‘Pratap Furnitures Ltd.’ is the market leader in moulded furniture. Now, it is planning to enter into a new product line, that is, furniture made of…

‘Pratap Furnitures Ltd.’ is the market leader in moulded furniture. Now, it is planning to enter into a new product line, that is, furniture made of wood and bamboo.

To start production it needs new machines and skilled labour along with good quality wood. For all this it needs ₹ $\displaystyle 2$ crore. ‘Pratap Furnitures Ltd.’ is planning to raise funds by issue of prospectus. But its Board of Directors decided to honour the existing shareholders by offering them the shares on pro-rata basis, before going for issue through prospectus.

Identify and explain the type of capital market from which ‘Pratap Furnitures Ltd.’ is going to raise funds.

Explain the two methods of raising funds discussed in the above case.

What reward do the investors get when shares are issued through prospectus?