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  • Indian Depository Receipts

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    Kiran Kb
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    Indian companies can raise capital from the Indian market through Indian Depository Receipts (IDRs), as stipulated in rules from 2004, but no company has listed as an IDR due to stringent eligibility requirements. The rules require strong overseas companies to have at least $100 million in capital/reserves, $500 million average turnover, profits for 5 years, 10% dividend for 5 years, and a debt-equity ratio below 2:1. Recent moves by Standard Chartered Bank and less stringent rules from the Indian government may encourage more overseas companies to list as IDRs and change how the Indian stock market develops going forward.

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    Indian companies can raise capital from the Indian market through Indian Depository Receipts (IDRs), as stipulated in rules from 2004, but no company has listed as an IDR due to stringent eligibility requirements. The rules require strong overseas companies to have at least $100 million in capital/reserves, $500 million average turnover, profits for 5 years, 10% dividend for 5 years, and a debt-equity ratio below 2:1. Recent moves by Standard Chartered Bank and less stringent rules from the Indian government may encourage more overseas companies to list as IDRs and change how the Indian stock market develops going forward.

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    15 views1 page

    Indian Depository Receipts

    Uploaded by

    Kiran Kb
    Indian companies can raise capital from the Indian market through Indian Depository Receipts (IDRs), as stipulated in rules from 2004, but no company has listed as an IDR due to stringent eligibility requirements. The rules require strong overseas companies to have at least $100 million in capital/reserves, $500 million average turnover, profits for 5 years, 10% dividend for 5 years, and a debt-equity ratio below 2:1. Recent moves by Standard Chartered Bank and less stringent rules from the Indian government may encourage more overseas companies to list as IDRs and change how the Indian stock market develops going forward.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
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    Indian Depository Receipts ( IDR’s )

    April 24th, 2009 • Related • Filed Under

    Companies outside India can raise capital from the Indian capital market with the Government
    notifying norms for issue of Indian Depository Receipts ( IDRs ). This has been stipulated in the
    Companies (Issue of Indian Depository Receipts) Rules, 2004 but there is not even a single
    company till date after 5 years listed as IDR and the main reason for this are.

    1. Only strong overseas companies would be allowed.


    2. Companies would have to have a pre-issue paid-up capital and free reserves of at least
    $100 million.
    3. An average turnover of $500 million during the three previous financial years.
    4. Company should have been making profits for at least last five years.
    5. A dividend of not less than 10 per cent each year for last five years.
    6. Have a pre-issue debt equity ratio of not more than 2:1.

    With such a strong entry barriers many companies have preferred to remain out of India but
    current steps by Standard Chartered Bank could be well satisfying them and Indian Government
    also willing to make the rules a bit less stringent and we can hope for the best and this can
    change the way Indian stock market would shape in near future.

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