Infosys Technologies has expressed concern about currency exchange fluctuations and their effect on the value of its American depository shares.

In its filing with the Securities Exchange Commission, Infosys has said fluctuations in the rupee-dollar rate will affect the conversion by Deutsche Bank Trust Company Americas, the depository, of any dividends paid in rupees.

In its filing, Infosys said: "These fluctuations will affect the dollar equivalent of the rupee price of equity shares on the Indian stock exchanges and, as a result, the prices of our ADS. Holders may not be able to convert rupee proceeds into dollars, and there is no guarantee about the rate at which any such conversion will occur, if at all."

As on June 30, 2003, Infosys had 66,249,366 equity shares issued and outstanding. There were approximately 11,050 record-holders of ADS translating into 4,334,256 ADRs (equivalent to 2,167,128 equity shares).

As India imposes foreign investment restrictions that limit a holder's ability to convert equity shares into ADS, Infosys has stated in its report that this may cause its ADS to trade at a premium or discount to the market price of its equity shares.

"Except under limited circumstances, the Reserve Bank of India must approve the sale of equity shares underlying ADS by a non-resident of India to a resident of India. Since foreign exchange controls are in effect in India, the Reserve Bank of India will also approve the price at which equity shares are transferred based on a specified formula, and a higher price per share may not be permitted," says the report.