Funds raised through the capital market during the first half of the current financial year have declined by 83.09 per cent over the corresponding period last year. By September 30, 1997, companies raised Rs 1,732.2 crore against Rs 10,246.5 crore in the corresponding period last year.
Of the total amount, the private sector companies raised Rs 1,689.3 crore, which is lower by 76.5 per cent over the previous fiscal. The government companies raised Rs 42.9 crore against Rs 1,842.4 crore in corresponding period last year.
During the period under review, the amount raised by corporates from abroad through euro issues dropped marginally from Rs 2,348 crore to Rs 2,228 crore. 1996-97 also saw private sector companies charging a lower premium for their equity compared to that in 1995-96, states the Reserve Bank of Indias report on currency and finance, 1996-97. The premium fell from 41 per cent in 1995-96 to 23.8 per cent during 1996-97.
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With the overall investment climate staying subdued, the floatation of fresh capital issues by government and non-government companies and banks and FIs declined by 17.8 per cent at Rs 18,854 crore in 1996-97.
In terms of sectorial break-up, while there was a substantial decline in the new capital issues by the private sector, issues floated by the government companies, banks and financial institutions registered a sharp increase. However, the RBI report added that corporates had raised a large amount of resources through private placement. The year 1996-97 saw the proportion of equity issues in the aggregate capital issues by non-government companies fall from 74.5 per cent to 58.9 per cent. Consequently, there was an increase in debentures issues, especially of the non- convertible nature during the last financial, said the report.
In 1996-97, 805 private sector issuers made applications for vetting of prospectuses for raising capital in the form of equities and debentures/bonus at Rs 12,916 crore, a decline of 38.8 per cent over 1995-96.
In respect of equity shares, clearance (including premium issues but excluding bonus issues) amounted to Rs 6,552 crore through 765 issues, registering a perceptible decline of 57.8 per cent over the previous year. However, the same period saw an increase in clearance for debentures and bond issues by 14.4 per cent at Rs 6,364 crore.
The clearance given by Sebi to government companies for issuing capital showed an increase of 46.5 per cent to Rs 5,457 crore during 1996-97.