The propensity of companies to raise money from the capital markets has been coming down sharply,something that the chairman of the Securities and Exchange Board of India (SEBI),UK Sinha,has described as a matter of concern. Worrying still,is that fact that around Rs 60,000 crore of fund raising proposals are reported to have been shelved by India Inc in the last three years.
I am finding that the propensity to raise capital has shown a very significant decline. I am finding that our decline is much more substantial among the BRIC (Brazil,Russia,India and China) countries or rest of the world, Sinha said at a seminar organised by the Confederation of India Industry (CII) in Kolkata on Tuesday.
In 2010-11,Indian companies are estimated to have raised Rs 67,000 crore from the primary market. In 2011-12,it came down to Rs 15,000-16,000 crore while in the current financial year,till end-February,domestic corporates are reported to have raised around Rs 14,400 crore from the primary market.
This is a big decline. We are finding many corporates,who have undergone the whole process of getting the final observation from SEBI,have not gone ahead with the fund raising. They have either withdrawn their request for raising money or have allowed the final observation,which is valid for one year,to lapse, Sinha said.
The stock market regulator is taking a bevy of measures to encourage companies raise funds from the capital markets,he said. Sinha said the e-IPO facility,which allows retail investors to submit bids electronically for initial public offers,has been introduced in 400 locations and SEBI plans to broad-base it to 1,000 locations soon.
SEBI has also observed that in more than 60 per cent of the initial public offers in the last three years,the shares have been trading below the issue price month after month.
It is a cause of worry. But SEBI does not fix the price. Our job is to ensure that all disclosure requirements are met. Hence,we have decided to put certain obligations on the investment bankers, Sinha said.
With PTI inputs