Group MANAN SOLANKI 52

Accounts Presentation

A rights issue is basically when a company offers existing shareholders a right to purchase additional shares of the company at a given price, which is at a discount to the prevailing market price of the stock, to make the offer enticing for the shareholder and to ensure that the rights offer is fully subscribed to.

A shareholder has the option of applying for additional shares also i.e. Over and above what he is entitled to.

The basic premise of carrying out rights offers is to raise additional capital. The company raises money from its existing shareholders, who have seemingly posed their faith in the company by virtue of being its shareholders, to invest in expanding capacities or to explore other investment opportunities.

Right issue

Kingfisher Airlines approved raising Rs 2,000 crore through a rights issue.

The decision came after the airline's attempts to raise $350 million by selling global depository receipts failed to attract investors.

The financially-strapped airline, which is in the midst of a debt restructuring, is seeking to raise Rs 2,000 crore, substantially higher than its current market cap of Rs 1,172 crore, leading some equity analysts to believe the promoters may not subscribe in proportion to their current holding in the company.

Case Study

Describes the process where a private entity offers its shares to the public for the first time.

If you have a private business and own all its shares, you can take some of these shares and sell them to the general public to raise money.

IPOs are quite popular with the general public across the world because they are perceived to make easy money for short term and long term investors alike.

A company decides to take out an IPO, and fixes the number of shares and price, at which the offer will be made to the public.

IPO

A government panel headed by disinvestment secretary Sumit Bose has decided to recommend a price band of Rs 220 to 240 for the proposed initial public offer (IPO) of the world's largest coal miner, Coal India Ltd.

The final decision on the price range will be taken by the empowered group of ministers on disinvestment, headed by finance minister Pranab Mukherjee, on Tuesday.

The government aims to mop up Rs 15,000 crore from an issue of 632 million shares, making this the largest-ever IPO in India's history. The biggest share offering to date is Reliance Power's IPO in 2008, which raised about Rs 11,500 crore.

The government is planning to give 5% discount to retail investors as incentive, another official said. The company has reserved 1% of its offering for its and its eight subsidiaries' employees, who total 3.95 lakh.

Case study

An offering of additional shares after the issuing company has already had an initial public offering (IPO).

This sometimes means the company is strapped for cash. A company may issue more shares to help pay the bills.

Subsequent issue

In July 2007 the ICICI Bank Ltd with the intension of ambitious expansion plans had launched a Mega IPO as a subsequent issue at the price band of INR940-950/-

The estimated amount to be garnered through this issue was INR10,000cr.

This time around it was the Mega IPO hitting the street. This issue got 3 times subscription. Also the company was interested in aiming for retail

investor to whom the shares were allotted to them at a special discounted price of INR890/-

Case study

Bonus shares are additional free shares issued to the shareholder by the company. Profitable Companies in India issue Bonus Shares. These are additional shares issues given the shareholder without any cost to existing shareholders.

Free shares of stock given to current shareholders, based upon the number of shares that a shareholder owns. While this stock action increases the number of shares owned, it does not increase the total value.

This is due to the fact that since the total number of shares increases, the ratio of number of shares held to number of shares outstanding remains constant.

Bonus issue

The board of state-owned Oil and Natural Gas Corporation (ONGC) on Thursday approved a special dividend of Rs 32 per share, a stock split and a bonus issue, the company said.

ONGC will split equity shares of Rs 10 face value into two shares of Rs 5 face value.

Case Study

Buyback is reverse of issue of shares by a company where it offers to take back its shares owned by the investors at a specified price; this offer can be binding or optional to the investors.

If they have huge cash reserves with not many new profitable projects to invest in and if the company thinks the market price of its share is undervalued.

Eg. Bajaj Auto went on a massive buy back in 2000 and Reliance's recent buyback.

BuyBack of shares

Shares of ratings agency Crisil surged by as much as 15 per cent to a 52-week high in morning trade on the BSE after the company said it will consider a buyback issue on October 18.

In a regulatory filing, the company said that a meeting of the board of directors of the company will be held on October 18 to consider the proposal to buyback the fully paid equity shares of the company.

In a regulatory filing, the company said that a meeting of the board of directors of the company will be held on October 18 to consider the proposal to buyback the fully paid equity shares of the company.

Case study