Ifm Final Ppt (1)

8/2/2019 Ifm Final Ppt (1)

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GROUP - 2


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GENDA


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GLOBAL DEPOSITORY RISK


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P O L I C Y B L I N D S P O T S T R I G G E R G L O B A L

D E P O S I T A R Y R E C E I P T P O N Z I S

SEBI banned seven companies from selling securities as they

manipulate stock prices using GDR.

After 15 yr. regulator identifies about the Ponzi scheme that the

companies used to dupe Indian Investors .

Indian Companies has been encouraged by Liberalised policy.

Indian Companies raise equity through GDRs , which are listed

in European Exchanges, called ADR


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CONTD..

SEBI has not quantified the losses due to Ponzi scheme, but going by

what the companies have declared, it could run into be hundred of crores

, making GDR issue a suspect. Example Cals Retailer.

These GDR are converted into Indian shares and sold, causing losses

to Indian Retail Investors.

Two Way Fungibility, firstlyvolume has not increase , secondlysale of

GDR in Indian Exchange.


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CONTD

The companies examined were less liquid before the GDR issues compared

with the post GDR issues.

The IDR are traded receipts of overseas companies with underlying shares

with custodians.

The identity of the GDR investors should be made public and mandatory for

companies to disclose the bank details in India and overseas.

The regulators have turned a blind eye to fungibility when it comes to

prescribing end use of funds unlike convertibles and the external commercial

borrowings.


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CONTD

Most of the price rigging has been tracked to just one firm at least in SEBI

investigation , pan Asia.

They have raised their traded prices because large GDR issuances from Yash Birla

group has investors like figura, trendsetter, tradetec.

The companies have invested in land in solar power project, bidding projects and the

funds for thermal plant. Birla power raised 330 crore in 2010 via two GDRs.

GDR holding stood at 33% in march 2010 which was sold off by the end of next

quarter in September 2010 they have raised up to 47%which fell to 31% in June 2011.

Price rigging that traps small investors and punishing the offenders the regulators

seems to be at sea.


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RISE IN GOO DS AND SERVICEEXPORTS


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I N D I A A M O N G T O P 2 0 E X P O R T I N G

C O U N T R I E S I N 2 0 1 0


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M A K E S I T T O T H E T O P 1 0 S E R V I C E

E X P O R T E R S L I S T


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CONTD..

Global goods export grew up by 14.5 % in 2010 after shrinking

12% in 2009.

Where as India's goods export rose at the rate of 31%

Indias ranking improved to 20 from 22 in 2009

Market share increased to 1.4% from 1.2%


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FACTORS CONTRIBUTED TO

RISE IN EXPORTS


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CONTD.

Exports shifting to manufactured goods from primary products

Increase in Engineering & petroleum exports

Diversification of markets

Greater interaction between business communities with newer

countries opens up various opportunities.

Various FTAs and consolidation of SEZs


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TRADE PACT NOT BESTOPTION


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Trade pact is an agreement between countries that seeks to

increase the level of free trade.

This is done by creating special tax, tariff and trade regulations

that can reduce barriers.

According to WTO report:

Free trade agreements(FTAs) and comprehensive economic

cooperation pacts do not result in increase in trade flows.


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CONTD

The explosion in PTAs is not matched by an expansion in trade

flows.

Number of PTAs in the world exceed 300,only 16% global

merchandise trade receive preferential treatment.

Number of PTAs increased after failure of Doha round


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INDIAN DEPOSITORYRECEIPTS


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MEANING:

Financial Instrument

Allows foreign companies to mobilize funds from Indian markets by offering

equity

Companies become Listed on stock exchanges

Declaring ownership of shares of a foreign company

It is proof of ownership of foreign company's shares

Similar to the American Depositary Receipts or Global Depositary Receipts

To globalize Indian Capital Market

To provide local investors to take exposure in global companies


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WHO CAN ISSUE IDRS

Company listed on the stock exchange of its country

Company should have a pre-issued paid up capital and free reserves of

at least $100 million

An average turnover of $500 million during three financial years

preceding issue.

Issuing company should make profits for at least five years preceding the

issue.

Declared dividend of not less than 10% each year for the said period


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NORMS FOR ISSUE OF

IDRS

Size of an IDR should not be less than Rs.50,000 crore

IDR issuance should have the prior nod of SEBI

An issuing company requires listing of IDRs in recognized stock

exchanges in India.

IDRs should not redeemed into underlying equity shares before

the expiry of the one year period from the issue date.

Issuing company in any financial year should not exceed 15%

of its paid-up capital and free reserves


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WHO CAN INVEST IN

IDRS

Non- residents Indians and Foreign Institutional investors

can possess IDRs by taking special permission of the ReserveBank of India.

Minimum investment in Indian Depositary Receipts is Rs. 2

lakh.


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Ifm Final Ppt (1)

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