FDI FII ADR

8/9/2019 FDI FII ADR

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FDI,FII,ADR FDI,FII,ADR

Presented by Presented by

DillipDillip KhuntiaKhuntia



FDIFDI

Physical Investment/Establishment of Physical Investment/Establishment of

EnterpriseEnterprise

Consist of Parent Enterprise & Foreign Consist of Parent Enterprise & Foreign

A ffiliate A ffiliate



T y pes T y pes

V ertical FDI V ertical FDI

Ow ns shares of Ow ns shares of ForeignForeignEnterprise:Enterprise:--

supplies input forsupplies input forit or uses outputit or uses outputof itof it

HorizontalHorizontal

FDIFDI

MNC carriesMNC carries

out similarout similarbusinessbusiness



What A ttracts FDI What A ttracts FDI

Consistent Economic Grow thConsistent Economic Grow th

DeregulationDeregulation

Liberal Investment RulesLiberal Investment Rules

Operational Flexibility Operational Flexibility

Availability of ResourcesAvailability of Resources



Methods of FDIMethods of FDI

B y incorporating a wholly ow nedB y incorporating a wholly ow ned

com pan ycom pan y

B y acquiring sharesB y acquiring shares

Through Merger & A cquisition Through Merger & A cquisition

Partici pating in an Joint V enturePartici pating in an Joint V enture



BenefitsBenefits

Hel ps in Economic GrowthHel ps in Economic Growth

Creates Em ployment O pportunityCreates Em ployment O pportunity

Better Lif estylesBetter Lif estyles

K nowledge & SkillK nowledge & Skill

Increase in Revenue of Increase in Revenue of Go vernmentGo vernment



Calendar yearCalendar year

20092009

Amount of FDI Amount of FDI

inflo w (ininflo w (in

Rs.croreRs.crore) )

In US$ mnIn US$ mn

January 2009 January 2009 13,34613,346 2,7332,733

February February 7,3297,329 1,4881,488

MarchMarch 10,02310,023 1,9561,956

April April 11,70811,708 2,3392,339

May May 10,16810,168 2,0952,095

June June 12,33512,335 2,5822,582

July July 16,85216,852 3,4763,476

August August 15,79615,796 3,2683,268



R ank R ank Countr yCountr y 20062006--0707 20072007--0808 20082008--0909 20092009--1010 Cumulati v Cumulati v

e inflow e inflow

%age to%age to

totaltotalinflow inflow

11 MauritiusMauritius 28,75928,759

(6,463)(6,463)

44,48344,483

(11,096)(11,096)

50,76450,764

(11,208)(11,208)

30,59130,591

(6,279)(6,279)

191,863191,863

(43,143)(43,143)

44%44%

22 Singa poreSinga pore 2,6622,662

(578)(578)

12,31912,319

(3,073)(3,073)

15,72715,727

(3,454)(3,454)

4,1624,162

(856)(856)

38,01438,014

(8,667)(8,667)

9%9%

33 U.S. A U.S. A 3,8613,861(856)(856)

4,3774,377(1,089)(1,089)

8,0028,002(1,802)(1,802)

5,3345,334(1,108)(1,108)

33,29433,294(7,443)(7,443)

8%8%

44 U.K U.K 8,3898,389

(1,878)(1,878)

4,6904,690

(1,176)(1,176)

3,8403,840

(864)(864)

1,1931,193

(246)(246)

24,09724,097

(5,473)(5,473)

6%6%

55 NetherlandsNetherlands 2,9052,905(644)(644)

2,7802,780(695)(695)

39223922(883)(883)

1,9621,962(406)(406)

17,81417,814(3996)(3996)

4%4%

66 Ja pan Ja pan 382382

(85)(85)

3,3363,336

(815)(815)

1,8891,889

(405)(405)

3,7883,788

(779)(779)

15,01315,013

(3,310)(3,310)

3%3%

77 C y prusC y prus 266266(58)(58)

3,3853,385(834)(834)

5,9835,983(1,287)(1,287)

3,1953,195(655)(655)

13,24513,245(2,927)(2,927)

3%3%



FDI Inflow FDI Inflow 4

4

4

To l Inflow



Statement 0n RBI·s Regional OfficesStatement 0n RBI·s Regional Offices

Recei ved FDI inflow Recei ved FDI inflow

0

000

0000

000

0000

000

0000

000

40000

M MB I hennai anaji BBSR R NI

DR



Sectors A ttracting FDISectors A ttracting FDI

0

5000

10000

15000

20000

25000

30000

2006-07 2007-08 2008-09 2009-10

Ser ice

omp ter

Telecomm nicationeal state

onstruction A ctivit

Automo ile

Po er

Metallurgical IndustriesPetroleum

C emical



FIIFII

Investor or Investment FundInvestor or Investment Fund

Registered in One Countr yRegistered in One Countr y

Invests in Another Countr yInvests in Another Countr y



Com paniesCom panies

Pension FundsPension FundsMutual FundsMutual Funds

Investment FundsInvestment Funds Insurance Com paniesInsurance Com panies

Bank Bank

Charitable TrustsCharitable Trusts

A sset Management Com pan y A sset Management Com pan y



Registered on the Basis of Registered on the Basis of

Prev ious Track RecordPrev ious Track Record

Com petenceCom petence

Financial Ca pabilityFinancial Ca pability

ManagementManagement



11 Asian Paint Ltd. Asian Paint Ltd.

22 Sonata Soft w

are Ltd.Sonata Soft w

are Ltd.33 Ranbaxy Laboratories Ltd.Ranbaxy Laboratories Ltd.

44 Balaji Telefilms Ltd.Balaji Telefilms Ltd.

55 HDFC Bank Ltd.HDFC Bank Ltd.

66 Infosys Technologies Ltd.Infosys Technologies Ltd.

77 CRISILCRISIL

88 RILRIL

99 Reliance Petroleum Ltd.Reliance Petroleum Ltd.

1010 Dr. Reddy,s LaboratoriesDr. Reddy,s Laboratories



Investment by FII in IndiaInvestment by FII in India

20000

5000

0000

5000

0

5000

0000

5000

2000025000

20000

200002

200203

200304

2004-

052005-

062006-

072007-

082008-

092009-

0

FII



Trend in FII Investment Trend in FII Investment

f rom No v f rom No v --03 to No v 03 to No v --1818

0

50

100

150

200

250

300

350

400

3rdNo v 6tNo v 9tNo v 12tNo v 18tNo v



WHY INDIA WHY INDIA

Second Largest Emerging Mark etSecond Largest Emerging Mark et

Skilled & Com petiti ve Skilled & Com petiti ve LabourLabour forceforce

Highest R ate of Return on Highest R ate of Return on

InvestmentInvestment

Second Largest Software develo perSecond Largest Software develo perGrowth o ver past f e w yearsGrowth o ver past f e w years

a veraging 8%a veraging 8%



ADR ADR

ADR represents ow nershi p in the ADR represents ow nershi p in the

shares of a nonshares of a non--U.S. com pan y andU.S. com pan y and

trades in U.S. financial mark ettrades in U.S. financial mark et

Introduced in 1927Introduced in 1927

JPMorgan JPMorgan



T y pes T y pes

Uns ponsoredUns ponsored

LevelLevel--II

LevelLevel--IIII

LevelLevel--IIIIII



ADR s· S pecial R isk ADR s· S pecial R isk

Currency R isk Currency R isk

Political R isk Political R isk

Inflation R isk Inflation R isk



SourcesSources

B y depositing the domestic sharesB y depositing the domestic shares

Can obtain in secondar y mark etCan obtain in secondar y mark et

B y PurchasingB y Purchasing

B y Swa ppingB y Swa pping



Strength & Weak nessStrength & Weak ness

StrengthStrength A llow to invest outside with greater A llow to invest outside with greater

easeease

Ca pitalize on emerging economiesCa pitalize on emerging economies Weak ness Weak ness

R iskyR isky

Language barrierLanguage barrier

Lack of International StandardsLack of International Standards



11 Bajaj AutoBajaj Auto

22 Dr. Reddy Dr. Reddy

33 HDFC Bank HDFC Bank

44 ICICI Bank ICICI Bank

55 Infosys TechnologiesInfosys Technologies

66 MTNLMTNL

77 Panti ComputerPanti Computer

88 Tata Motors Tata Motors

99 VSNL VSNL

1010 WIPR O WIPR O





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FDI FII ADR