The weightage of Tata Motors Ltd. is set to increase on FTSE indexes after its 'A' Ordinary Shares get delisted on Aug. 30, 2024.
The 'A' Ordinary Shares are also known as Differential Voting Rights shares.
"Tata Motors will remain in the index with an increased shares in issue total from 3,323,739,001 to 3,679,691,028 and an increased investability weighting from 55.453246451966% to 57.3440863373663%," according to a statement on Tuesday. The tax adjustment for either withholding tax or capital gain tax for this event will not be reflected in the index treatment.
In July 2023, Tata Motors announced its plans to delist the DVR shares to simplify its capital structure. On Aug. 30, 2024, the company will issue seven ordinary shares for every 10 DVR shares held by an investor.
Upon completion of restructuring of the share capital, the equity capital will be reduced by nearly 4% and the effective shareholding of the promoter and promoter group will be reduced by 3.16%.
Tata Motors had issued the ‘A' Ordinary Shares in 2008 as part of a rights issue with the objective of raising funds for overseas investments.
The rights attached to the ‘A' Ordinary Shares are similar to the rights attached to the Ordinary Shares in all respects, except that they have 5% additional dividend rights and one tenth voting rights. The DVR, hence, trades at a discount to Ordinary Share.
DVR Shareholders
As of Aug. 27, public shareholders held a 92.33% stake in Tata Motors DVR, while a 7.67% stake rested with the promoter and promoter group.
Among public shareholders, mutual funds held 16.09% stake, with the highest 7.88% resting with the ICICI Prudential Value Discovery Fund.
Foreign portfolio investors, including Vanguard, BNP Paribas and Franklin Templeton, held 33.67%.
Rekha Jhunjhunwala, with 1,01,62,000 shares equivalent to a 2% stake, is a noteworthy shareholder.
