In this ppt you will get to know what is right issue and how Tata Motors Issued Right Issue and what was the purpose of issuing right issue by the Company.

1. Presented By-
Jaya Saxena
Kirti Gupta
Pawan Tiwari
Abdul Razzaq
MBA-FINANCE

2. INTRODUCTION
 Name Of Company- Tata Motors Limited (formerly TELCO,
short for Tata Engineering and Locomotive Company
 CEO- Cyrus Pallonji Mistry (Chairman)
 Consolidated Revenue- 2,62,796 cr. 2014-15
 Founder: J. R. D. Tata
 Founded: 1945
 Subsidiaries: Land Rover, Jaguar Cars, Jaguar Land
Rover, Tata Daewoo, Tata Marcopolo, Tata Hispano, Tata
Motors Cars
 Parent organization: Tata Group

3. WHAT IS RIGHT ISSUE
 An 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.

4. ADVANTAGES OF RIGHT ISSUE
 Control in the hands of existing shareholders
 No dilution in the value of existing shares
 Expenses Saved
 Better Image
 More Certainty of getting shares
 No Misuse by directors

5. 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 Meeting
 Pass 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.

6. CONT…
 Issue notice in writing to every Director at least seven days’
before convening the Board meeting. [Sec 173 (3)]
 Convene a Board Meeting
 Pass 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.

7. 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

8. TATA MOTORS
RIGHT ISSUE
Offered Up to
150644759 Ordinary
Shares
face 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 ISSUE
 The Share Issue commenced on April 17, 2014 and closed on
May 2, 2015.

9. 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 subscribed
 Raised capital of 3853 cr.

10. 2015 RIGHT ISSUE
 2015 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.