Basis of Allotment is done after issue bid is closed & before actual allotment is done. It is the process in which how the allotment is done is finalized for different categories. Basis of Allotment is mainly important when the issue is oversubscribed, because all the applicants can't get allotment. Registrar have to select the applicants for allotment to shares reserved in each category.
In category applications are again seperated on the basis of lots(shares) applied. Lotwise applications & applied no. of shares percentage is calculated. On the basis of % then ratio is finalised for each category & lotwise applications.
Below is a chart which describes how shares is alloted & ratio for allotment in Retail Category.
Example - 1
Category - Retail
Reserved shares - 1,89,26,183
Lot - 65 shares
Approx. Total no of Applications - 10,73,971 (of which Retail Appl. @ Cut off price - 10,57,654)
No. of Shares applied for Retail Category - 11,91,57,935 (of which @cut off price - 11,64,45,355)
**** Figures given are sample purpose only (not actual )
**** Ratio for Allotment decided by Registrar in consultation with Stock Exchange eg. 68 : 247 (27.53 %) means from every 247 applications 68 applications selected for allotment.
Selection of application from every category (no. of shares applied) done seperately as per ratio. Ratio for lots (no. of shares applied) can be same or different but ratio %age is nearly about same.
The ratio & %age will be different for every IPO depending on the issue oversubscribed.
