TVS Motor Co to issue preferential bonus shares worth Rs 1,900 crore

TVS Motor Co’s board today approved the company’s plan to issue cumulative non-convertible redeemable preference shares (NCRPS) worth around Rs 1,900 crore as a bonus to its shareholders.

Non-convertible redeemable preference share means a preference share that is redeemable but is not convertible into or exchangeable with equity shares of the issuer at a later date.

These shares do not carry voting rights and they do not result in the expansion of the company's equity base or increase its debt. These NCRPS require no immediate payout and are cumulative in nature. On redemption, the shareholders get a cash payout.

“Pursuant to the scheme, 4 NCRPS of INR 10/- each fully paid up of the Company are proposed to be issued, by way of bonus, for every 1 equity share of Re 1 each fully paid up to the shareholders of the company by utilising its general reserves/retained earnings,” TVS Motor said in an exchange filing.

The preference shares will have a face value and issue price of Rs 10 apiece with a coupon rate of 6 percent and shall be redeemed on the expiry of 12 months from the date of allotment. The shares will be listed on the National Stock Exchange and BSE Ltd on which the company’s equity shares are listed. 

“Assuming the existing number of equity shares of the Company, an amount of around Rs 1,900 crore will be utilised from general reserves/retained earnings of the company for issuance of bonus NCRPS, under the scheme,” the company said. The company’s general reserve balance/retained earnings as of December 31 stood at Rs 7,574 Crore.

The issuance is subject to approvals from regulators and stock exchanges, the jurisdictional National Company Law Tribunal, and the applicable shareholders and creditors of the company.

Last week, TVS Motor’s board declared an interim dividend of Rs 8 per share for the financial year 2024 with March 19 as the record date. The company, which reported a net profit of Rs 1,598 crore for the first nine months of the current financial year, will incur Rs 380 crore as cost for this dividend payout. 

On Wednesday, the company’s shares closed at Rs 2,037.95 on the National Stock Exchange, down 0.2 percent from the previous closing.