Floats Dart Up, Mop-Ups Slip

The primary market witnessed a sharp decline in mobilisation through the public issue route in 2000-01. This was despite an increase in the number of floats.

There has also been a slowdown in the growth of private placements during the year compared with the previous four years.

However, there has been a significant jump in resource mobilisation by corporates through euro issues by way of foreign currency convertible bonds, global depository receipts and American depositary receipts.

The trend to tap the euro market slowed down during April-July 2001. There were three euro issues aggregating Rs 1,437 crore during the year compared with six issues worth Rs 2,625 crore in the corresponding period of the previous year.

Resource mobilisation through prospectus and rights issues decreased by 16.7 per cent to Rs 6,421 crore (Rs 7,704 crore).

Public sector units and government companies restrained from entering the market for the third consecutive year.

Resource mop-up by banks and financial institutions in the public sector slipped sharply by 42.3 per cent to Rs 1,472 crore (through five issues) from Rs 2,551 crore (through four issues) in 1999-2000.

The resources mobilised by the private sector dipped by 22.4 per cent to Rs 810 crore (Rs 1,044 crore). During the period, there were no issues from the public sector.

Most of the issues during 2000-01 were for Rs 10 crore and less compared with floats for higher amounts the previous year. The issues were mostly from the information technology sector. The average size of floats by private sector companies has registered a sharp dip to Rs 34 crore (Rs 65 crore).

The growth in resource mobilisation through private placements has also shown a decline. Resource mop-up increased by 10.2 per cent to Rs 67,500 crore compared with a jump of 23.3 per cent the previous year.

There has been a marked rise in resources mobilised through euro issues. There were 13 issues which were floated for an aggregate amount of Rs 4,197 crore compared with six issues aggregating Rs 3,487 crore in the previous year.

The net resource mobilisation by mutual funds have also dipped by 33.1 per cent to Rs 13,339 crore (Rs 19,953 crore) in 2000-01.

The decline in mobilisation is more in Unit Trust of India (UTI) than in private sector mutual funds. Resource mop-up by private sector mutual funds declined by 43.1 per cent to Rs 8,481 crore and by 56 per cent to Rs 1,999 crore by UTI.