Data source: SEBI 

Indian corporates' liking for overseas capital is well known. Not only is the capital abundant in foreign markets but it is also cheap. This is because interest rates in foreign markets are lower than in India. But interest rates are relevant when it comes to borrowing via debt. Apart from debt which comes in the form of foreign currency convertible bonds and external commercial borrowings (ECB's) corporates can also raise equity capital from foreign markets. This comes in the form of American Depository Receipts (ADRs) and Global Depository Receipts (GDRs). Raising capital via this mechanism enables foreign investors to participate in India story without taking any currency risk. On the other hand, listing in overseas markets gives the subject company a global platfor m.

Considering the recent slowdown in overseas markets the appetite of raising money via ADRs and GDRs has dried up. It can be seen from the chart that in all the 4 quarters of FY12 money raised via both these instruments was higher than in FY13. In fact, in 4QFY13 not a single Indian company managed to raise a penny via these instruments. It is not that Indian corporates have sufficient liquidity and they don't need to raise capital. The reason for dying faith in these instruments is that foreign investors are a bit circumspect about putting their money in India right now. Hence, Indian companies are unwilling to raise capital via this mechanism. We feel that unless the global environment improves such a dry spell is likely to continue.