Tata Motors sets record date of Sep 1 for DVR conversion, share Issuance

Tata Motors on Monday issued a detailed notice intimating tax deductions applicable to various categories of investors

Tata Motors has fixed September 1 as the record date for the conversion of shares with differential voting rights (DVR) (also known as A-ordinary shares) into ordinary shares.

Under the plan, first proposed in July 2023, seven ordinary shares of Tata Motors will be issued for every 10 A-shares held and its outstanding A-shares will stand cancelled.

At the end of Tuesday’s trade, the DVR conversion plan presented a small arbitrage opportunity to only certain categories of investors such as mutual funds and insurance companies, who don’t face any tax implications.

The value of 10 A-shares stood at Rs 7,490, Rs 117, or 1.54 per cent, lower than Rs 7,607, the value of seven ordinary shares.

 

Shareholders buying the DVRs could be a cheaper alternative to buy shares of Tata Motors. However, this may not be applicable to all investors as the conversion plan has three-levels of tax implications.

First, the cancellation of A-shares will be deemed as ‘dividend payout’ on accumulated profits at Tata Motors when the scheme becomes effective.

This will lead to withholding of dividend distribution tax. Thereafter, any money A-shareholders get after the deemed dividend minus their cost of acquisition will be treated as long-term capital gains tax.

There will be a small element of short-term capital gains tax when the independent trust—set up to carry out this capital reduction scheme – will buy and sell shares to pay the withholding taxes.

Tata Motors on Monday issued a detailed notice intimating tax deduction applicable to various categories of investors.


Manjushree Techno files for Rs 3,000 crore IPO

Manjushree Technopack, a plastic packaging, has filed its draft red herring prospectus (DRHP) with the Sebi for a Rs 3,000 crore IPO. The IPO will be a mix of fresh issue of up to Rs 750 crore and an offer of sale up to Rs 2,250 crore. The issue proceeds will be used for debt repayment and for acquisitions. Incorporated in the year 1987, Manjushree Technopack is a one stop packaging solutions provider with end-to-end capabilities (i.e. from design to delivery).    BS reporter