Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: due date for vat payment :: VAT RATES :: articles on VAT and GST in India :: cpt :: TDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARD :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT Audit :: Central Excise rule to resale the machines to a new company :: list of goods taxed at 4% :: form 3cd :: empanelment
News Headlines »
 Filing of online return for 4th quarter of 2016-17 — extension of period thereof
 CBDT simplifies ITR filing process from FY18
 Govt extends service tax return filing date to April 30
 No move to tax farm income, clarifies Arun Jaitley
 New board for indirect taxes to become operational from June 1
  9 changes that came into effect from April 1
 First time filing income tax? Here's all you need to know about Form 16 and Form 26AS
 New Opening Financial Controller Chartered Accountant (Manufacturing Plant) A Leading Company
 Income Tax Filing 2017: All you want to know about the single page ITR form SAHAJ
 How to benefit from investments in tax saving mutual funds
 60 per cent of income tax notices on fishy cash deposits returned

A job half done
September, 07th 2006
What the rating agencies are doing now is only half the job. The job left unfinished is that of appraising the price of an IPO it is not enough to appraise the company alone. -------------------------------------------------------------------------------- There is no point in impliedly saying that the company is good but you decide for yourself whether the price it is asking for its shares is reasonable or not. -------------------------------------------------------------------------------- There have been quite a few ratings done by accredited rating agencies ever since the Securities and Exchange Board of India (SEBI) pioneered and ushered in the optional regime for rating IPOs (initial public offerings). The rating agencies are appraising the IPOs on a scale of five but stopping well short of going the whole hog. It is all fine to say that a company has got a rating of four. The investors' purpose, however, will not be served unless they are also told whether they should go ahead and subscribe to the IPO at the price asked for. Ambiguous signals In the event, what the rating agencies are doing now is only half the job. The job left unfinished is that of appraising the price it is not enough to appraise the company alone. By leaving the issue of price unappraised, as it were, the signal given is ambiguous. Investors have had no option, much less a say, thus far in the matter of pricing of an IPO with the price already having been discovered in a price discovery exercise called book-building in which only the qualified institutional buyers (QIBs) and high net worth individuals (HNIs) are allowed to participate. While it would admittedly be difficult to give them a say in this process by the very nature of things, the least SEBI can do to comfort them is to mandate the compulsory rating of IPOs and take this forward by ordaining the rating agency to comment on the offer price as well with a clear-cut recommendation to the retail investor to go ahead or not at the asking price. A five out of five rating, for example, does not ipso facto justify a mind-boggling premium of, say, 20 times the face value. There is no point in impliedly saying that the company is good but you decide for yourself whether the price it is asking for its shares is reasonable or not. Comment on offer price The reason why SEBI has refrained from mandating comment on the offer price is perhaps to spare the raters the blushes in case the market does not bear out the rating agencies on the price front given the fact that the price quoted in the bourses is not only a function of fundamentals of the company but also of the demand-supply equation for its shares at a given point of time. Be that as it may, it still does not justify the `incomplete' recommendations, if one may say so, of the rating agencies which refrain from taking a call on the offer price. What the rating agencies can perhaps do is to comment on the price subject to the rider that it is based on the fundamentals of the company, industry and economy alone. For good measure, they should be allowed to save their skin by saying that, more often than not, more than the fundamentals it is the demand-supply equation that tilts the scales in favour of or against a particular scrip. S. Murlidharan (The author is a Delhi-based chartered accountant.)
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Portal Design Website Design Portal Designing Website Designing Web Design Professional Portal Design Professional Website Design Professional Web Design Portal Design India Website Design India Portal Designing India Website Designing India Web Design India Professional Portal Design India Professional Website Design India Chicago Professional Web Design New York Professional Web Design California Website Design Florida Website Design New Jersey Website Design Britain UK Website Design London Manchester Website Design

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions