However, with the stock currently quoting at around Rs 13.10, it is unlikely that the Delhi-based institution will be able to command a good premium. IFCI's last equity issue was in fiscal 1993-94.

According to merchant banking sources, IFCI urgently needs funds to augment its Tier I capital and the rights issue is probably for that purpose. They say that in view of the low market price of the scrip and IDBI's stated objective of reducing its stake in IFCI, the Delhi-based institution may see a lot of shareholders renouncing their rights entitlement. ``In such a case, IFCI will have to think of tying up with certain financial investors to see the issue through,'' said an investmentbanker.

Market sources say the rights issue is likely to be around Rs 75-100 crore in the ratio of one shares for evrey four share held. Company officials, however, refused to comment on this. At present, IFCI has an equity base of Rs 352.93 crore. In case of a 1:4 rights issue (as expected by the market), the paid-up capital will bloat to Rs 450 crore. The book value per share will also come down substantially from the current level of Rs 41.

On the bourses, IFCI scrip has been on the slide since April 1998 -- it has shed over 65 per cent and currently quotes near its all-time low of Rs 12.50. The fall in the stock price was precipitated by the poor performance in the first half of the current fiscal when the net profit dipped to Rs 68 crore as against Rs 217 crore in the corresponding period last year. The poor profitability was due to the hefty provisioning of about Rs 150 crore against non-performing assets during the period. With IFCI rumoured to be providing another Rs 150 crore in the second-half,profits will continue to remain depressed.

Meanwhile, IFCI's retail issue of bonds -- scheduled to hit the market in March -- has been deferred till the next financial year. According to market sources, the institution is likely to file its umbrella prospectus with Sebi after April.