Global Depositary Receipt - GDR

Sankesh Satpute (26) Yasin Sheikh (25) Joshua Dsouza (15) Pranith Karkera (27)

Definition
A bank certificate issued in more than one country for shares in a foreign company. The shares are held by a foreign branch of an international bank. The shares trade as domestic shares, but are offered for sale globally through the various bank branches.

GDR Custodian bank/Depository bank

Custodian Bank located in same country Works with the Depository Bank and follows instructions from the depository bank. Collects, remits dividends and forwards notices received from the depository bank.

Functions
A means to increase global trade. Increase volumes on local and foreign markets. Exchange of information, technology, regulatory procedures as well as market transparency. Aid to foreign investment.

Factors governing GDR Prices

Track record Analyst recommendations Relative valuation Market conditions International status of the Company

Advantages & Disadvantages

Greater exposure and raise capital in the world market. Increasing the shares liquidity while boosting the companys prestige on its local market. Encourage NRIs to invest in there home countries. Allow investors to invest in foreign companies without worrying about foreign trading practices, laws. Risk of foreign exchange

Difference GDR & ADR

Both GDR and ADR are depository receipts, and represent a claim on the underlying shares. The only difference is the location where they are traded. Depositary receipts traded in USA ADR Depositary receipts traded in a country other than USA GDR

Indian market & GDR

GDRs are an excellent means of investment for NRIs and foreign nationals wanting to invest in India They can invest directly in Indian companies without going through the hassle of understanding the rules and working of the Indian financial market since GDRs are traded like any other stock NRIs and foreigners can buy these using their regular equity trading accounts

GDR Prices
Company Mahindra & Mahindra Ltd. Reliance Industries Ltd. Ranbaxy Laboratories Ltd. Rolta India Ltd.

Updated on Apr 05, 2012 day end Close (USD) 13.56 29.13 9.31 21.61

State Bank of India

GAIL (India) Ltd. Larsen & Toubro Ltd

86.17
43.59 26.05

Source : http://www.goodreturns.in/adr-gdr-listings.html

GDR scam summary

FIIs like India Focus Cardinal Fund and Mavi Investment Fund, were converting the GDRs held by them into normal shares (known as cancelling GDRs) to sell in Indian markets. Most cancellations were happening within a short period from the issue of the GDRs by the company. Around 33 per cent to 75 per cent of the shares sold by these FIIs in various scrips were bought by these recurring clients.
Source: http://www.indianexpress.com/news/sebi-cracks-down-on-gdrscam/849933/0

Companies barred by SEBI

Asahi Infrastructure IKF Technologies Avon Corp K Sera Sera CAT Tech Maars Software Cals Refineries

Thank You