India Inc mops up record Rs2 lakh crore funds

New Delhi: India Inc sated its thirst for funds like never before in 2010, with a record mop-up of over Rs2,00,000 crore from the equity and debt market during the calendar year, reports PTI.

The capital raised by Indian companies in the 2010 calendar year was over one-third more than the Rs1,50,000 crore mop-up in the previous year and was a beacon of hope in a global economy that has been witnessing turbulence on account of the poor health of Western economies.

Experts said Indian companies seem to have found a silver lining in the global financial crisis, as they managed to wrangle better terms for garnering the funds required for business expansion activities. They expect even more funds to be mopped up in the New Year.

Indian firms raised a total of Rs2,00,123 crore during 2010 through equity issues-in the form of initial public offers (IPO), follow-on public offers (FPO), qualified institutional placement (QIP), rights issues and foreign depository receipts like global depository receipts (GDRs) and American depository receipts (ADRs)-as well as debt instruments like External commercial borrowings (ECBs) and foreign currency convertible bonds (FCCBs).

However, fund-raising from the international market, through FCCBs, ADRs and GDRs, was somewhat subdued in comparison to the previous year. There was not a single ADR issue by Indian companies in 2010.

Analysts believe that the Indian economy-which is expanding at a pace of almost 9%-with its ability to generate better returns, will attract an even higher amount of capital next year.

"Indian investors will definitely mop-up more capital in 2011 from the level of 2010. They will prefer domestic routes for raising capital in 2011," SMC Global Securities' strategist and research head Jagannadham Thunuguntla said, adding that the ECB route will be the instrument of choice for raising funds next year as well.

A total of 547 companies raised about $18 billion (Rs81,400 crore) through ECBs in 2010, while they had garnered nearly Rs75,000 crore ($15 billion) last year. The biggest ECB issuances during 2010 were by companies such as Indian Oil Corporation, Exim Bank and Reliance Industries.

The year 2010 also featured 70 public issues, that is, 62 IPOs and 8 FPOs. The funds raised through public issues totalled about Rs71,114 crore. A major chunk of the amount raised through share sales-that is, Rs49,946 crore- came from the government divesting its stake in public sector companies.

In the public offer segment, 2010 saw a clear revival in the Indian primary market after a lacklustre 2009, when only 20 companies raised close to Rs20,000 crore. The largest public issue in 2010 was that of Coal India, with the issue size exceeding Rs15,000 crore.

Coal India's share sale offer also made history as the largest public issue of all time in the Indian capital market.

The grand success of Coal India's IPO was also seen in the Rs9,967 crore follow-on offer of NMDC, NTPC's FPO (Rs8,287 crore) and Power Grid Corporation of India Ltd's FPO (Rs7,442 crore).

Notably, the response from all classes of investors was robust, given that most of the public offers were over-subscribed multiple times.

Public issues were seen across sectors such as power, minerals, infrastructure, banking, healthcare and realty, among others, indicating that investors' overall confidence in the primary market is on a high.

Further, one more special highlight in the 2010 primary market were public issues from sunrise sectors such as microfinance, fitness centres, etc.

In particular, it was the ECB-push that took India Inc's fund-raising activities in 2010 to a new level despite capital-raising activities turning lukewarm on fronts like ADRs, GDRs and FCCBs.

About 53 companies raised about Rs28,339 crore during the year 2010 through the sale of shares to qualified institutional investors, including overseas private equity firms and local and foreign financial services firms like banks, insurers and fund houses. During the calendar year 2009, the funds raised through the QIP route amounted to about Rs32,631 crore.

Adani Enterprises was the first company to set the trend for QIPs during the year, raising a total of Rs4,000 crore.

Its example was followed by Tata Motors (Rs3,350 crore) and IDFC (Rs2,654 crore).

The quantum of funds raised through rights issues-where listed companies offer shares to existing shareholders-jumped 135% on a year-on-year basis to Rs9,203 crore in 2010. In comparison, Indian companies were able to raise just Rs3,626 crore in the previous year.

While there were no ADR issues, some action was seen in the area of fund-raising through GDRs. During 2010, there were 33 GDR issuances, which raised Rs3,968 crore ($879 million). This was almost 43% lower than the funds raised through GDR issues in 2009.

"In an era where fund-raising in the Indian domestic markets through instruments such as IPOs, FPOs and QIPs has been quite strong and healthy, foreign fund-raising through ADRs has almost become a thing of past," according to an analyst.

Another sour point in the fund-raising space was that of FCCBs. During the year, a total of about Rs6,100 crore ($1.35 billion) was mopped up through 12 FCCB issues. This was lower than the FCCB activity seen in the previous year, when 13 FCCB issues raised about $2.23 billion (Rs10,000 crore).

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CBI questions Raja in 2G spectrum scam

New Delhi: Former telecom minister A Raja today appeared before the Central Bureau of Investigation (CBI) for questioning in the Rs22,000 crore second generation (2G) spectrum scam, over a year after the agency registered a case in this connection, reports PTI.

47-year-old Mr Raja appeared before the agency this morning after he was summoned by the CBI under Section 160 of the Criminal Procedure Code.

Mr Raja, who had earlier expressed his inability to appear before the agency, is likely to be questioned at length on the circumstances leading to spectrum allocation which has been criticised severely by the Central Vigilance Commission (CVC) and the Comptroller and Auditor General (CAG).

He was forced to resign last month in the wake of a controversy over his role in the spectrum allocation.

Mr Raja is likely to be questioned on the issue of advancing dates for allocation of spectrum and on the role of his relatives in some of the companies which allegedly acted as a front for certain telecom firms which got spectrum between September 2007 and January 2008.

Mr Raja got the telecom portfolio on 18 May 2007 and again got re-elected as a member of the 15th Lok Sabha and continued as telecom minister from 31 May 2009 till 14th November, this year when he tendered his resignation.

The former minister, who flew to Delhi on Wednesday night from Chennai, had told reporters that he would co-operate with the CBI in the probe.

The Supreme Court has asked the CBI and the Enforcement Directorate to submit status reports on their investigations into the 2G case to it by 10th February, when the case will come up for further hearing.

The CAG in its report to Parliament had said that the allocation of 2G spectrum at undervalued prices had resulted in the loss of Rs1.76 lakh crore to the exchequer.

The CBI in its FIR had mentioned the loss as Rs22,000 crore based on the findings of CVC which had referred the case to it.

Corporate lobbyist Niira Radia was earlier this week quizzed by the CBI at her South Delhi farmhouse. Ms Radia, who was questioned for four hours, came under the scanner after her taped telephonic conversations with various influential people including industrialists, politicians and journalists became public.

The CBI has also questioned former Telecom Regulatory Authority of India (TRAI) chief Pradip Baijal, a 1966 batch IAS officer of Madhya Pradesh cadre, in connection with the case.

The premises of Mr Raja, MR Baijal and Ms Radia were searched by the CBI earlier this month.

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Friday’s Market Preview: Cautious opening indicated

The local market is likely to open on a cautious note on subdued cues from the global arena. Wall Street closed mostly lower overnight in the holiday-shortened week on low volumes and mixed economic data while markets in Asia were trading mostly lower in early trade today on lower metal prices that put pressure on mining companies. The SGX Nifty was down 7.50 points at 5,988.50 compared to its previous close of 5,995.

The market opened with meagre gains on Thursday, tracking its Asian peers that were mixed. The indices slipped into the red after touching the day's high and were range-bound. However, a sharp rise in the weekly food inflation data put pressure on the market, dragging the indices down. The post-noon session saw the key indices trading sideways on both sides of the neutral line. The market closed flat with a negative bias, down for the second day in a row.

The Sensex ended at 19,982.88, below its psychological level of 20,000 and down by 32.92 points (0.16%) over its previous close. The Nifty settled 4.40 points (0.07%) lower at 5,980.

The US markets closed mostly lower on Thursday on mixed economic data amid thin-volume trade in the holiday-shortened week. In economic data, consumer sentiment was up in December to its highest level since June and demand for long-lasting manufactured goods rose. Initial claims for jobless benefits edged down, but a rise in new home sales in November was below expectations. A rise in copper inventories on the London Metal Exchange renewed demand concerns from China, the world’s largest consumer of metals.

The Dow gained 14 points (0.12%) to 11,573.49. The S&P 500 shed down 2.07 points (0.16%) at 1,256.77. The Nasdaq lost 5.88 points (0.22) to 2,665.60.

US stock markets are closed on Friday for the Christmas Eve holiday.

Markets in Asia were mostly lower in early trade on Friday on speculations of China’s policy measures and a fall in metal prices. Chinese stocks were lower on worries that higher lending costs will raise borrowing costs while new rules might curb auto sales. Japan’s Nikkei was down on lower metal prices and the weakening dollar against the yen lowered the outlook for exporters.

The Shanghai Composite declined 0.43%, the Hang Seng fell 0.30%, the KLSE Composite was down 0.13%, the Nikkei 225 shrank by 0.71%, the Seoul Composite shed 0.08% and the Taiwan Weighted fell 0.30%. On the other hand, the Straits Times surged 0.22% in early trade. The SGX Nifty was down 7.50 points at 5,988.50 compared to its previous close of 5,995.

India has been ranked as the most preferred real estate destination in the Asia Pacific region as foreign investors still consider the country to be extremely viable, a report released on Thursday showed.

“India, and particularly Mumbai and New Delhi, are ranked the foremost real estate market destinations as the residential properties have maintain the growth momentum, and foreign investors still consider this market to be extremely viable,” the ULI-PwC report, ‘Emerging trends in Real Estate in Asia Pacific 2011’, said.

Going forward, the report forecast that India will continue to maintain a GDP growth momentum of 9%-10% per cent by 2015, as Asia’s third-largest economy will witness new private equity in capital markets which will inject capital in infrastructure projects.

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