The real India growth story

Operators and investors continue to bleed at the Stock Market, partly due to greed and partly due to global uncertainties. After the withdrawal of the Wockhardt IPO, the real estate (realty) firm Emaar-MGF also withdrew its IPO——and while investors were licking their wounds came the real shocker.

Reliance Power, which had expected to net $3.5 billion from its IPO, had declared an issue price of Rs 450 per share. The company had expected the retail subscription to take the price close to Rs 900 per share——in the end it was a dampener, closing the day at Rs 372.30, following hefty selling by investors.


This debacle has forced other companies ot rethink their own IPOs. Globus Spirit, a liquor (IMFL: Indian Made Foreign Liquor) company, has withdrawn its IPO. Realty firm Uppal is postponing its Rs 2000 crore IPO, while BPTP another real estate company is re-thinking its IPO plans.

Despite the bearish trend, companies like Rural Electrification Corporation and GSS America Infotech are going ahead with their IPO plans. RECL is entering the markets on February 19 with a price band of Rs 90-Rs 105 per share while GSS America, whose issue opened on Monday, is coming with a price band of Rs 400-Rs 440 per share.

Even the government is worried. It has proposed to set up an "IPO pricing norms" committee to change the way that issue prices are determined——presently by the company and the merchant bank managing the issue.

Meanwhile the real India growth story continues on the ground——this time in Kutch. Rs 27,000 crore has been invested in the region's infrastructure, which has been devastated by the earthquake of 2001. Rs 75,000 crore more is expected in the next four years. The reason for this windfall of private equity in infrastructure is the state government. The first thing it has done is to build world-class roads in the region; and then encouraged the private development of power plants and ports. Secondly it walks the talk on fast track clearances of projects. Gujarat takes only three months to approve a project, which in most other states may take up to year.


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