COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

Contrary to popular belief, the primary market has not revived, nor is there any early broad-based revival, according to market analysts.

In the current fiscal between April and July, only nine public issues hit the market. According to analysts, three debt issues from ICICI (Rs 6.29 billion) and one from IDBI (Rs 7.50 billion) accounted for Rs 13.79 billion or 95 per cent of the period's total mobilisation of Rs 14.45 billion.

Additionally, the banking sector has mobilised Rs 3.5 billion, though equity financial institutions and banks as such have together raised Rs 14.14 billion. In other words, a whopping 98 per cent of the period's total amount. This is significantly up from their share of a meagre four per cent in 1994-95.

The rest of the mobilisation has been by the software sector, which through four public issues, has raised a meagre Rs 290 million, and one non-banking finance company which has raised Rs 30 million.

According to analysts, software issues are now set to dominate the coming months. In addition to Polaris Software offering (Rs 920 million) in early August, public issues are expected from Kala Consultants (Rs 320 million), SRA Systems (Rs 250 million), Wintech Computers (Rs 200 million), Computech (Rs 250 million), Helios and Matheson (Rs 110 million), Compucom (Rs 100 million), VMC Software (Rs 100 million), Akshay Software (Rs 80 million), Kaashyap Radiant (Rs 60 million), Fortune Informatics (Rs 20 million) and Sankhya Infotech (Rs 20 million).

Two major issues on the horizon are from Hughes Software (Rs 3 billion) and Datamatics (Rs 1 billion).

On the other hand, at least 10 banks, are gearing up to tap the market. These include Canara Bank, Oriental Bank of Commerce, Punjab National Bank, Union Bank of India, Indian Overseas Bank, Andhra Bank, Vijay Bank, Centurion Bank and Nedungadi Bank.

As in the last couple of years, raising of debt will continue from IDBI and ICICI while a debt issue from the Noida Toll Bridge Company is also awaiting an entry. Finally, there could be a couple of public sector undertaking disinvestment offerings to the public: one being from VSNL aggregating Rs 700 million, followed probably by the Gas Authority of India Limited and Container Corporation of India or Concor.

The flood of software IPOs, analysts strongly feel, needs to be urgently checked. Significantly, while in 1997-98, there was not even a single issue from the software sector, four software firms which entered the market in 1998-99 opened the floodgates.

All these four issues -- Sonata Software (Rs 227 million), KPIT Systems (Rs 116.1 million), Cybermate Infotek (Rs 21.5 million) and M M Softek (Rs 17.5 million) -- evoked overwhelming response from the investors. Similar has been the success story of the four software issues of the current fiscal: SQL Star (Rs 143 million), Compudyne Winfosys (Rs 127 million), Subex System (Rs 60.8 million) and Amex (68.8 million).

Taking advantage of the euphoric conditions, several unscrupulous promoters are now at work to exploit the investors' enthusiasm.

Analysts suggest that in addition to strengthening the disclosure norms, the minimum investment amount in such issues should be raised to Rs 100,000 to prevent the small investors from yet again joining in a sectoral frenzy.

Most disturbing, of course, is the languishing equity mobilisation by the manufacturing sector, with has reached zero level in the first four months. This represents a major fall successively over the last four years, from a high of Rs 110.05 billion in full 1994-95.

The primary market has been suffering for long from several ills. These include, among others, the loss of investors' faith consequent to the heavy losses in primary issues, and lack of exemplary action against past offending issuers.

Unrealistic entry barrier guidelines, compounded by a slowdown in the industrial activity, have only further worsened the situation. The forthcoming election may present a further reason for a lull in the activity.

UNI

Business