Scotts Garments Limited which had tapped the capital markets with its IPO in a price band of Rs 130-132 and then reduced due to poor subscription to Rs 118-120, was finally withdrawn due to poor subscription. The company had initially opened its issue on the 25th of April and the same was to close on 29th of April. The issue was extended to then close on the 3rd of May. The issue garnered subscription of a total of 28.17 lac shares against an offer size of 105.07 lac shares, resulting in subscription of 27%.

The issue received support from QIB’s to the extent of 36%, HNI’s 39%, retail investors 6% and employees 23%. The level of subscription did not change significantly from the time that the issue was extended. The earlier subscription was overall 25% which increased to 27%. QIB’s remained unchanged while HNI’s moved from 36 to 39. Retail actually reduced from 12 to 6 while employees increased significantly to 23 from 12.

What went wrong? The pricing was wrong and the fact that this was a mere manufacturer and not a retailer made the issue expensive. Secondly there is no interest in the textile sector currently and existing companies from the sector are not sought after. Thirdly there is general apathy in the IPO market and investors are simply not interested in the primary market.

What needs to be done to revive the market? There needs to be a block buster issue where looking at the attractiveness of the same, the issue just sails through and all investors make money. A couple of issues like the above is certainly going to make the primary markets more attractive than what it is today.