Prime Database, the major monitoring agency, says about 66 per cent of the money was raised by the information, communications and entertainment (ICE) sector. Equity accounted for 61 per cent of total resource mobilisation from the primary market in 1999-00, up from 18 per cent in 1998-99. The quantum raised via debt route was Rs 3,107 crore in 2000, down from Rs 5,604 crore last year.

The sedate response to the IPOs reflects investors' wariness as they burnt their fingers by their reckless involvement in the rash of dubious issues in 1992-95. Even today, not every IPO is lapped up. Most of them had to depend on the institutional book-building. Sip Technologies and Creative Eye had to call off their issues at the last moment owing to lack of investment interest, besides overpricing of premium amount.

It is true, Balaji Telefilms and Mukta Arts commanded premiums. IT&T, Pritish Nandy Communica tions and Hughes Telecom issues devolved on underwriters.

In early nineties, the primary market enjoyed real boomtime. Yet much earlier in 1977, Reliance Textiles and Industries raised Rs 28.2 crore by way of public issue, that was oversubscribed eight times. Subsequently, many IPOs enjoyed oversubscription in the heyday of the primary market. But the Reliance Group must be unique in the sense that it has tapped capital market 33 times to raise Rs 100,000 million .

The recent dormancy in the primary market has a lot to do with a number of developments. Investors have become cautious after a plethora of dubious issues that bombed. The decline of the old economy companies, that used to tap the market periodically, has led to the shrinkage of the primary market. The secondary market, too, is not in a good cheer. Lately book-building and private placement have gained momentum. Lastly, investors prefer debt to equity for reasons of risk. And most important, investors prefer mutual funds to park their funds in profitable and steady avenues. These factors have robbed the primary market of its vibrancy.

The industry-wise capital raised shows some distinct changes. In 1999-00, of the cumulative Rs 7,817 crore raised, banking and finance companies accounted for 53.3 per cent (86.2 per cent) and IT companies 19.8 per cent (0.8 per cent). Even the share of cement and construction companies edged up from 3.6 per cent to 4.3 per cent.

The shift towards knowledge- based IT sector points out the future trend. The `old economy ' sectors such as electronics, one time darling of the investors, textiles, engineering and food processing was minuscule while transport, mining and metals drew a blank.

The Securities and Exchange Board of India's (Sebi) liberal norms also help the revival of the IPOs market. It stipulated `ability to pay' in place of `actual payment of dividend'. It also allowed the companies to determine the par values of shares issued by them in accordance with Section 13(4) of the Companies Act 1956, replacing the old norm of fixed par values of Rs 10 and Rs 100.

The existing companies have been allowed to split par values of their shares. Those with dematerialised shares also can now alter the par values of a share indicated in the Memorandum of Articles of Association. Such freedom should stimulate the primary market.

It may be remembered that public and private banks have been exempted from eligibility norms for public issue. That partly explains their dominance in the IPOs recently.

In November 2000, ten companies came out with IPOs in the domestic market, raising Rs 210.13 crore, up 104 per cent over that in October 2000. Vijaya Bank floated a Rs 100 crore IPO that may bring the government's stake down to 72.2 per cent. Earlier in September 2000, Indian Overseas Bank raised Rs 111. 2 crore by way of an IPO issue.

In November 2000, Sebi decided to allow companies, irrespective of sector, to float a public issue by offering just 10 per cent of their equity, as in the past they were obliged to issue 25 per cent of their equity through a public issue. Sebi has also introduced other changes. The unsubscribed part of the fixed-price portion of a book-built can be offered to institutional investors. The companies are also required to maintain minimum public shareholding as a continuous listing requirement.

Not many are ready to bet on the future course of the primary market. Much depends on the revival of the industrial sector. If the feel good factor improves, more companies may come out with IPOs. According to a leading stock broker: "In year 2001, we will definitely expect a growth rate of 20 per cent to 30 per cent (in the IPOs)." The recent resurgence of primary market points to the revival gathering momentum in the future.

SR Kasbekar