Read the case study and answer question:
Radiant limited is a well known Pharmaceutical company. The company is planning to expand and modernize its business operations for which it requires 500 crores. Akshat, the finance manager of the company, advised to issue Equity Shares in the Capital market.
The Board finally decided to issue 300 crores through issue of Shares to general public electronically in the primary market. For the remaining 200 crores, the company will give a privilege to existing shareholders to subscribe to new shares as per the conditions of Radiant limited.
In order to meet floatation cost, for raising funds in the capital market the company decided to issue a money market instrument. Further the company will get the shares listed in the secondary market. Listing with stock exchange will facilitate buying and selling of securities and provide safety of investment to the investors.
"The Board finally decided to issue 300 crores through issuing shares to general public electronically in the primary market".
Identify the method of floatation mentioned in the above line.
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → e-IPO
Option (1) Offer through prospectus — Incorrect. This also sells shares to the public, but through a printed prospectus and advertisements. The case stresses that the shares are issued electronically.
Option (2) Offer for sale — Incorrect. The shares go first to brokers or issuing houses, who resell them to the public.
Option (3) Private placement — Incorrect. The shares go only to institutional investors and a few selected people, not to the general public.
Option (4) e-IPO — Correct. In an e-IPO, a company issues shares to the public through the on-line system of the stock exchange. Radiant Limited is issuing shares to the general public electronically in the primary market. That is an e-IPO.
Note: Although the chapter ‘Financial Markets’ was dropped from the NCERT textbooks during rationalisation, it has stayed in the NTA syllabus every year since 2022, except for 2025, and it is part of the syllabus again from 2026. This question is therefore based on the pre-rationalised NCERT, an extract from which is given below. NCERT (Pre-rationalised Edition):
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