Indian firms hit three-year low in raising funds

Indian companies raised a total of Rs 2.03 lakh crore of fresh capital from equity and debt markets in the April-December period of 2011, the lowest in three years.

According to the Economic Survey for 2011-12, the pre-Budget annual report card on the state of the economy, the funds raised by Indian companies in the first nine months of the current fiscal, at Rs 2,03,005 crore, was way below the figure of Rs 2,76,890 crore raised in fiscal year 2010-11 and Rs 2,12,635 crore mopped up during 2009-10.

During the April-December period of current fiscal, funds were raised through debt, private placement in corporate debt and equity, including Initial Public Offers (IPOs).

There was a lull in the primary stock market, where the companies raise funds through initial public offer (IPO), and the funding needs of the businesses are being mostly met through private placements of corporate debt this year.

There were no action in the area of fund-raising through ADR and GDR issues, the Survey said.

A total of just about Rs 9,683 crore has been garnered from the equity market during the period under review, which is five-time less than Rs 48,654 crore fund-raised in 2010-11.

There were only 30 public issues April-December period of 2011 and the funds raised through public issues totalled about Rs 5,043 crore, while in the fiscal 2010-11, 53 firms garnered Rs 35,559 crore.

The average size of initial share sale offers by Indian companies fell by four-times to Rs 168 crore in April-November period of 2011, as against to Rs 671 crore in previous fiscal.

The amount of capital mobilised through private placement of corporate debt in 2011-12 (April-December) was Rs 1,88,530 crore as compared to Rs 2,18,785 crore in 2010-11.

Further, about Rs 4,791 crore was raked in through debt issue as against Rs 9,451 crore in 2010-11.