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Wednesday, Nov 08, 2006

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Infy shareholders approve ADS conversion

Our Bureau

Bangalore Nov. 7

Shareholders of Infosys Technologies Ltd have approved the company's proposal to convert up to 30 million local shares into American Depository Shares (ADS), which should help the software major get into the Nasdaq 100 Index, raise its brand equity in US and win more customers.

"We want to be the first Indian registered company to get into the NASDAQ index. That particular journey requires that we enhance liquidity in the US. This is part of reaching that goal," the Infosys Chief Mentor, Mr N.R. Narayana Murthy, told shareholders at an extraordinary general meeting on Tuesday.

ADS Issue

The proposed sponsored ADS issue is the third such issue by the company since it got listed on Nasdaq in 1999. The last sponsored ADS issue in 2005 exceeded a billion dollar in size. At Monday's closing price of $51.66, the proposed issue if fully subscribed would exceed $1.5 billion in size.

Allaying shareholders' concern over the proposed issue — where a section of them felt that such an exercise was a pre-cursor for the company's takeover by foreigners — Mr Murthy asserted that the aim was to make Infosys bigger. Infosys believed in globalisation and "openness" and that the US market accounted for more than 60 per cent of its revenues, he said.

"We have to get more and more clients outside India and we have to enhance our brand equity. For that a lot of large firm's chief financial officers (in the US) must feel comfortable about us. They have to see us on their stock exchanges," he said. The Nasdaq index includes 100 of the largest domestic and international non-financial securities listed on exchange based market capitalisation.

At present, foreign institutional investors hold 36 per cent stock of Infosys. About 14 per cent of Infosys' stocks is listed and traded overseas. The issue, if fully subscribed, would increase Infosys' overseas float to 19.35 per cent, said Mr V. Balakrishnan, Chief Financial Officer.

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