1. HOW DO FIRMS IN INDIA FINANCE THEMSELVES? Conference on “Adapting India’s financial sector to a globalizing world” Goa 1 st November, 2002 Prithvi Haldea PRIME DATABASE

2. A THEN & NOW STUDY THEN : 1999-91 TO 1995-96 (6 YEARS) NOW : 1996-97 TO 2002-03 (A-S) (6 1 / 2 YEARS)

3. Companies have not been able to raise money thru IPOs,which have nosedived… by amount

4. and by number…

5. Rights issues route too has dried up…by amount

6. and by number

7. Marginally more money could be raised thru GDRs/ADRs, courtesy the IT boom…

8. though the number of companies who could do it has fallen.

9. Debt private placements as a whole had risen dramatically,only courtesy SLUs and FIs… but even this is falling now,both by amount

10. and by number

11. Private sector is, however, raising more money. But most of it is either for retiring old expensive debt…

12. or is for short-term working capital

13. But debt is available only to < A rated issuances

14. Lesser money is coming thru venture capital

15. And fewer companies are being funded by VCs

16. In fact, number of VC funds investing in Indian companies has also declined sharply…

17. So have new commitments received by Indian VC funds

18. The bad news is that most funds are now investing in later-stage

19. Projects financed thru public issues are now non-existent. Aggregate values have fallen…

20. and so have number of such projects

21. Retail investors, who were acting as venture capitalists, have vanished…

22. Bridge Finance - almost non-existent now

23. Loans (Banks/FIs) - on one hand,the problems of NPAs - on the other, no lendable proposals or no lending despite rising deposits,courtesy CVC/CBI

24. Leasing (NBFCs) - almost over now

25. Fixed Deposits - almost over now

26. Where does the FUTURE lie for firms? ???

27. Private Equity - only to select, big, profitable firms

28. Venture Capital - cautious, and as such restrictive

29. Primary Market - scenario extremely grim

30. 80 IPOs got SEBI approval, but could not enter market SL. COMPANY ISSUE AMOUNT NO. (Rs.crore) ____ ______________________________ ______________ 1 ESKAY K'N'IT (INDIA) LTD. 300 2 FUTURE SOFTWARE LTD. 200 3 GODREJ SARA LEE LTD. 200 4 NIMBUS COMMUNICATIONS LTD. 182 5 PUNJAB NATIONAL BANK 164 6 PARAS PHARMACEUTICALS LTD. 150 7 UTV SOFTWARE COMMUNICATIONS LTD.100 8 DATAMATICS TECHNOLOGIES LTD. 100 + 72 more

31. Companies actively wanting to access capital market Total companies : 614 Amount : Rs.112000 crore

32. Other pending issues Total companies : 1693

33. More problems for smaller IPOs - Regional Stock Exchanges in a disarray: problem for < Rs. 10 crore capital companies - Impractical 60% QIB guideline –not a single IPO till date under this

34. Revised entry norms for IPOs may help

35. Turnaround/ M & A Funds - when will they set up shop?

36. Private Sector Banks - some hope for borrowing

37. ADRs/ GDRs/ SDRs - 100+ companies interested - international markets in a bad shape

38. Pension Funds - uncertainty continues

39. Thank You… but how will firms finance themselves ? prithvi@primedatabase.com