Firms raise Rs 2,375 cr via rights issue

This was the lowest amount raised by Indian companies through rights issue since 2004-05,when it stood at Rs 1,006 crore; 2007-08 had seen record Rs 32,519 crore funds mobilised via this mode.

8220;Dismal market conditions through the year,compounded by firms raising monies through alternative routes like QIP and the preferential issue,were the main reasons for the poor utilisation of the rights route,8221; Prime Database noted.

In terms of the number of rights issues,the fiscal saw only 16 companies adopt the route to raise funds,33 per cent lower than the previous fiscal,which saw 24 issues.

The largest rights issue during 2011-12 was by Bajaj Hindusthan Rs 1,644 crore,followed by JK Paper Rs 246 crore and Gayatri Projects Rs 144 crore.

Significantly,nearly 69 per cent of the mobilisation,at Rs 1,644 crore,was done by the sugar sector.

8220;The manufacturing and services sector preferred increasingly to use the QIP and the preferential issues,8221; it added.

The new fiscal 2012-13 promises some action on the rights front. According to the report,there are as many as 26 companies which have already applied for or have obtained market regulator SEBI8217;s approval for raising Rs 7,775 crore.

Some of the major firms include Network18 Media amp; Investments Rs 2,700 crore,State Bank of Travancore Rs 500 crore,Bhushan Steel Rs 474 crore,Advanta India Rs 200 crore,Gammon Infrastructure Projects Rs 200 crore,Sun Pharma Advanced Research Rs 200 crore,Hinduja Foundries Rs 125 crore and EIH Associated Hotels Rs 110 crore.

In addition,there are at least another 28 companies who have in the last six months announced their plans to tap the rights market and may firm up their plans in the near future.

The flotation plans of all these companies are,of course,subject to a stable,if not a buoyant,secondary market.