During the financial year, 1998-99 (April-March), the SEBI received 60 offer documents for mobilising funds from the market to the tune of Rs.4802.17 crore. But only 55 issues were cleared for Rs. 1802.75 crore indicating a share of 37.54 percent of the total amount intended for mobilisation. However, in the month of March 1999 only 8 offer documents were received for Rs 3176.53 crore as against 9 offer documents for Rs 8150.02 crore in March 1998, a decline of 61.02 percent, which shows that there has been slackening in terms of amount mobilisation from the primary market. During the month under review only one offer document cleared for Rs. 14.75 crore as against 8 documents cleared for Rs.8137.10 crore during the same month in 1998.

There has been a rise of 22.24 percent in the resources mobilised from the primary market during the financial year 1998-99 when the total amount rose to Rs.5586.46 crore from Rs 4569.95 crore raised in the previous year. While the amount mobilised increased during 1998-99, the number of issues entering the market declined substantially from 111 in 1997-98 to 58 in 1998-99. This indicates that issuers are raising the resources from the primary market by making issues of large size and smaller are issues occupying a less significant place.

However, the amount mobilised during the month under review was Rs 439.95 crore through only 7 issues as against Rs 495.90 crore through 10 issues in March 1998 showing a decline of Rs. 55.95 crore or a fall of 11.3 per cent. The share of public issues was Rs 5018.90 crore or 89.84 percent in the total capital mobilised during 1998-99, compared to 62.6 percent during the previous year. Thus the companies have been increasingly raising funds through public issues rather than relying on existing shareholders. In March 1999, 81 percent of the total amount was collected through public issues.

Month-wise analysis of amount mobilised in primary market witnessed a mixed trend throughout the financial year, 1998-99. In some months very few issues entered the market while in other months relatively a larger number of issues were made to mobilise hefty amount. During the months of May 1998 and November 1998, the resources raised were less than Rs. 100 crore. On the other hand, in some months like September 1998 and December 1998 and February 1999 the amount mobilised were quite substantial. During December 1998, an amount of Rs 1237.83 crore, which was the highest during the financial year, was mobilised while the lowest amount of Rs 2 crore was collected in November 1998. The February saw a collection of Rs 870.93 crore.

On the one hand primary market has been dull and issues which appeared in the market for mobilising resources for the corporate needs were few, on the other hand mega issues have been floated to fund their resources by the financial institutions such as IDBI, ICICI, IFCI, SIDBI etc. It may be noted that during 1998-99 there were 11 mega issues for Rs.4610.84 crore as against 12 issues for a lesser amount of Rs 3483.84 crore during the previous year.

The share of mega issues was 82.5 percent in the total amount mobilised during the year 1998-99. The Industrial Development Bank of India raised Rs 2250 crore and ICICI raised Rs 2200 crore, while India Cements Ltd. raised Rs 160.84 crore. Thus, the manufacturing sector did not enter the market in a big way during 1998-99 and the investment in industrial sector may be taking place through intermediation of financial institutions. This trend reflects that disintermediation for raising the resources is taking the back seat and intermediation is playing the front role.

This slack in mobilisation of resources by the non-financial corporates is also corroborated by the decline in the non food bank credit off take from the banking sector due to sharp fall in the industrial activity reflected in deceleration in the growth rate of industrial production.

The average size of the issues (including public and rights) was Rs 96.32 crore during 1998-99 as against Rs.41.17 crore during the previous year. However, if 11 mega issues of Rs 100 crore and above are excluded, the average size of the issue will be Rs 20.75 crore during 1998-99 as against Rs 10.97 crore for 1997-98.

It would be seen that in 1998-99, there were 15 issues below Rs.5 crore and 9 issues above Rs.5 crore and below Rs.10 crore each. During 1997-98, however, there were 52 issues in the first group of issue and 26 issues in the next higher group.

During the financial year 1998-99, listed companies floated 40 issues for Rs 5182.25 crore and 18 IPOs for Rs 404.21 crore as compared to 59 issues by listed companies for Rs.3522.43 crore and 52 issues through IPOs for Rs 1047.52 crore during 1997-98. The IPOs’ contribution towards resource mobilisation declined to 7.2 percent during the year under review from 22.9 percent in the previous year. However, the listed companies’ share increased to 92.8 per cent in 1998-99 from 77.10 percent in 1997-98 (April- March). The fall in the share of IPOs indicates that new companies will not enter in big way the investment activity and capital formation in near future.

As regards the position during the month under review there has been a rise in amount mobilised through IPOs. There was 1 IPO issue for Rs 3.78 crore during March 1999 as compared to no issues during March 1998.

There were 43 self-appraised issues (74.14 percent of the total no of issues) amounting to Rs.5216.49 crore (93.38 percent of the total amount raised) during 1998-99 as compared to 77 issues (69.37 percent of the total no. of issues) amounting to Rs. 3197.86 crore (69.98 percent of the total amount raised) in the previous year. Of the remaining issues that entered the market during 1998-99, 3 issues were appraised by a bank, 10 issues by the development financial institutions and 2 issues by the other financial institutions.

Industry-wise analysis of resource mobilisation during 1998-99, reveals that banks and financial institutions garnered 79.70 percent of the total amount through 10 mega issues followed by the cement and construction companies having the combined share of 3.6 per cent. The trend during the current year has varied from that observed during the corresponding period of the previous year. In 1997-98, almost all the industry groups entered the market, while in 1998-99 only few industry groups like banks and financial institutions, financial companies, cement and construction, electronics, info-tech, etc. came to market. As regards pattern in 1997-98, banks and financial institutions mobilised only 49.0 percent of the total capital raised and other sectors accounted for a larger share indicating a less intermediation activity. The banks and financial institutions had mobilised Rs.4738 crore or 84.81 per cent. Electronic (Rs.203.77 crore), cement and construction (Rs.199.02 crore) and textiles (Rs.121.54 crore) were other important industries which entered the market and mobilised substantial resources. There were five issues of the order of Rs.46.92 crore by the information and technology industry

during 1998-99 compared to only one issue of Rs.8.51 crore during the previous year. There was one power issue during 1998-99 collecting Rs.13.10 crore as compared to nil during 1997-98.

been a decline in the number of issues as well as in the amount of capital raised as compared to the position in 1997-98. Western region through 29 issues collected Rs.4856.27 crore, which was 86.9 per cent of the total amount taken together mobilised in all other regions, i.e. northern, eastern and southern. The southern region occupied the second position in terms of amount mobilised at Rs.293.42 crore (5.70 per cent).

The details of instrument-wise capital mobilisation reveal that significance of instruments which earn fixed income is rising and importance of assets with varying yield rates associated with risk is falling at a sharp pace. Thus during 1998-99, share of funds raised through bond issues was the highest at 79.65 per cent followed by equity at 15.33 per cent. Equity issues had accounted for 41.17 per cent during 1997-98. Thus, the share of equity declined during the year under review. Besides, premium equity issues, which mobilised 85.58 percent of total equity raised, could mobilise 77.0 percent in 1997-98 implying that only quality issues can earn premium. However, equity on premium continues to be important, probably due to issues of good quality entering the market with required disclosures and transparency.

It would be seen that the instruments like partially convertible debentures and non-convertible debentures were not utilised for raising resources during 1998-99.

The information relating to underwriting of issues indicates that 7 issues of 32 issues were underwritten and 25 issues were not underwritten

during 1998-99 as compared to 10 issues which were underwritten and 52 issues which were not underwritten during 1997-98. In March 1999, there was only one issue, which was underwritten, and two issues were not underwritten.

During 1998-99, according to data available for 21 issues, 19 issues were subscribed less than twice and two issues were subscribed more than twice and less than 5 times. There was no issue, which was subscribed, more than 5 times and less than 10 times. The details of issue reveal that banks and financial institution’s issues were oversubscribed for more than one time.