1 1 Public Offer of Securities and IPOs

2 1 Overview of Securities Market 2 Overview of Initial Public Offer 3 Offer For Sale 4 Acquisition Window 5 Statistics Agenda 2

Exchange of Ideas 3

Purpose of Stock Exchanges 4 Stock Exchange Allow companies to raise equity from investors and for investors to invest in good companies Provide investors a market to buy and sell securities Primary MarketSecondary Market

Trading Process 5 Seller Buyer Broker Exchange Bank Clearing Corporation Depository

The clearing banks and the depositories provide the necessary interface between the custodians/clearing members for settlement of funds and securities obligations of trading members Clearing and Settlement - Purpose 6 To determine funds and securities obligations of the trading membersTo settle the trade through exchange’s robust settlement process

Clearing and Settlement Process 7 Exchange Clearing Corporation Depository Clearing Bank Custodian / CM

T+2 Rolling Settlement – T+1 activities 8 Confirmation of the institutional trades. Provision of exception window available for late confirmations. Time limit and the additional charges for the exception window to be decided by exchanges. The exchanges / Clearing House / Clearing Corporation process and download obligation files to the brokers’ terminals DPs accepts instructions for pay-in of securities by the investors in physical form at least upto 4 p.m. and in electronic form by 6 p.m. The depositories accept the requests from DPs for ‘same day processing’.

T+2 Rolling Settlement – T+2 activities 9 Depository permits downloading of the pay-in files of securities and funds from broker pool accounts Depository processes pay-in requests and transfers the consolidated pay-in files to the Clearing Corporation The Exchanges / Clearing Corporation execute pay-out of securities and funds to the Depositories and Clearing Banks Depositories and the Clearing Banks complete the process by 2:00 p.m.

Overview of Regulatory Framework 10 SCRA And Rules SEBI Act Stock Exchange Requirement Companies Act SEBI(ICDR) Regulations Syndicate Member Underwriter Registrar to Issue Depositories Company/Issuer to initiate process Preparation of Prospectus and due diligence by Merchant Banker Checking compliances and in- principle approval by BSE Go ahead by SEBI Engagement of various Intermediaries to fulfill various obligation

Old Process of Initial Public Offer (T + 60 days) 11 Company Exchange Investor RTA Bank Investor submits application and cheque 2. Application checked and basis done 3. Application sent to exchange for registration 4. Draw list of allotees, allotment letters, share certificates 5. Allottee approval6. Company issues shares 7. Capital transferred to company and shares transferred to investors along with capital for unallotted shares

Initial Public Offer Issue Process (T + 12 days) 12 Grading Agency Syndicate Bank Broker Legal Counsel Regulator Lead Manager Exchange Escrow Bank Syndicate Member Depository RTA Company Investor

Streamlining Initial Public Offer Issue Process (T + 6 days) 13 Grading Agency SCSB (ASBA) DP/RTA/BROKER Legal Counsel Regulator Lead Manager Exchange Escrow Bank Syndicate Member Depository RTA Company Investor

DayActivity T+1  Registrar to get the electronic bid details from the stock exchanges by end of the day and give to SCSB  SCSBs to continue / begin blocking of funds T+2  Issuer, merchant banker and registrar submit relevant documents to stock exchange(s)  SCSBs send confirmation of funds blocked to registrar  Registrar reconciles compiled data from the stock exchange(s) and SCSBs T+3  Registrar to finalize basis of allotment and submit to designated stock exchange (DSE) for approval.  Designated Stock Exchange(s) to approve the basis of allotment  Registrar to prepare funds transfer schedule and issue funds transfer instructions to SCSBs Streamlining Initial Public Offer Issue Process – Day wise activity 14

DayActivity T+4  SCSBs credit funds in public issue account of the issuer who allotment.  Registrar/Issuer initiates corporate action for credit of shares to allottees.  Issuer and registrar file allotment details with DSE  Registrar sends bank-wise data of allottees, amount due on shares allotted, if any, and balance amount to be unblocked to SCSBs. T+5  Registrar receives confirmation of demat credit from depositories.  Issuer/registrar file confirmation of demat credit, lock-in and issuance of instructions to unblock ASBA funds, with stock exchange(s).  Issuer make listing application to stock exchange(s) who give listing and trading permission.  Issuer, merchant banker and registrar publish allotment advertisement and stock exchange(s) issue commencement of trading notice. T+6  Trading commences Streamlining Initial Public Offer Issue Process – Day wise activity…contd. 15

16 1. Shares delivered to clearing house account through broker before issue opens and /Intimated to Exchange 2. Bids placed and funds blocked3. File for basis of allotment with SE4. Allocation instructions 5. Instructions for clearing house and shares tendered for pay in 6. Transfer of shares to pool account of trading members and to investor 7. Pay out of funds and transfer of balance shares if any to promotor/company Offer For Sale (OFS) Broker Investor Clearing Corporation Exchange Merchant Banker/ RTA Promotor/ Company Trading member Pool a/c

COAL INDIA LTD Issue DateJanuary 30, 2015Total Consideration (Rs. Cr)22, Retail Issue Size126,327,288 Cumulative Quantity (Retail) 55,647,668 Non Retail Issue Size 505,309,152Cumulative Quantity(Non- Retail) 619,594,231 Issue Size (shares)631,636,440Cumulative Quantity675,241,899 Cases 17 RURAL ELECTRIFICATION CORPORATION LIMITED Issue Date:April 8, 2015Total Consideration (Rs. Cr) Retail Issue Size 9,874,590 Cumulative Quantity (Retail) 89,075,112 Non Retail Issue Size 39,498,360 Cumulative Quantity(Non- Retail) 184,107,713 Issue Size (shares) 49,372,950 Cumulative Quantity 273,182,825

For Delisting, Open Offer or Buy BackUse of Exchange platform as an alternate means for acquisition of shares Robust secondary market operating process that seamlessly links the investor, broker, exchange platform, the clearing corporation, the clearing banker and the depository Tax benefit of using an Exchange platform Robust clearing and settlement mechanisms of secondary market brings efficiency in the system Acquisition process under the regulatory framework of Exchange bringing trust in the market Real time disseminate of information brings transparency in the process Acquisition Window – Salient Features 18

19 1. Shares delivered to pool a/c 2. Shares tendered to Clearing Corporation 3. Bid placed4. Filed for basis of allotment5. Allocation instructions6. Instructions for clearing house7. Pay in of funds 8. Pay out of shares to acquirer / Pay out of funds to trading member and balance shares if any 9. Funds delivered to shareholders Acquisition Window Trading member Pool a/c Acquirer Clearing Corporation Exchange Merchant Banker/ RTA Shareholder 8

Initial Public Offer Issue in India - Statistics

As on January 8, 2016, 119 SME Companies listed on BSE vis-à-vis 10 companies on Other Exchanges. Amount raised Rs. 918 crore Out of 119 companies, 12 companies have migrated to the main board of the Exchange Market capitalization of the companies listed on SME platform Rs. 7,165 CroresNo. of Market Makers – 93Average investors per issue SME - Statistics 21

As on November, 149 companies have completed their OFS issuesBSE appointed the Designated Stock Exchange in 126 (~85%) OFS issues.Over 500 members have participated in OFS via BSE platform. The process has helped the Government to raise over Rs. 37,520 Crs through divestment of holdings in PSUs. 83 OFS issues have been conducted exclusively only on BSE Platform Offer For Sale - Statistics 22

Offer to Buy Buyback Bayer Cropscience Ltd. Book Size (Shares) 12,65,000 Issue Size (Rs.crs) 506 Delisting ESSAR Oil Ltd. Book Size (Shares) 14,24,89,858 Issue Size (Rs.crs) 2081 Takeover Tide Water Oil (India) Ltd. Book Size (Shares) 2,26,512 Issue Size (Rs.crs)

Statistics Buyback Issue Size (Rs.crs) 1,256 No. of issues 8 Delisting Issue Size (Rs.crs) 3,111 No. of issues 4 Takeover Issue Size (Rs.crs) 558 No. of issues 9 Total Issue Size (Rs.crs) 4,925 No. of issues 21 24

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