NEW DELHI: Tata Motors (TML) has decided to cancel its ‘A’ ordinary shares, also known as different voting rights (DVR) shares as part of the company’s effort to simplify its capital structure. As per Tata Motors, this move will result in a reduction of the company’s overall outstanding shares by 4.2%. The cancellation process is expected to take 12-15 months. Tata Motors said the process will witness a 3.2% dilution in promoters voting rights.
To compensate DVR shareholders, Tata will issue 7 ordinary shares for every 10 ‘A’ ordinary shares. This is a 23% premium compared to the previous day’s closing level of ‘A’ ordinary shares as against ordinary shares, it said in a regulatory filing on Tuesday after announcing its June quarter results.
Post completion of delisting of the American Depository Shares from the New York Stock Exchange as of January 23, 2023, Tata Motors has currently two types of listed equity securities, namely Ordinary Shares and ‘A’ Ordinary Shares. The ‘A’ Ordinary Shares carry 1/10th of voting rights of Ordinary Shares and are entitled to 5 percentage points higher dividend.
The ‘A’ Ordinary shares were first issued by TML in 2008 and subsequently in a further QIP in 2010 and rights issue in 2015. Tata Motors remains the only large listed entity with DVRs in India. Regulatory changes have since restricted issuance of such instruments with DVR and TML remains only large listed corporate with such an instrument.
On Tuesday, it reported a consolidated profit of Rs 3,202.8 crore for June quarter as against a loss of Rs 5,006.60 crore in the same quarter last fiscal. However, profit fell sequentially by 40% as it had posted Rs 5,407 crore profits in the March quarter.
SHARE DISTRIBUTION: To compensate DVR shareholders, Tata will issue 7 ordinary shares for every 10 ‘A’ ordinary shares. This is a 23% premium compared to the previous day’s closing level of ‘A’ ordinary shares as against ordinary shares