today said it would delist its American Depository Receipts (ADRs) from the New York Stock Exchange, due to low trading volumes.
"Our ADR programme has not developed the trading volumes or liquidity that we (had) initially hoped (for) when we listed," said Vinod Kumar, chief executive officer of Tata Communications.
The Securities and Exchange Board of India (Sebi)'s public shareholding norms were another reason for the termination of the ADR programme. The guidelines mandates companies listed on Indian bourses to offload at least 25 per cent of its stake to shareholders.
"The soon-to-be effective Sebi guidelines on minimum public shareholding was a crucial factor in our decision, since, under the guidelines, ADRs are not considered when calculating the percentage of public shareholding," said Kumar.
Tata Communications said it would approach the US Securities and Exchange Commission (SEC) to effect the delisting on or about May 28. The delisting would be effective 10 days after filing the request. The company said it intended to concentrate all trading of its ordinary shares on the BSE and the National Stock Exchange.
After the delisting, Tata Communications will terminate the deposit agreement, pursuant to which the ADRs were issued. "The amendment will require the depositary to sell the ordinary shares of the company underlying any ADRs that remain outstanding as soon as pracatable 30 days after the termination of the ADR programme becomes effective, on or about August 14," the company said.
The holders of Tata Communications' ADRs can surrender ADRs in exchange for ordinary shares before August 13. After that, the depositor would have to sell the shares underlying any ADRs that have not been surrendered. Tata Communications, formerly called VSNL
, was acquired by the Tatas in 2002 as part of government's divestment plan. The government continues to hold 26 per cent in the company. The company's stock went up by 0.8 per cent in today's trade, to close at Rs 230, according to the BSE.