Mopup via rights issues rises 133%

Mobilisation of resources through rights issue has risen by 133 per cent in the fiscal ending 2003-04.

The year saw Rs 1,006 crore being raised against Rs 431 crore mopped up in the previous year, according to Prithvi Haldea, managing director of PRIME Database. This is, however, just 8 per cent of the Rs 12,630 crore raised in 1992-93.

The rights route was taken by 22 companies in 2003-04, which is higher by 83 per cent over the previous year that saw 12 issues. As many as 488 companies made rights issues in 1992-93.

The largest issue in the year was from Electrolux Kelvinator which was worth Rs 199.77 crore. It was followed by Hindustan Inks' worth Rs 196.73 and IDBI Bank's worth Rs 154.23 crore.

As per PRIME, the response to most issues was good as they were made at a discount to the ruling market price. Also, the turnaround, though marginal, in the fortunes of rights issues ""both by numbers and by amount""came primarily because of bullish conditions in the secondary market which ran through whole of the year, Haldea added.

According to PRIME, the new fiscal appears promising and a buoyant secondary market will encourage more companies to come out with rights issues.

Even though only Texmaco has entered the market, with a Rs 15 crore issue, as many as 14 companies like Centurion Bank, Balarampur Chini, Bharat Forge etc have applied for Sebi approval.