The crisis of confidence in the primary capital market is continuing. Investors who burnt their fingers badly in shady public offerings of companies in the last seven years are keeping away. In terms of amount raised through public issues, the year 2002-03 ended with a mobilisation of only Rs 5,732 crore, through both debt and equity issues. Significantly, only Rs 1,039 crore of this was through equity IPOs, the rest being bond issues. The total mobilisation turned out to be 11 per cent lower than the preceding year which had closed at Rs 6,423 crore.By number of public issues, the year will go down as the worst ever with only 14 issues hitting the market, of which only 6 were IPOs. The total of 14 issues represented a 26 per cent fall from the already poor number of 19 issues in 2001-02 and meant a huge 89 per cent decline from 124 issues in 2000-01, leave aside being anywhere close to the all-time high of 1,428 public issues in 1995-96, according to Prithvi Haldea of Prime Database.But for the eight debt offerings which dominated the issuances, mobilising Rs 4,693 crore or 82 per cent of the total, the year would have done even worse on the amount front also. This year’s debt raising, like the last year, was restricted to only two financial institutions with no mobilisation by the corporate sector. While ICICI Bank raised Rs 2,342 crore, much less than its last year’s collection of Rs 4,018 crore, IDBI raised slightly more money at Rs 2,351 crore.The bad experiences of the mid-90s, further compounded by the losses incurred in most IPOs of the previous three years, made the investors prefer safety, as represented by debt. Little wonder, from zero per cent in 1994-95, the share of debt in total public issue mobilisation has been rising consistently: from 25 per cent in 1995-96, 60 per cent in 1996-97 and 63 per cent in 1997-98 to a peak of 94 per cent in 1998-99. The amount raised through equity issues during the year did not come anywhere close to market expectations at the beginning of the year. Only Rs 1,039 crore was raised almost similar to Rs 1,082 crore in the preceding year. The equity mobilisation represented a significant decline of nearly 58 per cent from Rs 2,475 crore that had been raised in 2000-01. Haldea stated that significantly, Rs 773 crore or 74 per cent of the total equity during the year was raised by PSU banks. From the private sector, only three companies made it to the market, led by I-Flex (Rs 210 crore), Divi’s (45) and Radaan Mediaworks (11).On an industry-wise basis, Rs 5,466 crore or a phenomenal 95 per cent of the total resources were raised by te financial sector. Manufacturing and services sectors continued to languish with a meagre share of Rs 266 crore.
