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This is an archive article published on July 19, 2011
Liberalise ECB norms for mining: report
Kotak Mahindra Investments Ltd KMIL has suggested the government to allow mining companies to issue Global Depository Receipts without prior listing at bourses and liberalise external commercial borrowing norms to promote investments in the sector. The report,on ways to facilitate investments in the mining sector,will be considered by an inter-ministerial committee headed by mines secretary hellip;
Kotak Mahindra Investments Ltd KMIL has suggested the government to allow mining companies to issue Global Depository Receipts without prior listing at bourses and liberalise external commercial borrowing norms to promote investments in the sector.
The report,on ways to facilitate investments in the mining sector,will be considered by an inter-ministerial committee headed by mines secretary S Vijay Kumar soon. In its report,KMIL has pointed out that the mining sector is plagued by stringent eligibility norms for domestic listing for mining firms and strict eternal commercial borrowing norms ECBs which have rendered them incapable in accessing the capital markets.
According to official rules,only listed Indian entities can issue depository receipts in overseas markets while GDRs issued cannot be exceed 51 per cent of the issued and subscribed capital of the issuing firm,it cited.
Since most mining and exploration firms find it difficult to meet the above conditions and tap global capital markets,the suggestion is to have a holding company incorporated overseas to be listed on a foreign stock exchange and allow the listed holding entity to invest in its Indian company. the KMIL suggested.
The report also suggested extending tax exemptions on dividend income or capital gains from the GDRs. It said tax exemption for mining and exploration bonds be provided as in case of infrastructure bonds.
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