Sebi Acknowledgement Cards Of 265 Companies Lapse

Earlier, obtaining a Sebi acknowledgement card was an eagerly awaited event and companies rushed to open their issues as soon as the card was secured. The poor market conditions have, however, reversed this trend.

Of the 265 issues which allowed their cards to lapse, 229 were public issues, 24 were rights issues and 12 were public-cum-rights issues.

As per Prime, the first indications of this came as early as in the beginning of 1995, when the market witnessed the first major decline, aided as it was by the MS Shoes fiasco.

As many as 54 companies who had obtained cards during the January-March 1995 period had then shelved their plans.

 

Among the major issues so hit were Arm (Rs 181 crore), Woolworth (Rs 100 crore), Integrated Rubian Exports (Rs 60 crore) and Kajaria Ceramics (Rs 59 crore).

Subsequent months saw the issues of Kedia Castle Dellon (Rs 284 crore), Modi ITV (Rs 90 crore), Dharamsi Morarjee (Rs 73 crore), Baroda Rayon (Rs 71 crore), Sanghi Industries (Rs 70 crore) and Gitanjali Gems (Rs 65 crore) being called off even after obtaining the Sebi approval.

The worse was still not over. The maximum number of issues which withdrew, however, were the ones which had obtained their Sebi cards during the October, 1995, to March,1996, period. The total number of such issues stood at 155.

This happened because the market continued to deteriorate. The major issues called off during this period included Spic Petrochemicals (Rs 455 crore), Nova Electro Magnetics (Rs 131 crore), Punj-Lloyd (Rs 100 crore), Somani Cement (Rs 90 crore), Hindustan Times (Rs 90 crore), CRB Daewoo Securities (Rs 61 crore) and Mesco Airlines (Rs 57 crore).

The medium-sized issues which withdrew over the last one year included Gal Offshore (Rs 50 crore), DCM Estates (Rs 48 crore), Sterling Computers (Rs 45 crore), Grapco Industries (Rs 41 crore), Falcon Tyres (Rs 35 crore), Falcon Marine Exports (Rs 32 crore), SKS (Rs 31 crore), Grapco International (Rs 29 crore), Goyal Gases (Rs 25 crore), Sunstar Lubricants (Rs 25 crore), Jay Rapid Roller (Rs 23 crore) and Nikamal Plastics (Rs 21 crore).

A majority of the 265 withdrawals were from the manufacturing sector and not from the financial services sector which has in any case been flooding the market for the last 2 years. Of the 265 companies, as many as 233 (88 per cent) were from the manufacturing sector.

Almost all the bigger issues so withdrawn had planned to raise money through premium. The medium and smaller issues succumbed simply because of the total investor apathy to new issues.

Unfortunately, the list of withdrawals is only getting longer by the day. Of the 498 issues which have obtained Sebi approvals between April 1 and August 31, several are already in the process of abandoning their issue raising plans if the primary market continues to behave in the present fashion.

There are at least another 500 issues which are at present in hibernation and have not even bothered to file their documents with Sebi, unnerved as they are with the continuing poor state of the capital market. This is evident from the declining number of new issue documents being submitted to Sebi for approval. A total of 143 documents had been filed in February, which rose to 221 in March and further to 392 in April. The same, however, fell to only

90 in May, 51 in June, 49 in July and to 43 in August up to the August 24.

Total mobilisation through public issues in the current year is already taking a beating. In the April-August period, a sum of only Rs 3768 crore has been mobilised compared with Rs 4458 crore in the same period of the previous year.