Mahindra Bt Plans 10% Adr Float

The Mahindra & Mahindra group and British Telecom, the two promoters of Mahindra British Telecom (MBT), the software major, are examining the possibility of floating an issue of American Depository Receipts (ADRs).

The offering will comprise 10 per cent of MBT's stock and initial plans show that the two promoters want to list the company on the Nasdaq. The M&M group owns 60 per cent of MBT. It is one of the largest providers of software services to British Telecom.

Top company executives believe the time is ripe for an ADR and its track-record could easily fetch a high valuation. The company believes it could generate at least Rs 1,500 crore from the float.

 

MBT joins a string of domestic software majors which are planning a US listing, including Bangalore-based Infosys Technologies. Buoyed by new incentives announced for the software sector, these companies want to exploit the goodwill for Indian software stocks in western markets.

In its efforts to promote software exports, the central government had announced a series of measures to further unshackle the sector. The measures have had a positive impact as software stocks have outshone other stocks in an increasingly bearish market.

MBT reported a total income of Rs 101.37 crore in 1997-98 and a net profit of Rs 29.28 crore, a 150 per cent jump over last year's profit of Rs 12.12 crore. EPS rose to Rs 60.21 from Rs 25.25

MBT is planning to expand its services geographically by industry and in specific technology segments by establishing more business development offices in the United States and develop new partnerships in Europe and other parts of the world.

MBT is today the largest supplier of software services to British Telecom. However by the end of 1997-98, 25 per cent of the company's billable software professionals including those working in the company's subsidiary in USA worked on projects other than that of British Telecom.

MBT had in 1996-97 diversified its customer portfolio and the company decided to to offer full life cycle services.