1993: An IPO that flew; and how

Infosys Technologies, today the bellwether IT stock in India, was far from a favoured pick 18 years ago. When it tested the waters with a share offering in February 1993, N.R. Narayana Murthy and his team got a cold response from Dalal Street denizens. The Rs 95 per share issue (Rs 10 plus a premium of Rs 85) almost bombed. Investors clearly perceived the premium too high for an obscure company. Desperate calls went to people such as V.G. Siddhartha, today Chairman of Amalgamated Bean Coffee Trading Co., better known for the Caf Coffee Day chain he runs.

The IPO scraped through after investment banker Morgan Stanley picked up 13 per cent of the company's equity, and what a cracker the listing turned out to be. If you had bought 100 shares in the IPO by shelling out Rs 9,500, it would be valued at a little over Rs 4 crore today. Siddhartha's investment alone would have been worth some Rs 2,000 crore if he had held on to his Infosys shares, he told BT earlier this year. A strong dividend record, an even better bonus history, supernormal corporate governance standards and the company's robust revenue and profit growth have brought it where it is.

Nod to private MFs
Winds of change swept through the Indian mutual fund industry in 1993. The government allowed the private sector into an industry that was until then controlled by the Unit Trust of India. Kothari Pioneer Mutual Fund was the first off the block in July 1993. Private sector mutual funds, with their innovative schemes, improved customer service, and better marketing and distribution networks reached out to investors, who responded enthusiastically. In 1993, the total assets under management by mutual funds were Rs 47,000 crore. Today, it stands at Rs 665,282 crore and there are at least 39 private sector funds servicing the investors.

Crackdown on Badla
Badla, the indigenous carry-forward system invented at the Bombay Stock Exchange to overcome liquidity constraints in the secondary market, was banned to rein in speculation and make the markets more transparent. Stiff opposition from the broking community forced the market regulator SEBI to reintroduce it in 1996. It was finally consigned to history in 2001 with the introduction of rolling settlement along with futures and options contracts.

Did you know?
Naresh Goyal's Jet Airways began operations in May 1993 in the fi rst real challenge to the dominance of Indian Airlines over the Indian skies.
 

Quote of the year The genie is out of the bottle. The reforms have a momentum of their own. Jagdish Bhagwati, Economic Policy Advisor to the Director General of GATT