ADRs & GDRs

P R E S E N T ED B Y:
NUKARAJU MAROJU
SACHIN KUMAR
SUJATHA B R
VINAY KUMAR
A N K U R VA S H I S T H A
S UD E E P NAYA K

P301413CMG331
P301413CMG349
P301413CMG374
P301413CMG382
P301413CMG389
P301413CMG372

WHAT IS ADR
2

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. dollars
Ownership in the shares of a non-U.S. company and
trades in U.S. financial markets

ADRs & GDRs

3

INTERNATIONAL CAPITAL MARKET

INTERNATIONAL BOND MARKET

EURO
BOND

FOREIGN
BOND

INTERNATIONAL EQUITY MARKET

GDR

ADR

Process to Issue ADR

4

Issuing Company
(RIL)

Domestic Custodian
bank
(SBI)

Share
Certificate
Confirmation

Foreign
Depository
(Morgan Stanley)

Issue of DR

GDR/ADR Holders
(Bank Of America)

Payment
Dividend

Clearing Agency

Foreign Stock
Exchange
(NYSE)

Types Of ADRs
5

Types of
ADRs

Unsponsored

Level I

Sponsored

Level II

Level III

Private
Placement

Types Of ADRs
6

Unsponsored ADRs:
Trades on Over-The-Counter Market.
Company has no formal agreement with a Depositary Bank.
Issued by more than one Depositary Bank
Sponsored Level I ADRs
Issuing 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.

Types Of ADRs
7

Sponsored Level II ADRs

Issuing 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 ADRs

Issuing 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.

WHAT IS GDR
8

GDR: Global Depository Receipt

A 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

How Does ADR/GDR Works

9

ADRs can have single ratio (1 ADR= 1 share), multiple ratio (1

ADR=5shares) or fraction ratio (1 ADR= share) ratios

For Example: INFOSYS LTD

1 ADR = 1 Equity Share

Share Price in India(NSE) = Rs. 3,028.25
Currency Exchange rate:
1$ = Rs.63.50
ADR Price in USA (NASDAQ) = 3028.2563.50
1 ADR = $48

Difference Between ADR & GDR

10

Advantages Of ADR/GDR
11

Gives attractive pricing to the issuer and diversification

opportunity to the investor

Can be listed on any of the overseas stock exchanges /OTC
Raise capital from foreign markets
Freely transferable by non-resident.
No foreign exchange fluctuations
Enhances image of company globally
They can be redeemed by ODB
The ODB should request DCB to get the corresponding
underlying shares released in favor of non resident of
investors. (Shareholders of issuing companies)

Disadvantages Of ADR/GDR
12

Violating the Regulations & requirements of SEC

leads to de-listing from U.S Stock exchange.

Issue cannot exceed more than 51% of the subscribed
capital.

INDIAN ADR
13
Industry

Sponsored/
Unsponsor
ed

1:1

Pharma. & Biotech.

OTC

1:1

Construct.&Materials

HDB

NYSE

1:3

Banks

ICICI Bank

IBN

NYSE

1:2

Banks

Infosys

INFY

NYSE

1:1

Software&ComputerSvc

OTCQX

1:2

Fixed Line Telecom.

S.N
o.

Company

Dr. Reddy's Laboratories

RDY

NYSE

Grasim Industries

GRSXY

HDFC Bank

4
5
6

Exchang Ratio
Ticker
e
DR:ORD

Mahanagar Telephone Nigam MTENY

Rediff.com India

REDF

NYSE

2:1

Software&ComputerSvc

Sesa Sterlite

SSLT

NYSE

1:4

Construct.&Materials

SIFY

SIFY

NASDAQ

1:1

Software&ComputerSvc

10

Tata Motors

TTM

NYSE

1:5

Industrial Engineer.

11

Videocon d2h

VDTH

NASDAQ

4:1

TV Services

12

Wipro

WIT

NYSE

1:1

Software&ComputerSvc

13

WNS Holdings

WNS

NYSE

1:1

Support Services

INDIAN ADR/GDR
14

OTHER PROVISIONS
15

ADRs 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 these
RBI has given 2 Way Fungibility option for DR through SEBI
registered stock broker and Authorized Dealer category-I
Taxation 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%

CONCLUSION
16

A depositary receipt is a negotiable financial instrument issued by

a bank to represent a foreign company's publicly traded securities

Expansion in Overseas can be financed by issuing ADRs/GDRs in
that country
The depositary receipt trades on a local stock exchange represents
an interest in a company that is headquartered outside
DR can be sponsored or unsponsored & there are three levels for
sponsored ADR
GDR represents a bank certificate issued in more than one
country for shares in a foreign company

17

THANK YOU