Mobilisation of funds in the rights issue market during fiscal 2003 has plummeted to the lowest in a decade, thanks to a lacklustre secondary market. The year saw a mere 12 issues hitting the markets which raised a meagre Rs 431 crore during the whole fiscal, according to Prime Database. The figure was 59 per cent lower than Rs 1,041 crore mobilised in the preceding fiscal and only 3 per cent of Rs 12,630 crore mobilised during the boom period of fiscal 1993, according to the database. The fiscal 1993 had seen 488 issues which has plummeted to 12 issues in fiscal 2003.According to Prime managing director Prithvi Haldea, the response to most issues in 2003 was poor and five issues had to extend their closing dates for lack of adequate response in the initial issue period. These include issues from Kopran, Singer India, Ipisteel, Pentagon Global and Cybermate Infotek. Worse, the database predicts that the current fiscal, too, does not appear to be promising. Till date, only one company (PCS) has entered the right issues market with a Rs 20 crore issue, the database said.Prime added that only five companies have so far applied for or obtained approval of Securities and Exchange Board of India (Sebi) in fiscal 2003. These include Electrolux Kelvinator (Rs 199 crore), JMA (Rs 6 crore), TCM (Rs 3 crore), Borax Morarji (Rs 2 crore) and Manappuram General FInance (Rs 2 crore).In addition, only 13 companies have announced their plans to tap the rights issue market in the past six months, according to Prime. These include Colour Chips, Global Trust Bank, Gujarat Alkalies, Hindustan Inks, Hitachi Home, IDBI Bank, IFB Agro, J&K Bank, Noida Toll Bridge, RK Ispat, Shriram City, Shriram Investments and Shriram Transport. The largest issue in the year was from Ballarpur (Rs 217 crore) which took up 50 per cent of the entire year’s mobilisation. This was followed by Karur Vysya Bank (Rs 36 crore), Karnataka Bank (Rs 32 crore), Chettinad Cement (Rs 30 crore) and Cholamandalam Investment (Rs 30 crore).The poor run of rights issues both by numbers and by amount, Haldea stated, is primarily because of the dull conditions in the secondary market which ran through almost the whole of the year. In fact, the continuing fall in the number of companies can be ascribed mainly to the depressed secondary market prices of a vast majority of companies, many due to poor fundamentals.
