India Inc's fund raising via rights issue dips 61% in FY09

Funds raised by India Inc through rights issues plunged to Rs 12,622 crore in 2008-09, down 61 per cent over the last fiscal, because rough market conditions made offer prices unattractive, according to data compiled by Prime Database.

During 2007-08 Rs 32,518 crore was raised through rights issues, as per data compiled by Prime Database.

"Rights offers are made at a discount to the market price, and hence are able to draw in shareholders' response specially when the secondary market is doing well," Prime Database Chairman and Managing Director Prithvi Haldea said.

"In a declining market, the offer prices become unattractive. This has brought again the subject of the long duration of a rights issue into focus, and calls for regulatory attention," he stated.

Mobilising resources through rights issues recorded a huge decline in the recently concluded fiscal 2008-09, Prime Database said. In the fiscal, only 23 companies used the rights route, while the previous year saw 30 issues.

The big issues in FY'09 include Hindalco (Rs 5,048 crore), Tata Motors (Rs 4,146 crore) and Dish TV (Rs 1,140 crore).

Rights issue is an invitation to the existing shareholders for purchasing shares of the company.