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Journalism of Courage
NEW DELHI, July 2: Companies raising money through initial public offerings IPOs continued its free fall with only seven companies tapping the market in the first quarter of 1998-99, according to a report. The number has fallen from a high of 1350 in 1995-96 to only 51 in 1997-98. IPOs from the manufacturing sector has been even more dismal with the figure falling from 884 in 1995-96 to only 29 in the last fiscal, the report by prime datebase, a Primary Market Monitor, said.
The seven companies raised a meagre amount of Rs 124 crore in the first quarter, Prime said adding of these only four were from the manufacturing sector.
In contrast, fund mobilisation through the debt route in the first quarter was a high of 86 per cent of the total mobilisation, similar to 86 per cent in full of last fiscal.
But for the mobilisation by financial institutions and private, public setor banks, the overall picture would have been very dismal, Prime said.
According to Prime, public issues of Abhishek Spinfab Rs19.86 crore and Welspun Syntex Rs 37.60 crore bombed in the market and the promoters were forced to go through the devolvement route. Prime blamed a combination of factors including investors8217; apathy consequent to the phenomenal losses in the 1993-95 period, lack of investor confidence in market practices, over-stringent entry barrier guidelines and lack of severe punishment to errant promoters for the current state.
The only issue which generated good response was the one from J amp; K bank. This, Prime said, should not denote any kind of revival because being a bank issue, it quot;catered more to the distraught investors8217; need for high safety rather than returns which normally drives the equity marketquot;. One of the main reasons for the continuing fall in IPOs is the dominance of debt.
