Errors force Coal India IPO to offer exit

Errors in Coal India IPO have forced the company to offer an exit option to investors.

Huge demand from investors,mainly foreign investors,saw Coal India8217;s mega initial public offer being oversubscribed 15.20 times on the final day of the issue on Thursday,generating bids worth a record Rs 2,35,290 crore. However,some minor errors in the red herring prospectus RHP for the offer have forced the company to come out with an option to investors to withdraw their applications.

While the IPO,which opened on October 18,garnered total demand for over 960.36 crore shares,as against 63.16 crore equities on offer,market regulator Sebi has asked the company to give an option to investors to withdraw from the issue. It is clarified that on account of typographical errors in the companys standalone summary statement of profit and loss restated,the amount shown under Accretion in stocks and other income for the quarter ended June 30,2010 on pages 6

and F6 of RHP were inadvertently interchanged with

each other, the company said in a notice to investors on Thursday.

In view of the above,kindly note that bidders including QIB bidders,if they so desire,may withdraw their bids. The request for withdrawal of such bid shall be received on or before 5 pm on October 25 2010, the company8217;s notice said which came as a surprise to analysts,investment bankers and investors. We dont know why the company was forced to give the withdrawal option to investors on such small typographical errors. Its a bit surprising, said an investment banking source.

When contacted,Sebi officials were not available for comments.

Clarifying the errors,the companys notice said,accretion in stocks for the quarter ended June 30,2010 should be read as Rs 54.45 million instead of Rs 31,945.99 million; and other income for the quarter ended June 30 2010 should be read as Rs 31,945.99 million instead of Rs 54.45 million. It is further clarified that there has been no change in the total income of the company or otherwise the companys standalone summary statement of profit and loss restated,on page 6 and F6 of the RHP,in any manner whatsoever,Coal India said in the notice.

The required changes will be made to correct the errors set forth above in the company8217;s prospectus. Deoki Bijay amp; Co,chartered accountant and auditors of the company,has consented to the issuance of this corrigendum notice and to the corresponding correction to the standalone financial statement restated that company their report dated September 24,2010 and to the reference to their name in the form and context in which they appear in this corrigendum, Coal India said.

Analysts said the withdrawal option wont make any impact on the IPO process. The issue has generated demand for Rs 2.35 lakh crore the highest upfront payment for any IPO in the country. Nobody is going to withdraw the applications for some small errors like this, said an analyst.