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Discuss !!!!!!!ISSUES!!!!!!!!!!! within the Stock Markets Tips & Gyan !! forums, part of the Quiz , Marketplace and Community games category; Issue Open 27/01/2006 Issue Close 02/02/2006 Issue Size 16500000 Issue Type Book Building Face Value Rs.10/- Price Range Rs.100/- to ...

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Inox Leisure Ltd. Issue open on 27th Jan.
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Inox Leisure Ltd. Issue open on 27th Jan. - January 28th, 2006

Issue Open 27/01/2006
Issue Close 02/02/2006
Issue Size 16500000
Issue Type Book Building
Face Value Rs.10/-
Price Range Rs.100/- to Rs.120/-
Tick Size Re.1/-
Market Lot 50
Minimum Order Qty 50
Listing Stock Exchange NSE, Mumbai


Inox Leisure is one of India's larger multiplex cinema operators. It has eight operational multiplexes, with 32 screens across seven cities: Mumbai, Pune, Vadodara, Goa, Jaipur, Kolkata (two multiplexes) and Bangalore.

While consolidating its position in the exhibition business, Inox Leisure has entered the film distribution business, acquiring the distribution rights for certain Hindi film titles in select distribution circuits. It had invested Rs 7.5 crore in financing the film, "The Rising'.

Inox Leisure's present IPO is to raise finance its expansion. The company is setting up around 11 multiplexes in locations like Hyderabad, Vishakapatnam, Jaipur, Kolkata, and Bangalore at an estimated cost of Rs112.82 crore.

Strengths

Inox Leisure has developed a strong patronage in the last couple of years. Over 2003-05, the number of patrons has shown a robust CAGR of 52% to 38,88,547 and in the half-year ended September 2005, it touched 80% of the numbers in FY 2005, at 31,25,801.
The revenue has shown a impressive CAGR of 57% to Rs 61.48 crore over 2003-2005 and touched Rs 50.25 crore in the six months ended September 2005, which was 80% of the full year sales of FY 2005. OPM has grown steadily to 33.6% end FY 2005, from 28.7% in FY 2003. In six months ended September 2005, it stood even better at 40.3%. The bottom line grew from mere Rs 9 lakh in FY 2003 to Rs 8.24 crore in FY 2005. In the six months ended September 2005, the profit after tax was Rs 9.73 crore.
The Indian multiplex industry is on a high growth trajectory, with its increasing share of the overall box office collections. The growth of multiplexes is fuelled by a rise in disposable incomes, a boom in organised retail, entertainment tax benefits given by several state governments and the corporatisation of the Indian film industry.
Weaknesses

The promoter of the Inox Leisure, Gujarat Fluorochemicals (GFL), is not related to the film industry and is reducing its stake through offer for sale in the present IPO. About 10% of the total funds raised will go to GFL, and not to the company.
Over 75% of the revenue comes from box-office collections. The poor success rate of Hindi films, inadequate enforcement of anti-piracy laws in India and increasing home viewing options such as DVD and cable TV may constrain the growth in the number of cinema patrons.
The multiplex business enjoys relatively low breakeven due to higher ticket rates and entertainment tax benefits. However, tax benefits are for a limited period and ticket rates can be regulated by the states.

Valuation

The nearest comparable companies are PVR Cinema, Adlabs and Shringar Cinemas. PVR Cinemas, which is the largest multiplex cinema operator by number of screens, recently completed its IPO and is trading around 169 times its FY 2005 EPS, Adlabs is trading at a PE of around 60 times its FY 2005 EPS. Shringar Cinemas, which has yet to report profit, is trading around Rs 80.

On an expanded equity of Rs 60 crore, FY 2005 EPS of Inox Leisure works out to Rs 1.26. Based on this, PE stands at 79.4 and 95.2 at the price band of Rs 100 and Rs 120. In the first half, the company has already crossed the FY 2005 net profit. However, first half is the main season and one cannot annualise the figures. Nevertheless, one can expect over 100% growth in net profit in FY 2006, bringing down the PE to below 50.
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Sadbhav Engineering Ltd. Issue Open on 3rd Feb.
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Sadbhav Engineering Ltd. Issue Open on 3rd Feb. - February 2nd, 2006

Issue Open 03/02/2006
Issue Close 08/02/2006
Issue Size 2900000
Issue Type Book Building
Face Value Rs.10/-
Price Range Rs.165/- to Rs.185/-
Tick Size Re.1/-
Market Lot 35
Minimum Order Qty 35

Analysis

Background :

Sadbhav Engineering Limited (SEL) was incorporated in 1988 as a private company. It took over the running business of M/s. Bhavna Construction Co. in 1989. M/s. Bhavna Construction Co. was a partnership firm, engaged in construction business since 1968.
SEL's main focus areas are irrigation, roads & highways and mining operations. In a span of 17 years, SEL has executed a total of 32 projects. The company has executed various canal and road projects from Sardar Sarovar Narmada Nigam Ltd. and NHAI. It has also carried out excavation of overburden and lignite for GIPCL, GMDC, GHCL, etc.
SEL has its own workshop at Ognaj, Ahmedabad where its equipments are maintained and overhauled regularly. Sadbhav has also obtained ISO 9001-2000 certification for management systems in the year 2005.
As on March 31, 2005 the company's contract receipts stood at Rs.205.37 crore and for the six months ended September 30, 2005 stood at Rs.125.26 crore.
The company has envisaged a total cost of Rs.55.46 crore for the new project. The entire requirement of the fund is proposed to be financed through this Issue.

Objects of the Issue :

To meet the investment requirements in Mumbai - Nasik Expressway Limited; a Special Purpose Vehicle incorporated for the execution of the Vadape-Gonde four lane BOT (Build Operate Transfer) project.
To meet margin money for purchase of capital equipment.
To meet working capital requirement & issue expenses.

The following project will be executed :

SEL will be undertaking the Vadape Gonde four lane BOT project that will be its first BOT project. The project has been awarded by NHAI and shall be executed by Mumbai Nasik Expressway Limited, a Special Purpose Vehicle formed by Gammon India Limited, B.E. Billimoria & Co. Limited and SEL. The total equity component is expected to be Rs.175 crore. Out of this, the company will be contributing 20% of the share capital. Sadbhav will be executing construction work worth Rs.486 crore.

Strengths :

Experienced promoters are managing the company. Mr. Vishnubhai M Patel, the CEO and Managing Director, has more than 37 years of experience in the construction industry.
SEL has track record of completing all the projects in the stipulated time schedule without compromising on the quality of work. The company's adherence to the standards and procedures prescribed by NHAI and other funding bodies has helped it to bag many prestigious projects. Sadbhav has a bid capacity of Rs.702.45 crore for NHAI projects.
Sadbhav gets 75% of its revenues from road projects. SEL has over nine years of experience in road projects and has developed expertise in handling large projects independently and through joint ventures. The government plans to invest substantially in road development as it has been identified as a key sector. This will be positive for the company.
The Indian construction industry is valued at Rs.2,40,000 crore and is growing at 7% to 8% per annum. India has been ranked as the sixth-fastest growing country in terms of construction. The Government is concentrating on infrastructure development of the country and is therefore giving great impetus to major projects in the road, irrigation and mining sectors. This will be beneficial for the company in the long term.

Weakness :

The Vadape-Gonde four-lane BOT project, which would be funded by the present IPO is a toll based project. The success of the project would depend upon the traffic and toll collections. Toll based projects have not been successful in India.
The BOT project will not yield immediate returns to Mumbai - Nasik Expressway Limited, the SPV and in turn the company. The toll revenue flow will commence from the beginning of fourth year i.e. on completion of the construction period as per the tender document.
The company's contingent liabilities as on 30th September 2005 stand at Rs.203.34 crore. As against this, the net worth of SEL is Rs.65.88 crore. In case these legal obligation/contingent liabilities materialize, the net worth of the company will be negatively affected.
SEL has an outstanding amount of Rs.17.46 crore as debtors exceeding more than six months as on 30th September 05. Out of this Rs.14.46 crore is outstanding from Gujarat Industries Power Company, for which SEL has filed suit. Sadbhav has not made any provisions for the same. In case of non-recovery, the profitability will get affected.

Valuations :

The total revenues and net profits of the company have increased at a CAGR of 2.4% and 1.4% respectively over the period FY 2000-05.
For the financial year ending 2005, the company's total income has declined by 16% to Rs.207.28 crore from Rs.247.31 crore in the previous year. This was because of decrease in turnover from road projects as no tenders for road construction were floated by NHAI. During the year 2004-05, the construction expenses reduced by 13.7% to Rs.112.18 crore due to reduction in turnover and cost saving measures of the management.
In contrast to this, the net profits of the company increased by 44% to Rs.7.38 crore in FY 05 from Rs.5.13 crore in the previous year. This was because of the deferred tax benefit that was credited.
For the half-year ended September 2005, the total income and the net profits stood at Rs.123.82 crore and Rs.5.69 crore respectively. The net asset value per share as on 30th September 2005 was at Rs.82.36.
Annualized EPS on post-IPO equity works out to Rs.10.45. At the price band in the range of Rs.165 to Rs.185, the shares are being offered at a post issue annualized P/E of 16-18 times. In comparison to this, the average PE multiple for industry stands at 27x.


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Re: Sadbhav Engineering Ltd. Issue Open on 3rd Feb.
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Re: Sadbhav Engineering Ltd. Issue Open on 3rd Feb. - February 3rd, 2006

Well venga make a particular thread on ISSUE and make it sticky so that all issue are posted in a single thread itself....and would be much easily for ppl to access.



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Re: Sadbhav Engineering Ltd. Issue Open on 3rd Feb.
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Re: Sadbhav Engineering Ltd. Issue Open on 3rd Feb. - February 3rd, 2006

Hey thanks Vjaquarian Good idea


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GVK Power & Infrastructure Ltd. Issue Open on 2 Feb
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GVK Power & Infrastructure Ltd. Issue Open on 2 Feb - February 3rd, 2006

Issue Open 02/02/2006
Issue Close 07/02/2006
Issue Size 8275556
Issue Type Book Building
Face Value Rs.10/-
Price Range Rs.260/- to Rs.310/-
Tick Size Re.1/-
Market Lot 20
Minimum Order Qty 20
Listing Stock Exchange NSE, Mumbai

GVK Power & Infrastructure (GVKPIL) is the holding company of the
power businesses of GVK and also provides operations and maintenance
services to its power assets. G V Krishna Reddy controlled GVK is a
diversified business group with interests in power, roads, urban
infrastructure, bioscience, hotels and manufacturing. The group has
identified power and infrastructure as focus areas.

GVKPIL presently owns a 53.96% stake in GVK Industries (GIL), which
has two power plants: (i) the operational 216-MW Jegurupadu Phase I,
and (ii) the 220-MW Jegurupadu Phase II project, to be commissioned by
mid February 2006.

In addition, GVKPIL currently owns a 47.47% equity stake in Gautami
Power (GPL), which is developing a 464-MW combined cycle power plant
that is expected to be commissioned by September 2006. GVKPIL will
increase its ownership in GPL to 51% by subscribing to the equity of
GPL. Once all the three plants become operational, the total capacity
of the three plants will be 900 MW. All the three plants are
independent power plants (IPP) and supply, or will supply, their
output to Andhra Pradesh power distribution companies (APDISCOMs)
under their respective long-term power purchase agreements

GVKPIL proposes to utilise the funds raised through this issue to
contribute part of the equity required by GPL to establish a 464-MW
duel fuel combined cycle plant located in Andhra Pradesh and repay the
bridge finance availed for funding the equity of GPL. The equity
investment in GPL is estimated at Rs. 95.3 crore and the repayment of
loan is estimated at Rs 60 crore.

The initial public offer (IPO) is of 8,275,556 equity shares of Rs 10
each through 100% book-building process. The price band has been fixed
at Rs 260 to Rs 310 per equity share of Rs 10 each. The issue opens on
2 February and closes on 7 February 2006. It will constitute 35% of
the fully diluted post-issue paid-up capital of the GVKPIL.

Strengths

Each of GVKPIL's generation facilities has an assured source of
revenue under a take- or- pay power purchase agreement(PPA) with
APDISCOMs. The power distribution companies are required to pay for
the plant's output at an agreed plant load factor (PLF), regardless of
whether or not APDISCOMs actually takes delivery of the power
generated. APDISCOMs' payment obligations to GVKPIL, as per PPAs, are
secured by letters of credit, escrow arrangement and the state
government's guarantee covering all of APDISCOMs' payment obligations.
According to GVKPIL's management APDISCOMs has never defaulted on
their monthly payment obligations even by a signal day.
It is expected that GVKPIL will benefit from economies of scale
through the use of shared facilities between Jegurupadu Phase I and
Jegurupadu Phase II. These shared facilities include using the
approach roads to the projects, sharing the use of the demineralised
plant capacity, raw water storage reservoir and potable water, staff
quarters, and the administrative building and the compound walls.

Weaknesses

Currently there is shortage in the availability of gas in Andhra
Pradesh. The shortage is likely to persist at least in FY 2007. As a
result, operations of the existing Jegurupadu phase I as well as
proposed phase II and GPL will be adversely affected.

Valuation

The FY 2005 EPS of GVKPIL (standalone) stands at Rs 0.7 on post-issue
equity. The company's net profit in the first half of FY 2006 has been
inflated by Rs 2 crore by the one-time technical services fees
received from subsidiary and interim dividend of Rs 5 crore received
form the subsidiary. Thus, the net profit of Rs 4.23 crore in the
first half of FY 2006 cannot be annualised. Here it will be more
appropriate to consider the consolidated results, which shows a net
profit of only Rs 48 lakh. On annualising it, the consolidated EPS is
just Rs 0.4. Th offer price band is Rs 260-310. Naturally, the price
band factors in the company's expected full earnings from the two
proposed new power projects. However, considering the state of natural
gas availability, these projects are likely to fully reflect earning
only from FY 2008.


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Sakuma Exports Ltd.Issue Open on 8th Feb
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Sakuma Exports Ltd.Issue Open on 8th Feb - February 9th, 2006

Issue Open 08/02/2006
Issue Close 14/02/2006
Issue Size 6666667
Issue Type Fixed Price
Face Value Rs.10/-
Price Range Rs.50/-
Tick Size
Market Lot 100
Minimum Order Qty 100
Listing Stock Exchange Mumbai, NSE

Analysis

Background :

Sakuma Exports Ltd. (SEL) started its operation as a partnership firm in the year 1999. The firm was converted to a public limited company in the year 2005.
The company is into trading and export of commodities and merchandise both in domestic and international market. Presently it has a client base of over 75 in South East Asia, Middle East, Europe, Africa and the United States of America. Clientele of the Company includes Mitsubishi Corporation, ConAgra (International) S.A, Khimji Ramdas.
The company exports commodities like peanuts, red split lentils, De-oiled cakes (soya, sunflower etc.) sugar, onions, maize, wheat flour, sesame seed, chilli, rice, castor oil and chickpeas.
SEL has supply chain with more than 400 suppliers across India. It is exporting from a number of seaports along the coastline of India - Mundra, Kandla, JNPT, Nhava Shiva, Mumbai, Chennai, Kakinada and Vizag, apart from the dry ports.
Object of the Issue :
Increase in Long Term Working Capital: Rs. 3650 lakhs.
General Corporate Purposes: Rs. 333 lakhs.
Issue Expenses: Rs. 350 lakhs.

Strengths :

SEL has been making profit for last five years. In the year 2002, the company was conferred certificate of recognition as an 'Export House'.
The net profit of the company has grown from Rs.17.86 Lakhs in March 2003 to Rs. 135.85 Lakhs in March 2005 at a CAGR of 175.8 %. The sales of the Company have grown from Rs. 3,874 Lakhs as on March 2003 to Rs. 16,021 Lakhs as on March 2005 at a CAGR of 103.3%.
In FY 2004-05 export in agriculture and allied product recorded a growth of 9.12% with the export value touching Rs.27,111 crore. Major export items that registered a positive growth are pulses, castor oil, nuts and seeds and cereals.
Role of International trade is on the rise, thanks to globalization of markets. In FY2004-05, export touched US$ 80 billion, which is below 1% of the global export market. In view of the Trade deficit and negative balance of payment of India the Government has been laying thrust on Export Promotion. Exporting companies are likely to get benefit out of this.

Weakness :

SEL depends a lot on few customers. Top 10 customers of the company constitute nearly 70% of the total export turnover in FY2005.
Sundry Debtors at the end of FY2005 stood at Rs.4,757 Lakhs, which is 88% of the Total assets. This resulted in a negative cash flow.
Net profit margin of the company has decreased from 1.3% in FY2002 to 0.85% in FY2005. Even though export opportunities in several agricultural commodities like sugar and horticulture are opening up, trading in them is subject to the vagaries of international price. This could adversely affect the bottom-line.
The company is unable to execute bulk orders due to shortage of fund. It is also unable to forward business credit.
SEL operates in a globally competitive environment. Growing competition might force the company to reduce the price of its commodities, where the margin is already wafer-thin.

Valuations :

Sales has increased by 75 % from Rs.9,188 lakhs in FY2004 to Rs.16,021 lakhs in FY2005. PAT during the same period has increased by 56% from Rs.18 lakhs to Rs.28 lakhs.
Return on Net worth has increased from 12.48% in FY2004 to 27.68% in FY2005. NAV per share at the end of FY2005 Rs.10.
Post issue EPS works out to be Rs.2.47 based on annualized profit till 31st August 2005, Rs.399.79 lakhs. Shares are offered at a price of Rs.50, at a PE multiple of 20.23. Peer group companies like Adani Exports and Vishal Exports Overseas have a PE multiple of 12.22 and 3.26 (calculated on NSE price of 7th Feb, 2006).


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Re: !!!!!!!ISSUES!!!!!!!!!!!
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Re: !!!!!!!ISSUES!!!!!!!!!!! - February 10th, 2006

The South Indian Bank Ltd.Issue Open on 10th Feb.

Issue Open 10/02/2006
Issue Close 15/02/2006
Issue Size To be announced
Issue Type Book Building
Face Value Rs.10/-
Price Range Rs. 60/- to Rs. 66/-
Tick Size Re.1/-
Market Lot 100
Minimum Order Qty 100
Listing Stock Exchange Mumbai, NSE, Cochin

Analysis

Background :

The South Indian bank (SIB) is one of the old generation private banks; it was incorporated in 1929 and became a scheduled bank in the year 1946.
SIB is into retail as well as corporate banking space. Bank's retail portfolio includes housing loans, gold loans, auto loans, educational loans and other personal loans, while for corporate clients it offers products like term loans, short term loans, cash credit, working capital finance, export credit, bill discounting, letters of credit and guarantees.
Bank also offers specialized products for agriculture sector like SIB planters' choice (Loan for land purchase to agriculturist) and SIB agriflex (Loan for land development). SIB is a depositary participant for CDSL. As on September 30, 2005 it has over 2,734 active depository accounts spread over 46 centres across India.
SIB's business is spread across 17 states and 2 union territories through its 432 branches and 59 extension counters as on September 2005. This network includes 92 rural, 195 semi-urban, 81 urban, and 64 metropolitan branches with 19 specialized branches of which 13 are NRI branches. As on September 30, 2005, 276 of Sib's branches and 21 Extension Counters are online networked under CBS and this covers over 87% of Bank's total business.
The bank has tie up with ICICI Asset Management Company for the distribution of mutual funds. It also sell life insurance products of ICICI Prudential and non life insurance products of United India Insurance.
It is the first private sector bank in India to open a Currency Chest on behalf of the RBI in April 1992 and to start an Industrial Finance Branch in March 1993.
SIB is the first Kerala based Bank to implement a Centralized Banking solution. It is the first private sector bank in Kerala to open an overseas branch to cater exclusively to export and import business.

Object of the issue :

To augment capital base so as to meet the future capital requirements arising out of the implementation of the Basel II standards.
To meet issue related expenses.
Strengths :
Average cost of deposit of the bank was decreased from 8.48% in FY02 to 5.42% in FY05. While for its competitors like Centurion bank of Punjab, Federal bank and Karnataka bank ratio was at 6.17%, 5.92% and 7.03% respectively in FY05.
Bank's credit deposit ratio as on 31st March 2005 stood at 63.18%, while for its competitors like bank of Rajasthan, Centurion bank of Punjab and Karnataka bank ratio was at 35.67%, 62.15% and 58.02% respectivey.

Weakness :

Capital adequacy ratio of the bank as on 31st March 2005 was at 9.89%, which was just above the regulatory requirement of 9%. While for its competitors like Bank of Rajasthan, Centurion bank of Punjab and Karnataka bank ratio was at 12.75%, 39.22% and 14.16%. (Source RBI)
Net NPAs to Net Advances ratio of SIB stood at 3.81% as at March 31, 2005. While for its competitors like Bank of Rajasthan, Centurion bank of Punjab and Karnataka bank ratio was at 2.5%, 2.51% and 2.29%.
As of September 30, 2005, 27.67% of bank's net demand & time deposit and 90.86% of total investments were in Government and other approved securities. Yields on these investments are dependent to a large extent on interest rates. In a rising interest scenario market value of these securities could decline.
Most of the business is coming from single state Kerala. As on 31 st March 2005, 432 branches, or approximately 81% of bank's total branches were located in the state of Kerala, approximately 83% of the Bank's loans and advances were from branches located in the state of Kerala. So, the loan portfolios are regionally concentrated.
Rising oil prices, liquidity mop-up due to accelerated corporate Capex and current unreasonably low level of real interest rates are expected to put upward pressure on the interest rates. Rising interest rates coupled with funding constraint posed by lower deposit growth could act as dampeners to credit growth and could also exert pressure on margins of banking industry. These could affect SIB's performance in future.

Valuation :

Total income of the bank increased at a CAGR of 7.26% to Rs. 811 crores in FY05 from Rs. 613 crores in FY01. However the net profit of the company went down to Rs. 15.55 crores in FY05 from Rs. 86.66 crores in FY04 due to decrease in the profit on sale of investment from Rs. 187 crores in FY04 to Rs. 37 crores in FY05.
Net worth of the Bank as on September 30, 2005 was Rs. 450 crores. While the book value per Equity Share as on September 30, 2005, was Rs. 77.87. However the return on net worth as on September 30, 2005 was 3.78%.
Post issue annualized EPS of the bank based on 30th September 2005 earnings work out to be Rs.3.84 on lower band; at a PE multiple of 15.63. Similarly Post issue annualized EPS work out to be Rs. 3.95 on upper band; at a PE multiple of 16.71.



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Indo Tech Transformers Ltd.Issue Open on 10th Feb.
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Indo Tech Transformers Ltd.Issue Open on 10th Feb. - February 11th, 2006

Issue Open 10/02/2006
Issue Close 16/02/2006
Issue Size 3945130
Issue Type Fixed Price
Face Value Rs.10/-
Price Range Rs.130/-
Tick Size
Market Lot 50
Minimum Order Qty 50
Listing Stock Exchange NSE, Mumbai

Analysis

Background :

Indo Tech Transformers Ltd. (ITTL) was incorporated in 1992 and is engaged in the business of manufacturing Distribution and Power Transformers.
ITTL currently manufactures transformers from three facilities. Of these, two facilities are located in Chennai, and one in Palakkad. The three plants are capable of manufacturing 500 - 600 transformers of assorted sizes every month, and have an overall annual capacity of 2450 MVA.
Since inception, ITTL has supplied over 55,000 transformers of various capacities to over 3,000 customers in India. Over the last 8 years, the company has exported around 600 transformers to Nigeria, Sri Lanka, U.K., U.S.A., Ghana, Canada and several other countries.
The company is coming up with an issue of 39,45,130 equity shares at a fixed price of Rs.130 each. The issue consists of Fresh issue of 29,56,750 equity shares and an offer for sale of 9,88,380 equity shares.
The total project cost is of Rs.46.75 crore. The net proceeds of the issue, after deducting all Issue related expenses, are estimated to be Rs. 35.36 Crore.

Object Of The Issue :

Relocation and modernization of Saidapet plant into a new Distribution Transformer Plant of 750 MVA / annum at Chennai for Rs.7.5 crore.
Setting up a new Power Transformer Plant with a Capacity of 2400 MVA /Annum including 220 KV class of transformers for Rs.30.6 crore.
Setting up of Dry Type Transformer Plant at Chennai with a capacity of 120 units per annum for Rs.2 crore.
To meet working capital requirements of Rs.3.4 crore
To meet Issue Expenses of Rs. 3.07 crore.

Strengths :

ITTL currently has an order book position worth of Rs. 135.5 crore as on January 2, 2006 which are pending execution. Of these the order book position for Power transformers is Rs. 115.8 Crores and Distribution transformer is Rs. 19.7 Crores.
ITTL has expanded its manufacturing capacity from 450 Mega Volt Ampere (MVA) to 2450 MVA. The commissioning of the proposed power transformer plant of 2400 MVA of annual capacity will enable ITTL to manufacture power transformers of higher range viz.132 Kilo Volt and 220 Kilo Volt. With increasing demand for higher class of transformers the company will move up the value chain.
Profits and Income of ITTL have grown at a CAGR of 37.14% and 24.08% respectively from FY2001 to FY2005.
The Government emphasis on providing 'Power for All by 2012'. About 100,000 Megawatt (MW) of power generation capacity is likely to be added by 2012. For every 1MW of new capacity that comes up 7 MVA transformers are used across generation, transmission and distribution segments; this implies a demand of 700,000 MVA of transformers unfolding over the next 5 years. This would result in an annual demand of about 140,000 MVA. The increase in demand of transformers due to this program will benefit all organized electrical equipment manufacturers.
Projected growth of Indian economy depends on the growth of the power sector and in order to support a growth rate of around 7% p.a., the rate of growth of power needs to be over 10% annually. This argument supports the growing necessity and importance of transformers in India.

Weaknesses :

State Electricity Boards (SEBs) are ITTL's principal customers. The company derived 63% of its revenue from the SEBs for the FY2005 and half year ending September 2005.
ITTL's group company, Vigneshwara Electricals Ltd. has a negative net worth of Rs.8,76,520 for the year ended March 31, 2005. Vigneshwara Electricals Ltd. has also been incurring losses from past three financial years.
ITTL enjoys a 15% price preference with Tamil Nadu Electricity Board on account of our Small Scale Industry status. The company would lose the SSI benefits once the proposed projects are implemented, as its investments in plant and machinery would have exceeded the limit. Thereafter, it would not be entitled to the price preference.
The ratio of Debtors to total assets has increased from 35.74% to 45.78% from FY2005 to half year ending September 2005.

Valuation :

Book Value per share as on 31st March 2005 is Rs.84.94. Net-worth of ITTL was Rs.23.93 crore. Book values of EMCO Ltd. and Bharat Bijlee Ltd., the comparable industry peers are Rs.153.8 and Rs.92.6 respectively during the same period.
The EPS of the company as on 31st March 05 is Rs.37.76. Post issue PE is 4.43. EPS and PE of EMCO Ltd. and Bharat Bijlee Ltd. are Rs.11.9 and 23.6 and Rs.35.8 and 15.7 respectively. Industry PE is 29.
Return on Networth is 33.38% based on FY 05 results.
NAV per equity share as on 31st March 05 is Rs.84.94. Post Issue Net Asset Value would be Rs. 63.39.


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Gitanjali Gems Ltd.Issue Open On 16th Feb.
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Gitanjali Gems Ltd.Issue Open On 16th Feb. - February 17th, 2006

Issue Open 16/02/2006
Issue Close 21/02/2006
Issue Size 17000000
Issue Type Book Building
Face Value Rs.10/-
Price Range Rs.170/- to Rs.195/-
Tick Size Re.1/- Market Lot 35
Minimum Order Qty 35
Listing Stock Exchange Mumbai, NSE


Background :

The company was incorporated in the year 1986 as Pvt. Ltd. Company. In the year 1994 it became a Public Ltd Company and subsequently changed its name to Gitanjali Gems Ltd. (GGL).
GGL is an integrated diamonds and jewellery manufacturing company and among the largest manufacturers and retailers of diamonds and jewellery in India. Its operations include sourcing of rough diamonds from primary and secondary source suppliers in the international market, cutting and polishing the rough diamonds for export and the manufacture and sale of diamond and other jewellery through its retail operations in India as well as abroad.
Company has two-diamond manufacturing facilities, a 100% export oriented unit, which produces gold and platinum studded jewellery and two jewellery-manufacturing facilities, which produce branded jewellery for the company's retail operations in India.
Gitanjali Gems Ltd through its subsidiaries and associate companies operated in retail segment with its most popular jewellery brands namely Nakshatra, D'Damas, Asmi, and Gili.
GGL sell it's branded diamond and other jewellery products in India through it's 620 outlets, including outlets in host stores, 5 stand alone stores and 17 stores set up through franchisee arrangements spread across 30 cities and towns.
GGL had recently entered into a strategic alliance with the World Gold Council to launch a range of jewellery called Gold _Expression, which is based on Italian designs. GGL's arm Digico has also entered into partnership with two other companies and formed a new company called Brightest Circle Jewellery.

Objects of the Issue :

Investment in subsidiaries, joint ventures and associate companies;
Capital expenditure for expansion of retail operations;
Setting up a jewellery manufacturing facility at the proposed Gems and Jewellery Special Economic Zone at Hyderabad;
Setting up of an additional jewellery manufacturing facility at Andheri, Mumbai;
Expansion of the existing jewellery manufacturing facility at SEEPZ area, Mumbai;
Working capital purposes;
Future acquisitions and general corporate purposes and
Meeting Issue Expenses

Strength :

GGL has a strong brand equity reflected by the popularity of its retails brands namely Nakshatra, D'Damas, Asmi, Gili and Giantti. As per Solitaire International, a publication of the Gem and Jewellery Export Promotion Council of India, four of the brands under which the company sell it's branded jewellery, Nakshatra, Asmi, Gili and D'Damas, feature among the ten best known jewellery brands in India.
GGL has a strong sales and distribution network in India. It includes sales through exclusive distributors for our jewellery products, direct sales to large department stores & reputed jewellery stores and direct sales to end customers through company's retail operations. As of September 30, 2005, GGL had 26 distributors across India, 5 exclusive stand alone stores owned by company and approximately 620 outlets, including brand kiosks in large department stores, retail store chains and shopping malls.
Average price of rough diamond (which company import) decreased from Rs. 19,575 per carat in FY01 to Rs. 16,603 per carat in FY04. While the average price of polished diamond (which company export to international market) increased from Rs. 93,766 per carat to Rs. 104,972 per carat in FY04.
With the steps like duty free imports of rough diamonds and the waiver of customs duty on colored, rough gemstones and semi-processed, half-cut and broken diamonds, gems and jewellery industry is bound to grow at a fast pace.

Weakness :

Promoter group companies also operating in the same line of business and may pose threat on procurement of rough diamond from international market.
As major chunk of revenue is coming from export business so any fluctuation in currency could impact the profitability of GGL.
This industry is completely based on fashion and trend and difficult to predict the upcoming trend. Company may face challenge in this respect.
There are many players in this sector who are emerging on export arena like Su raj diamonds & jewellery, Adani export and Rajesh export, so the company may face tough competition.

Valuation :

Net sales of the company declined to Rs. 1,371 crores in FY05 from Rs. 4,017 crores in FY01. While the net profit of the company declined from Rs. 45.5 crores in FY01 to Rs. 8.85 crores in FY05.
As of September 30, 2005, the company had a book value of Rs.86.51 per share, while the net worth of the company was at Rs. 346.03 crores for the same period.
Post issue annualized EPS based on 30th September 2005 earning work out to be Rs. 8.78. The shares are being offered in the price band of Rs. 170 to Rs.195. At P/E multiple of 19 to 22.


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K Sera Sera Productions Ltd. Issue Open On 16th Feb.
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K Sera Sera Productions Ltd. Issue Open On 16th Feb. - February 17th, 2006

Issue Open 16/02/2006
Issue Close 22/02/2006
Issue Size 5000000
Issue Type Book Building
Face Value Rs.10/-
Price Range Rs.64/- to Rs.70/-
Tick Size Re.1/-
Market Lot 100
Minimum Order Qty 100
Listing Stock Exchange Mumbai

Analysis

Background :

In June 2002, Mantra Trading Company Pvt Ltd. (Mantra) and Vajra Trading Company Pvt Ltd. (Vajra), promoters of K Sera Sera Productions Ltd. (KSS), acquired the shares of Garnet Paper Mills Ltd. (GPML), a company carrying out the business of manufacturing paper, duplex board and other related paper products. GPML was listed in 1995. Subsequently, KSS's Promoters made an open offer in 2002 pursuant to the takeover regulations to acquire shares from the public. The object Clause was amended in October 2002 to carry on the business of entertainment through motion pictures, still pictures, television serials and other allied entertainment products and the name of GPML was changed to the present K Sera Sera Productions Ltd.
KSS has three business divisions viz. Motion Pictures Production, Motion Pictures Distribution and Television, Broadband and wireless.
KSS started its film production and ventured into television content production in the year 2003-04. KSS's subsidiary 'Twenty Twenty' was incorporated in October 2004 to concentrate on television content production.

Object Of The Issue :

Build up infrastructure facility for its existing operations for Rs.4.5 Crores
Fund its distribution division for Rs.3 Crores.
Augment working capital resources for Movie production for Rs.25 Crores.
Finance expenses of the issue

Strengths :

KSS has been awarded with an ISO 9001: 2000 certification for the quality management system, for provision of quality entertainment films, television and distribution services.
KSS has entered into a tripartite agreement with Sahara and Shri Ram Gopal Varma's Varma Corporation Ltd. for production of ten movies under Sahara Banner. As per this Memorandum of Understanding (MoU) the films could be either Produced or Directed by Shri Ram Gopal Varma. KSS has entered into another agreement with Sahara for assignment of worldwide Satellite Telecast Rights for a total consideration of Rs.26.71 Crores.
The company has entered into agreements for co-production of movies with Percept Picture Company Pvt Ltd., Shree Ashtavinayak Cine Vision Ltd., Sohail Khan Production and SLB Films Pvt Ltd.
Income of KSS has grown at a CAGR of 690.7 % for FY2003 till FY2005. The same is Rs.37.5 Crores and Rs.32.2 Crores for the FY2005 and six months ending September 2005 respectively.
Profits of the company have grown at a CAGR of 740.2% for FY2003 till FY2005. The same is Rs.2.26 Crores Rs.5.25 Crores for the FY2005 and six months ending September 2005 respectively.
The Indian Entertainment Industry stands at over Rs. 20,000 Crores today. It is expected to grow in high double digits at 18% per annum compounded annually over the next five years, to reach over Rs 45, 000 Crores by 2009. The largest contributor to this growth will be the television segment followed closely by the film segment.

Weaknesses :

As per the tripartite agreement between KSS, Sahara and Varma Corporation Ltd. (VCL), KSS and VCL have to produce ten movies under the Sahara banner till 29th June 2006. Six movies have been produced so far. In case the remaining four movies are not completed within the stipulated time, KSS and VCL would suffer financial loss @ Rs.5,00,000 per month till the completion of movies.
Also, as per this MoU, KSS and VCL cannot jointly produce or direct any other movie till 29th June 2006 or until completion of the ten Movies whichever is earlier.
KSS is largely dependant on movie releases for major part of its income. The revenue tends to rise or fall depending upon the number of movies released during a financial year. The revenue cycle for any movie is generally four months, so the number of films releases varies from quarter to quarter. Hence there could be a vide fluctuation in the company's quarterly results. These results would also depend on the success of the movie.
The Movie Production expenses of the company have grown at a CAGR of 789.9 % for FY2003 till FY2005.
KSS has reported a negative cash flow from operations. The same being Rs.5.16 Crores and Rs.2.91 Crores for the FY2005 and six months ending September 2005 respectively.

Valuation :

Book Value per share as on 31st March 2005 and 30th September 2005 is Rs.26 and Rs.29.62 respectively. Net-worth of the company for the same period is Rs.37.74 Crores and Rs.42.9 Crores respectively. Book Value per share of Balaji Telefilms Ltd. and Pritish Nandy Communications Ltd. for FY2005 is Rs.32.7 and Rs.57.5 respectively.
Return on Networth (RoNW) for the year ending March 2005 and as on 30th September 2005 is 5.99% and 12.21% respectively. RoNW for Balaji Telefilms Ltd. and Pritish Nandy Communications Ltd. for FY2005 is 23.1% and 6.9% respectively.
The annualized EPS of the company based on September 2005 results on post issue equity is Rs.5.38. Post issue PE is in the range of 11 to 13 times for the price range of Rs.64 to Rs.70. Industry PE is 41.


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