Right Issue Of TATA MOTORS

Presented By-Jaya Saxena

Kirti GuptaPawan TiwariAbdul Razzaq

MBA-FINANCE

INTRODUCTIONName Of Company- Tata Motors Limited (formerly TELCO,

short for Tata Engineering and Locomotive CompanyCEO- Cyrus Pallonji Mistry (Chairman)Consolidated Revenue- 2,62,796 cr. 2014-15Founder: J. R. D. TataFounded: 1945Subsidiaries: Land Rover, Jaguar Cars, Jaguar Land

Rover, Tata Daewoo, Tata Marcopolo, Tata Hispano, Tata Motors Cars

Parent organization: Tata Group

WHAT IS RIGHT ISSUEAn issue of rights to a company's existing shareholders that

entitles them to buy additional shares directly from the company in proportion to their existing holdings, within a fixed time period

In a rights offering, the subscription price at which each share may be purchased in generally at a discount to the current market price.

Rights are often transferable, allowing the holder to sell them on the open market.

ADVANTAGES OF RIGHT ISSUEControl in the hands of existing shareholdersNo dilution in the value of existing shares  Expenses SavedBetter ImageMore Certainty of getting sharesNo Misuse by directors

PROCEDURE FOR ALLOTMENT OF SHARES ON RIGHT BASIS ( Companies act- 2013 sec-62) Issue notice in writing to every Director at least seven days’

before convening the Board meeting. [Sec 173 (3)]Convene a Board MeetingPass a Board resolution for approving “Letter of offer”. The

offer letter shall include right of renunciation also.Dispatch Letter of offer to all existing shareholders through

registered post or speed post or through electronic mode at least three days before the opening of the issue.

Receive acceptance, renunciations, rejection of rights from shareholders.

CONT… Issue notice in writing to every Director at least seven days’

before convening the Board meeting. [Sec 173 (3)]Convene a Board MeetingPass Board resolution for approving allotment and issue of

shares.File with Registrar a return of allotment in E-Form PAS-3

within 30 days of allotment of shares.File C-form MGT 14 within 30 days of Issue of securities.

PURPOSE OF RIGHT ISSUE BY TATA MOTORS The management is likely to dilute around 4.5 per cent stake in

Tata Motors to issue additional shares to existing shareholders. The money raised through the rights issue will be used to

reduce debt. Tata Motors needs around Rs 2,500-Rs 3,000 crore annually

to meet its capex needs. This could be funded through the rights issue

The issue of additional equity will lead to expansion of equity base (more number of shares), which will lead to dilution of earnings per share

The proceeds from the share issue will intended to be used for funding expenditure towards plant and machinery, research and product development

TATA MOTORS RIGHT ISSUE

Offered Up to 150644759 Ordinary

Sharesface value Rs. 2 for cash at a price of Rs.450

(including a

premium of Rs. 448)

each in the ratio

of 6 Ordinary

Shares for every 109 fully paid-up

Ordinary Shares

Offered up to 2,65,30,290 ‘A’ Ordinary

Shares face value Rs. 2 at a price of Rs. 271

(including a

premium of Rs. 269)

each in the ratio of 6 ‘A’

Ordinary Shares

for every 109 fully paid-up

‘A’ Ordinary Shares,

TATA MOTORS PLANNED TO RAISE 7500 CR. THROUGH RIGHT ISSUEThe Share Issue commenced on April 17, 2014 and closed on

May 2, 2015.

RIGHT ISSUE IN 2008

Last time COMPANY ISSUED RIGHT ISSUED on 29-05-08 & company raised 4200 cr. Rs.

 Rights issue of ordinary shares at 340 per share of fv 10 aggregating Rs. 2186 cr.

The 'A' Ordinary Shares would be issued at a price of Rs. 305 per share of face value of Rs. 10/- each. Aggregating rs.1961 cr.

2008 ratio – 6:1( 1 Ordinary & ordinary “A” share for every 6 shares held)

Not fully subscribedRaised capital of 3853 cr.

2015 RIGHT ISSUE2015 ratio – 109:6 ( 6 fully paid-up Ordinary Shares for

every 109  share fully paid up)FOR EXAMPLE- If an investor holds 200 shares of Tata Motors Ltd. on record

date, will be eligible for 11 shares (200*6/109).   “A” ordinary shares means on the basis of DVR. Each “A”

ordinary shareholder get more than 0.5% div as compare to ordinary shareholder , voting rights are same 1 vote for every 10 shares held.

They invited American Depositary Shares (ADS) by offering up to 64,09,964 of such shares at a price of USD 39.42.

On may 2nd 2015 shares  was oversubscribed by 1.21 times & co. raised 9040.56 cr.

The money raised in 2015 helped the company to pay off debts which and also company invested the money in manufacturing 1500 new vehicle.