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Indian companies raise Rs 31,000 crore via rights issue
Posted: Apr 10, 2009 at 1020 hrs IST


 New Delhi (PTI): Corporate...
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Zee News Apr 10, 2009 Indian Companies Raise Rs 31,000 Crore Through Rights Issue In 2008

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"With near frozen debt market and drying up of initial public offers, firms tried their luck with rights issue, as they were in need for funds to meet their expansion costs," SMC Capital Equity Head Jagannadham Thunuguntla said.
"Most of the rights issue which hit the market in mid 2008 has failed to generate good public response. These has somewhat shaken the confidence of other companies following which they postponed their expansion plans," Thunuguntla said.

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Zee News Apr 10, 2009 Indian Companies Raise Rs 31,000 Crore Through Rights Issue In 2008

  1. 1. Indian companies raise Rs 31,000 crore via rights issue Posted: Apr 10, 2009 at 1020 hrs IST New Delhi (PTI): Corporate India mopped up an impressive Rs 31,069 crore via rights issue in 2008, a two-fold rise over the previous year, as fund raising from the debt market and through IPOs dried up amid the global economic crisis. During the calendar year 2008, funds amounting to Rs 31,069 crore were raised through rights issue, up two-fold over the last year's figure of Rs 14,085 crore, as per data compiled by brokerage firm SMC Capital. quot;With near frozen debt market and drying up of initial public offers, firms tried their luck with rights issue, as they were in need for funds to meet their expansion costs,quot; SMC Capital Equity Head Jagannadham Thunuguntla said. Some of the big ticket rights issue that hit the markets in 2008 include Tata Motors' over Rs 4,000 crore issue to fund acquisition of British marquee brand Jagaur Land Rover (JLR) and Rs 5,000 crore Hindalco rights issue. quot;The two big issues of last year saw lukewarm response from investors with the remaining being subscribed by the promoters. It acts as an advantage for the companies, as the promoters fill in the remaining gap and there is no dampening effect on the prestige of the firm,quot; Thunuguntla added. However, in terms of number of issues, there was a marginal drop with 26 issues hitting the capital market in 2008, against 29 in 2007. Rights issue is an invitation to the existing shareholders for purchasing shares of the company. quot;Of the companies which came out with rights offer, most of them had already announced their expansion plans. This shows that even as number of issue decreased over the last year, the average issue size increased substantially,quot; he said. The average issue size in 2008 was at Rs 1,195 crore, while in 2007 it was Rs 486 crore, SMC Capitals data showed. Meanwhile, so far this year, no company has tapped the rights issue option as marketmen said they have taken cues from last year's failure of several big issues to garner public subscription. quot;Most of the rights issue which hit the market in mid 2008 has failed to generate good public response. These has somewhat shaken the confidence of other companies following which they postponed their expansion plans,quot; Thunuguntla said. The companies which would tap the rights issue route to raise funds in 2009 include Religare (Rs 1,850 crore), Fortis (Rs 1,000 crore), Max India (Rs 650 crore), Alok Industries (Rs 450 crore) and Greenply (Rs 75 crore).

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