Cairn and able

Updated: Jan 22 2007, 08:05am hrs
Why did the Cairn IPO pricing problem happen (‘Pricing the piper’, January 16) Because some regulations were made without the necessary changes in others. Remember the brouhaha when margins and pro-rata allotment were introduced
First, with margins, there is no need to have a price band. Perhaps the bidding itself would have ‘discovered’ a much lower price.
Moreover, if margins are to be paid, then would you bid on the first day or the last The fact is that the imposition of margins has virtually closed the book, since you would logically come in only on the last day. Early subscriptions should arouse suspicion. Herein lies the solution. The bidding for QIBs should be open only for a day. It should a closed-book process. Thereafter, a cut-off point can be announced for retail investors, who would now be aware of the price and also the extent of QIB interest. They can then have two days to submit applications. Also, retail allotment should be made absolutely pro-rata, with no slabs, to remove the incentive for multiple applications and fake demat accounts.
T Ramaswami, Mumbai
Sweetened
India must congratulate Reliance (‘RIL Q3 net up 58%’, January 19) for its foresight in building a mega-refinery that can process low-grade sour crude as well, which spells operational flexibility and high refining margins. Higher global prices for high-grade crude oil seem to favour Reliance.
Prakash Dwivedi