Read the following passage and answer the question.

AAMA Solar Limited is searching options to raise ₹2,000 crores from the primary market for diversification and modernisation of existing projects. It hired the services of a renowned financial consultancy firm, Laxmi Pvt. Ltd. for suggesting options for the same. Laxmi Pvt. Ltd. suggested a list of options to the board of directors. It was decided that for the immediate requirement of ₹150 crores, the company will give a privilege to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company ₹500 crores would be raised by allotment of securities to a consortium of financial institutions, instead of investing subscription from the public by making a direct appeal to investors to raise capital. It was further decided to raise capital to the tune of ₹650 crores through an issuing house. All these options were accepted by the Board of Directors. The Board further decided to raise ₹700 crores through the online system of the stock exchange by entering into an agreement with the exchange.

Identify the method of flotation of new issues in the primary market, not taken up by company?

Offer through prospectus

The correct answer is option 2- Offer through prospectus.

Offer through prospectus method of flotation of new issues in the primary market, not taken up by company.
Offer through Prospectus: Offer through prospectus is the most popular method of raising funds by public companies in the primary market. This involves inviting subscription from the public through the issue of prospectus. A prospectus makes a direct appeal to investors to raise capital, through an advertisement in newspapers and magazines. The issues may be underwritten and also are required to be listed on at least one stock exchange. The contents of the prospectus have to be in accordance with the provisions of the Companies Act and SEBI disclosure and investor protection guidelines.

Right issue- It was decided that for the immediate requirement of ₹150 crores, the company will give a privilege to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company.

E-IPO- The Board further decided to raise ₹700 crores through the online system of the stock exchange by entering into an agreement with the exchange.

Offer for sale- It was further decided to raise capital to the tune of ₹650 crores through an issuing house.