Onelife Cap

Onelife Capital Advisors Ltd. has entered the capital market on 28th September 11, with a public issue of 33.50 lakh equity shares of Rs. 10 each, in the band of Rs. 100 to Rs. 110 per share.

This company had managed IPO of Paramount Print Packaging, which is now ruling at 23 against its issue price of Rs. 35. We had cautioned the investors on this IPO in the past, as fair value was seen at Rs. 10.

Now looking to the price band of Rs. 100 - Rs. 110 for IPO of this company, we are taking the primary market in the drain, as the sole object of this IPO is to rob the gullible retail investors, either at the IPO or at the listing stage, by manipulating the price on the bourses.

The present paid up equity capital of the company is Rs. 10.01 crore, of which, equity of Rs. 9.46 crore were issued at par, to the promoters in November 09 and November 10. For FY10, total income of the company was Rs. 62 lakh, while PAT was at Rs. 11 lakh. In FY11, financials worsened with income falling to Rs. 39 lakh, with net loss of Rs. 60 lakh. However, the worst part is its financials is that deposit of Rs. 4 crore has been given as deposit for premises used as office, while Rs. 6.37 crore has been given as advances to a promoter group company. See how smartly the equity has been raised by the promoters and how smartly (read dangerously) used by the company.

The company proposes to raise Rs. 33 to Rs. 37 crore from this IPO, of which, Rs. 7 crore will be used for office, Rs. 11.60 crore for development of Portfolio Management Services and Rs. 7.70 crore for brand building. Very easy to spend IPO fund by the promoters, as same can easily be shown by the company, due to its non-tangible nature, except for office premises. Also, what is the need of a 3,000 sq. feet office premises or why the same has not been acquired by the company from its existing equity raised, of over Rs. 10 crore?

This issue has been structured purely to play in the market, where ultimate victims will be the retail investors. In last 6 months, we have seen many such IPOs hitting the market, with no quality fundamentals and with sole intent to indulge in speculative and operator play. Some of them are PG Electroplast, Bharatiya Global, Aanjaneya Life, Brooks Lab, Readymade Steel, Rushil Decor, Sanghvi Forgings, Servalakshmi Paper, Shilpi Cable, Timbor Home, VMS Industries, Paramount Print and so on.

Infact, it has become very easy for some unprofessional BRLMs to structure an IPO by taking help of promoters and operators, where all 3, share the amount made from the IPO and speculative operations. Infact, all these IPOs are of the size of Rs. 30 to Rs. 90 crore and priced at 4 to 6 times of its fair value. But in this case, we don't find even Rs. 10 as its fair value. Means, looting gullible retail investors is not seen coming to an end in the near future. Infact, desire and thirst of looting is increasing with every passing day. SEBI must exercise its power to curb such IPOs, which is nothing but a slow poison, killing our primary market, as also, looting the small and retail investors. Infact, each such IPO is causing an average loss of Rs.100 crore to the system and the retail investors. Does it mean that this is seen as an exemption limit, having set for looting via primary market, by our rules and regulations?

So clear advice is to remain away. By, doing so, even you can stop this loot. A move of Anna Hazare kind has to be initiated for the IPO, where one will neither apply nor trade in such IPOs. By doing so, peoples' power can stop this loot.