DVR share transfer will cost Rs 100 crore, according to Tata Motors

9 Aug 2023 , 02:23 AM

According to chairman N Chandrasekaran, stamp duty will be the main reason why Tata Motors’ decision to cancel its DVR (differential voting rights) shares, which are trading at a discount to its ordinary shares, will cost the business Rs 100 crore. After 15 years, the auto manufacturer is deleting DVR shares, which have fewer voting rights but a greater dividend yield.

At the annual general meeting (AGM) on Tuesday, shareholders questioned Chandrasekaran on Tata Motors’ decision to reduce its equity capital. Chandrasekaran said that the company is doing this to be fair to both ordinary and DVR shareholders. 

He continued by saying that the decision was approved by Tata Sons (the promoter) since it was in the best interests of the company and the shareholders.

According to Chandrasekaran, the cancellation of DVRs will also result in a 3.2% dilution of promoter voting rights.

In India, Tata Motors was the first business to release DVRs. They were issued to help pay for the purchase of Jaguar Land Rover in 2008. For every 10 DVR shares held by investors, it is presently lowering the equity capital by issuing seven ordinary shares. Tata Motors chose a share swap rather a cash purchase to repurchase the DVRs in order to retain liquidity for future expansion.

Chandrasekaran stated that the business is considering introducing a range of SUVs similar to the Jeep. But he went on to say that they wouldn’t be generic cars. ‘We are still assessing the locations where we wish to operate. This (items resembling Jeeps) is also being assessed. It won’t be a copycat product, though.

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