instance, Tips has recently acquired music right for 57 films of leading producers like Subhash Ghai, Vidhu Vinod Chopra, Rajeev Rai, Vashu Bhagnani, Sunny Deol, Feroz Khan, Devgan Enterprises and some of these film personalities have bid for sizeable portion of its shares.

Thanks to the good response from film industry, Tips is increasing the non-institutional portion from 4.5 lakh shares to 7.5 lakh shares. This is being done by reducing the institutional portion by 3 lakh shares from 18 lakh to 15 lakh.

The fixed price portion (which is 10 per cent of the issue size of 30 lakh shares) opens for subscription on September 26 and closes on October 3. The bookbuilding portion of 27 lakh shares was oversubscribed by 4.14 times with a total bid of 2700 for 1.12 crore shares. The average bid price was Rs 350 and the company has collected around Rs 390 crore from public.

The 2000-earnings discount the offer price of Rs 325 by 12.4 and projected earnings for fiscal 2001 give a multiple of 11. The IPO proceeds are being used for funding Tips' Rs 187.95-crore project. Of this, a major portion of Rs 120 crore is going towards acquiring music rights. Also, the company is setting up a studio for recording music, promotional activities and videos at a cost of Rs 10.19 crore, a manufacturing plant for compact discs (CDs) at Rs 27.49 crore and expansion of existing audio cassette manufacturing facilities in two phases at Rs 14.56 crore.