Multinational companies with subsidiaries listed on Indian stock exchanges are exploring the possibility of delisting their shares through an exchange offer of Indian depository receipts (IDRs).

The move follows the successful listing of IDRs by Standard Chartered on June 11 on Bombay and National stock exchanges.

The issue came up for discussion at the August 4 board meeting of the Securities and Exchange Board of India (Sebi).

“Standard Chartered IDR proved to be a good investment for investors. We are happy that investors got some decent return on their investment,” a senior Sebi official told Financial Chronicle. “The success of Standard Chartered IDR will encourage other MNCs to tap the market,” the official said.

“The feedback (after Standard Chartered IDR issue) also suggests that some of multinational companies with listed subsidiaries in India are

exploring the possibility of delisting their shares through an exchange offer of IDRs, if permissible. As the issues crystallise, they will be taken up with concerned authorities,” according to the agenda of Sebi’s August 4 board meeting.

Some of the MNC candidates for delisting include Oracle, 3M, Alfa Laval, Atlas Copco, Berger and Gillette, Enam Securities said in a report recently. Sebi did not name any companies. Some of the MNCs that have delisted from Indian markets include Matrix Labs, Lotte India and HSBC Investdirect.

Sometimes, MNCs fail to get the required number of shares to delist them from Indian markets. Recently, for instance, Goodyear

India’s delisting offer failed after retail investors, who held about 18 per cent stake, decided to stay away from it.

Confectionery major Cadbury India has yet to get 100 per cent stake in its Indian subsidiary even though the company delisted its shares a long time ago.

Finnish major Wartsila is also fighting small shareholders to buy out the entire stake though the shares were delisted in India in 2007.

The capital market regulator said with the listing of Standard Chartered IDRs, the framework that has been put in place for a foreign issuer to access the Indian market was tested for the first time.

“Based on the feedback received since then, the market wants clarity and finality to certain issues including fungibility, tax parity and the end use of proceeds,” Sebi said.

Standard Chartered’s IDRs were priced at Rs 104 each and they are now trading at Rs 119.

Sebi officials said they would take up the matter with the Reserve Bank of India and the government before deciding on the issue.