adr wipro meenakshi 2212376

7/31/2019 ADR Wipro Meenakshi 2212376

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NAME: MEENAKSHI SHARMA

SMS-ID: 2212376

BATCH: PGCBM-14

CENTRE: SEC-14, GURGAON

NAME OF THE TOPIC: CALCULATION OF ADR WIPRO TECHNOLOGIES

COURSE: INTERNATIONAL FINANCIAL MANAGEMENT

FACULTY: DR. H.K PRADHAN


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CALCULATION OF ADRWIPRO TECHNOLOGIES

A depository receipt or a DR is a type of negotiable (transferable) financial security that is traded

on a local stock exchange but represents a security, usually in the form of equity that is issued by

a foreign publicly listed company.

The DR, which is a physical certificate, allows investors to hold shares in equity of other

countries. The issue of such instruments involves the delivery of ordinary shares of an Indian

company to a domestic custodian bank in India, which in turn instructs an overseas depository

bank to issue GDR (global depository receipt) on a predetermined ratio. The GDR can be sold

outside India in their existing form. The underlying shares (arising after redemption of GDR) can

also be sold in India While ADRs are listed on the US stock exchanges; the GDRs are usually

listed on a European stock exchange. A GDR may evidence one or more GDS(global depository

share). Each GDS represent underlying share of Issuing company.

A GDR or ADR means any instrument in the form of a Depository receipt or certificate by

whatever name it is called, created by the Overseas Depository Bank (ODB) outside India and

issued to non-resident investors against the issue of ordinary shares or foreign currency

convertible bonds of issuing company. These are negotiable instruments denominated in US $

representing a non-US company's publicly traded, local currency equity shares.

One of the most common types of GDRs is the American depositary receipt (ADR), which has

been offering companies, investors and traders global investment opportunities since the

1920s.While ADRs are listed on the US stock exchanges, the GDRs are usually listed on a

European stock exchange.

ADRs are bought and sold on American markets just like regular stocks, and are

issued/sponsored in the U.S. by a bank or brokerage. ADRs were introduced as a result of the

complexities involved in buying shares in foreign countries and the difficulties associated with

trading at different prices and currency values. For this reason, U.S. banks simply purchase a

bulk lot of shares from the company, bundle the shares into groups, and reissues them on eitherthe New York Stock Exchange(NYSE), American Stock Exchange(AMEX) or the Nasdaq. In

return, the foreign company must provide detailed financial information to the sponsor bank. In

brief, an ADS is a Common stock (ordinary shares) of a foreign corporation, held by a US bank

in a custodial account on behalf of a stockholder and American Depository Receipts (ADRs ) are

issued against ADS.


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There are three different types of ADR issue:-level 1, level 2 and level 3.

Level 1 - This is the most basic type of ADR where foreign companies either don't qualify or

don't wish to have their ADR listed on an exchange. Level 1 ADRs are found on the over-the-

counter market and are an easy and inexpensive way to gauge interest for its securities in North

America. Level 1 ADRs also have the loosest requirements from the Securities and Exchange

Commission (SEC).

Level 2 - This type of ADR is listed on an exchange or quoted on Nasdaq. Level 2 ADRs

have slightly more requirements from the SEC, but they also get higher visibility trading

volume.

Level 3 - The most prestigious of the three, this is when an issuer floats a public offering of

ADRs on a U.S. exchange. Level 3 ADRs are able to raise capital and gain substantial visibility

in the U.S. financial markets.

There are four main parties that come to play with ADRs:

(1) The issuing corporation is the first party. This is typically a large foreign-based

corporation that is already listed on a major foreign exchange. Rather than dual list its shares on

its home exchange and on a U.S. exchange, the issuer sells a bulk amount of its shares to a

trusted U.S. party - a recognized bank.

(2) A U.S. bank is the second party in this process; by accepting the issuing company's shares

and selling representative certificates to investors, the bank is said to sponsor the security,making it accessible to investors in the ADR's local market. Essentially, the bank accepts the

shares from the foreign corporation, stores all of them in its vault, and prints a bunch of

certificates that represent the shares. Those certificates are then issued to investors via an

exchange.

(3) A major U.S. exchange (i.e. NYSE or Nasdaq) then lists the banks certificates for trading,

allowing investors to buy and sell ADR units just as they would normal shares. Investors set

market prices for the ADRs through the bidding process, pricing and freely trading the units back

and forth in U.S. dollars. Because they are ADRs, investors avoid the problem of converting into

foreign currency each time the units are bought and sold. They also don't have to deal with

foreign trading rules or laws; however, the appropriate Securities and Exchange Commission

(SEC) rules do apply.

(4) The SEC is the fourth major party involved in ADRs. While it plays no direct role in the

issuance and trading of the ADR units, the SEC requires ADR issuers to file certain documents


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with the SEC before allowing the proposed ADR units to be issued and traded in the U.S.

markets.

Determining the price of an ADR:-

Let's use an example to give you a better idea of how the ADR process works. Suppose a

recent boom in the popularity of Bloody Mary drinks has increased the prospects for the vodka

industry. Russian Vodka Inc. wants to list shares on the NYSE to gain exposure to the U.S.

market and to tap into the growing demand for vodka.

Russian Vodka already trades on the Russian Stock Exchange at 127 Russian roubles, which,

at this time, is equivalent to US$4.58. Let's say that a U.S. bank purchases 30 million shares

from Russian Vodka Inc. and issues them in the U.S. at a ratio of 10:1. This means each ADRshare you purchase is worth 10 shares on the Russian Stock Exchange. Thus the new ADR

should have an issue price of around US$45.80 each (10 times $4.58).

Once an ADR is priced and sold on the market, its price is determined by supply and demand,

just like an ordinary stock. However, if the U.S. price varies too far from the Russian price after

taking the currency exchange rate and the ratio of ADRs to home country shares into account, an

arbitrage opportunity may arise. ADRs tend to follow the general trend of the home country

shares, but this is not always the case.

There are several factors that determine the value of the ADR beyond the performance of the

company.

(1)Political Risk - Ask yourself if you think the government in the home country of the ADR

is stable? For example, you might be wary of Russian Vodka Inc. because of the characteristic

instability of the Russian government.

(2)Exchange Risk - Is the currency of the home country stable? Remember the ADR shares

track the shares in the home country. If a country's currency is devalued, it will trickle down to

your ADR. This can result in a big loss, even if the company had been performing well.

(3)Inflationary Risk - This is an extension of the exchange rate risk. Inflation is the rate at

which the general level of prices for goods and services is rising and, subsequently, purchasing

power is falling. Inflation can be a big blow to business because the currency of a country with

high inflation becomes less and less valuable each day.


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With globalization dissolving borders, it only makes sense that we have the ability to invest in

foreign entities. Many nations who are striving to become industrialized are undervalued

compared to the levels they will eventually reach.

Many people, therefore, consider ADRs an undiscovered gem in the financial markets.

Diversification does not stop at just investing in different types of stocks or bonds. By investing

in different countries, you gain the potential to capitalize on emerging economies, which

hopefully leads to more green in your pocket

The Company

Wipro Technologies

About Company and its history of ADR

Wipro Limited is a $5 billion Indian conglomerate. It is one of the top IT industries in India.Wipro Ltd. has interests varying from information technology, consumer care, lighting,engineering and healthcare businesses. Billionaire Azim Premji leads the group.

History

Wipro started as a vegetable oil trading company in 1947 from an old mill founded by AzimPremji's father. When his father died in 1966, Azim, a graduate in Electrical Engineering fromStanford University, took on the leadership of the company at the age 21. He repositioned it andtransformed Wipro (Western India Vegetable Products Ltd) into a consumer goods company that

produced hydrogenated cooking oils/fat company, laundry soap, wax and tin containers and laterset up Wipro Fluid Power to manufacture hydraulic and pneumatic cylinders in 1975. At thattime, it was valued at $2 million.

In 1977, when IBM was asked to leave India, Wipro entered the information technology sector.In 1979, Wipro began developing its own computers and in 1981, started selling the finishedproduct. This was the first in a string of products that would make Wipro one of India's first

computer makers. The company licensed technology from Sentinel Computers in the UnitedStates and began building India's first mini-computers. Wipro hired managers who werecomputer savvy, and strong on business experience..

In 1980 Wipro moved in software development and started developing customized softwarepackages for their hardware customers. This expanded their IT business and subsequentlydeveloped the first Indian 8086 chip.

Since 1992 Wipro began to grow its roots off shore in United States and by 2000 Wipro Ltd

ADRs were listed on the New York Stock Exchange.
http://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Information_technologyhttp://en.wikipedia.org/wiki/Customer_servicehttp://en.wikipedia.org/wiki/Lightinghttp://en.wikipedia.org/wiki/Engineeringhttp://en.wikipedia.org/wiki/Healthcarehttp://en.wikipedia.org/wiki/Azim_Premjihttp://en.wikipedia.org/wiki/Azim_Premjihttp://en.wikipedia.org/wiki/Azim_Premjihttp://en.wikipedia.org/wiki/Stanford_Universityhttp://en.wikipedia.org/wiki/IBMhttp://en.wikipedia.org/wiki/American_Depositary_Receipthttp://en.wikipedia.org/wiki/American_Depositary_Receipthttp://en.wikipedia.org/wiki/IBMhttp://en.wikipedia.org/wiki/Stanford_Universityhttp://en.wikipedia.org/wiki/Azim_Premjihttp://en.wikipedia.org/wiki/Azim_Premjihttp://en.wikipedia.org/wiki/Azim_Premjihttp://en.wikipedia.org/wiki/Healthcarehttp://en.wikipedia.org/wiki/Engineeringhttp://en.wikipedia.org/wiki/Lightinghttp://en.wikipedia.org/wiki/Customer_servicehttp://en.wikipedia.org/wiki/Information_technologyhttp://en.wikipedia.org/wiki/India


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The company's revenue grew by 450% from 2002 to 2007. This success has led to higher salaries(wages have been growing by more than 14% per year since 2005), which puts pressure on the

company's margins.

Wipro Technologies deals in following businesses

IT Services: Wipro provides complete range of IT Services to the organization. The rangeof services extends from Enterprise Application Services (CRM, ERP, e-Procurement andSCM) to e-Business solutions. Wipro's enterprise solutions serve a host of industries suchas Energy and Utilities, Finance, Telecom, and Media and Entertainment.

Product Engineering Solutions: Wipro is the largest independent provider of R&Dservices in the world. Using "Extended Engineering" model for leveraging R&D

investment and accessing new knowledge and experience across the globe, people andtechnical infrastructure, Wipro enables firms to introduce new products rapidly. Technology Infrastructure Service: Wipro's Technology Infrastructure Services (TIS) is

the largest Indian IT infrastructure service provider in terms of revenue, people andcustomers with more than 200 customers in US, Europe, Japan and over 650 customers inIndia.

Business Process Outsourcing: Wipro provides business process outsourcing services in

areas Finance & Accounting, Procurement, HR Services, Loyalty Services andKnowledge Services. In 2002, Wipro acquiring Spectra mind and became one of thelargest BPO service players.

Consulting Services: Wipro offers services in Business Consulting, Process Consulting,

Quality Consulting, and Technology Consulting.

Wipro's Sister Concerns (Business Units)

Wipro Infrastructure Engineering: It has emerged as the leader in the hydraulic cylindersand truck tipping systems market in India.

Wipro InfoTech: It is one of the leading manufacturers of computer hardware and aprovider of systems integration and infrastructure services in India. Wipro InfoTech ismore focused on the manpower services and is not at the cutting edge of technology.

Wipro Lighting: It manufactures and markets the Wipro brand of luminaries. Wipro

Lighting offers lighting solutions across various application areas such as commerciallighting for modern work spaces, manufacturing and pharmaceutical companies, designerpetrol pumps and outdoor architecture.


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Timeline

1980 - Diversification into Information Technology

1990 - Incorporation of Wipro-GE medical systems 1992 - Going global with global IT services division 1993 - Business innovation award for offshore development

1995 - Wipro gets ISO 9001 quality certification, re-certified twice for mature processes 1997 - Wipro gets SEI CMM level 3 certification, enterprise wide processes defined

o Start of the Six Sigma initiative, defects prevention practices initiated at project

level. 1998 - Wipro first software services company in the world to get SEI CMM level 5 [4] 1999 - Wipro's market capitalization is the highest in India

2000 - Start of the Six Sigma initiative, defects prevention practices initiated at project

level. Wipro listed on New York Stock Exchange.

2001 - First Indian company to achieve the "TL9000 certification" for industry specificquality standards.

o Wipro acquires American Management Systems global energy practice o Becomes world's first PCMM Level 5 Company.o Premji established Azim Premji Foundation, a not-for-profit organization for

elementary education. Wipro becomes only Indian company featured in Business Weeks 100 best -performing

technology companies.

2002o Worlds first CMMi ver 1.1 Level 5 company.

o Wipro acquires Spectramind.

o Ranked the 7th software services company in the world byBusinessWeek(Infotech 100, November 2002).

2003

o Wipro acquires Nervewire.o Wipro Technologies Wins Prestigious IEEE Award for Software Process

Excellence.

o Wipro Technologies awarded prestigious ITSMA award for services marketingexcellence.

o Wipro wins the 2003 Asian Most Admired Knowledge Enterprise Award.

2004o Crossed the $1 Billion mark in annualized revenues.

o Wipro launches Indias first RFID enabled apparel store.o Wipro Technologies named Asian Most Admired Knowledge Enterprise second

year in a row.o IDC rates Wipro as the leader among worldwide offshore service providers

2005 - Wipro acquires mPower to enter payments space and also acquires EuropeanSystem on Chip (SoC) design firm NewLogic

2008 - Wipro acquires Gallagher Financial Systemsto enter mortgage loan origination

space
http://en.wikipedia.org/wiki/Wipro_Technologies#cite_note-zdnet-3http://en.wikipedia.org/wiki/Wipro_Technologies#cite_note-zdnet-3http://en.wikipedia.org/wiki/BusinessWeekhttp://en.wikipedia.org/wiki/BusinessWeekhttp://en.wikipedia.org/wiki/BusinessWeekhttp://en.wikipedia.org/wiki/BusinessWeekhttp://en.wikipedia.org/wiki/Wipro_Technologies#cite_note-zdnet-3


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The Offer and Listing

Price History

Wipros equity shares are traded on The Stock Exchange, Mumbai or BSE and the NationalStock Exchange of India Limited, or NSE. During the year the company has obtained approvalfor de-listing its equity shares from the Kolkata Stock Exchange Association Limited. ItsAmerican Depositary Shares, as evidenced by American Depositary Receipts, or ADRs, aretraded in the U.S. on the New York Stock Exchange, or NYSE, under the ticker symbol WIT.Each ADS represents one equity share. Its ADSs began trading on the NYSE on October 19,

2000.

As of March 31, 2009, Wipro had 1,464,980,746 issued and outstanding equity shares. As ofMarch 31, 2009, there were approximately 14,945 record holders of ADRs evidencing23,692,051 ADSs (equivalent to 23,692,051 equity shares). As of March 31, 2009, there wereapproximately 228,457 record holders of its equity shares listed and traded on the Indian StockExchanges.

The following tables set forth for the periods indicated the price history of our equity shares andADSs on the BSE, NSE and the NYSE. The stock prices for the prior periods are restated toreflect stock dividend issued by the Company from time to time.


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Track of last 6 months of ADR on exchange showing % deviation from Fair

Value in India

Date INR/USDWipro

nasdaqWiproBSE ADR Value % deviation from Fair Value

8/4/2009 47.57995 15.24 482.35 725.118438 50.33%

8/3/2009 47.59002 15.12 491.05 719.5611024 46.54%

7/31/2009 48.06196 14.52 490.65 697.8596592 42.23%

7/30/2009 48.30997 14.39 488.55 695.1804683 42.29%

7/29/2009 48.42598 14.14 466.7 684.7433572 46.72%

7/28/2009 48.21491 14.15 464 682.2409765 47.03%

7/27/2009 48.16525 14.16 459.75 682.01994 48.35%

7/24/2009 48.23013 14.08 459.4 679.0802304 47.82%

7/23/2009 48.45035 13.95 456.25 675.8823825 48.14%

7/22/2009 48.52019 13.56 451 657.9337764 45.88%

7/21/2009 48.43985 13.48 457.95 652.969178 42.59%

7/20/2009 48.20497 13.64 460.05 657.5157908 42.92%

7/17/2009 48.73031 13.06 429.4 636.4178486 48.21%

7/16/2009 48.67021 12.67 416.45 616.6515607 48.07%

7/15/2009 48.63014 12.21 412.85 593.7740094 43.82%

7/14/2009 48.96505 11.27 400.25 551.8361135 37.87%

7/13/2009 49.0898 11.22 389.7 550.787556 41.34%

7/10/2009 48.79002 11.49 384.7 560.5973298 45.72%

7/9/2009 48.70979 11.3 372.15 550.420627 47.90%

7/8/2009 48.89001 10.93 373.3 534.3678093 43.15%

7/7/2009 48.23026 11.12 376.4 536.3204912 42.49%

7/6/2009 48.57523 11.26 371.1 546.9570898 47.39%

7/3/2009 47.87993 11.75 385.55 562.5891775 45.92%

7/2/2009 47.94505 11.7 381.25 560.957085 47.14%

7/1/2009 47.89515 11.8 378.45 565.16277 49.34%

6/30/2009 47.76992 11.85 377.65 566.073552 49.89%

6/29/2009 48.05022 11.89 378.65 571.3171158 50.88%

6/26/2009 48.10017 11.46 383.7 551.2279482 43.66%

6/25/2009 48.60258 11.11 374.6 539.9746638 44.15%

6/24/2009 48.53019 10.72 381.25 520.2436368 36.46%

6/23/2009 48.55273 10.66 376.6 517.5721018 37.43%

6/22/2009 48.42979 11.35 378.3 549.6781165 45.30%

6/19/2009 48.01034 11.47 380.7 550.6785998 44.65%

6/18/2009 48.10991 11.52 377.75 554.2261632 46.72%

6/17/2009 47.98988 11.53 378.65 553.3233164 46.13%

6/16/2009 47.59971 11.95 397 568.8165345 43.28%

6/15/2009 47.7148 12.28 401.75 585.937744 45.85%

6/12/2009 47.60354 12.91 409.95 614.5617014 49.91%

6/11/2009 47.61472 12.63 423.25 601.3739136 42.08%


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6/10/2009 47.33017 12.81 432.7 606.2994777 40.12%

6/9/2009 47.48979 12.24 423.75 581.2750296 37.17%

6/8/2009 47.55517 12.41 406 590.1596597 45.36%

6/5/2009 47.11222 12.38 392.8 583.2492836 48.49%

6/4/2009 47.20468 12.2 390.9 575.897096 47.33%

6/3/2009 47.0599 12.51 395.9 588.719349 48.70%

6/2/2009 47.01643 12.46 391.35 585.8247178 49.69%

6/1/2009 46.96273 11.8 397.7 554.160214 39.34%

5/29/2009 47.11732 11.55 381.55 544.205046 42.63%

5/28/2009 47.6097 11.25 368.4 535.609125 45.39%

5/27/2009 47.66995 11.17 378.55 532.4733415 40.66%

5/26/2009 47.86022 10.96 372.3 524.5480112 40.89%

5/25/2009 47.30478 10.87 366.65 514.2029586 40.24%

5/22/2009 47.10993 11.08 368.7 521.9780244 41.57%

5/21/2009 47.28001 11.16 375.6 527.6449116 40.48%

5/20/2009 47.42001 11.49 394.8 544.8559149 38.01%

5/19/2009 47.78504 10.69 385.9 510.8220776 32.37%

5/18/2009 47.89017 10.38 497.0999646

5/15/2009 49.39266 10.1 377.75 498.865866 32.06%

5/14/2009 49.71024 10.52 364.35 522.9517248 43.53%

5/13/2009 49.71005 9.92 374.75 493.123696 31.59%

5/12/2009 49.3174 10.42 375.25 513.887308 36.95%

5/11/2009 49.51009 10.23 349.4 506.4882207 44.96%

5/8/2009 49.28268 10.6 355 522.396408 47.15%

5/7/2009 49.09975 10.9 380.05 535.187275 40.82%

5/6/2009 49.59015 10.61 359.2 526.1514915 46.48%

5/5/2009 49.30016 9.47 368.4 466.8725152 26.73%

5/4/2009 49.91001 9.38 364.6 468.1558938 28.40%

4/30/2009 49.91488 9.26 462.2117888

4/29/2009 50.03468 9.09 330.5 454.8152412 37.61%

4/28/2009 50.51724 9.16 315.4 462.7379184 46.71%

4/27/2009 50.24762 9.12 324.75 458.2582944 41.11%

4/24/2009 49.77479 9 311.9 447.97311 43.63%

4/23/2009 49.93487 8.52 312.95 425.4450924 35.95%

4/22/2009 50.32981 8.16 281.65 410.6912496 45.82%

4/21/2009 50.47247 8.01 274.25 404.2844847 47.41%

4/20/2009 50.1797 8.47 273.6 425.022059 55.34%

4/17/2009 49.85986 8.32 274.3 414.8340352 51.23%

4/16/2009 49.7575 8.06 276.65 401.04545 44.96%

4/15/2009 49.67509 8.44 269 419.2577596 55.86%

4/14/2009 49.57517 8.75 433.7827375

4/9/2009 49.98493 8.85 274.2 442.3666305 61.33%

4/8/2009 50.18971 8.89 282.1 446.1865219 58.17%

4/7/2009 50.02037 8.03 401.6635711

4/6/2009 50 8.34 269.45 417 54.76%

4/3/2009 50.0797 8.45 423.173465

4/2/2009 50.35021 7.99 270.25 402.2981779 48.86%

4/1/2009 50.56998 7.29 251.6 368.6551542 46.52%

3/31/2009 50.64022 7.11 245.4 360.0519642 46.72%

3/30/2009 51.5152 7.12 241.1 366.788224 52.13%


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3/27/2009 50.64536 7.4 253.1 374.775664 48.07%

3/26/2009 50.15507 7.82 254.6 392.2126474 54.05%

3/25/2009 50.66993 7.5 242.4 380.024475 56.78%

3/24/2009 50.72037 7.46 242.3 378.3739602 56.16%

3/23/2009 50.37911 7.69 239.05 387.4153559 62.06%

3/20/2009 50.56978 6.6 231.45 333.760548 44.20%

3/19/2009 50.31015 6.79 232.7 341.6059185 46.80%

3/18/2009 51.29018 6.66 230.65 341.5925988 48.10%

3/17/2009 51.41014 6.34 227.3 325.9402876 43.40%

3/16/2009 51.40009 6.3 228.25 323.820567 41.87%

3/13/2009 51.49477 6.24 224.55 321.3273648 43.10%

3/12/2009 51.89016 6.07 212.1 314.9732712 48.50%

3/11/2009 51.15986 5.79 296.2155894

3/10/2009 51.55996 5.98 308.3285608

3/9/2009 51.87027 5.38 205.75 279.0620526 35.63%

3/6/2009 51.69537 5.56 213.2 287.4262572 34.82%

3/5/2009 51.76981 5.53 206.25 286.2870493 38.81%

3/4/2009 51.53485 5.74 205.85 295.810039 43.70%

3/3/2009 51.96988 5.36 200.5 278.5585568 38.93%

3/2/2009 51.88473 5.14 202.85 266.6875122 31.47%

2/27/2009 51.07007 5.69 207.35 290.5886983 40.14%

2/26/2009 50.39509 5.93 215.95 298.8428837 38.39%

2/25/2009 49.83978 6.04 217.45 301.0322712 38.44%

2/24/2009 49.91773 6.11 212.2 304.9973303 43.73%

2/23/2009 49.82497 5.99 298.4515703

2/20/2009 49.62513 6.17 215.3 306.1870521 42.21%

2/19/2009 49.68501 6.32 220.35 314.0092632 42.50%

2/18/2009 49.68006 6.25 209.05 310.500375 48.53%

2/17/2009 49.43486 6.32 209.7 312.4283152 48.99%

2/16/2009 48.61966 215.8

2/13/2009 48.42471 6.77 223.9 327.8352867 46.42%

2/12/2009 48.59035 6.84 222.3 332.357994 49.51%

2/11/2009 48.65976 6.67 221.95 324.5605992 46.23%

2/10/2009 48.66507 6.77 225.55 329.4625239 46.07%

2/9/2009 48.60009 7.17 226.2 348.4626453 54.05%

2/6/2009 48.52532 7.28 223.95 353.2643296 57.74%

2/5/2009 48.66007 6.81 219.7 331.3750767 50.83%

Calculation of ADR on 5th Feb 2009

Wipro Technologies on 5 th Feb 2009 Trades on Bombay Stock Exchange at 219.7 Indian

Rupees.

This is equal to US$ 219.7/48.66 = 4.51

Now the ratio at which Wipro Technologies shares are priced in U.S is 1:1

This means that each ADR you purchase is worth 1 share on the Bombay stock exchange.


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A quick calculation tells us that each ADR should have an issue price of US$ 4.51 (US$

4.51 per share X 1 shares)-since 1 share equal to 1 ADR

Once an ADR is priced and sold, its subsequent price is determined by supply and

demand factors, like any ordinary share.

Inference

We see that on 5th Feb 2009 ADR is priced at US$ 6.81, while it should ideally be 4.51.

Hence, there is a percentage deviation of 50.83.

Graphical Representation of the movement of shares on BSE and NASDAQ

0

100

200

300

400

500

600

700

800

1 8 15 22 29 36 43 50 57 64 71 78 85 92 99 106 113 120

BSE

NASDAQ


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Graphical Representation of the Percentage Deviation of ADR for last 6

months

% deviation from Fair Value

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

1 11 21 31 41 51 61 71 81 91 101 111 121

% deviation from Fair Value

Graphical Representation of the movement of Infy NASDAQ w.r.t movement

of INR & US$

0

10

20

30

40

50

60

1 9 17 25 33 41 49 57 65 73 81 89 97 105 113 121

INR/USD

Wipro NASDAQ


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Inferences

Fluctuations in the exchange rate between the Indian rupee and the U.S. dollar will affect

the U.S. dollar equivalent of the Indian rupee price of our equity shares on the Indianstock exchanges and, as a result, will likely affect the market price of our AmericanDepositary Shares, or ADSs, listed on the New York Stock Exchange, and vice versa.

Though once an ADR is priced and sold, its subsequent price is determined by supply and

demand factors, like any ordinary share. But, we see here that somewhat the movement

of ADR is similar to the value of price at BSE. This means that, both ADR and share

value at BSE are governed by some common factors.

adr wipro meenakshi 2212376

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