Rights Issues Hit by a Sluggish Economy

Image: Vivek Prakash / Reuters

The sluggish economy seems to have taken its toll on rights issues as well. Resource mobilisation through the rights issue route has slumped a hefty 68 percent in the first half of 2013-14, with Rs 2,166 crore being raised compared to Rs 6,749 crore in the same period the previous year. Data provided by PRIME, the primary market database provider, shows nine companies used the rights route during the period, compared with 10 the previous year.

PRIME has attributed the slump to the volatile market conditions and a lack of confidence over raising and deploying fresh capital.

The second half of the fiscal is also likely to be gloomy as only 13 companies have applied to Sebi for raising just Rs 652 crore.