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Homework Title / No.: Assignment no.

2 Course Code: MGT 523

Course Instructor: Mr. Anoop Mohanty Course Tutor (if applicable):

Date of Allotment: 16.09.10 Date of submission: 28.9.10

Student’s Roll No.B49 Section No. : S1904

Declaration:
I declare that this assignment is my individual work. I have not copied from any other student’s
work or from any other source except where due acknowledgment is made explicitly in the text,
nor has any part been written for me by another person.

Student’s Signature:

Praveen Kumar Pandala

Evaluator’s comments:
_____________________________________________________________________

Marks obtained: ___________ out of ______________________

Content of Homework should start from this page only:


IPO of Reliance Power Limited

Introduction:

Reliance Power is a part of Anil Dhirubhai Ambani Group (ADAG). ADAG is


one of the biggest and most respected business groups in India. ADAG has diverse interests in
power distribution and trading, entertainment and media, financial services and
telecommunications. Reliance Power’s primary business is to plan, develop, construct and
operate power plants domestically & internationally. The company is currently engaged in the
construction of 12 medium and large power projects with a combined installation capacity of
24,200MW, making it one of the companies with largest portfolio of power assets in India. The
company’s projects are located in Northern, Western and North-Eastern parts of the country,
where the demand for power is higher.
Reliance Power is ADAG’s primary vehicle for power generation. The Government of India has
identified the power sector as a key sector of focus to promote sustained industrial growth. It has
embarked on an aggressive mission – “Power for All by 2012”– and has undertaken multiple
reforms to make the power sector more competitive and result oriented. A detailed description of
a few of these projects which will get funding from IPO proceeds is given below. Five other
projects—the gas-fired Dadri project (7,480 MW), the coal-fired MP Power project (3,960 MW)
and three run-of-the-river hydroelectric projects, Siyom (1,000 MW), Tato II (700 MW) and
Kalai II (1,200 MW)—are in various stages of development. Dadri, a 7,480 MW project to be
located in Uttar Pradesh, is expected to be the largest gas-fired power project at a single location
in India.
IPO details:

PF/ IPON / 10012008 / 373

Reliance Power Limited

Industry: Power Generation & Operation Group: Anil Dhirubhai Ambani Group

IPO Snapshot

100% Book Building Issue

Issuer Reliance Power Limited

Public issue of 26,00,00,000 equity shares (constituting 11.50% of post issue paid up capital of
issuer)

Face value Face value of equity shares is Rs.10 per share

Price Band Rs.405 to Rs. 450 per equity share

Issue Size Rs. 10,530 crore – Rs. 11,700 crore

Issue is open From January 15 to 18, 2008

Application for the Issue can be for 15 shares and in multiples of 15 shares thereafter

Book Running Lead Managers are • Kotak Mahindra Capital Company


Limited, UBS Securities India Private
Limited.
• ABN AMRO Securities (India) Private
Limited, Deutsche Equity India Private
Limited.
• Enam Securities Private Limited, ICICI
Securities Limited.
• JM Financial Consultants Private Limited,
J.P. Morgan India Private Limited.
Co- Book Running Lead Managers are • Macquarie India Advisory Services
Private Limited.

• SBI Capital Markets Limited

Registrar to the Issue is Karvy Computershare Private Limited

IPO Grading CRISIL IPO GRADE 4/5 by CRISIL Limited,


indicating above average fundamentals

• Kotak Mahindra Capital Compan Limited.


• UBS Securities India Private Limited.

• ABN AMRO Securities (India) Private


Limited.

• Deutsche Equities India Private Limited.

• Enam Securities Private Limited.

• ICICI Securities Limited.


Underwriters
• JM Financial Consultants Private Limited.

• J.P. Morgan India Private Limited.

• Macquarie India Advisory Services


Private Limited.

• SBI Capital Markets Limited.

• Reliance Securities Limited.

• Kotak Securities Limited.

• ABN AMRO Asia Equities (India)


Limited.

• JM Financial Services Private Limited.

• Karvy Stock Broking Limited.

• SBICAP Securities Limited

ALLOTMENT BASIS

Promoters Contribution 3,20,00,000 shares

Retail investors At least 6,84,00,000 shares or Issue less allocation to Non-


Institutional Investors and Qualified Institutional Bidders (30%).
Non-Institutional At least 2,28,00,000 shares or Issue less allocation to Retail
Investors
Investors and Qualified Institutional Bidders(10%).
Qualified Institutional At least 13,68,00,000 equity shares(60%).
Buyers

Employee Reservation nil


Payment Methods for the Issue

The payment methods available to the investors to apply in this public issue of shares:

Amount Payment Method 1 Payment Method 2


Payable per
Equity For Retail Individual Bidders and For Any Category
Share (Rs.) Non- Institutional Bidders
Face Value Premium Total Face Value Premium Total

On 2.50 112.50 115.00 10.00 440.0# 450.0#


Application

By Due Date 7.50 327.5# 335.0# _ _ _


for Balance
Amount
payable

Total 10.00 440.50# 450.0# 10.00 440.0# 440.0#

# Retail Discount, as applicable, to be adjusted.

A discount of Rs.20 to the Issue Price determined pursuant to the completion of the book
building process shall be offered to the retail individual bidders.

Capital structure of the company:

Aggregate Aggregate Value


Nominal Value at Issue Price

A) AUTHORISED SHARE CAPITAL

11,000,000,000 Equity Shares of Rs. 10 110,000.0


each

5,000,000,000 Preference Shares of Rs. 10 50,000.0


each

Total 160,000.0

B) ISSUED, SUBSCRIBED AND


PAID UP SHARE CAPITAL
BEFORE THE ISSUE

2,000,000,000 Equity Shares of Rs. 10 20000.0


each

C) PRESENT ISSUE IN TERMS OF


THIS PROSPECTUS

Issue of 260,000,000 Equity Shares of Rs. 2,600.0 115,632.0#


10 each

Of which:

a. PROMOTER’S CONTRIBUTION

Issue of 32,000,000 Equity Shares of Rs. 320.0 14400.0


10 each as Promoter’s Contribution in the
Issue
Therefore:

b. NET ISSUE TO THE PUBLIC

Issue of 228,000,000 Equity Shares of Rs. 2280.0 101,232.0#


10 each

D) EQUITY CAPITAL AFTER THE


ISSUE

2,260,000,000 Equity Shares of Rs. 10


each 22,600.0 1,015,632.0#

E) SHARE PREMIUM ACCOUNT

Before the Issue _ _

After the Issue 113,032.0#

# (net of Retail Discount)

Objective of the issue:

1. Funding Subsidiaries to part-finance the construction and development costs of certain of


our projects they are pursuing the development of 13 power generation projects which
are currently under various stages of development. Out of these projects, one is being
executed by us and 11 projects are being developed by nine subsidiaries which have been
set up to develop these projects. One project is expected to be executed through a
subsidiary that remains to be transferred to us. For more details of the projects under
development.
2. General corporate purposes.
3. Achieve benefits from listing of the Equity Shares.
S. Name of Our percentage shareholding in Identified Projects Location
the subsidiary
no. subsidiary

1 RPSCL 100% 600 MW Rosa Phase I UP

2 RPSCL 100% 600MWRosa Phase II UP

3 VIPL 100% 300 MW Butibori Maharashtra

4 SPL 100% 3,960 MW Sasan MP

5 MEGL 100% 1,200MWShahapurCoal Maharashtra

6 USHPPL 80% 400 MW Urthing Sobla Uttarakhand

Share holding pattern:

Shareholding pattern Pre Issue % Post Issue %

Promoter Group 100.0 89.90


Others NIL 10.10

Total 100.0 100.0

Promoters:

Individual promoter: Mr. Anil Dhirubhai Ambani.


Corporate promoters: Reliance Inn ventures Private Limited (RINL), Reliance Energy Limited
(REL), AAA Project Ventures Private Limited.
Shareholdings of Mr. Ambani and RINL are jointly held with AAA Projects.

IPO performance detail after listing:

IPO Listing Detail


Listing Date: Monday, February 11, 2008
BSE Scrip Code: 532939
NSE Symbol: RPOWER
Listing In: A Group
Sector: Power - Generation and Supply
ISIN: INE614G01033
Issue Price: Rs. 450.00 Per Equity Share
Face Value: Rs. 10.00 Per Equity Share.

Listing Day Trading Information


BSE NSE
Issue Price: Rs. 450.00 Rs. 450.00
Open: Rs. 547.80 Rs. 530.00
Low: Rs. 355.05 Rs. 355.30
High: Rs. 599.90 Rs. 530.00
Last Trade: Rs. 372.50 Rs. 372.30
Volume: 63,882,239 134,392,544

Performance:-
After the listing company performance was very poor we can see it from the performance
chart.
After an unexpected poor performance on listing of Reliance Power, Anil Ambani finally
decided to come out with bonus shares. To remain in the race and do not loose investors trust
in ADA group, company today announce to offer free bonus shares for Reliance Power
investors (non promoter). Final decision will be taken in company's board meeting.

Company share price continuously decreasing. As per the 28.9.10 company share price is
164.91.
News about the Reliance Power Limited:

SC clears hurdles for Reliance Power IPO


The Supreme Court on Wednesday cleared the hurdles for the launch of the Rs 10,000-
crore mega initial public offering by Reliance Power by staying the proceedings in the Gujarat
High Court seeking to restrain the company from going ahead with the IPO on January 15.
A three-Judge Bench, comprising the Chief Justice, Mr K G Balakrishnan, Mr Justice R V
Raveendran and Mr Justice J M Panchal, stayed the hearing of a Public Interest Litigation (PIL)
petition filed by a Rajkot-based NGO, Grahak Suraksha Mandal in the Gujarat High Court, after
hearing senior counsel Mr Harish Salve, who appeared for RPL. The Bench issued notice to the
Mandal returnable in three weeks.

Mr Salve, who mentioned the petition before the Bench, alleged that the PIL was motivated and
filed to cause undue harassment to RPL. He said that PIL was now being used as a surrogate
weapon to fight corporate war. He said that the NGO had filed the petition before the Gujarat
High Court after the Securities and Exchange Board of India had cleared the IPO. In the appeal,
the Securities Appellate Tribunal did not stay SEBI’s order.
He contended that the Gujarat High Court was to take up the PIL for hearing today and if the
apex court did not interfere then similar petitions would be filed to blackmail the company. He
said that the IPO could not be reversed as it would affect the capital and stock markets. “We are
into an international project and the world is looking at us. The project would go if the IPO was
stopped and foreign institutional investors would not come,” he said.
Mr Salve submitted that according to the information received from various sources, several
other PILs were to be filed in some other High Courts to obstruct the IPO of the company. This
would not only be against public interest but also against the interest of the investors. While
seeking stay of all further proceedings in the Gujarat High Court, RPL sought a direction to
transfer all the pending litigations to the Bombay High Court since the registered office of the
company was situated in Mumbai, reports The Hindu Business Line.
Rel Power IPO subscribed 73x; gets bids of Rs 7.5 lk cr
The initial public offer of Reliance Power, Anil Dhirubhai Ambani Group Company,
has received an excellent response since day one despite negative sentiment in markets as well as
across the globe. The issuesubscribed 73.04 times and received bids worth about Rs 7.5 lakh
crore.
The reserve portion of QIBs subscribed 83 times and non institutional investors 190 times and
retail nearly 15 times.
Subscription Details
Investors Times
Qualified institutional buyers 82.62
Non institutional investors 190.02
Retail individual investors 14.87
Total 73.04

The issue received bids for 16.65 billion equity shares as against 22.8 crore shares on offer.
The price band is between Rs 405-450 per share. The company is likely to raise more than Rs
10000 crore from this public issue excluding promoters’ contribution.

Rel Power refunds nearly Rs 1 lakh crore


Reliance Power, part of the Reliance Anil Dhirubhai Ambani group which recently
completed its initial public offering (IPO) has completed the allotment of shares to successful
investors, as per the basis of allotment approved by the Stock Exchange. The company has
commenced refunding the excess application money today. The refunds to QIBs and Non
Institutional Investors have been effected today through electronic credits.
The allotment and refund exercise post closure of the IPO has been carried out in a record short
time of 10 working days considering that this IPO was by far the largest in the history of Indian
capital markets. Reliance Power IPO attracted over 5 million bids from all categories of
domestic and international investors with aggregate commitment of over Rs 7,50,000 crore, as
against the issue size of Rs 11,560 crore. 60% of the net issue reserved for qualified institutional
buyers, was oversubscribed 82.5 times. 5% of this category has been allotted on a proportionate
basis to Mutual Funds only. An aggregate of 446 domestic and international QIBs will receive
only 1.2 per cent of their applied quantity of shares. 10% of the net issue reserved for non
institutional investors was oversubscribed 159.6 times. About 12,000 non institutional investors
will receive only 0.6 per cent of their applied quantity of shares.30% of the net issue reserved for
retail investors was oversubscribed 13.6 times. Retail investors have been issued shares at a
discount of Rs. 20 i.e. at Rs. 430 per Share. Over 41.7 lakh successful bidders in the retail
category will get approximately 15 shares each while approximately 4.5 lakh retail investors
who bid for less than 225 shares would not get any shares according to the allocation as
approved.
The excess application money of approximately Rs one lakh crore received from the investors is
being refunded to the investors. Post allotment Reliance Power has approximately 42 lakh
shareholders. The equity shares, offered through this IPO, will be listed on Bombay Stock
Exchange and National Stock Exchange of India. Reliance Power is the flagship company of the
Reliance ADA Group to develop, construct and operate power generation projects. The
company is currently developing 12 power projects with a combined planned installed capacity
of 28,000 MW, one of the largest portfolios of power generation assets under developments.

Reliance Power crosses IPO price of Rs 450


Reliance power which made history in Indian capital market by raising more than Rs
11,000 crore from initial public offer in January, crossed its issue price of Rs 450 today as it
slipped below issue price since listing day and did not recover. The stock has touched an
intraday high of Rs 451 and an intraday low of Rs 421.40. At 2:21 pm the share was quoting at
Rs 448, up Rs 31.15, or 7.47%, with volumes of 1,23,22,550 shares. On Friday, the share closed
down 1.21% or Rs 5.10 at Rs 416.85. Promoter of Reliance Power, Anil Dhirubhai Ambani has
announced bonus in the ratio of 3:5 (three shares for five shares held) yesterday in the
conference. Record date will be announced soon. Now the person who got allotment at Rs 430,
will get new price of Rs 269 per share. This news has started benefiting the stock in terms of
recovery as it crossed Rs 400 mark on February 18 and today touched Rs 450, issue price.
The share had listed, on the BSE, at Rs 547.80 and touched a high of Rs 599.90 on February 11,
2008. But negative sentiment in markets and long gestation period of projects, both these factors
impacted the stock on listing day and on subsequent days. It had touched a low of Rs 389 on
listng day and 52-week low of Rs 332.50.
Reliance Power had entered capital market with a public issue of 26 crore equity shares of Rs 10
each (22.8 crore shares for public and 3.2 crore shares for promoters) at a price band of Rs 405-
450. The company raised Rs 11,700 crore from this issue, which will be used for upcoming
power projects.
Reliance Power puts IPO money in MFs
Reliance power Ltd, which raised Rs 11,562 crore in its IPO in January last, has
temporarily parked almost the entire money in mutual funds. The 2007-08 financial results
declared by the company on Monday show that Rs 11,412.81 crore is invested in mutual funds.
The company has not disclosed either the funds or the schemes where the money has been
invested.
The IPO offer document says that the company “intends to invest the funds from the issue in
interest bearing liquid instruments including deposits with banks and investments in mutual
funds. These investments may include investments in mutual funds managed or financial
products sold by one of our affiliates, RCL (Reliance Capital)”
The company has spent only Rs 25.83 crore as of March 31, 2008 in construction and
development of its various projects.
The temporary parking of the IPO money in mutual funds has helped the company report a net
profit of Rs 94.6 crore for 2007-08. Total income for year stands at Rs 132.8 crore, of which
dividend income is Rs 112.7 crore.
The company has also informed that from March 31, Coastal Andhra Power Ltd, Reliance Coal
Resources Pvt Ltd, Sasan Power Infrastructure Pvt Ltd, Sasan Power Infraventures Pvt Ltd,
Maharashtra Energy Generation Infrastructure Ltd and Coastal Andhra Power Infrastructure Ltd
have been incorporated as wholly owned subsidiaries.
On the BSE, the scrip was traded at Rs 403.25, an increase of 0.27 per cent over the previous
closing of Rs 402.15, reports The Hindu Business Line.

Conclusion:

As per the analysis of the reliance power limited from the performance chart we
came to know that when the IPO was listed in the market price was 450 after that price
continuously decreasing from last 2 years. The company is in the market because the goodwill of
the reliance group industry is very good.

As per the analysis of the last 2 years performance is not good but from last month price of the
shares are increasing that is the good sign for the company but to taking in the consideration
future of the company’s share price is not good because it was issued on the 450 after that it
never touch the price band of the 450. To touch the price band of the 450 is very difficult.
References:

 www.moneyvriksh.com/ipo

 www.moneycontrol.com

 www.reliancepower.co.in

For news

 www.moneycontrol.com/news/business/reliancepowerlimited