The Indian primary market has virtually dried up as the total value of initial public offering of 2007 has

witnessed an erosion of about $3.43 billion so far this year, with the media space being worst hit, a latest
report says.

The bullish trend in the capital market was see in the IPO volume of 2007, as a record volume of $8.18
billion was raised.

However, rough market conditions have resulted in a negative return of about 42 per cent or a value
erosion of $3.43 billion in absolute terms till October 10, according to a report of Nexgen Capitals, the
merchant-banking arm of brokerage firm SMC Global Securities.

"In a bear market fund raising activity becomes very difficult. Excess of bull market last year has resulted
in the bear market this year. In a bull market takers for every issue at every level can be found but today''s
market is a buyers market," Nexgen Capitals Equity Head Jagannadham Thunuguntla said.

In the backdrop of bearish capital market conditions this year, the IPOs of 2007 have reported wealth
erosion across the industry segments.

"More than 60 per cent of the value is eroded in the industry segments of auto, healthcare,
manufacturing, media and real estate," the report added.

"Media was the worst hit space as business in this sector is very difficult to continue, besides this sector
has a very long gestation period," Thunuguntla said, adding "when a market falls the capex driven firms
such as infrastructure and realty are affected, while media related firms which generally have in-
operational cashflows also get negative impact."

There were 103 IPOs in 2007, out of which 88 representing (85 per cent) were in loss and only 15 in
profit.

So far in 2008, IPO volumes have seen substantial drop to $4.23 billion, comparison with last year when
the IPO volume was as much as $8.31 billion, indicating a YoY drop of 47 per cent on annualised basis.

An analysis of various sectors show that media suffered the maximum loss (75.05 per cent), followed by
auto (73.70 per cent), healthcare (64.71 per cent), manufacturing (60.70 per cent) and real estate (59.98
per cent).

Meanwhile, banking, financial services and insurance reported a loss of 24.05 per cent in its return,
infrastructure (15.56 per cent), IT & ITeS (48.06 per cent), retail (44.41 per cent) and telecom (29.54 per
cent).

The report added, 'the mark-to-market losses of IPOs of 2008 is as high as 59 per cent with a loss of
about $2.5 billion on absolute basis'.

The current MTM losses in the IPOs of 2008 have been experienced across the industry segments. Some
of the IPOs which have seen heavy over subscription such as Future Capital, Reliance Power have seen
serious value erosion.

So far this year, there were 34 IPOs, of which 29 issues representing 85 per cent of the total volume are
in loss, while 5 IPOs amounting to 15 per cent are in profit.