Financial Daily from THE HINDU group of publications
Tuesday, Mar 09, 2004

Cross Currency

Group Sites

Corporate - Public Offer

GAIL issue proves sceptics wrong: CMD

Ashok Dasgupta

Mr Proshanto Banerjee, CMD, GAIL

New Delhi , March 8

THE Chairman and Managing Director, GAIL, Mr Proshanto Banerjee, is today a very happy man indeed.

Not only did his body language show it all, it was also exuberance that he exuded while rattling off the final numbers of the gas major's initial public offering (IPO) to Business Line here.

The CMD's elation stems from a number of counts. For one, for proving the sceptics wrong. Contrary to initial worries, the issue has been a huge success. "The numbers talk for themselves," he says.

Secondly, he is overwhelmed by the fancy that the retail investors took to the offering. And thirdly, the very success of the IPO proves that the share was not overpriced, as some consultants had noted when GAIL entered the market. And so Mr Banerjee felt that the GAIL story needs to be told - the fact that not only private sector or the privatised sector, but even the public sector can hold on to its own. GAIL shareholders, he assures, will not regret being a part of the PSU, because the company has still a long way to go.

"For a first couple of days, we came across a lot of scepticism regarding the outcome. But today, when we have seen the final numbers, we are actually more than delighted ... and that's why I felt that the GAIL story needs to be told," said Mr Banerjee.

"We started with an issue size of 8.46 crore shares and the original amount sought to be mopped up was Rs 1,564 crore. That was the target and the floor price was Rs 185 with a five per cent discount for the retail investors. What has now actually happened is that the allotment price after the book-building is coming to Rs 195. Number two, we got oversubscribed 9.28 times, accounting for a mop up of Rs 14,518 crore," he says. But can he keep a part of the oversubscription? "No," he says. "The IPO is limited to 10 per cent, and so, as the allotment price is higher by about Rs 10, the total mop-up will be about Rs 84 crore higher than initially envisages," Mr Banerjee explains.

"Again, at one time it was though that the retail investors in India would not respond favourably to the GAIL offer. We have found that 3,72,414 investors have applied in totality, out of which only 320 are QIBs (Qualified Institutional Bidders). So the remaining 3,72,000-plus are basically individuals, NRIs, HUF and high networth individuals. This shows a very large response of the retail investors," he says. And with a smile, belying his immense pleasure, he adds: "From what I am told, I am not an expert, the last such large response was in the case of the Maruti IPO some time in July 2003, where the total number of investors was some 3.13 lakh or so. So I think, it is a very significant achievement for GAIL." As for the FIIs, a total of 152, out of which the top 10 in the list from various countries show that our road-shows have been worth the while. "In fact, out of the total amount subscribed (Rs 14,518 crore), 61 per cent has come from foreign investors, 18 per cent from the Indian investors - that accounts for about 79 per cent - and the remaining from the retail side, including high networth individuals," said Mr Banerjee. GAIL will continue to be a Government-owned company, because even after the divestment, 57 per cent of the shareholding will be with the Government, and some 9.6 per cent shares are held by IOC and ONGC.

"And, it is the declared policy of the Government that in the foreseeable future, the oil and gas sector will continue to have three flagship companies and one of them is GAIL. But we do also believe that the reflection of the company's worth in the stock market is also something we value, and that happens when the liquidity goes up, the retail investors and the QIBs develop stakes in the company and lastly, but not the least, that it has brought in good money for the Government," says Mr Banerjee.

More Stories on : Public Offer | Petroleum

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Morepen gets USFDA nod for Himachal facility

Israel's Hamlet plans industrial park
Indo Gulf Fertilisers unit shut-down
Boston Scientific gets US nod for coronary stent
Hindustan Inks is now Micro Inks
Siyaram interim Rs 4
Alok Ind plans to hike share capital
Merven to allot warrants to ICICI venture fund
Avon Organics to allot warrants to promoters
Tata Motors to raise up to $500 m through issue of securities
Kerala HC declines to stay Govt order on Coke
Nicholas Piramal gets approval for Canere merger
KSE draws up expansion plan; to set up veg refining plant
IOC eyes Gujarat, Haryana for naphtha cracker plant
Tyco Elec to make refractive plate switch at Bangalore
HPCL inks product sharing agreement with Shell India
GAIL issue proves sceptics wrong: CMD
Berger Paints EGM okays 1:2 bonus
Ten Sports expects rise in subscription declaration
Adesh Gupta new Liberty Shoes CEO
Bhilai Steel posts 15 pc rise in output
Talaulicar to oversee Cummins operations

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2004, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line