Sebi resumes clearing of small initial public offerings

Mumbai, March 30 | Updated: Mar 31 2005, 05:30am hrs
The number of small initial public offerings (IPOs) are set to hit the primary market with the Securities and Exchange Board of India (Sebi) beginning to clear new issues of the size of Rs 7.5 to 17 crore.

In the last one week, between March 21 and 27, Sebi has issued observations on three companiesCyber Media, Nandan Exim and Shree Ganesh Forgings. The combined size of these three issues is nearly Rs 44 crore.

Sebi has already cleared the draft prospectus of Mangalam Drugs that is expected to come out with an IPO of Rs 15 crore by April 19, 2005. The Saksoft IPO which opened for subscription on Wednesday is expected to raise Rs 7.5 crore from the primary market. The company is issuing shares at Rs 30 per share.

The Sebi move is in line with the stance taken by its new chairman M Damodaran. In his first exclusive media interview to FE last month after taking over as Sebi chairman, Mr Damodaran had stated that small issues will be cleared at the earliest.

Gurunath Mudlapur, head of strategy at Khandwala Securities, said: Sebi is clearing the issue based on quality and content and not on the issue size. With most of the companies running on fully capacity and economy on an uptrend, the IPO route is the fastest way to raise money as it is cheaper than debt.

Already 12-15 smaller companies have filed its draft prospectus with Sebi for raising money through the IPOs, ranging from Rs 5 to 23 crore. These companies are Nectar Lifescience (Rs 23.22 crore), ARS Systems & Communications (Rs 5.60 crore), Proalgen Biotech (Rs 15.40 crore), SPS Steels Rolling Mills (Rs 22 crore), MSP Steel & Power (Rs 16 crore), Maanya Biotech (Rs 5 crore), Ken Software Technologies (Rs 9.45 crore), Special Blasts (Rs 6 crore), Indowind Energy (Rs 7.53 crore), Pochiraju Industries (Rs 15 crore), Usher Agro (Rs 7.60 crore) and Zylog Systems (Rs 7.82 crore). Sebis clearing of small issues, when most of the companies are tapping the market through book-built issues, has come as a relief to the small entrepreneurs.