Tata Capital Ltd – Preference Shares Issue 2019


About the Company

  • Tata Capital Limited ("TCL"), the flagship financial services company of the Tata Group, is a subsidiary of Tata Sons Private Limited and is registered with the Reserve Bank of India as a Systemically Important Non-Deposit Accepting Core Investment Company ("CIC").
  • TCL group has a diversified product portfolio with a presence in both the wholesale and retail finance segments.
  • In the previous tranche of preference shares, CRISIL had assigned ‘AAA/Stable’ rating on preference shares of ₹40 crore of Tata Capital Limited (TCL). CRISIL has also reaffirmed its ratings on the company's other debt instruments and long term bank facilities at 'CRISIL AAA/Stable/CRISIL A1+'.

About Preference Shares

Preference shares are one of the special types of share capital having fixed rate of dividend and they carry preferential rights over ordinary equity shares in sharing of profits and also claims over assets of the firm. It is ranked between equity and debt as far as priority of repayment of capital is concerned. Some of the key features of preference shares are:

  • Fixed Dividends - Preference shares carry a fixed rate of interest on the face value for payout of dividends
  • Preferential Rights - Preference shares have preferential rights over ordinary equity shares with respect to sharing of income and claims on assets. Preference share dividend has to be paid before any dividend payment to ordinary equity shares. Similarly, at the time of liquidation also, these shares would be paid before equity shares
  • No Voting Rights - These shares have no voting rights and the holders do not have any say in the management of the company
  • Fixed Maturity - Similar to a debt instrument, preference shares also have fixed maturity date
  • Dividends Paid out of Profits - Preference dividend is paid out of the divisible profits of the company. A company is not bound to pay dividend on preference shares if its profits in a particular year are insufficient. In case of cumulative preference shares, dividends are postponed to future years

TATA Capital Preference Shares Details 1
TATA Capital Preference Shares Details 2

* In pursuance of Section 43 of the Act, the CRPS shall carry a preferential right with respect to (a) payment of dividend calculated at a fixed rate, which may either be free of or subject to income tax; and (b) repayment, in the case of a winding up or repayment of capital, of the amount of the share capital paid-up or deemed to have been paid-up, whether or not, there is a preferential right to the payment of any fixed premium. Note: Investors are advised to consult their tax advisor before investing in any financial instrument.

Who Can Apply: Scheduled Commercial Banks; Co-operative Banks; Regional Rural Banks; Insurance Companies; Mutual Funds; Indian Companies and Bodies Corporate registered in India; Trust; Resident Individual Investors; Hindu Undivided Families through Karta; Limited Liability Partnerships; Public Financial.

Who Cannot Apply: Minors without guardians’ name; Association of Persons, Foreign Portfolio Investors; Qualified Foreign Investors; Foreign Nationals; Non-Resident Indians; Persons resident outside India; Venture Capital Funds; Alternative Investment Funds, Overseas Corporate Bodies; Foreign Institutional Investors; Multilateral and Bilateral Financial Institutions; Bodies Corporate incorporated outside India.



Disclaimer: This document is prepared by the Research Division of IndiaNivesh Securities Ltd (The Company) on the publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been taken based upon this information. IndiaNivesh Securities Ltd does not warranty either expressly of impliedly, the accuracy, completeness or reliability of any information provided herein. Neither IndiaNivesh Securities Ltd nor any of its employees / Directors / authorized representatives shall be liable for any direct, indirect, special consequential, punitive or exemplary damages including lost profits arising in any way from the information contained in this material, and hereby disclaims any liability with regard to the same. This report is disseminated for the information of authorized recipients only and is not to be relied upon or taken is substitution for the exercise of due diligence and judgment by any recipient. This report does not provide individually tailored investment advice; investor should seek independent financial advice with respect to the merits and risks involved in any of the matters concerning investment in the Schemes / products mentioned in the report.

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