Nirma puts off mega issue plans

MUMBAI, November 27: The proposed Rs 300 crore equity issue of Nirma Limited through the book building process has been put off to the firs...

MUMBAI, November 27: The proposed Rs 300 crore equity issue of Nirma Limited through the book building process has been put off to the first quarter of next year following an unfavourable climate for investment.

The lead book runner to the issue, J M Financial and Investment Consultancy Services Ltd, said the emergence of political uncertainity, volatility in the forex markets and the resultant upheavals in the stock market had created an unfavourable climate.

According to a statement, the lead managers in consultancy with the company have decided to monitor the market condition and review the launch of the issue, which could be in the range of Rs 350 to Rs 400 crore, in the first quarter of 1998.

The statement said certain critical issues were also in the process of being resolved with various authorities and other logistical details for the first ever book building exercise were being worked out.

Meanwhile, J M Financial has requested SEBI to grant an exemption from disclosing the status of entries in the book at the end of the day, once the bidding period starts.

Currently as per the SEBI guidelines the book runner has to disclose the demand for the issue on a daily basis, at the end of the day. SEBI8217;s rationale in incorporating this regulation was to ensure full transparency during the book building process.

SEBI is said to be examining JM Financial8217;s request and is expected to take a stand in a few days, sources said.

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According to the book runner, disclosure of the demand would give rise to discrepancies. They feel that if the demand is disclosed, investors might revise their own bids in their favour. The issuers may also work this out to their advantage by artificially building up the book and exhibiting an unwarranted demand for the shares. The book runner has also argued that internationally there is no need to disclose the number of bids once the book opens.

J M Financial is now working on building a software which will link various terminals of the different stock exchanges and give the total number of bids.

Nirma has decided to use the trading terminals of the National Stock Exchange, the Over the Counter Exchange of India and the Bombay Stock Exchange to provide bidding for the issue. The three exchanges have already prepared the software which is yet to be tested.