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Our Bureau

Mumbai, Nov 3 The non-promoter shareholders have ignored Tata Motors’ rights issue, the data released by the company reveal.

The promoters – Tata Sons, Tata Capital and Tata Investment Corporation Ltd – picked up 60.69 per cent of ‘A’ ordinary shares – shares with differential voting rights – worth Rs 1,187.85 crore and 58.31 per cent of ordinary shares worth Rs 1,272.38 crore. Together, the company has invested Rs 2,228 crore to buy the unsubscribed portion of rights issue shares as the retail and institutional shareholders turned down the offer.

The figures of rights issue allotment published by the company, show that shareholders have picked up only 33.75 per cent of the rights issue shares with differential voting rights. Given the fact that the promoters held 33.34 per cent stake in the company, it is clear that non-promoter shareholders did not subscribe to the offer. Post rights issue, the promoters’ stake in the company went up to 42 per cent.

The underwriters, JM Finance, subscribed a portion worth Rs 192.9 crore. JM was supposed to underwrite more than Rs 1,100 crore. However, it is learnt that due to financial constraints the merchant banker could not honour its commitment.

The rights issue – one share for every six shares held for both the ordinary shares and those with lower voting rights – was to raise Rs 4,145.81 crore to part-finance Tata Motors’ acquisition of Jaguar and Land Rover from Ford Motor Company. The deal was completed in June.

The price of ordinary rights issue was at Rs 340 and the differential voting rights component of the rights issue was priced at Rs 305. The issue opened on September 29 and closed on October 20. For the most part of the offer period, Tata Motors’ shares were being traded much below the offer price, hovering around Rs 250. The share which touched Rs 133 a week ago, closed at Rs 190.9 on the BSE on Monday, 11 per cent up from its previous close.

Shareholders picked up 41.34 per cent of ordinary rights issue shares. “Other than promoters some institutional investors might have bought some shares in the first few days since the rights issue was announced. Retail investors seem to have kept away,” said a Mumbai-based stock analyst.

“The poor response to the rights issue may be a temporary sentiment dampener. But in a way, it is positive for Tata Motors that the promoters’ stake has increased as the fundamentals of the company are strong,” said an analyst with brokerage firm Dolat Capital Market. “Most of the bad news including downtrend in Jaguar Land Rover sales, declining sales in the domestic market and Nano-related troubles has been discounted in the company’s stock price. It seems the worst phase has been over for the stock,” he said.

Ms Vaishali Jajoo, analyst with Angel Broking, said “If the market improves, the promoters can sell some of their stake to institutional buyers and strengthen its financial position.” However, she said “the company is still going through challenging times. The commercial vehicle sales have declined and it can be a concern,” she said.

More Stories on : Cars | Rights Issue | Tata Motors Ltd

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