Infosys is 1st India-registered firm to be listed on NASDAQ
IT services major Infosys became the first India-registered company to be listed on NASDAQ on March 11, 1999. Infosys Technologies was also the first Indian company to be added to the NASDAQ-100 index, which lists 100 largest non-financial stocks in terms of market capitalisation. NASDAQ is the second-largest stock exchange in the world by market capitalisation.
Infosys, the Bangalore-based software trailblazer, created history on March 11 by becoming the first Indian-registered company to list on Nasdaq, one of the two major stock exchanges in the US.Technically, however, Infosys is the second Indian company to list on Nasdaq, since the $30 million (Rs 126 crore) US-registered but wholly Chennai-domiciled Cognizant Technology Solutions listed in June 1998. Now the doors are open and we could expect to see at least 10 Indian information technology (IT), pharmaceutical and telecom companies follow Infosys' example over the next two years. By global standards, however, India's presence on Nasdaq will be modest. Some 80 Israeli companies and a good number of companies from Australia, Argentina and South Africa are also on Nasdaq.Nasdaq itself was launched in 1971. Although the most widely-tracked indicator of stock market health, the Dow, is based on its rival New York Stock Exchange (NYSE), close to 60 per cent of the total share volume and listed companies in the US is on Nasdaq. It is the popular perception that it is an exchange predominantly for IT companies, since its stars have been names like Microsoft, Intel, Oracle and Netscape.Actually, less than 20 per cent of the listed companies are in the IT industry. The bulk are in pharmaceuticals, biotechnology, banking, telecom, electronics, oil, transportation and housing. By and large, Nasdaq is home to new, first-generation, technology-driven companies. Already around 20 IT companies founded by Indian-Americans with a total market capitalisation of around $16 billion - like i2 Technologies, Microchip Technologies and Mastech - are listed on it.It is to Infosys' credit that it has been diligently following American accounting principles for the past few years so as to make its debut on Nasdaq easy. The fact that it is a professionally-owned, one-industry company of relatively new vintage helped. Over 80 per cent of its revenues are generated in North America.But a large majority of established, family-owned Indian companies will have to rework their accounts if they wish to seek listing in the US. The American standards are ruthless. In 1993, Daimler-Benz listed on the NYSE. Its reported profit of $370 million under German rules got converted into a $1 billion loss by American standards.This is not so in India. Second, unlike India, the US requires all deferred taxes to be recorded. Third, unlike the US, India allows excess depreciation and provides a choice to the company on the method to be adopted for calculating the depreciation charge.Fourth, unlike the US, the Indian standard recognises the revaluation of fixed assets. Fifth, US accounting standards require gains or losses from foreign currency transactions to be included in determining net income. There are other differences as well - for example, the US does not allow proposed dividend to be accrued and requires current portion of long-term debt to be shown as current liability.The London-based International Accounting Standards Committee, a private-sector body of which the Institute of Chartered Accountants of India is a member, has been pursuing the cause of core, uniform norms to be adopted around the globe. 