Market for primary equity offering had revived in the first three months of this calendar. But companies continued to struggle to raise funds through debt.

According to Bloomberg League Table data, ONGC's Rs 12,600 crore offer for sale and MCX IPO have helped the equity issuances more than double in the March quarter over the corresponding period last year. However, the total equity issues for this fiscal year at Rs 32,700 crore , was 58 per cent lower than the previous fiscal.

Divestment of stakes by promoters (in case of ONGC, MCX, NBCC, Wipro and Godrej Properties) was higher than fresh equity offering this quarter.

Help from rally

The strong rally in equity market this year, with BSE Sensex gaining 13 per cent has helped companies raise funds through the qualified institutional placements (QIP) route quite easily. In the three months ended March, companies have raised Rs 1,120 crore worth of equity through QIP as opposed to Rs 107 crore in the December quarter.

Staying away from debt

Even as the equity issuances revived, tight liquidity conditions, high domestic interest rates and risk aversion among international lenders led to lower debt raising by the corporates. While the money raised through domestic loans declined by 71.6 per cent, the international bond raising declined 35 per cent in the March quarter.

According to the league table data, only 30 loan deals were arranged this year compared to 80 deals a year ago, indicating subdued investment activity.

Domestic bonds raised during the quarter were Rs 53,400 crore as compared to Rs 38,000 crore a year ago. But the rise in bond issues can be partly due to tax-free bonds issuances. Much of the Rs 40,000-crore of tax-free bonds to be raised for the year 2011-12, were raised during the March quarter.

>mvssantosh@thehindu.co.in

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