IGI Logo

Tata Motors remains the only major listed company with "A" ordinary share capital.

In 2008, TML issued "A" ordinary shares at a 10 per cent discount to ordinary with lower voting rights (1/10th) and higher dividend (by 5 per cent).

In 2009, SEBI disallowed companies to create new class of shares with differential rights impacting the market for new issuances. Existing "A" ordinary shares were allowed to continue.

Tata Motors announced its DVR to get delisted and shareholders of DVR will get ordinary shares in the ratio 7:10.

The transaction will reduce the total share capital by 4 per cent making it EPS accretive for all shareholders.

Promoter voting rights diluted by 3.2 per cent and post implementation of scheme voting rights and economic rights of shareholders will become the same.

Elimination of price discount between ordinary and "A" ordinary shares will improve overall market capitalization, Tata Motors said.

Tata Motors Board has approved a NCLT Scheme of Arrangement for cancellation of "A" ordinary shares and issuance of ordinary shares as consideration for the cancellation/capital reduction.

Every "A" ordinary shareholder will receive 7 ordinary shares for every 10 "A" ordinary shares held.

This translates to 23 per cent premium to the previous day closing price of "A" ordinary shares; and 30 per cent discount to ordinary share price versus 43 per cent prevailing discount.

The transaction will reduce the total share capital by 4 per cent making it EPS accretive for all shareholders. Also, elimination of price discount between ORD and "A" ordinary shares will improve overall market capitalization. 

There is no cash outgo for Tata Motors and hence no impact on Net Debt.

The transaction increases the free float of ORD shares by 18 per cent and enhances voting rights of public shareholders by 3.2 per cent.

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.