Rights issue

An offer of new shares to existing shareholders, usually at a discount, in proportion to what they already hold. Unlike a bonus it raises real money.

A one-for-four rights issue at ₹800 when the share trades at ₹1,200 gives a theoretical ex-rights price of ₹1,120.

A shareholder who takes up the rights is unaffected in value terms; one who does nothing is diluted, which is why the entitlement itself is tradeable on Indian exchanges and should be sold rather than allowed to lapse.

The reason for the raise is the analysis. Money for a specific, high-return project is different from money to repay debt the business could not service.

Read the objects of the issue, then the balance sheet.