Description
The document about Global Depository Receipts (GDR). It explains the concept of GDR and also the guidelines for issuing the GDR by the companies.
GDR’s It is way of issuing shares of foreign company mostly to raise capital in US dollar or Euro. It generally is a certificate issued in more than one country. The certificates are generally held by an investment bank and trade as though they are shares of domestic company. They are available for sale by many branches of the investment bank in other countries too. To simply state it, 'Global Depository Receipt' (GDR) means a security issued by a bank or a depository outside India against underlying rupee shares of a company incorporated in India. The following are the guidelines for GDR issue ? ? Ashok Leyland cannot raise more than 100% of its net worth stated on the last audited balance sheet. Ashok Leyland planning to take government approval to acquire Dana Holding Corporation should have a consistent tract record of good performance in minimum last three financial years. ? Ashok Leyland can make direct investment in any foreign security out of the proceeds of GDR provided that GDR issue has been made in accordance with the Scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt Mechanism) Scheme 1993 and the guidelines issued there under from time to time by the Central Government. ? Out of the proceeds of GDR, Ashok Leyland can make direct investment in any foreign security provided that it files with the designated authorized dealer in form ODA full details of the investment proposed. ? Ashok Leyland can exchange shares of Dana Holding Corporation with GDR’s issued by Ashok Leyland. This is possible only if it is issued in accordance with the scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt Mechanism) Scheme, 1993. Also, Ashok Leyland should issue the GDR previously before the exchange happens and it should be listed in any stock exchange outside India. The
clause also states that it should not exceed amount equal to 10 times export earnings of Ashok Leyland during the last financial year. ? Ashok Leyland can exchange shares of Dana Holding Corporation with GDR’s issued by Ashok Leyland within 30 days from the date of issue of GDRs in exchange for acquisition of shares of the foreign company under sub-regulation (1), Ashok Leyland is supposed to submit a report in form ODG to the Reserve Bank. ? If Ashok Leyland has issued GDRs, it is allowed to acquire shares of Dana Holding Corporation as it is in the same area of operations. It is better that Ashok Leyland raise fund by issuing GDR because it is less expensive than ADR and is less time consuming especially if it is issued on London and Luxemburg stock exchange. To calculate the net worth of Ashok Leyland for pricing of GDR issues, the share price of Ashok Leyland should be taken as the higher of the following two averages: ? Average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the six months preceding the relevant date.(Rs 53.4 for Ashok Leyland ltd) ? Average of the weekly high and low of the closing prices of the related shares quoted on a stock exchange during the two weeks preceding the relevant date.(Rs 42.3 for Ashok Leyland ltd) Hence Rs 53.4 to be used for all pricing purposes. The “relevant date” means the date thirty days prior to the date on which the general body of shareholders to consider the issue of FCCB. The number of equity shares issued of Ashok Leyland are 150,00,00,000. Thus the net worth of Ashok Leyland is Rs 80.1 billion. When it is converted to US dollars it will be $ 1.73 billion. To acquire Dana Holding Corporation it has to raise $ 1.7 billion. This is less than the net worth of Ashok Leyland, thus they are able to fulfill this clause.
The export of Ashok Leyland of last financial year was Rs 8620 million. To convert this to US dollars the exchange ratio of 1 USD = Rs 46.17 was used. This gives the total export as US $ 186 million. Ashok Leyland can exchange GDR with shares of Dana Holding Corporation upto 10 times export earnings. Thus, they are able to fulfill this clause as they need only $ 1.7 billion whereas they can raise $ 1.86 billion. The problem with issuing GDR is that the promoters of Ashok Leyland will dilute their shareholding, making it unfavorable to the promoters.
doc_333970117.docx
The document about Global Depository Receipts (GDR). It explains the concept of GDR and also the guidelines for issuing the GDR by the companies.
GDR’s It is way of issuing shares of foreign company mostly to raise capital in US dollar or Euro. It generally is a certificate issued in more than one country. The certificates are generally held by an investment bank and trade as though they are shares of domestic company. They are available for sale by many branches of the investment bank in other countries too. To simply state it, 'Global Depository Receipt' (GDR) means a security issued by a bank or a depository outside India against underlying rupee shares of a company incorporated in India. The following are the guidelines for GDR issue ? ? Ashok Leyland cannot raise more than 100% of its net worth stated on the last audited balance sheet. Ashok Leyland planning to take government approval to acquire Dana Holding Corporation should have a consistent tract record of good performance in minimum last three financial years. ? Ashok Leyland can make direct investment in any foreign security out of the proceeds of GDR provided that GDR issue has been made in accordance with the Scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt Mechanism) Scheme 1993 and the guidelines issued there under from time to time by the Central Government. ? Out of the proceeds of GDR, Ashok Leyland can make direct investment in any foreign security provided that it files with the designated authorized dealer in form ODA full details of the investment proposed. ? Ashok Leyland can exchange shares of Dana Holding Corporation with GDR’s issued by Ashok Leyland. This is possible only if it is issued in accordance with the scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt Mechanism) Scheme, 1993. Also, Ashok Leyland should issue the GDR previously before the exchange happens and it should be listed in any stock exchange outside India. The
clause also states that it should not exceed amount equal to 10 times export earnings of Ashok Leyland during the last financial year. ? Ashok Leyland can exchange shares of Dana Holding Corporation with GDR’s issued by Ashok Leyland within 30 days from the date of issue of GDRs in exchange for acquisition of shares of the foreign company under sub-regulation (1), Ashok Leyland is supposed to submit a report in form ODG to the Reserve Bank. ? If Ashok Leyland has issued GDRs, it is allowed to acquire shares of Dana Holding Corporation as it is in the same area of operations. It is better that Ashok Leyland raise fund by issuing GDR because it is less expensive than ADR and is less time consuming especially if it is issued on London and Luxemburg stock exchange. To calculate the net worth of Ashok Leyland for pricing of GDR issues, the share price of Ashok Leyland should be taken as the higher of the following two averages: ? Average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the six months preceding the relevant date.(Rs 53.4 for Ashok Leyland ltd) ? Average of the weekly high and low of the closing prices of the related shares quoted on a stock exchange during the two weeks preceding the relevant date.(Rs 42.3 for Ashok Leyland ltd) Hence Rs 53.4 to be used for all pricing purposes. The “relevant date” means the date thirty days prior to the date on which the general body of shareholders to consider the issue of FCCB. The number of equity shares issued of Ashok Leyland are 150,00,00,000. Thus the net worth of Ashok Leyland is Rs 80.1 billion. When it is converted to US dollars it will be $ 1.73 billion. To acquire Dana Holding Corporation it has to raise $ 1.7 billion. This is less than the net worth of Ashok Leyland, thus they are able to fulfill this clause.
The export of Ashok Leyland of last financial year was Rs 8620 million. To convert this to US dollars the exchange ratio of 1 USD = Rs 46.17 was used. This gives the total export as US $ 186 million. Ashok Leyland can exchange GDR with shares of Dana Holding Corporation upto 10 times export earnings. Thus, they are able to fulfill this clause as they need only $ 1.7 billion whereas they can raise $ 1.86 billion. The problem with issuing GDR is that the promoters of Ashok Leyland will dilute their shareholding, making it unfavorable to the promoters.
doc_333970117.docx