Scotts IPO withdrawn due to investor disinterest

Extension of issue dates, cut in offer price failed to garner investor interest

Textile firm Scotts Garments withdrew its initial public offering (IPO) on Friday after an extension of the issue dates and a cut in the offer price failed to bring in investors.

The company received bids for only 27 per cent of the 10.5 million shares on offer, according to exchange data as of close on Friday. A merchant banker confirmed that the IPO has been withdrawn.

Retail investors had bid for around six per cent of the 3.52 million shares reserved for them, according to data on the exchange websites.

Employees bid for only 16 per cent of the 450,000 shares available to them.

Qualified institutional investors bid for 36 per cent of the 2.51 million shares reserved for the category.

The company had originally kept the issue open from April 25-29. This was later extended to May 3. The price band at which investors could bid for shares of the company was cut from Rs 130-132 to Rs 118-120.

The company planned to use the money raised through the issue to fund a part of the cost of setting up a unit for trouser manufacturing at Doddaballapur, Karnataka and knitting and a fabric processing unit at Kagal-Kolhapur in Maharashtra. Some of the money was also to be used to meet working capital requirements.

Canbank Venture Capital Fund had invested in the company by picking up 1.74 million shares at a price of Rs 115 a share through a pre-IPO placement.

The company had generated revenues of Rs 500.25 crore in FY12. It had a profit after tax of Rs 84.03 crore. In the subsequent financial year, it had a revenue of Rs 329.39 crore and profit after tax of Rs 20.41 crore till October 2012, according to the offer documents.

This was the second IPO to be withdrawn during 2013. Earlier, Sai Silks (Kalamandir) Ltd had withdrawn its IPO in February.