Discuss the trends in euro issue by Indian companies
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Answer:
After reading this article you will learn about the trends and pattern of euro issues in India.
Strategic with the maiden issue of the Reliance Industries in May 1992, around 100-odd Indian companies have so far tapped the global market with a cumulative mobilization of X 99,207 crore by the end of 2004-05 through 162 issues (Table 1.1).
Indeed, India has the distinction of issuing the maximum number of Depository Receipts (DRs) among the emerging economies. The genesis of Indian multinational corporations (MNCs) with not only international operation, but also a global ownership is logical fallout of this process.
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While bunching of Depository Receipt issues took place in the early 1990s possibly in view of the pent-up overseas demand for Indian scrips, it seemed to have been primarily motivated by the existing costly procedure of flotation in the Domestic market. Initially GDRs were the preferred mode with the majority of listings in the Luxembourg or the London Stock Exchange in view of their less stringent disclosure requirements vis-a-vis the requirement under the US GAAP (Generally Accepted Accounting Principles).
Besides, a majority of the Indian GDRs were issued pursuant to the US Rule 144A, and/or Regulation of the US Securities Exchange Commission, which enabled their trading in the US market too mainly through the PORTAL system.
Nevertheless, ADRs have since emerged as the star attraction through its higher global visibility, particularly for the new-economy stocks. While ownership pattern of Indian GDR/ADR is not clear, both individual and foreign ownership were in general, found to be higher in London than in the US as per the Paris – bases World Federation of Exchanges (FIBV) Survey (1999).
The lowest and highest numbers of Euro issue are recorded in the year 1992-93 and 1994-95 respectively.
ADVERTISEMENTS:
1. The lowest and highest amounts of Euro Issues are witnessed in the year 1992-93 and 2000-01 respectively.
2. The highest number and amount of Euro Issues are recorded in different years. From this observation, we can say that the highest numbers of Euro Issues are not necessarily to contribute the highest amount and this is depending on the size of capital offered by the companies at that time.
3. The annual growth rate in number and amount of Euro Issues were witnessed greater fluctuation. These fluctuations are highlighted because of various reasons like, steps taken by the Government from the time to time, rate of growth/expansion of individual companies and their ambition to raise funds from overseas, etc.
4. The last two years of the study witnessed the positive growth rate in number as well as amount of Euro Issues. This is because of the companies permitted to make Euro Issues are broaden by the Government of India.