Piramal Pharma Ltd Rights Issue 2023

Piramal Pharma has announced a rights issue for investors. The subscription window opened on August 8, 2023. It will remain open until August 17, 2023. You can subscribe to Piramal Pharma’s rights issue if you have the company’s stocks in your portfolio. Let us see the details associated with the rights issue and how you can subscribe to it.

Piramal Pharma Right Issue Important Dates 

Piramal Pharma Rights Issues Details

Piramal Pharma rights issues will be allocated at a ratio of 5:46. Eligible shareholders applying for the rights issues will receive 5 rights shares for 46 fully paid-up equity shares held on the record date. The company has informed the bourses that each rights share has a face value of ₹10, and the total issue size aggregates to ₹1,050 crore. The issue price is decided to be ₹81 per share. 

About the Company – Piramal Pharma

Piramal Pharma is a part of the Piramal Group, a global business conglomerate. The India-based company engages in end-to-end manufacturing of a diversified portfolio of products including oral solids, liquids, creams, ointments and sterile injectibles. It has approximately 15 manufacturing facilities and caters to over 100 countries via a global distribution network. 

The company’s business operation covers three major verticals: 

• Piramal Pharma Solutions (PPS)
• Piramal Critical Care (PCC)
• Consumer healthcare (CH) business 

Objectives of the Rights Issue

Piramal Pharma will utilise the funds from the right issue to primarily meet its debt obligations.

Eligibility for the Rights Issue

Rights issues are offered only to existing shareholders. In this case, shareholders holding the shares of Piramal Pharma on the record date of August 2, 2023, will be considered eligible to receive the rights shares. The last date to buy the shares to subscribe to the rights issue was August 1, 2023.

Terms of Payment

The full amount of ₹81 has to be paid at the time of subscribing to the issue. The company targets raising ₹1,050 crore from 129,629,630 equity shares. 

What Is Rights Issue?

Companies sometimes need a fresh source of capital to fund their operations. Sometimes additional funding is required, especially when expansion is on the horizon. The rights issue is an option for listed companies to raise additional funds from their existing investors. It is a corporate finance strategy where companies issue new shares to their existing shareholders at a special price. It allows the issuing company to receive fresh capital, promoting capital infusion and maintaining its ownership stake. 

Investors are given the option to subscribe to the offer. Each investor is allocated rights issues on a pro-rata basis at a specific price and within a certain period of time. Investors can usually purchase the additional shares, sell their rights shares, or ignore the offer.

Rights issues can affect the share price by diluting its value and affecting the trading volume. The earnings per share also fall because the rights issue also spreads the company’s profit over a wider number of shares.

What Is Rights Entitlement?

Rights shares are temporarily allocated to the existing shareholders. It is called rights entitlement in the specified ratio of their existing shares. The shares are credited to the Demat account. Shareholders are given the option (not a mandate) to subscribe to the issue.  

What Options Are Available to Eligible Investors Regarding Rights Issues?

Shareholders can choose any of the following options.

• Exercise their rights: Shareholders can exercise their rights and purchase the shares.
• Not exercise their rights: Shareholders can refuse to buy the shares.
• Sell in the secondary market: If the shareholders don’t want to subscribe to the rights entitlement they can sell them in the secondary market to interested investors.
• Lapse of the entitlement: The rights entitlement will lapse if the shareholder does not subscribe to or denounce their rights.

How to Subscribe to Rights Issue

You can pay for the rights issue in any of the following ways.

Through ASBA: You can make payment via the Applications Supported by Blocked Amount 

(ASBA) process through your bank. 

Through RTA: If you can’t apply online, you can use the Composite Application Form (CAF) sent to you by the company’s Registrar and Transfer Agent (RTA). You can submit the filled-out CAF form at a Self-Certified Syndicate Bank (SCSB) branch. The form contains details, such as cheque number and date, the depository participant (DP) identification number, PAN details, and signature.

Final words

Rights issues benefit both the company and investors. For companies, it offers a fresh source of capital. It is an alternative to incurring debt. If you are an investor, you can realise capital gains from the shares. However, you might consider the actual reason the company is issuing rights shares before subscribing. 

Disclaimer: This article has been written for educational purposes only. The securities quoted are only examples and not recommendations.