The Supreme Court has permited Shoppers's top to go ahead with its book-built IPO. On Tuesday, the Guwahati High Court had the IPO, which was due to start on April 27. After a day's delay, the IPO opened today, and was fully subscribed in the first few hours. The issue closes on May 4.

Shopper's Stop has 16 stores across the country, and the company is owned partly by the Rahejas. The Shopper's Stop IPO, comprising issue of 6.95 million shares, representing 20.2 percent of the retailer's expanded equity, was priced at Rs 210-250 per share.

26 April, 2005: The Guwahati High Court has flashed the STOP sign to Shopper's Stop IPO, which was scheduled to open on April 27. Stop, proceed with care. Traffic bumps ahead.

The North East Investors’ Association (NEIA) had moved the Guwahati High Court asking to stop Shopper's Stop from going ahead with the proposed IPO, citing Section 274 (1G) of the Companies Act. The Section deals with disqualifying directors of erring companies from becoming members on boards of other companies.

In a parallel development, Kolkata-based Burrabazar Investors Welfare Association moved the Calcutta High Court against the Shoppers' Stop IPO. It has made almost the same charges as the North East Investors’ Association. However, no order was passed and May 10 was set as the next date for hearing.

The promoters of Shopper's Stop are also board members in several other companies run by them. According to the North East Investors’ Association, these companies had neither held annual general meetings (AGMs) regularly nor filed annual reports regularly. These procedures are mandatory under the relevant sections of the Companies Act. The Act bars directors of such erring firms from becoming directors on the boards of other companies for a period of five years from the date on which the last time the mandatory procedures were fulfilled.

The NEIA petition accused the Rahejas (promoters of Shopper's Stop) of misleading the public. The other Raheja companies in question are East Lwan Resorts and Mass Traders Ltd.

Hearing the petition, the Shillong Bench stayed the Shopper's Stop IPO. The court stay was communicated to the Securities and Exchange Board of India (Sebi). Citing the order, Sebi directed Eenam Consultants, Shopper's Stop IPO book-running lead manager, not proceed with the IPO.

The company had planned to issue 6,946,033 shares priced between Rs 210 and Rs 250. The issue was to close on May 3. One of the most high-profile retail chains in India, the IPO of Shopper's Stop was closely followed among market watchers. The company had expected to raise between Rs 150 crore and Rs 175 crore through the IPO.

BY OUR BUSINESS CORRESPONDENT