PowerPoint Presentation

Presented By: Nukaraju Maroju P301413CMG331Sachin Kumar P301413CMG349Sujatha B R P301413CMG374Vinay Kumar P301413CMG382Ankur Vashistha P301413CMG389Sudeep Nayak P301413CMG372 ADRs & GDRs1

WHAT IS ADR ADR - American Depositary Receipts A negotiable certificate issued by a U.S. bank Represents a specified number of shares of a foreign company ADRs are denominated in U.S. dollarsOwnership in the shares of a non-U.S. company and trades in U.S. financial markets

22ADRs & GDRsINTERNATIONAL CAPITAL MARKETINTERNATIONAL EQUITY MARKETINTERNATIONAL BOND MARKETEURO BONDFOREIGN BONDADRGDR3Process to Issue ADRIssuing Company(RIL)Foreign Depository(Morgan Stanley)Clearing AgencyForeign Stock Exchange(NYSE)GDR/ADR Holders (Bank Of America)Domestic Custodian bank(SBI)Share CertificateConfirmationIssue of DRPaymentDividend4Types Of ADRs5Types Of ADRsUnsponsored ADRs: Trades on Over-The-Counter Market.Company has no formal agreement with a Depositary Bank.Issued by more than one Depositary BankSponsored Level I ADRsIssuing Company has to comply with U.S SEC minimal requirements. No need to issue quarterly or annual reports in compliance with U.S GAAP.Issuing Company must have its security listed on one or more domestic stock exchange.

6Types Of ADRsSponsored Level II ADRsIssuing Company must file a registration statement with the U.S. SEC and is now under SEC Regulations.Company is required to issue quarterly or annual reports and has to follow U.S GAAP standards or IFRS.Shares can be listed on U.S stock Exchange (NYSE, NASDAQ & AMEX).Sponsored Level III ADRsIssuing Company is required to follow stricter rules which are followed by U.S companies.Company can do a public offer in U.S after filing Offering Prospectus.Price Sensitive information which is disclosed in home market must be filed with U.S SEC too.

7WHAT IS GDRGDR: Global Depository ReceiptA bank certificate issued in more than one country for shares in a foreign company Offered for sale globally through the various bank branches Shares trade as domestic shares

8How Does ADR/GDR WorksADRs can have single ratio (1 ADR= 1 share), multiple ratio (1 ADR=5shares) or fraction ratio (1 ADR= share) ratiosFor Example: INFOSYS LTD1 ADR = 1 Equity Share Share Price in India(NSE) = Rs. 3,028.25Currency Exchange rate:1$ = Rs.63.50ADR Price in USA (NASDAQ) = 3028.2563.501 ADR = $48

9Difference Between ADR & GDR

10Advantages Of ADR/GDRGives attractive pricing to the issuer and diversification opportunity to the investorCan be listed on any of the overseas stock exchanges /OTCRaise capital from foreign marketsFreely transferable by non-resident.No foreign exchange fluctuationsEnhances image of company globallyThey can be redeemed by ODBThe ODB should request DCB to get the corresponding underlying shares released in favor of non resident of investors. (Shareholders of issuing companies)

11Disadvantages Of ADR/GDRViolating the Regulations & requirements of SEC leads to de-listing from U.S Stock exchange.Issue cannot exceed more than 51% of the subscribed capital.

12INDIAN ADRS.No.CompanyTickerExchangeRatio DR:ORDIndustrySponsored/Unsponsored1Dr. Reddy's LaboratoriesRDYNYSE1:1Pharma. & Biotech.S2Grasim IndustriesGRSXYOTC1:1Construct.&MaterialsS3HDFC BankHDBNYSE1:3BanksS4ICICI BankIBNNYSE1:2BanksS5InfosysINFYNYSE1:1Software&ComputerSvcS6Mahanagar Telephone NigamMTENYOTCQX1:2Fixed Line Telecom.S7Rediff.com IndiaREDFNYSE2:1Software&ComputerSvcS8Sesa SterliteSSLTNYSE1:4Construct.&MaterialsS9SIFYSIFYNASDAQ1:1Software&ComputerSvcS10Tata MotorsTTMNYSE1:5Industrial Engineer.S11Videocon d2hVDTHNASDAQ4:1TV ServicesS12WiproWITNYSE1:1Software&ComputerSvcS13WNS HoldingsWNSNYSE1:1Support ServicesS13INDIAN ADR/GDR

14OTHER PROVISIONSADRs and GDRs being one of the way of directly subscribing to capital of Indian Companies by non-residents, subscribing to DRs is termed under FDI, and accordingly sectorial caps apply on issue of theseRBI has given 2 Way Fungibility option for DR through SEBI registered stock broker and Authorized Dealer category-ITaxation of income from any overseas securities issued by Indian companies including DRs is dealt specifically under section 115AC (for other than employees of issuing company) and 115ACA (for employees of issuing company)Dividends under the hands of the resident employees @ 10%Income in way of long-term capital gains on transfer of those DR s are taxed at a concessional rate of 10%15CONCLUSIONA depositary receipt is a negotiable financial instrument issued by a bank to represent a foreign company's publicly traded securitiesExpansion in Overseas can be financed by issuing ADRs/GDRs in that countryThe depositary receipt tradeson a local stock exchange represents an interest in a company that is headquartered outsideDR can be sponsored or unsponsored & there are three levels for sponsored ADRGDR represents a bank certificate issued in more than one country for shares in a foreign company

16THANK YOU17