By Vaishnavi Naval

Global Depository Receipt

 A Depository Receipt is a negotiable security that represents an ownership
interest in securities of a foreign issuer typically trading outside its home
market.

 GDR is a certificate issued by a depository bank, which purchases shares of

foreign companies and deposits it on account.

 GDRs represent ownership of an underlying number of shares of a foreign

company.

 DRs listed and traded in US markets are known as American Depository

Receipts (ADRs) and those listed and traded elsewhere are known as Global
Depository Receipts (GDRs).
 History
1. DR were originally developed to enable US investors to invest
internationally in the late 1920s.

2. The 1990s saw a spurt in the number of DR’s.

3. Prior to 1990, firms from developed markets dominated the DR market

but firms from emerging markets now constitute a major chunk of listed
and traded DR programs.
 Characteristics of GDR
1. It is an unsecured security.

2. It may be converted into number of shares.

3. It is listed and traded in the stock exchange.

Advantages of GDR
1. Accessibility to foreign capital markets.

2. Increase in visibility and status of the issuing company.

3. Rise in the capital because of foreign investors.

 Eligibility for Issue of GDRs
 An Indian corporate can raise foreign currency resources abroad through the issue of Global
Depository Receipts (GDRs).

 Regulation 4 of Schedule I of FEMA Notification no. 20 allows an Indian company to issue its
Rupee denominated shares to a person resident outside India being a depository for the
purpose of issuing GDRs.

Currently, the stock exchanges trading GDRs:

 London Stock Exchange

 Luxembourg Stock Exchange

 Singapore Stock Exchange

 Hong Kong Stock Exchange

 Frankfurt Stock Exchange

 Process to Issue GDR

The local depository

Local
Deposits these shares custodian provides
Broker/Company
to local depository notifications of local
buys shares from
custodian shares to foreign
local market
depository bank

Depository bank
Investors buy these
issues DR in the
DRs from the market.
market.
 How does GDR work?
 Let,1 ITC share in Indian market trades around Rs. 1000. Means 10 Euros.

 HSBC buys 100 shares of ITC and issues in the ratio 10:1 in foreign market

 Which implies, 1 GDR represents 10 ITC share, i.e. 100 Euros.

 Subsequent price is determined by market forces.

 Issue of GDR by Bharat Forge
 The GDR issued by Bharat Forge is listed on Luxembourg Stock Exchange.

 Issue Price of the Offered GDRs: U.S.$27.50 per Global Depository Receipt.

 One GDR represents one equity share of the company.

 Citigroup and JP Morgan acted as joint lead managers and book-runners to the
offering.

 On 19 April 2005, the Company issued and allotted 3,272,800 Global Depository
Receipts (GDRs) and on 5 May 2005, the Company issued and allotted 363,700 GDRs
aggregating to USD 100 million (including greenshoe option).

 Therefore, the total underlying shares under the GDRs were 3,636,500 Equity
Shares of Rs.10 each.
 Issue of GDR by Bharat Forge
 The current price as on 3rd Aug. 2020 is $5.15

 The initial deposits of shares in connection with this offering will be made by
the delivery to Citibank, N.A. (Mumbai) as custodian of a share certificate
representing the Shares.

 Upon receipt by the Custodian of such share certificate and receipt by the
Depository of confirmation from Bharat Forge that the Shares to be represented
by the GDRs have been issued as fully paid, the Depository shall execute and
deliver the Master GDR Certificate evidencing the GDRs to a common depository
for Euroclear and Clearstream, Luxembourg.
 Issue of GDR by Bharat Forge
 The Issuer and the Depositary have made arrangements with Euroclear and
Clearstream, to act as securities depositories for the GDRs.

 All GDRs issued in this offering will be registered in the name of a common
nominee and held by a common depository for Euroclear and Clearstream.

 Transfers of ownership interests in GDRs are to be accomplished by entries made

on the books of Euroclear and Clearstream, and participants in Euroclear and
Clearstream, in each case acting on behalf of the Holders of GDRs.
 Issue of GDR by Bharat Forge
 Cash dividends on the Shares, if any, will be paid in Rupees and, subject to any
restrictions imposed by Indian law, regulations or applicable permits, will be
converted into U.S. dollars by the Depository in the manner provided in the
Deposit Agreement and distributed to holders of GDRs.

 The amounts distributed to the Holders of GDRs will be net of the fees,
expenses, taxes and governmental charges payable by such Holders of GDRs
under the terms of the Deposit Agreement.

 Holders of the GDRs will have no voting rights with respect to the Shares and, as
such, cannot instruct the Depositary as to the voting of the Shares.
THANK YOU