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Nasscom calls for easing IPO norms for Internet and e-commerce companies

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CIOL Bureau
New Update

BANGALORE: National Association of Software and Services Companies (Nasscom) has recommended that the norms for Internet and e-commerce companies that are floating initial public offerings (IPO) should be eased. This was stated by the organisation on the occasion of a one-day conference on Venture Capital '99, jointly organised by Nasscom and The Indus Entrepreneurs.

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In a statement, Nasscom president Dewang Mehta has said that the organisation had suggested to the Securities and Exchange Board of India (SEBI) that the manadatory three-year track record for IPOs should be done away with, especially with regard to Internet and e-commerce companies.

"For Internet companies, investors are looking at future growth and profitability and many a times it is difficult to realise the true valuation for an Internet company before a public float," Mr Mehta said.

In his address, Information Technology secretary P.V. Jayakrishnan said that there was a proposal to seed incubator type institutions in India and the Silicon Valley. "Such incubator type institutions will provide basic readymade facilities, particularly to small start-up companies and individuals at the seed stage to develop their ideas in a productised manner. This proposal is under the formulation stage. In this direction, we are in the process of setting up business development centre at San Jose," he said.

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Mr Jayakrishnan said that two broad challenges that lie before the government were to achieve the targets of $50 billion software and $10 billion for hardware exports by 2008 and make India a super power in IT, while achieving the motto of "Move works to India".





"To achieve these challenges, we need to have a strategy, mechanism and policy in place… Industry has to come forward to participate and collaborate with the government and suggest ways and means to achieve our goals," Mr Jayakrishnan added.

The secretary said that the 2.5 Gbps Internet backbone, being set up by the department of telecommunications, was expected to be completed by August 2000. "There is, however, the issue of last mile connectivity, which needs to be given priority without which we will not be able to make proper use of the backbone.

He said that his ministry propose to upgrade the PCO and STD booths to Cyber Centres. "These booths will provide multiple services - Internet, fax, e-mail and e-commerce to the common man. This will result in creating IT awareness among the citizens, propogating of IT literacy, rural penetration of IT applications and training citizens in the use of day to day IT services," he added.

In his address, KPMG's Sridhar Iyengar pointed out that some of the pre-requisite for preparing to tap the venture capital market were; prepare a concise business plan with pertinent date, do not under sell or over sell, your conviction and faith in business should come through and respect the venture capitalist's intelligence and market knowledge.

He advised that one should not shop the deal as it reduces the valuation immediately, even if the business potential was immense. He said some of the factors that minimised valuation were existence of group companies in allied areas of business, inter group fund transfer, non-adherence to statutory requirements, infringement of intellectual property rights, negative attitude and lack of willingness to accept suggestions and recommendations.

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