State-run gas firm Gas Authority (India) Ltd may list on the New York Stock Exchange or the Nasdaq by converting its global depository receipts into American depository receipts.

"During the course of government's recent offer for sale of 10 per cent equity in GAIL, international investors raised concern over low liquidity and tradability of GDRs and suggested that GAIL should consider converting GDRs into ADRs," company sources said.

Currently GDRs constitute about 6.5 per cent of the company's capital. "We felt that in order to improve liquidity and have international presence, GDRs should be converted into ADRs as in the case of Mahanagar Telecom Nigam Ltd and Videsh Sanchar Nigam Ltd," they said.

The proposal is likely to be put for approval by the Navratna board soon.

After the approval, merchant bankers and legal counsel will be appointed for the process. International accountants will also be hired for the conversion of GAIL accounts and audit as per the US GAAP.

"The process would need approval from Foreign Investment Promotion Board, Reserve Bank of India and ministries of finance and petroleum & natural gas," sources said, indicating that the whole process may take a couple of years.

The choice between NYSE and Nasdaq would be made after studying the merits and demerits of listing on these exchanges.

A concept paper from ICICI Securities, the lead managers for the recent public offer, states that converting GDRs into ADRs will lead to improved trading volumes and liquidity and enhance US and global media coverage of the company's business and finances.

It would also broaden and diversify shareholder base, improve institutional ownership and lay the foundation for subsequent successful offerings in the United States market.

Sources said ICICI Securities has suggested to GAIL a listing on NYSE as it offered greater prestige, higher visibility and lower volatility as compared to Nasdaq while its relatively high listing fee was a demerit.

As part of divestment programme, government in 1997 had decided to offload GAIL's equity in the international market by issuing GDRs. The issue was launched in October 1997 but was deferred due to unprecedented crash in the international markets.

The global issue by way of GDRs was again launched after due diligence in October 1999. It was priced at $9.67 per GDR comprising of 6 equity shares. The government through this process sold 135 million shares (22.5 million GDRs) amounting to 15.96 per cent of GAIL's capital. The GDRs were listed on the London Stock Exchange.