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May 31, 2001
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Money > Business Headlines > Report May 31, 2001 |
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ADR/GDR issues: more freedom likelyBipin Chandran Indian information technology companies may soon find it easier to list overseas. The IT ministry has proposed an increase in the $100 million limit on American depository receipts and global depository receipts issue through the automatic route for IT companies. "The IT ministry is of the view that the limit of $100 million needs to be raised so that it becomes easier for IT companies to raise money from overseas stock markets," a ministry official told Business Standard, adding, "besides, it would help companies to take decisions quicker on overseas listings." As per the current guidelines, if the size of the ADR/GDR issue is over $100 million, companies need to get a government okay. Raising the limit has been a long standing demand of IT companies. However, the IT ministry has not yet finalised other details like the new upper limit for automatic approval for ADR/GDR. "If you look at the size of the overseas listing of the Indian IT companies recently, most of them are much higher than the $100 million limit," the official added. IT services companies like HCL Technologies, Wipro and Satyam Computer Services had to approach the government for approval as the size of their ADR/GDR was above $100 million. For example, in March, the board of Wipro had cleared a proposal to go for a $500 million ADR/GDR issue. As part of sops to the IT industry, finance minister Yashwant Sinha in his 2001-02 Budget proposals, had announced that the government would allow Indian companies to invest up to $50 million annually abroad through the automatic route without being subjected to the three-year profitability condition. The government had also allowed companies that have issued ADR/GDR to acquire shares of foreign companies up to an amount of $100 million or an amount equivalent to ten times their exports in a year, whichever is higher. Powered by YOU MAY ALSO WANT TO READ:
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