The buoyancy in the capital market has enthused companies like Sterlite Industries, United Breweries, Bharat Forge and Centurion Bank to plan rights issues totalling Rs 2,450 crore (Rs 24.50 billion) this fiscal, which is more than double the Rs 1,006 crore (Rs 10.06 billion) raised in 2003-04.

Sterlite plans to come up with its mega rights issue of Rs 1,819 crore (Rs 18.19 billion); UB plans to raise Rs 214 crore (Rs 2.14 billion), while Bharat Forge is to mop up Rs 124 crore (Rs 1.24 billion) during 2004-05, according to the debt market monitoring firm Prime Database.

Also in the queue are rights issues of Centurion Bank [Rs 91 crore (Rs 910 million)], Balrampur Chini [Rs 59 crore (Rs 590 million)], South Indian Bank [Rs 54 crore (Rs 540 million)] and Polyolefins Rubber [Rs 30 crore (Rs 300 million)].

Texmaco has already floated its rights issue to raise Rs 15 crore (Rs 150 million).

"A buoyant secondary market is definitely a positive sign that would encourage companies to come out with rights issues. As many as 14 companies have either applied for or obtained the Securities and Exchange Board of India's approval for Rs 2,450 crore worth of rights issues," Prime managing director Prithvi Haldea said in a statement.

He said 24 more companies including Tata Motors, Bata, Jammu & Kashmir Bank, Federal Bank, CESC, Elder Pharma, Gujarat Ambuja Exports and Varun Shipping have announced their plans to raise capital in recent times.

Rights issues witnessed a significant 133 per cent jump last fiscal when 22 companies raised a total Rs 1,006 crore from the market as against 12 companies raising a meagre Rs 431 crore (Rs 4,310 million) in 2002-03.

Electrolux Kelvinator's Rs 199.77 crore (Rs 1,997.7 million) was the largest issue in 2003-04, followed by Hindustan Inks [Rs 197 crore (Rs 1,970 million)], IDBI Bank [Rs 154 crore (Rs 1,540 million)] and Cholamandalam Investment [Rs 70 crore (Rs 700 million)].

"However, mobilisation of capital through rights issues in 2003-04 was still a meagre 8 per cent of the Rs 12,630 crore (Rs 126.30 billion) raised in the boom year of 1992-93," Haldea said.

Rights issues have tapered off after the boom year with companies raising Rs 9,306 crore (Rs 93.06 billion) in 1993-94, Rs 6,793 crore (Rs 67.93 billion) in 1994-95 and Rs 6,520 crore (Rs 65.20 billion) in 1995-96.

In 1996-97, these issues shrunk to Rs 2,724 crore (Rs 27.24 billion) and came down further to Rs 1,703 crore (Rs 17.03 billion) in the next fiscal. They plunged to Rs 568 crore (Rs 5.68 billion) in 1998-99.

There was some revival in the market in 1999-2000 when 28 companies raised a total Rs 1,560 crore (Rs 15.60 billion) through rights issue but it again came down to Rs 729 crore (Rs 7.29 billion) in 2000-01.

The market rebounded in 2001-02 when 13 companies raised a total of Rs 1,041 crore (Rs 10.41 billion) but it again slumped to Rs 431 crore (Rs 4.31 billion) in 2002-03, Prime said.