Now a method to the madness?!?

Securities and Exchange Board of India’s new-found penchant for creating history is quite remarkable. The market watchdog on March 22, 2007, tightened the disclosure norms for real-estate IPOs – realty companies will now have to make the projection of the land/project on the present value basis (discounted at market rates) instead of future value. But that’s not the news creating history. On the same day, SEBI made the grading of Initial Public Offerings (IPOs) mandatory. IPO grading is a service aimed at facilitating the evaluation of equity issues offered to public. IPO issuers must furnish bank details accompanied by other balance sheet facts and figures. The disclosure-based model, as adopted by the regulator, is clearly a blessing in disguise for the investors. The disclosure, a one page evaluation by an expert agency (CRISIL, ICRA, CARE, and Fitch Ratings, et al), will be reduced to a single numerical grade on a scale of five (a higher score will indicate stronger fundamentals). The grading will be an autonomous and unprejudiced opinion of the grading agency (these agencies will be under public scrutiny) and SEBI will not play any role in the assessment made by the grading agency.

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Source : IIPM Editorial, 2006

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