Bang Overseas, a provider of fashion fabrics and ready-to-wear requirements in apparel, textile and retail segment, has opened for subscription with an initial public offering (IPO) of 3,500,000 equity shares of Rs 10 each for cash at a price to be decided through a 100% book-building process. The issue will constitute 25.81% of the post-issue paid-up capital of the company.

Moneycontrol conducted a poll on market experts to check whether to apply for the public issue or not. Experts reactions are mixed to the issue.

Experts/Company	Poll Result	Experts view
R S Iyer (KR Choksey)	Apply	Bang Overseas is an average issue. People can apply for this issue with a long term view.
SP Tulsian (Investment Advisor)	Don’t Apply	Bang Overseas is a new player in the ready-to-wear men’s segment and marketing under the brand name of Thomas Scott, with 12 retail outlets, of which, three are franchisee.   The company is now planning to set up a total of 100 retail outlets across India, of which, 50 would be company operated and 50 would be franchisee based for which cost is estimated at Rs 10.63 crore. The company is also setting up new apparel manufacturing unit at a cost of Rs 36.71 crore and also warehousing and logistic facilities for Rs 10.23 crore. The entire requirement is being met from proposed IPO which would mobilize Rs 72 crore at the upper band of Rs 207 per share.   The plans of the company appear to be quite ambitious and no provision for increased working capital requirements has been made in cost of project. With 12 stores in operations, the inventory of the company as at 30-09-07 was at Rs 20.65 crore with debtors of Rs 41 crore. This results in debtor cycle of close to 120 days while holding inventory for about 55 days. If 100 retail outlets are planned, it would increase 8 fold from the present levels. Even present requirement of working capital has been met from unsecured loan, availed from promoters, of about Rs.17 crore. So, non-availability of such finance for increased level of activity would pose a problem.   We have various companies listed on the bourses with similar business model. Celebrity Fashion, having topline of over Rs 300 crore with Kunal Kapoor as brand ambassador is a loss making concern and ruling at Rs 55. Donear Industries with Yuvraj Singh as brand ambassador and an expected EPS of Rs 5 for FY 08 is now ruling at Rs 120.   The company has pan India retail network with strong brand equity and also huge manufacturing facilities with new facilities coming up at Surat. Kewal Kiran Clothing, having a topline of Rs 200 crore with similar trend of profits has been ruling all along at Rs 180 levels, which now rules at around Rs 450. Thanks to momentum play on the counter! This company is likely to have an EPS of around Rs 18 for FY 08. Koutons is a big player in the segment and cannot actually be compared with Bang. The market perception for the sector and the companies operating in this field is very low and most have a multiple of around 10 - 12 times. Infact if the multiples have gone up, it has been possible only because of the brand equity enjoyed by some.   In case of this IPO, share is being issued at a multiple of 17 times at the upper band, which makes the issue fully priced, leaving no scope for any capital appreciation. Plus, the present state of the market, adds uncertainty to the prospects of the company and issue. Better to skip this issue.

The issue will close for subscription on January 31, 2008. The price band has been fixed between Rs 200 and Rs 207 per equity share. 
 
The issue comprises a net issue of 3,400,000 equity shares of Rs 10 each after a reservation for eligible employees of 100,000 equity shares of Rs 10 each for cash at a premium. The equity shares are proposed to be listed on Bombay Stock Exchange and National Stock Exchange. 
 
The proceeds from the proposed issue are to be deployed for setting up retail outlets across India; brand building; setting up a new apparel manufacturing unit; warehousing and logistic facilities; general corporate purposes and to meet Issue expenses.
 
The book running lead manager to the Issue is Almondz Global Securities Ltd.