This is basically related to Rights Issue of a company. A right issue, as the name suggests is a right to buy the shares of the company, usually at a discounted price. This is a privilege given to the existing share holders only. Companies usually undertake rights issue if they want to rise fresh money from market. Think of rights issue as a new IPO but for existing shareholders only (private IPO).
Keeping this in perspective, let us look at what Neuland is trying to communicate to its shareholders. I will split this into smaller chunks for clarity. For now let us look at the whole communication:
application form has a bold colored text which says " Issue of 12,25,276 equity shares of a face value of Rs 10 each (equity shares) of neuland lab for cash at a prie of rs 204 per equity share including a share premium of rs 194 per equity share aggregating to rs 2499.56 lacs to the existing equity shareholders of our company on a rights basis in the ratio of 4 fully paid up equity shares for every 25 fully paid up equity share held on the record date i.e aug 14,2014 (right issue/the issue). The issue price for the equity share is 20.4 times the face value of the eqity share"
1) Neuland is trying to say that they want to issue 12,25,276 new shares at a price of Rs.204 per share - This means they want to raise Rs.24.99 Crs (1225276 x 204) in additional capital.
2) The face value of each share is Rs.10 hence they are also saying that out of Rs.204, Rs.194 is a premium amount
3) By saying ".....to the existing equity shareholders of our company on a rights basis..." They are saying that this is a rights issue, a privilege only to existing shareholders only.
4) "..on a rights basis in the ratio of 4 fully paid up equity shares for every 25 fully paid up equity share" - With this they are defining the rights issue which in this case is happens to be 4 is to 25. Meaning for every 25 shares you own, you have a right to buy an additional 4 shares.
5) "on the record date i.e aug 14,2014 (right issue/the issue)" With this Neuland is also stating that you need to be recognized as a shareholder of the company on the books of the company by on or before 14th August and not later.
6) "The issue price for the equity share is 20.4 times the face value of the eqity share" They are just restating that the right issue price is at Rs.204/- or 20.4 times the face value of Rs.10.
In simpler words the company is offering its shares to you at Rs.204/- per share while in the open market it was trading at an average of Rs.400/- ! So this is great discount to the open market.
Of course whether to opt for the right or completely ignore it is totally up to you.
