How right is Rights Issue?

Any company can raise money form public by three different ways
1-Initial Public Offer (raising first time from market)
2-Following Public Offer (Not the first time)
3-Rights Issue

Right Issue: in this case companies want to give rights to existing shareholder to buy the share. Here only existing shareholders are eligible for the right issue. Company can offer 1:3 or 2:5 or any number of shares. 1:3 means 1 share for every 3 share.
The company will make an announcement that it is offering the rights issue to all shareholders (those who own the shares of the company) on a particular date. This date is called the record date.
After the rights announcement but before the record date, the shares are known as cum-rights। Even if you do not currently own the shares but if you buy them at that time, you will get the rights issue. On the record date, they become ex-rights. If you buy them after this day, you do not get the rights issue.

Example:
For instance, XYZ offered its shareholders three rights shares for every share held by them. On February 1, 2008, the rights issue was offered at Rs 60 per share. The cum rights price of the shares (shares offered for sale with the associated rights) was Rs 500. If you bought these, the rights issue would have been applicable for you. The ex-rights price adjusted to Rs 170 [(500 + 60x3)/4=170 ]. These shares are offered for sale without the rights.

Q: Why should shareholder opt for rights issue?
A: Because they get additional share at discount rate।

Q: Should always opt for rights issue?
A: we should first see why company need these money, if it is for a sound business plan that will eventually increase the profits and share price, then it is a good bet.