Fund raising by Indian companies through rights issue plunged 49 per cent to Rs 4,573 crore in 2013-14, according to a report by Prime Database.

It said: “As of now, 2014-15 looks slightly more promising.”

In a rights issue, shares are issued by companies to their existing investors as per their holding at a pre-determined price and ratio.

According to the report, firms mopped up Rs 4,573 crore in 2013-14 against Rs 8,945 crore garnered in the preceding fiscal.

This was also the lowest level of funds raised through rights issue since 2011-12, when companies had raked in Rs 2,375 crore.

“Uncertain market conditions through the year, delays in the rights issue process and an overall lack of confidence in companies to raise and deploy fresh capital were the main reasons for the poor utlilisation of the rights route,” Prime Database MD Pranav Haldea said.

In terms of number, 2013-14 witnessed 13 companies using the rights route compared with 16 firms in the previous fiscal.

The largest rights issue in 2013-14 was from Tata Power (Rs 1,993 crore), followed by Godrej Properties (Rs 700 crore) and Reliance Mediaworks (Rs 600 crore).

The rights issue route was additionally used by two companies — Peirce Leslie and Dalal Street — to dilute promoters’ stake to comply with the SEBI norms of 25 per cent minimum public shareholding.

Dalal Street’s issue (Rs 9 lakh) was successful, while Pierce Leslie had to refund the amount collected from investors as it was not able to obtain the minimum subscription.

In terms of sector, 43 per cent of the mobilisation was done by power, followed by real estate 17 per cent.

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