Mumbai: Kochi-based V-Guard Industries Ltd, the Rs200-crore electric equipment manufacturer, is ready to brave the path where many large corporations are fearing to tread. The company is entering the capital market on 18 February with an initial public offering (IPO) of eight million shares, with a price band of Rs80-85. If the issue is priced at the higher end of the band, it will be able to raise Rs68 crore.

In past one week, three public floats were abandoned. Wockhardt Hospitals Ltd was the first firm to scrap its IPO after it managed to sell only 20% of the 25 million shares floated. The next casualty was Delhi-based realtor Emaar MGF Land Ltd which could sell only 39% of 102 million shares. SVEC Construction Ltd, a Hyderabad-based construction company, was the third firm to withdraw its IPO.

Kochouseph Chittilappilly, the 56-year-old promoter of V-Guard Industries, is confident about a positive response from the investors to the issue. “The size of the issue is very small. I am optimistic (about its success),” he said. Chittilappilly is banking on the 7,000-odd dealers who sell the company’s products to get retail investors for the IPO. The company manufactures stabilizers, fans, pumps and cables and has a dominant presence in south India. In the financial year ending March 2007, the company’s operating profit was Rs27 crore on total sales of Rs223 crore.

However, not every promoter who is planning to raise money from the market, seems to share Chittilapilly’s confidence.

“Many companies have filed red herring prospectus with Securities and Exchange Board of India (Sebi) to enter the market, but the promoters are going slow in responding to the queries raised by the capital market regulator on their draft offer documents. Till a few weeks back, they were quick in responding to Sebi’s queries as they wanted to hit the market fast but now they seem to be in no hurry,” said a senior official at an investment bank who didn’t wish to be quoted.

After the draft offer document is filed, Sebi normally seeks clarifications on various issues and once the regulator is satisfied with the answers, the float is cleared.

“It’s true that the market mood has changed from extreme greed to fear, but the fact that we are going ahead with the issue is because we have seen interest among qualified institutional buyers,” said Amit Rathi, managing director of Anand Rathi Securities which is managing the V-Guard issue.

His optimism is shared by other merchant bankers who are planning to raise money for several mid-sized firms. Sharad Rathi, head of investment banking at Almondz Global Securities Ltd, feels the current pessimism over IPOs will not continue for long.

“Investors who have suffered losses will ultimately come back (to the market) to make good their losses,” he said. Four firms whose IPOs he is managing are all going ahead with their plans, he said, but declined to name them.

Normally, 60% of an issue is reserved for qualified institutional buyers and if this portion is not fully subscribed, the issue is scrapped.

Recent IPOs such as Emaar MGF and Wockhardt Hospitals received lukewarm response from the qualified institutional buyers.

The mood in the IPO market will be put to test by the Rural Electrification Corp. Ltd’s Rs1,640 crore issue that opens on 19 February.

rachna.m@livemint.com