Jul 26, 2023
By: Abhishek Jha
Credit: tata motors
Tata Motors has announced its DVR to get delisted and shareholders of DVR will get ordinary shares in the ratio 7:10.
Credit: Tata Motors
At present, Tata Motors has two types of listed equity securities – ordinary shares and 'A' ordinary shares which trade as Tata Motors DVR.
Credit: Tata Motors
‘A’ ordinary shares carry 1/10th of the voting rights of ordinary shares and are entitled to five percentage points higher dividend.
Credit: Tata Motors
The Tata Motors board has approved the cancellation of 'A' ordinary shares, and issue of 7 ordinary shares for every 10 'A' ordinary shares.
Credit: Tata Motors
Tata Motors had first issued the 'A' ordinary shares in 2008 and subsequently in a further QIP in 2010 and rights issue in 2015.
Credit: Tata Motors
The 'A' ordinary shares currently trade at a 43% discount to ordinary shares on the basis of closing prices on NSE as of July 24, 2023.
Credit: Tata Motors
“Elimination of price discount between ordinary and "A" ordinary shares will improve overall market capitalisation”
Credit: TataMotors
The move translates to a 23% premium to the closing price of "A" ordinary shares and a 30% discount to ordinary share price.
Credit: Tata Motors
There is no cash outgo for Tata Motors and hence no impact on the net debt of the company.
Credit: Tata Motors
Along with the delisting of ADRs, these actions will simplify, streamline and consolidate trading of TML equity shares to the TML ordinary shares on NSE and BSE.
Credit: tatamotors