Chart
1 : Capital Raised through Public and Rights issues during 1998-99
TRENDS
IN PRIMARY MARKET
The primary market, which has been shown subdued trend with investment
pessimism during 1996-97 and 1997-98, is picking up during 1998-99. During
April-December 1998, the capital mobilisation rose by 27 per cent over
the same period in 1997. Moreover, the issues entering the market on average
have been of larger size than those which have appeared during same period
in 1997. The financial institutions and banks have mobilised relatively
larger portion of the total resources from the primary market. The primary
market witnessed some degree of recovery in the investment activity.
Status of Offer
Documents
| Type of Documents |
|
|
|
|
||||
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
|
| Received |
49
|
1409.53
|
90
|
4057.38
|
10
|
364.01
|
11
|
502.14
|
| Cleared |
45
|
1619.37
|
81
|
2927.59
|
05
|
55.88
|
04
|
18.06
|
During the first 9 months of current financial year, April - December 1998-99, the SEBI received 49 offer documents for an amount of
Rs. 1409.53 crore and cleared 45 issues amounting
to Rs.1619.37 crore. During April-December '97, the SEBI had received 90
offer documents for an amount of Rs.4057.38 crore and cleared 81 issues
for an amount of Rs. 2927.59 crore. Thus there was a fall during April-December
1998 in offers as well as cleared documents indicating lower investment
activity in the coming months in the primary market.
During the month of December '98, 10 offer
documents were received and 5 were cleared by the SEBI for Rs. 364.01 crore
and Rs. 55.88 crore, respectively compared to 11 offer documents received
and 4 cleared for Rs. 502.14 crore and Rs. 18.06 crore, respectively during
December '97.
Capital Raised
|
|
|
|
||||||
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
|
| Public |
23
|
3518.80
|
56
|
1597.89
|
04
|
1075.05
|
06
|
459.84
|
| Rights |
18
|
409.79
|
34
|
1494.28
|
02
|
162.78
|
02
|
13.87
|
| Total |
0
|
0
|
||||||
The resource mobilisation from the primary market during first nine months of current financial year (April - December 1998) increased by more than 27 per cent to Rs.3928.59 crore from Rs. 3092.17 crore during 1997 (April-December). The rise in capital mobilisation was achieved despite the fall in number of issues from 90 to 41 mainly on
account of significant boost in the number
of large size issues during the current year compared to the same period
last year. The noteworthy development was that financial institutions raised
83.0 per cent of the total capital mobilised through primary market (Table
2). Month-wise analysis shows that 6 issues were opened in December '98
for Rs. 1237.83 crore as compared to 8 issues for Rs. 473.7 crore in the
same month in 1997, thus registering a robust recovery.
Chart
1 : Capital Raised through Public and Rights issues during 1998-99
The activity of public issues is getting momentum
as companies with 23 public issues raised
|
|
|
|||
|
No.
|
Amount
|
No.
|
Amount
|
|
| April |
04
|
409.33
|
17
|
216.03
|
| May |
04
|
97.10
|
14
|
1104.06
|
| June |
05
|
100.38
|
21
|
124.94
|
| July |
06
|
365.52
|
08
|
173.89
|
| August |
04
|
333.08
|
07
|
193.88
|
| September |
09
|
973.51
|
03
|
28.42
|
| October |
02
|
409.84
|
05
|
422.92
|
| November |
01
|
02.00
|
07
|
354.31
|
| December |
06
|
1237.83
|
08
|
473.72
|
| Total | ||||
Rs.3518.80 crore during April-December 1998
as compared with Rs. 1597.89 crore in April-December 1997. In terms of
percentage share, public issues contributed 89.57 per cent to total capital
raised during the current financial year so far as compared to rights,
although as already mentioned few issues of financial institutions accounted
for 80 per cent of the total capital raised.
In the absence of a few direct issues by the
industrial or services sectors it is not yet clear to which extent the
capital raised would result in real physical capital formation. According
to month-wise details, the capital mobilisation from the market has shown
rising trend from June '98 onward (Table 3).
Trends In Large
Issues
| Name of the Company |
Issue |
Instru. |
Issue
date |
Offer
size
|
| The Industrial
Credit &
Invt.Corp.of India Ltd. |
|
|
27/04/98
|
300.00
|
| The Industrial
Credit &
Invt.Corp.of India Ltd. |
|
|
16/07/98
|
300.00
|
| The Industrial
Credit &
Invt.Corp.of India Ltd. |
|
|
27/08/98
|
300.00
|
| Industrial Development Bank of India |
|
|
21/09/98
|
750.00
|
| The Industrial
Credit &
Invt.Corp.of India Ltd. |
|
|
26/10/98
|
400.00
|
| The Industrial
Credit &
Invt.Corp.of India Ltd. |
|
|
09/12/98
|
300.00
|
| Industrial Development Bank of India |
|
|
21/12/98
|
750.00
|
| The India Cements Ltd. |
|
|
28/12/98
|
160.84
|
| Total |
There were 8 issues in the range of Rs.100
crore and above amounting to Rs.3260.84 crore which opened during April
- December 98 as against 9 issues of Rs.100 crore and above amounting
to Rs.2233.85 crore during April - December 97. The 8 issues of the size
of Rs.100 crore and above contributed 83 per cent in the total capital
raised during April - December 98 compared to 9 issues of Rs.100 crore
and above during the corresponding period of the previous year contributing
72.24 per cent (Table 4).
|
Apr - Dec98
|
Apr - Dec'97
|
Dec '98
|
Dec '97
|
|||||
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
|
| <5 cr. |
13
|
27.56
|
44
|
102.36
|
02
|
04.29
|
04
|
08.71
|
| =>5cr. <10cr. |
03
|
21.84
|
22
|
148.33
|
00
|
0.00
|
00
|
0.00
|
| =>10cr. <50cr. |
11
|
224.52
|
10
|
239.92
|
01
|
22.70
|
01
|
12.00
|
| =>50cr. <100cr. |
06
|
393.83
|
05
|
367.71
|
00
|
0.00
|
02
|
153.00
|
| =>100cr. <500cr. |
06
|
1760.84
|
08
|
1434.56
|
02
|
460.84
|
01
|
300.00
|
| =>500 cr. |
02
|
1500.00
|
01
|
799.29
|
01
|
750.00
|
00
|
0.00
|
| Total |
0
|
0
|
||||||
The average size of the issues (including
public & rights) that entered the market during April-December 98
was Rs.95.82 crore as against Rs.34.36 crore during the period April-December
97. However on excluding 8 issues of Rs. 100 crore and above, the average
size of the issues works out to Rs.20.23 crore during April-December 98.
The average size of issues opened during the corresponding period last
year excluding 9 issues of Rs.100 crore and above was Rs.10.60 crore.
Analysis of Issues
: Listed and IPOs
| Category
of
Company |
Apr - Dec'98
|
Apr - Dec'97
|
Dec '98
|
Dec '97
|
||||
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
|
| Listed |
28
|
3621.47
|
41
|
2150.46
|
04
|
1212.78
|
05
|
466.88
|
| IPOs |
13
|
307.12
|
49
|
941.71
|
02
|
25.05
|
03
|
06.83
|
| Total |
0
|
0
|
||||||
During the first 9 months of current financial
year, listed companies made 28 issues for raising Rs. 3621.47 crore and
shared 92.2 per cent of the total capital raised. The IPOs with 13 issues
mobilised only Rs. 307.12 crore during April-December '98,
substantially lower than Rs.941.71 crore during
the same period in 1997. The IPOs' contribution to capital mobilisation
has been on the decline during 1998 reflecting a slack in the new economic
activity and perception of the issuers. The listed companies in the month
of December '98 also mobilised a large amount of Rs.1212.78 crore as against
Rs.466.88 crore in December '97. There were only two IPOs for Rs.25.05
crore in December 1998 compared to 3 issuers for Rs.6.83 crore in December
1997.
Chart 2 : Types
of issues during 1998-99
Sector- Wise Analysis
| Sector |
Apr - Dec'98
|
Apr Dec'97
|
Dec '98
|
Dec '97
|
||||
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
|
| Private |
38
|
3825.28
|
82
|
2443.19
|
06
|
1237.83
|
07
|
383.71
|
| Joint |
02
|
33.01
|
03
|
31.11
|
00
|
0.00
|
00
|
0.00
|
| Public |
01
|
70.30
|
05
|
617.87
|
00
|
0.00
|
01
|
90.00
|
| Total |
0
|
0
|
||||||
The trends in sector-wise break up of capital raised reveals that during April-December 1998, private sector accounted for 97.3 per cent and public sector for 1.78 per cent, respectively. The share of
public sector in terms of amount mobilised
was higher at 19.9 per cent in the same period of 1997. In December 1998,
only private sector entered the market with 6 issues for Rs.1237.83 crore
(Table 7).
Appraisal of Issues
|
|
|
|
December '97
|
|||||
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
|
| Appraised |
12
|
251.03
|
30
|
1345.48
|
01
|
02.35
|
03
|
69.48
|
| Unappraised |
29
|
3677.56
|
60
|
1746.69
|
05
|
1235.48
|
05
|
404.23
|
| Total |
0
|
0
|
||||||
There were 29 self-appraised issues (70.73
per cent of the total no of issues) amounting to
Rs.3677.56 crore (93.61 per cent of the total
amt. raised) during April -December'98 as compared to 60 issues (66.67
per cent of the total no. of issues) amounting to Rs.1746.69 crore (56.49
per cent of the total amount raised) in the corresponding period of 1997.
Out of 41 issues that entered the market in
the period under review, only 2 issues were appraised by a bank, 2 were
appraised by the financial institutions and 8 by the development financial
institutions.
| Industry |
|
|
|
|
||||
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
|
| Banking / Fis |
11
|
3316.00
|
06
|
1091.82
|
02
|
1050.00
|
02
|
390.00
|
| Cement & Const. |
03
|
193.02
|
05
|
22.23
|
01
|
160.84
|
00
|
0.00
|
| Chemical |
02
|
36.50
|
04
|
196.69
|
00
|
0.00
|
00
|
0.00
|
| Electronic |
02
|
88.36
|
02
|
44.05
|
00
|
0.00
|
00
|
0.00
|
| `Engineering |
03
|
4.24
|
05
|
61.81
|
01
|
1.94
|
00
|
0.00
|
| Finance |
05
|
24.52
|
19
|
69.69
|
00
|
0.00
|
01
|
00.35
|
| Food Processing |
02
|
21.10
|
03
|
76.41
|
00
|
0.00
|
00
|
0.00
|
| Health Care |
00
|
0.00
|
06
|
27.61
|
00
|
0.00
|
01
|
4.06
|
| Info. Tech. |
02
|
25.05
|
01
|
8.51
|
02
|
25.05
|
00
|
0.00
|
| Leather |
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
| Metal |
02
|
3.51
|
07
|
814.39
|
00
|
0.00
|
01
|
02.42
|
| Mining |
01
|
20.40
|
01
|
107.48
|
00
|
0.00
|
00
|
0.00
|
| Misc. |
02
|
7.50
|
14
|
139.79
|
00
|
0.00
|
00
|
0.00
|
| Packaging |
00
|
0.00
|
02
|
4.96
|
00
|
0.00
|
00
|
0.00
|
| Paper & Pulp |
00
|
0.00
|
02
|
07.88
|
00
|
0.00
|
01
|
1.88
|
| Petrochemical |
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
| Plastic |
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
| Power |
01
|
13.10
|
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
| Printing |
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
| Rubber |
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
| Telecommn. |
00
|
0.00
|
01
|
5.07
|
00
|
0.00
|
00
|
0.00
|
| Textile |
04
|
121.54
|
07
|
353.25
|
00
|
00.00
|
01
|
63.00
|
| Tourism |
00
|
0.00
|
02
|
28.10
|
00
|
0.00
|
00
|
0.00
|
| Transport |
01
|
53.75
|
03
|
32.43
|
00
|
0.00
|
01
|
12.00
|
| Total |
0
|
0
|
||||||
Industry- Wise
Analysis
The industry-wise break up of capital mobilised
from the primary market is furnished in Table 9 it would be seen from the
data that during April-December 1998, banking /FIs mopped up 84.4 per cent
followed by cement and construction 4.9 per cent (Rs. 193.02 crore) and
Textiles 3.09 per cent (Rs.121.54 crore). Electronics, Chemicals, Food
Processing, Finance and that Mining were other important industries, which
mobilised resources from the primary market. During the same period in
1997, also Banks/FIs 34.0 per cent (Rs. 1050.00 crore) and metals 26.3
per cent (Rs. 814.39 Crore) and textiles 11.4 per cent (Rs.353.25 crore)
mobilised large amounts.
Region-Wise Capital
Mobilisation
| Region |
|
|
|
Dec '97
|
||||
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
|
| Northern |
10
|
171.25
|
12
|
179.73
|
01
|
1.94
|
01
|
1.88
|
| Eastern |
04
|
128.87
|
24
|
1142.53
|
00
|
0.00
|
03
|
65.77
|
| Western |
20
|
3347.58
|
37
|
1072.81
|
03
|
1072.70
|
02
|
312.00
|
| Southern |
07
|
280.89
|
17
|
697.10
|
02
|
163.19
|
02
|
94.06
|
| Total |
0
|
0
|
||||||
On comparing the April to December 98 data
with the corresponding period of the last year, it is observed that there
has been an increase in the capital raised in the western region despite
the decrease in the number of issues. In the Northern, Eastern and Southern
regions, there has been a decline in the number of issues as well as amount
of capital raised as compared to
the corresponding period of the last year.
While Western region shared 85.2 per cent during April-December 1998, the
remaining 3 regions collected just 14.8 per cent.
Chart
3 : Region wise distribution of capital raised
Instrument-wise Analysis
| Type of Instrument |
Apr - Dec'98
|
Apr - Dec'97
|
Dec '98
|
Dec '97
|
||||
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
|
| Equity - par |
15
|
157.29
|
55
|
226.50
|
01
|
02.35
|
04
|
8.71
|
| - premium |
14
|
547.89
|
26
|
1446.39
|
03
|
185.48
|
02
|
102.00
|
| CCPS |
02
|
37.21
|
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
| Pref. Shares |
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
| FCDs |
03
|
71.33
|
06
|
208.67
|
00
|
0.00
|
01
|
63.00
|
| PCDs |
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
| NCDs |
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
| Bonds |
07
|
3100.00
|
01
|
300.00
|
02
|
1050.00
|
01
|
300.00
|
| OFCDs (Optionally) |
00
|
0.00
|
03
|
910.61
|
00
|
0.00
|
00
|
0.00
|
| Fully Convt. Debt) | ||||||||
| & OFCDDs (Op. Fully | ||||||||
| Convt. Discntd. Debt.) | ||||||||
| OCCPS (Op. Convt. |
01
|
14.87
|
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
| Cumm. Pref. Shares) | ||||||||
| Any Other |
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
00
|
0.00
|
| Total |
0
|
0
|
||||||
During the current financial period, funds
raised through bond issues were the highest at about 78.91per cent followed
by equity shares at 17.95 per cent. It is interesting to note that magnitude
of issues on premium declined from Rs. 1446.39 crore during April-December
'97 to Rs. 457.87 during April-December '98. The fully convertible debentures
have lost the preference of investors as amount mobilised under this instrument
declined from Rs. 208.67 crore during April-December '97 to Rs. 71.33 crore
during April-December '98. It would be seen that partially convertible
debentures and non-convertible debentures have not been issued. Similarly,
preference shares have also lost their place among various instruments
in the primary market.
Trends In Underwriting
As regards underwriting activities, of the
23 issues, 5 issues for Rs. 162.92 crore were underwritten and 18 issues
for Rs. 3355.88 crore were not underwritten during April-December 1998
as against 9 issues for Rs. 343.99 crore and 47 issues for Rs. 1253.9 crore,
respectively, during April-December 1997. It shows that underwriting activities
have been declining.
| (Public Issues) |
Apr - Dec'98
|
Apr Dec'97
|
Dec '98
|
Dec '97
|
||||
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
No.
|
Amount
|
|
| Underwritten |
05
|
162.92
|
09
|
343.99
|
01
|
22.70
|
01
|
63.00
|
| Not underwritten |
18
|
3355.88
|
47
|
1253.90
|
03
|
1052.35
|
05
|
396.84
|
| Total |
0
|
0
|
0
|
|||||
During the month of December '98 only one
issue was underwritten for Rs. 22.7 crore and three issues for Rs. 1052.35
crore were not underwritten as compared to 1 issue underwritten for 63.00
crore and 5 issues not underwritten for Rs. 396.85 crore in December 1997.
This trend indicates that stringent norms imposed on entry in the market
has lessened the requirement for underwriting.
Subscription of
Issues Opened
|
|
|
|
|
||
| <=2 times |
|
<=2 times |
|
||
| >2 | <=5 times |
|
<=5 times |
|
|
| >5 | <=10 times |
|
>5 | <=10 times |
|
| >10 | <=20 times |
|
>10 | <=20 times |
|
| >20 | <=50 times |
|
>20 | <=50 times |
|
| >50 | <=100 times |
|
>50 | <=100 times |
|
| >100 times |
|
>100 times |
|
||
During April-December 1998, according to the
data available for 15 public issues from post-issue reports, almost all
issues were subscribed less than twice. During April-December 1997, however,
of the 52 public issues, 46 issues were subscribed less than twice and
4 issues were subscribed more than twice but less than five times.
The details of issues reveal that FIs and
banks issues were by and large oversubscribed. Among them UTI bank (1.49
times), ICICI bank (1.69 times) , Jammu and Kashmir bank (1.83 times) were
prominent. However, R.K. Ispat Ltd. got the subscription 1.99 times of
its original issue. The ICICI, during April-December 1998 entered the market
three times and its issues were oversubscribed on each occasion.
Undersubscription
of Issues
As per the data available with the SEBI as
on January 04, 1999 from the post-issue reports from lead managers, there
were 5 issues amounting to Rs.257.89 crore for the period April 97 to
December 97 that were undersubscribed. However, later on they were subscribed.
During the period April-December 1998 there were 7 undersubscribed issues amounting to Rs.161.62 crore. All these issues were later on subscribed.