From May 1992 onwards, Indian companies have been issuing GDRs and ECBs on the Euro market on a large scale.
To date, 47 GDR issues have taken place, which raised $3,856 million, and 11 ECB issues which raised $998 million. Most of these securities are listed in Luxemborg. GDR issues have tappered down in recent months.
--------------------------------------------------------------------- Euro Issues (US$ Million) 1992-93 1993-94 1994-95 --------------------------------------------------------------------- GDRs 240 1597 3857 ECBs 0 896 998 --------------------------------------------------------------------- Total 240 2493 4855 ---------------------------------------------------------------------
Guidelines issued by the Finance Ministry in October 1994 had only specified that proceeds of Euro issues of Indian companies should be kept abroad, until they are ready to be deployed for specific projects. However, during January 1995, the RBI stated that these proceeds could be deposited in foreign branches of Indian companies or foreign banks, which are rated for short-term obligations. The funds could also be invested in treasury bills, or high quality commercial paper, having a maturity of less than one year.
The Ministry of finance is also considering a proposal of taking into consideration the profit before tax as a measure of profitability for considering Euro Issue proposals as against profit after tax considered earlier. This would bring tax-paying companies at par with the non tax-paying compaines.
Centre for Monitoring Indian Economy, Bombay
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Last updated: August 1995.