Reflecting the depressed state of the capital market, the first six months of the current financial year witnessed only four rights issues, as compared to 12 during the first six months of the previous year, according to Prithvi Haldea of Prime Database.
Between April-September, 2001, only two IPOs hit the market, mobilising a measly Rs 6 crore.
However, thanks to Tata Engineering's Rs 672 crore rights issue, the amount raised in the 6-month period touched Rs 737 crore, far higher than the Rs 350 crore that had been raised in the corresponding period of the previous fiscal.
In fact, it was almost similar to the Rs 729 crore raised during the whole of last year.
Though the amount mobilised signifies a substantial 110 per cent increase over the corresponding period of the previous year, it accounts for only six per cent of the Rs 12,630 crore that was raised in the boom year (1992-93) by a record 488 companies, Haldea said.
Though Tata Engineering led the pack of issuers with a Rs 672 crore offer, it may be recalled that the company had earlier announced a Rs 1,307 crore issue, which it had to scale down by nearly 50 per cent due to bad market conditions and poor corporate performance.
The other issuers in the period were Alok Industries (Rs 51 crore), Dalmia Cement (Rs 8 crore) and Dharamsi Morarji Chemical (Rs 7 crore).
According to Haldea, the poor run of rights issues could be attributed to the dull conditions prevalent since the last two years.
In fact, the continuing fall in the number of companies tapping the rights route can be ascribed to the generally depressed secondary market prices of a vast majority of companies, Haldea added.
On the other hand, scores of companies that have done well have preferred to meet their fund requirements through preferential allotments or by way of private placements to mutual funds, private equity investors and venture capital funds.
Several corporates have also opted for debt through the private placement route. According to Haldea, the investors' apathy towards the primary capital market consequent to the 1993-1996 fiasco also continues to be a major factor for the current state of the rights market.
In that period, most companies had made issues at a very high premium and as these subsequently led to significant losses. As a result, the investors just turned away.
The future does not have much in store either. It is unlikely that market may witness any significant activity on the rights front in the balance 6-month period of the current fiscal (2001-02).
According to Prime, only 3 issues have hit the market since October. The issuers are: Gammon India (Rs 19 crore), Arvind Mills (Rs 75 crore) and SKF Bearings (Rs 88 crore).
In addition, only three companies hold Sebi approval. These are: Omax Autos (Rs 4 crore), R K Ispat (Rs 3 crore) and Tata Investment Corp (Rs 33 crore).
