ISSUE OPENS ON 09-03-12 AND CLOSES ON 12-03-12.
PRICE BAND RS 30-32.
ISSUE SIZE RS 25CR.
Chennai based Olympic Cards is planning to raise Rs 25cr through IPO to fund its expansion programme. Ashika Capital is the sole book-running lead manager for the issue. In the past Ashika has managed Vaswani, Sudar Garments and VMS Industries. Ashika is notorious for introducing poor quality IPOs.
Olympic Cards is in to manufacturing and trading of wedding and greeting cards, business cards, envelopes, letterheads, calendars, notebooks and account books. It also trades in printing inks. Its manufacturing facility is located in Chennai with an installed capacity of 145 mn pieces. Manufacturing sales contribute 82% to 86% to total revenues; trading sales make up the rest.
The IPO carries grade 1, awarded by CRISIL. The grade assigned to Olympic Cards reflects its presence in an industry which is highly fragmented, with low entry barriers. This weakens the bargaining power of players. Even though Olympic Cards is a leading player in South India, low product differentiation does not really give any player an edge.
The current concentration will adversely affect the company’s long-term prospects. The grade factors in the company’s exposure to the risk of brand dilution. It shares the ‘Olympic’ brand with the promoter’s relatives who have a similar business.
Centralized management, and relatively weak internal processes and management information systems have also influenced the grade. Further, the independent directors’ have limited role in the management.
