• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager
• BL Club
• Smartbuy
• Books
• Gallery

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

K.R.Srivats

New Delhi, Sept. 10 IFCI is not looking to offload its entire holding of Tata Motors Differential Voting Right (DVR) shares for now although it had sold large parcels of such shares recently, its Chief Executive Officer and Managing Director, Mr Atul Kumar Rai, has said.

“We have offloaded over 30 per cent of our holding. There is no view as yet on exiting. The idea was to create tradability and volumes for such instruments (DVRs). Trading volumes for DVRs were virtually non-existent. There is no depth. We think our move will help create liquidity”, Mr Rai told Business Line here.

He declined to specify the actual number of DVR shares sold by IFCI till date, but noted that the institution had earned over 20 per cent rate of return on the DVR shares offloaded.

Tata Motors was the first listed company to issue shares with DVRs in India. Of the 6.4 crore DVR shares issued by Tata Motors in November last, IFCI held 81.96 lakh shares as on June 30, 2009. Trading in DVR shares had commenced on the stock exchanges on November 5, 2008.

DVR shares are equity shares with differential voting rights and dividend benefits. DVRs allow investors to earn better returns/higher dividends for surrendering their voting rights. Issuance of DVR shares allows a company to raise money without diluting voting rights. This would help promoters to hedge against probable hostile takeovers.

The DVR issue was done by Tata Motors at a price of Rs 305, which was about 10 per cent less than the ordinary rights issue price of Rs 340. A total amount of Rs 4139.3 crore was raised by Tata Motors through rights issue and DVR issue. About 84 per cent of the issued DVRs is with the promoters.

Mr Rai also made it clear that IFCI does not have any commitment to hold on to the Tata Motors DVR shares. “Our strategy will be to maximise returns”, he said.

As regards the tax implications of the selling of DVR shares, Mr Rai noted that IFCI was a minimum alternate tax (MAT) paying company.

More Stories on : Financial Institutions | Stocks | Tata Motors Ltd

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Copyright © 2009, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line