Sucheta Dalal :Investors find Tara Foods IPO difficult to digest
Sucheta Dalal

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Investors find Tara Foods IPO difficult to digest  

May 3, 2010

Tara Health Foods Ltd, which is engaged in producing animal foods and edible oils, has extended the subscription period for its initial public offering (IPO) till 5 May 2010 from the earlier closing day of 30 April 2010 and has revised the price band from Rs180-Rs190 to Rs175-Rs185 due to poor response from investors.

Atherstone Capital Markets Ltd, the lead book-running manager of the issue, said that the subscription period has been extended on the grounds of some ‘technical reasons.’

Overall, the issue has been subscribed 0.03 times so far. Qualified Institutional Buyers (QIBs) have completely avoided the IPO which saw zero bids out of the 35 lakh shares reserved under the category. The Non Institutional Investors’ (NIIs) quota was subscribed 0.02 times while retail investors subscribed just 0.07 times on the closing day of the IPO.

The issue was priced at a price band of Rs180-Rs190 earlier. Tara Foods posted a net profit of Rs16.99 crore for the year ended March 2009. Rating agency Fitch has assigned an ‘IPO Grade 2’ to the issue.

Moneylife had earlier reported on how Tara Foods is not a good investment choice for investors and how QIBs and NIIs have been avoiding companies not having good fundamentals. Read here: ( and here

Market watchdog Securities and Exchange Board of India (SEBI) officials did not respond to Moneylife’s query on how such fundamentally poor companies were being given a go-ahead by the regulator.

The company is planning to mop up Rs175 crore-Rs185 crore by issuing 1 crore shares to the public including an anchor investor quota of 15 lakh shares. — Ravi Samalad


-- Sucheta Dalal