Indian stakeholders concerned over Infosys' ADR issue

Bangalore, Nov 7: The Indian shareholders of the IT giant Infosys today expressed grave concern over the company's decision to come out with its sponsored secondary American Depository Receipt (ADR) issue saying that it will lead to the return of the 'East India Company' in the country.

Expressing their concern in the Extra-ordinary General Body meeting held here, the stakeholders feared that this might lead to foreign companies to take over the prestigious Indian company which had made its name world over due to its innovation and top class corporate culture.

Allaying fears of the shareholders, company's Non Executive Chairman N R Narayana Murthy said the ADR was very important for Infosys to realise its ambition of growing bigger and to get into the Nasdaq-100 index. It was a plan to raise its brand equity in the US to attract more customers, he explained.

"Infosys should become the first registered Indian company to get into Nasdaq index. For this we have to enhance our liquidity in the US. The ADR issue is part of achieving this goal," he said.

Mr Murthy who looked annoyed when an elderly shareholder took the name of East India Company, said, "Please don't take that name. If our customers in the US (who mainly constitute Infosys' business) feel the same we will be finished. Let alone Infosys, if such thing happens all the Indian software companies will have to close down," he feared.

The Infosys EGM which was quite lively, passed the resolution on the ADR issue through which not more than 30 million shares would be offered in the US, by voice vote with requisite majority. It was interesting to note that the shareholders voiced dissent for the first time. This was the third time the IT bellwether is issuing an ADR after its 2003 and 2005 issues proved to be very success.

If fully subscribed the stake of foreign investors would up from 13.95 per cent to 19.35 per cent, Infosys CFO V Balakrishnan informed the shareholders.

Elaborating the need for issuing the ADR Mr Murthy told the shareholders that the company would have to enhance the comfort level of customers abroad.

''They must feel that Infosys is a very strong company. As we grow stronger we get noticed better by CEOs and CFOs and their confidence level will go up resulting in more business to our company.

Liquidity of a technological company like Infosys is very important in the international level,'' he said.

Saying that it was a part of the company's strategy to enhance the customers, Mr Murthy asked the shareholders not to fear of a foreign take over. ''If we grow smarter, work hard and grow at a fast pace, it is unlikely that a foreign company will buy us over.

Otherwise it is a international law in the present day scenario that big companies swallow up small companies,'' he added.

UNI