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.

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.

Identify the method of floatation discussed above.

Rights issue

The correct answer is Option (1) → Rights issue.

The method of floatation discussed in the case study is Rights issue.

In a rights issue, the company offers new shares to its existing shareholders in proportion to their current holdings, usually at a discounted price. This method is mentioned in the case where Radiant Limited plans to allow its existing shareholders to subscribe to new shares for the remaining 200 crores, giving them a privilege to buy additional shares under specific conditions.