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Over 42% money raised via IPOs lie unused

By Deepak Korgaonkar in Mumbai
July 22, 2008 10:45 IST
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More than 42 per cent of the funds mobilised through initial public offers in the last one year are idling away either in banks or debt schemes.

A total of 32 companies mopped up Rs 40,148 crore (Rs 401.48 billion) for their expansion plans, but could utilise only Rs 23,603 crore (Rs 236.03 billion) so far.

According to available information, realty, telecom and logistic companies have used the money for the pre-determined purposes, while power, port and securities and finance companies have used only a portion of the IPO resources and parked the remaining amount with banks and debt funds.

Reliance Power, Future Capital, GSS America Infotech, Kolte Patil Developers, OnMobile Global and Mundra Port utilised less than 20 per cent of their IPO proceedings.

Jyothy Laboratories raised Rs 305.69 crore (Rs 3.05 billion) through a public issue in December 2007, but did not utilise a single rupee till March this year.

Cairn India, DLF, HDIL and Vishal Retail utilised the entire amount raised, while Idea Cellular, Religare Enterprises and Puravankara Projects used over 90 per cent of the IPO proceedings.

Reliance Power raised Rs 11,562 crore(Rs 115.62 billion), out of which it used Rs 118.83 crore (Rs 1.18 billion) for issue expenses and Rs 3 crore (Rs 30 million) as deposit with the Bombay Stock Exchange.

The power company has earmarked Rs 2,045 crore(Rs 20.45 billion)  for funding subsidiaries to part-finance the construction and development of 7,060 mw power projects spanning 10 years. But it has spent just Rs 25.83 crore (Rs 258.3 million) till March this year.

Future Capital had raised Rs 491 crore (Rs 4.91 billion) through a public issue, out of which it has utilised Rs 88.47 crore (Rs 884.7 billion) and invested the remaining amount in the mutual funds.

GOING SLOW

 

Amount in Rs cr

Raised

Utilised*

Reliance Power

11562

148

Mundra Port

1771

201

IRB Infra

945

717

Brigade Ent

704

300

Future Capital

491

88

OnMobile Global

480

52

Jyothy Lab

306

NA

Kolte Patil 

276

14

Motilal Oswal 

246

192

MindTree Con

238

112

*Till Mar 31, 2008 Source: Financial results 

Mundra Port and Special Economic Zone utilised merely Rs 201 crore (Rs 2.01 billion) out of the IPO proceedings of Rs 1,771 crore (Rs 17.71 billion).

DLF, HDIL and Puravankara Projects collectively raised Rs 11,745 crore (Rs 117.45 billion) from the public and have utilised most of the funds for acquisition of land and development rights and prepayment of loans.

Meanwhile Idea Cellular has utilised Rs 2,015 crore (Rs 20.15 billion) out of Rs 2,125 crore (Rs 21.25 billion) collected, for building, strengthening and expanding network and related services in new circles and for redemption of preference shares. Manaksia invested 50 per cent or Rs 137.32 crore (Rs 1.37 billion) of public issue money into short-term mutual funds investments.

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Deepak Korgaonkar in Mumbai
Source: source
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