Hemant Sachan- Ifm

ASSINGMENT OF INTERNATIONAL FINANCE ON EURO CURRENCY MARKET ADRS $ GDRS SUBMITTED BY HEMANT SACHAN M0729 SEC-A

Ame rican Depositar y Receipt

An American Depositary Receipt (or ADR) represents ownership in the shares of a foreign company trading on US financial markets. The stock of many non-US companies trades on US exchanges through the use of ADRs. ADRs enable US investors to buy shares in foreign companies without undertaking cross-border transactions. ADRs carry prices in US dollars, pay dividends in US dollars, and can be traded like the shares of US-based companies. Each ADR is issued by a US depositary bank and can represent a fraction of a share, a single share, or multiple shares of foreign stock. An owner of an ADR has the right to obtain the foreign stock it represents, but US investors usually find it more convenient simply to own the ADR. The price of an ADR is often close to the price of the foreign stock in its home market, adjusted for the ratio of ADRs to foreign company shares. Depository banks have numerous responsibilities to an ADR holder and to the non-US company the ADR represents. The first ADR was introduced by JPMorgan in 1927, for the British retailer Selfridges Co. The largest depositary bank is the Bank of New York Mellon. Individual shares of a foreign corporation represented by an ADR are called American Depositary Shares (ADS).

Types o f AD R pr og rams When a company establishes an American Depositary Receipt program, it must decide what exactly it wants out of the program and how much they are willing to commit. For this reason, there are different types of programs that a company can choose.

Un spo ns or ed s har es Unsponsored shares are ADRs that trade on the over-the-counter (OTC) market. These shares have no regulatory reporting requirements and are issued in accordance with market demand. The foreign company has no formal agreement with a custodian bank and shares are often issued by more than one depositary. Each depositary handles only the shares it has issued. Due to the hassle of unsponsored shares and hidden fees, they are rarely issued today. However, there are still some companies with outstanding unsponsored programs. In addition, there are companies that set up a sponsored program and require unsponsored shareholders to turn in their shares for the new sponsored. Often, unsponsored will be exchanged for Level I depositary receipts.

Level I Level 1 depositary receipts are the lowest sponsored shares that can be issued. When a company issues sponsored shares, it has one designated depositary acting as its transfer agent. A majority of American depositary receipt programs currently trading are issued through a Level 1 program. This is the most convenient way for a foreign company to have its shares trade in the United States. Level 1 shares can only be traded on the OTC market and the company has minimal reporting requirements with the U.S. Securities and Exchange Commission (SEC). The company is not required to issue quarterly or annual reports. It may still do so, but at its own discretion. If a company chooses to issue reports, it is not required to follow US generally accepted accounting principles (GAAP) standards and the report may show money denominations in foreign currency. Companies with shares trading under a Level 1 program may decide to upgrade their share to a Level 2 or Level 3 program for better exposure in the U.S. markets.

Level II (listed) Level 2 depositary receipt programs are more complicated for a foreign company. When a foreign company wants to set up a Level 2 program, it must file a registration statement with the SEC and is under SEC regulation. In addition, the company is required to file a Form 20-F annually. Form 20-F is the basic equivalent of an annual report (Form 10-K) for a U.S. company. In their filings, the company is required to follow GAAP standards. The advantage that the company has by upgrading their program to Level 2 is that the shares can be listed on a U.S. stock exchange. These exchanges include the New York Stock Exchange (NYSE), NASDAQ, and the American Stock Exchange (AMEX). While listed on these exchanges, the company must meet the exchange’s listing requirements. If it fails to do so, it will be delisted and forced to downgrade its ADR program.

Level III (offering) A Level 3 depositary receipt program is the highest level a foreign company can have. Because of this distinction, the company is required to adhere to stricter rules that are similar to those followed by U.S. companies. Setting up a Level 3 program means that the foreign company is not only taking some of its shares from its home market and depositing them to be traded in the U.S.; it is actually issuing shares to raise capital. In accordance with this offering, the company is required to file a Form F-1, which is the format for an Offering Prospectus for the shares. They also must file a Form 20-F annually and must adhere to GAAP standards. In addition, any material information given to shareholders in the home market, must be filed with the SEC through Form 8K. Foreign companies with Level 3 programs will often issue materials that are more informative and are more accommodating to their U.S. shareholders because they rely on them for capital. Overall, foreign companies with a Level 3 program set up are the easiest on which to find information.

Restricted programs Foreign companies that want their stock to be limited to being traded by only certain individuals may set up a restricted program. There are two SEC rules that allow this type of issuance of shares in the U.S.: Rule 144-A and Regulation S. ADR programs operating under one of these 2 rules make up approximately 30% of all issued ADRs.

144-A Some foreign companies will set up an ADR program under SEC Rule 144(a). This provision makes the issuance of shares a private placement. Shares of companies registered under Rule 144-A are restricted stock and may only be issued to or traded by Qualified Institutional Buyers (QIBs). No regular shareholders will have anything to do with these shares and most are held exclusively through the Depository Trust & Clearing Corporation, so the public often has very little information on these companies. 144-A shares may be issued along side of a Level 1 program.

Regulation S The other way to restrict the trading of depositary shares is to issue them under the terms of SEC Regulation S. This regulation means that the shares are not and will not be registered with any United States securities regulation authority..... Regulation S shares cannot be held or traded by any “U.S. Person” as defined by SEC Regulation S rules. The shares are registered and issued to offshore, non-US residents. Regulation S shares can be merged into a Level 1 program after the restriction period has expired.

Indian ADR Trading in US ADR ISSUE DR. REDDY'S LABORATORIES LTD. HDFC BANK LTD. ICICI BANK LTD. INFOSYS TECHNOLOGIES LIMITED MAHANAGAR TELEPHONE NIGAM LIMITED REDIFF.COM INDIA LTD SATYAM COMPUTER SERVICES LIMITED SIFY LTD. VIDESH SANCHAR NIGAM LIMITED WIPRO LTD.

SYMBOL INDUSTRY RDY Pharmaceutical HDB Banks IBN Banks INFY Technology Services MTE Fixed Line Comm.

EXCH NYSE NYSE NYSE NASDAQ NYSE

REDF SAY

Technology Services Technology Services

NASDAQ NYSE

SIFY VSL WIT

Technology Services Fixed Line Comm. Technology Services

NASDAQ NYSE NYSE

Global Depositor y Receipt A Global Depository Receipt or Global Depositary Receipt (GDR) is a certificate issued by a depository bank, which purchases shares of foreign companies and deposits it on the account. GDRs represent ownership of an underlying number of shares. Global Depository Receipts facilitate trade of shares, and are commonly used to invest in companies from developing or emerging markets - especially Russia. Prices of GDRs are often close to values of related shares, but they are traded and settled independently of the underlying share. Several international banks issue GDRs, such as JPMorgan Chase, Citigroup, Deutsche Bank, Bank of New York. They trade on the International Order Book (IOB) of the London Stock Exchange.

GDR - Global Depositary Receipt Global Depository Receipt (GDR) - certificate issued by international bank, which can be subject of worldwide circulation on capital markets. GDR's are emitted by banks, which purchase shares of foreign companies and deposit it on the accounts. Global Depository Receipt facilitates trade of shares, especially those from emerging markets. Prices of GDR's are often close to values of realted shares. Very similar to GDR's are ADR's. GDR's are also spelled as Global Depositary Receipt.

Indian GDR THE COMPREHENSIVE GDR LISTING GDR Companies

# euro convertible bond **adjusted for bonus

Industry Segregation

Date Of GDR Issue

Size Of GDR Issue US $ Mill

Shares GDR per Issue GDR Price **(US$)

Arvind Mills

Textiles

03-Feb-94

125.00

1.0

9.78

Ashok Leyland

Autos

20-Mar-95

137.77

3.0

12.79

Bajaj Auto

Autos

27-Oct-94

110.00

1.0

16.89

Ballarpur Ind.#

Paper

27-May94

35.00

1.0

8.77

Bombay Dye

Textiles

16-Nov-93

50.00

1.0

9.20

BSES Ltd

Power

04-Mar-96

125.00

3.0

14.40

Century Textiles

Diversified

21-Sep-94 100.00

2.0

254.00

CESC

Power

14-Apr-94

125.00

1.0

10.67

Core Parent

Pharma

21-Jun-94

70.00

1.0

12.60

Crompton Greaves Electrical

02-Jul-96

50.00

1.0

7.56

DCW

Diversified

19-May94

25.00

5.0

13.55

Dr. Reddy's

Pharma

18-Jul-94

48.00

1.0

11.16m

E. I. Hotels

Hotels

07-Oct-94

40.00

1.0

9.30

EID Parry

Fertiliser

07-Jul-94

40.00

1.0

8.39

Finolex Cab

Cables

19-Jul-94

55.00

1.0

16.60

Flex Industries

Packaging

30-Nov-95

30.00

2.0

8.05

G.E. Shipping

Shipping

17-Feb-94

100.00

5.0

15.94

G.N.F.C

Fertiliser

06-Oct-94

61.11

5.0

12.75

GAIL

Oil & Refineries

04-Nov-99

22.50

6.0

9.67

Garden Silk

Textiles

04-Mar-94

45.00

5.0

26.28

Grasim (1st)

Diversified

25-Nov-92

90.00

1.0

12.98

EUR OCURRE NC Y MARKET The euro is the official currency of the European Union (EU), and has been implemented in 15 member states, known collectively as the Euro zone (Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, Spain). It is also used in 9 other countries around the world, 7 of those being in

Europe. Hence it is the single currency for over 320 million Europeans. Including areas using currencies pegged to the euro, the euro directly affects close to 500 million people worldwide. With more than €610 billion in circulation as of December 2006 (equivalent to US$802 billion at the exchange rates at the time), the euro is the currency with the highest combined value of cash in circulation in the world, having surpassed the U.S. dollar. The euro was introduced to world financial markets as an accounting currency in 1999 and launched as physical coins and banknotes on 1 January 2002. It replaced the former European Currency Unit (ECU) at a ratio of 1:1. The euro is managed and administered by the Frankfurt-based European Central Bank (ECB) and the Euro system (composed of the central banks of the euro zone countries). As an independent central bank, the ECB has sole authority to set monetary policy. The Euro system participates in the printing, minting and distribution of notes and coins in all member states, and the operation of the Euro zone payment systems. While all European Union (EU) member states are eligible to join if they comply with certain monetary requirements, not all EU members have chosen to adopt the currency. All nations that have joined the EU since the 1993 implementation of the Maastricht Treaty have pledged to adopt the euro in due course. Maastricht obliged current members to join the euro; however, the United Kingdom and Denmark negotiated exemptions from that requirement for themselves.[4] Sweden turned down the euro in a 2003 referendum, and has circumvented the requirement to join the euro area by not meeting the membership criteria. In addition, three European microstates (Vatican City, Monaco, and San Marino), although not EU members, have adopted the euro due to currency unions with member states. Andorra, Montenegro, and Kosovo have adopted the euro unilaterally, while not being EU members

Eurocurrency Market The money market in which Eurocurrency, currency held in banks outside of the country where it is legal tender, is borrowed and lent by banks in Europe. The Eurocurrency market allows for more convenient borrowing, which improves the international flow of capital for trade between countries and companies.

Eurocurrency Currency deposited by national governments or corporations in banks outside their home market. This applies to any currency and to banks in any country. For example, South Korean won deposited at a bank in South Africa, is considered Eurocurrency. Also known as "Euromoney".

- Having "Euro" doesn't mean that the transaction has to involve European countries. However, in practice, European countries are often involved. - Funds deposited in a bank when those funds are denominated in a currency differing from the bank's own domestic currency. Eurocurrency applies to any currency and to banks in any country. Thus, if a Japanese company deposits yen in a Canadian bank, the yen will be considered Eurocurrency.

Eurobond A bond that is denominated in a different currency than the one of the country in which the bond is issued. A Eurobond is usually categorized by the currency in which it is denominated, and is usually issued by an international syndicate. An example of a Eurobond is a Eurodollar bond, which is denominated in U.S. dollars and issued in Japan by an Australian company. Note that the Australian company can issue the Eurodollar bond in any country other than the United States. Eurobonds are attractive methods of financing as they give issuers the flexibility to choose the country in which to offer their bond according to the country's regulatory constraints. In addition, they may denominate their Eurobond in their preferred currency. Eurobonds are attractive to investors as they have small par values and high liquidity.

Currencies pegged to the euro

There are a number of non-EU currencies that were pegged to a European currency and are now currencies related to the euro: the Cape Verdean escudo, the Bosnia and Herzegovina convertible mark, the CFP franc, the CFA franc and the Comorian franc. In total, the euro is the official currency in 15 states inside the European Union, and 5 states/territories outside the European Union. In addition, 23 states and territories have currencies that are directly

pegged to the euro including 14 countries in mainland Africa, 3 EU members that will ultimately join the euro, 3 French Pacific territories, 2 African island countries and another Balkan country, Bosnia and Herzegovina.