Do our companies justify the premium they demand from the market?  A study on the matter and suggestion for plausible redressal.

Volume : IV, Issue : IV, April - 2015

Dr. Subrata Mukherjee, Bijay K Bhattacharya, L K Sinha Ray, Ghosh M K

This is an endeavour to highlight how far the public issues of shares of companies justify the premium they demand

from public vis-�-vis a suggestion for regulators to monitor or keep a close watch on the trading activity and fixation

of premium in post reform era.

In post reform era the companies themselves determine the price of public issue. The government practically has no control over this issue i.e.

the premium charges by the company This was a great boost for Indian companies and naturally resource mobilisation immediately after the

beginning of reforms increased significantly but from 1996-97 to 2002-03 the process suffered a lot. It again geared up from 2003-04 to 2007-08.

2007-08 witnessed a spectacular growth. In recent years, however, the euphoria is practically at low ebb.

The situation suffered significantly after subprime effect when market nose dived. The reversal of sensex from 2010 could not lift the stock price

of a good number scripts which issued public offers between 2007and 2013. They are trading at a steep discount. This has developed negative

sentiment across the investors especially among the retail investors in recent times. During the last three years many public issues have been

withdrawn. There are instances when state owned financial institutions intervened to rescue public offers.

Time has come to review of this contentious issue by the regulatory body to the benefit all the sectors.