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Editor’s Column – November, 2015

General:

International Monetary Fund (IMF) on 6 October 2015 released World Economic Outlook (WEO) October 2015 Update. As per the said report, India’s growth is expected to strengthen from 7.3 percent 2015 and last year to 7.5 percent in 2016. Also, domestic demand in India is projected to remain strong.

India has accelerated its efforts to improve the business climate during the past year, finds the World Bank Group’s annual ease of doing business measurement.

Capital Markets:

Foreign portfolio investors (FPIs) invested Rs.223.4 billion in Indian capital markets in October 2015 after withdrawing Rs.232.2 billion from the markets during August-September 2015.

The initial public offerings (IPOs) this year have been a mixed bag. The stock prices of eight of the 16 companies listed this year through IPO route are below their issue prices.

After NTPC’s public issue of tax-free bonds saw a massive response from investors, state-owned Power Finance Corporation (PFC) witnessed an overwhelming subscription of its public issue of debt.

It is said that the reduction in the repo rate led to this massive response for the public issue of PFC’s tax-free bonds as the 50-bps cut will likely bring down the yields on forthcoming public issue of tax-free bonds.

IndiGo's $464 million (Rs. 3,020 crore) initial public offering (IPO) was six times oversubscribed as foreign investors scrambled to buy into India's biggest airline,

Coffee Day Enterprises' (which runs Cafe Coffee Day (CCD) chain) Rs. 1,150-crore public issue was over-subscribed 1.81 times. Meanwhile, the company's shares debuted on a weak note, opening at Rs. 313 against the issue price of Rs. 328 on the BSE while it opened at Rs 317 on the NSE.

Fragrance maker S H Kelkar & Company's public offering (IPO) has been subscribed 27 times, boosted by strong appetite from high net worth and institutional investors.

Changes in prospectus by SEBI:

Indian capital market regulator SEBI has made it easier for small investors to go through IPO prospectus by notifying that companies seeking to bring IPOs will now be required to file a five-sheet abridged prospectus.

The disclosure requirements in the abridged prospectus have been rationalized in consultation with Investor Associations and market participants.  The revised abridged prospectus improves the readability and contains relevant information for the investor to take well informed investment decision.

Currently, the full prospectus that companies file for their public offers including IPOs runs into 400-500 pages and it has often been felt that the investors find it difficult to get the key information from such bulky documents.

The revised guidelines in this regard, shall be applicable on issues opening for subscription from December 1, 2015. The move would help in reducing the paperwork and cost for companies.

Extension on filing timelines by MCA:

Keeping in view the request received from various stakeholders, the Ministry of Corporate Affairs has extended the due date for the forms AOC-4 and AOC-4 XBRL upto 30th November, 2015. The additional fee requirement for Form MGT-7 E-Form is also relaxed for all such forms filed till 30th November, 2015, wherever additional fee is applicable.

Conclusion:

With Diwali round the corner, we can witness the Big Billion Ecommerce War between Flipkart Vs Snapdeal Vs Amazon. The intense competition in this space, especially among the top 3 players is good for the consumers.

Wishing you all a Happy Diwali and a Prosperous New Year!!!

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