Initial

Public Offerings

10 Apr 2013

IPO Activity in India in Q1 March2013

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Markets Snapshot Q1 March2013

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18,836
BSE Sensex
3.1%

382
FII (INR bn)

New Listings

IPO Proceeds
(INR bn)

1.68

14.3%
Sensex declined 3.1% during first quarter of 2013. This fall wiped INR 5.96 tn of shareholders wealth

78%
166%

Favourable policies* for Foreign investors attracted more investments

IPO listings increased from 3 in Q1 March2012. This Increase in IPO is due to opening of SME exchanges

Proceeds decrease as listings were mainly on BSE-SME

For Q1 Mar2013, Q-O-Q basis * Simpler regime for foreign investors and increasing caps in FIIs ARC Financial Services April 2013 IPO Activity in India in Q1 March2013 www.arc-fs.com

IPO Market Overview

Index
Market Scenario in 2013 IPO Activity in India in Q1 March2013 BSE-SME and NSE-Emerge

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ARC Financial Services

April 2013

IPO Activity in India in Q1 March2013

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BSE SENSEX Worst Performer Among Major Indices

FTSE 8.7%
6,412

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14,579

DOW Jones

11.3%

31/12/2012 Jan13

12/02/2013 Feb13

27/03/2013 Mar13

31/12/2012 Jan13

13/02/2013 Feb13

28/03/2013 Mar13

Hang Seng

1.6%

Environment of political instability due to withdrawal of support by DMK and lingering doubts about interest rate cut by RBI

BSE Sensex

3.1%

22,300

Expectations regarding increase in corporate taxes

12/31/2012 Jan13 2/12/2013 Feb13

18,836

31/12/2012 Jan13

12/02/2013 Feb13

26/03/2013 Mar13

3/27/2013 Mar13

ARC Financial Services

April 2013

IPO Activity in India in Q1 March2013

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even the good FII inflow brings no respite

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Although the CY2013 started off with good inflow of FII* in January, it slowed down over the next two months Although FII inflow has been encouraging Indian equities have been the worst performing market in the first quarter of the CY2013 because of bad performance of mid and small cap firms Successful reining of inflation by RBI and government will surely have a positive impact on FII inflow in the coming quarters

FII inflow in previous five quarters 392 345 382

FII in Q1 March2013 (In INR bn): 382

291
192

96

94

-16 Q1 2012
ARC Financial Services

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Jan

Feb

Mar
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* Foreign Institutional Investors April 2013 IPO Activity in India in Q1 March2013

IPO Market Overview

Index
Market Scenario in 2013

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IPO Activity in India in Q1 March2013

BSE-SME and NSE-Emerge

ARC Financial Services April 2013 IPO Activity in India in Q1 March2013 www.arc-fs.com

Rundown of Q1 March2013 vis--vis Q1 March2012

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Q1 March2012
No. of Deals Main Board SME 2 1 6.94 2.31 Main Board SME

Q1 March2013
1 7 1.68 0.21

Capital Raised (INR bn) Average Deal size (INR bn)

Top Deal (INR bn)

Multi Commodity Exchange (6.63)

V-Mart (0.94)

Top Sector (Volume)

Banking & Finances (2)

Agriculture (3)

Top Sector (Proceeds in INR bn)

Banking & Finances (6.70)

Retail (0.94)

ARC Financial Services

April 2013

IPO Activity in India in Q1 March2013

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The Grim Picture of IPO Market in Q1 March2013

Indian IPO market did not see much action in Q1 March2013

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IPO volume increased to 8 compared to 3 in Q1 March2012; the increase was driven by the listings on SME exchange. (There was no change in number of new listings compared to immediate previous quarter)
Main exchange witnessed only a single IPO in Q1 March2013

Small IPOs were the flavor of the quarter

Out of 8 IPOs in Q1 March2013, 7 are SME having a size of less than INR 200 mn

With maximum listings happening on SME exchange, the IPO proceeds declined (85%) to just INR 1.68bn in Q1 March2013 over the proceeds of INR 6.94 bn in the year ago period
Current quarter did not witness any IPO of above INR 1bn The biggest IPO (V-Mart Retail) raised just INR 940 million (also the only listing on main exchange in the quarter)

Compared to Q4 December2012, IPO proceeds declined by a whopping 97% in Q1 March2013

The sharp decline was driven by the big IPOs of Bhati Infratel (INR 41.5bn), PC Jewelers (INR 6.1 bn) and CARE (INR 5.4 bn)

IPOs over last five quarters (Volume) 8 5 3 8 8

IPOs over last five quarters (Proceeds) (INR bn) 55

7
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q1 2012

6
Q2 2012

1
Q3 2012 Q4 2012

2
Q1 2013
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ARC Financial Services

April 2013

IPO Activity in India in Q1 March2013

The Flag Bearers of Q1 March2013

Size (INR mn) IPO Price (INR) 25 25 210 20 25 40 35 25

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% Return

Listing Date

Company*

Sector

Price (INR) (Last working day of Q1 March2013) 37.6 51.9 196.3 29.7 30.3 39.1 41.1 26.0

14-Jan-13 7-Feb-13 20-Feb-13 11-Mar-13 12-Mar-13 12-Mar-13 19-Mar-13 25-Mar-13

Eco Friendly Food Processing Park Esteem Bio Organic Food Processing V-Mart Retail Sunstar Realty Development Channel Nine Entertainment Kavita Fabrics HPC Biosciences Bothra Metals and Alloys

Agriculture Agriculture Retail Real Estate Entertainment Textile Agriculture Metal

75.2 112.5 944.2 106.2 116.7 51.0 157.5 122.1

50.4% 107.8% -6.5% 48.5% 21.2% -2.3% 17.3% 4.0%

* Companies are listed in the order of listing date ARC Financial Services April 2013 IPO Activity in India in Q1 March2013 www.arc-fs.com

Sector Wise Comparison of IPOs

Sector* Retail Agriculture Metal/Alloys Entertainment Real Estate Textile IPO Volume 1 3 1 1 1 1 % of IPO Volume 12.5% 37.5% 12.5% 12.5% 12.5% 12.5% IPO Proceeds (INR mn) 944.2 345.2 122.1 116.7 106.2

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% of IPO Proceeds 56.0% 20.5% 7.2% 6.9% 6.3%

51.0

3.1%

After being major contributor in IPOs last year, BFSI sector has seen no new IPO so far in 2013 Agriculture has been the most favored sector so far, amounting to 3 out of 8 IPOs so far In SMEs agriculture sector leads with 46.5% of the total SME proceeds

Although 7 out of 8 IPOs are SME the constitute only 44% of the total proceeds
So far the only non-SME IPO of V-Mart Retail is the largest with the proceeds of INR 944 mn IPO of V-Mart Retail was subscribed 1.2 times

*In order of increasing % proceeds for Q1 March2013 ARC Financial Services April 2013 IPO Activity in India in Q1 March2013 www.arc-fs.com

Sector Wise Comparison (Volume & Proceeds)

Volume (Q1 2013): 8 Proceeds(Q1 2013): INR 1.68 bn

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12.5% 3.1% 12.5% 37.5% 6.3% 6.9%

7.2% 20.5%

12.5%

12.5%

12.5%

56.0%

Agriculture
ARC Financial Services

Retail
April 2013

Real Estate

Textile

Entertainment

Metal/Alloys
www.arc-fs.com

IPO Activity in India in Q1 March2013

All is not lost

Positive outlook towards Indian economy:

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Inflation coming under control, WPI inflation fell from 7.6 in 2012 to 6.7 in March2013 Governments commitment towards reforms

Partial deregulation of diesel

BSE is looking to launch its own IPO in 2013, this will pave way for IPOs from other stock exchanges as well BSE SME is targeting to list more than 30 SMEs by the end of 2013 Government has increased the cap in FIIs on government bonds from $15 bn to $25 bn, this has been done to attract more institutional investors

ARC Financial Services

April 2013

IPO Activity in India in Q1 March2013

www.arc-fs.com

IPO Market Overview

Index
Market Scenario in 2013

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IPO Activity in India in Q1 March2013

BSE-SME and NSE-Emerge

ARC Financial Services April 2013 IPO Activity in India in Q1 March2013 www.arc-fs.com

Fundamental Differences in SME and Normal Exchange

Details SME IPO Stage Track Record IPO Grading Paid up capital Issue size cap IPO Underwriting Exemption from 3 years of profitability Not required Up to INR 100 mn(100-250 mn has the option of listing on SME) None 100% underwritten (15% on the books of merchant banker) Post Issue Stage Reporting requirements Market making Trading Half yearly Mandatory (75% time of the day for 3 years) In lots Quarterly Not mandatory In shares

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Main Board

Track record of 3 years of profitability Mandatory Not less than INR 100 mn None Mandatory

ARC Financial Services

April 2013

IPO Activity in India in Q1 March2013

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Why should SMEs get listed???

Availability of capital and future financing options Liquidity for shareholders

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Ability to provide capital required for growth, R&D and M&A Terms of debt are favorable for a listed company Ease of exit and liquidity for risk investors Tax benefits for early risk investors The long term capital gain tax for a listed SME is zero Shares are efficient and cost-effective substitute for acquisition of target companies M&A are completed in a timely manner for listed companies ESOPs are very effective in tool to retain talent Employees can be provided with bonuses without any effect on cash flows Listed companies have more credibility in the eyes of customers/clients Ability to attract new investors
IPO Activity in India in Q1 March2013 www.arc-fs.com

Facilitates acquisitions

ESOPs

April 2013

Visibility/ Recognition
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April 2013

IPO Activity in India in Q1 March2013

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Sector: Agriculture
No. of IPOs 3 Issue Size (INR mn) 345.2 % of total IPO Proceeds 20.5%

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Company Name

Listing Date

Listed At

Issue Price (INR)

25 35 25

Issue Size (INR mn)

Price (Last closing price of the qtr) (INR)

51.9 41.1 37.6

Return# (%)

Minimum Order Quantity*

6000 4000 6000

Esteem Bio Organic Food Processing HPC Biosciences Eco Friendly Food Processing Park

7-Feb-13 19-Mar-13 14-Jan-13

BSE-SME BSE SME BSE SME

112.5 157.5 75.2

107.8% 17.3% 50.4%

Sector: Metal
No. of IPOs 1 Company Name Issue Size (INR mn) 122.1 Listing Date Listed At

*Minimum Order Quantity is the minimum number of shares investor can apply while bidding in an IPO. MOQ for SME is very large compared to normal IPOs

% of total IPO Proceeds 7.2%

Issue Price (INR) 25

Issue Size (INR mn)

Price (Last closing price of the qtr) (INR) 26.0

Return# (%)

Minimum Order Quantity 6000

Bothra Metals and Alloys

ARC Financial Services

25-Mar-13

BSE SME

122.1

4.0%

April 2013

IPO Activity in India in Q1 March2013

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Sector: Retail
No. of IPOs 1 Issue Size (INR mn) 944.2 % of total IPO Proceeds 56.0%

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Company Name

Listing Date

Listed At

Issue Price (INR)

Issue Size (INR mn)

944.2

Price (Last closing price of the qtr) (INR)

Return# (%)

Minimum Order Quantity

Subscripti on

IPO Grading

V-Mart Retail

20-Feb-13 BSE, NSE

210

196.3

-6.5%

66

1.2x

Sector: Real Estate

No. of IPOs 1 Issue Size (INR mn) 106.2 % of total IPO Proceeds 6.3%

Company Name

Listing Date

Listed At

Issue Price (INR)

20

Issue Size (INR mn)

Price (Last closing price of the qtr) (INR)

29.7

Return# (%)

Minimum Order Quantity

6000

Sunstar Realty Development

11-Mar-13

BSE SME

106.2

48.5%

ARC Financial Services

April 2013

IPO Activity in India in Q1 March2013

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Sector: Entertainment
No. of IPOs 1 Issue Size (INR mn) 116.7 % of total IPO Proceeds 6.9%

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Company Name

Listing Date

Listed At

Issue Price (INR)

25

Issue Size (INR mn)

Price (Last closing price of the qtr) (INR)

30.3

Return# (%)

Minimum Order Quantity

6000

Channel Nine Entertainment

12-Mar-13

BSE SME

116.7

21.2%

Sector: Textiles
No. of IPOs 1 Issue Size (INR mn) 51.0 % of total IPO Proceeds 3.1%

Company Name

Listing Date

Listed At

Issue Price (INR)

40

Issue Size (INR mn)

Price (Last closing price of the qtr) (INR)

39.1

Return# (%)

Minimum Order Quantity

3000

Kavita Fabrics

12-Mar-13

BSE SME

51.0

-2.3%

ARC Financial Services

April 2013

IPO Activity in India in Q1 March2013

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helps companies develop their business through

Organic Growth
Investor Relation Management Fund Raising (Equity and Debt) Advisory / Consulting

In-Organic Growth
Mergers & Acquisitions

ARC Financial Services

ARC Financial Services, a boutique investment bank, was founded in June 2008 by a passionate group of professionals with the intent of providing quality investment banking & related advisory services for Indian Corporates with global aspirations. ARC Financial Services (ARC) caters to the funding needs of growth-hungry Indian Enterprises, especially in the small and medium enterprise sector. The services bouquet offered by ARC includes private equity advisory, mergers and acquisitions advisory, raising equity and debt capital, IPO advisory, project financing and restructuring advisory services.

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Thank You
CA. Tapan Jindal
tapan@arc-fs.com +91 11 6542 2128

Manoj Singh
info@arc-fs.com +91 11 4562 2128

Disclaimer The information contained herein has been obtained form various public sources. The above information is believed to be correct but is not necessarily complete and its accuracy cannot be guaranteed. ARC Financial Services is not responsible for any error or any decision taken by the reader based on this information. ARC Financial Services Pvt. Ltd. will not accept any liability, whatsoever with respect to the use of this document or its content.

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