Tata Motors to convert DVR shares into ordinary shares: Check details

Tata Motors on Tuesday (July 25) announced a simplification of its corporate structure along with the announcement of its June quarter (Q1FY24) numbers. The auto giant announced cancelling its 'A' ordinary shares (DVR) issued in 2008, followed by a further share sale in 2010 and a rights issue in 2015.

In its press release, the company said, "Tata Motors Board has approved an NCLT Scheme of Arrangement for the cancellation of "A" ordinary shares and the issuance of ordinary shares as consideration for the cancellation or capital reduction. It further said that every "A" ordinary shareholder will receive seven ordinary shares for every 10 "A" Ordinary shares held.

"This translates to a 23 per cent premium to the previous day's closing price, the company said in its press release.

The company added that the transaction will reduce the total share capital by nearly 4 per cent, making it EPS-accretive for all shareholders. Elimination of the price discount between ORD and "A" ORD shares will improve overall market capitalisation, and it expects it to take 12–15 months for completion.

Tata Motors, which produces India's top-selling Nexon sport utility vehicle (SUV), has benefited from a string of price hikes for its passenger vehicles and falling input costs, analysts have said.

Meanwhile, a 29 per cent jump in JLR's retail sales, excluding those of its China joint venture, drove up Tata Motors' quarterly revenue by 42.5 per cent to Rs 1.02 lakh crore. JLR, which usually forms two-thirds of the company's revenue, accounted for over 70 per cent of first-quarter revenue. READ MORE

However, second-quarter production and cash flow at JLR are expected to be lower than the first due to an annual summer plant shutdown.

Shares of Tata Motors closed up 1.6 per cent ahead of results. They have outperformed the Nifty Auto index's 25 per cent increase so far this year, with a 64.8 per cent rise for the year as the company swung to a profit on improved sales and financials at JLR.

With inputs from Reuters

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