Tata Motors - Delisting from NYSE

Tata Motors - Delisting from NYSE
Case Code: FINC215
Case Length: 7 Pages
Period: 2004-2023
Pub Date: 2024
Teaching Note: Available
Price: Rs.200
Organization: Tata Motors
Industry: Automotive
Countries: India
Themes: Stock Market
Tata Motors - Delisting from NYSE
Abstract Case Intro 1 Case Intro 2 Excerpts

Excerpts

The Listing

In July 2004, the board of Tata Motors approved a proposal to list the company on the NYSE in the form of ADRs. Tata Motors was listed on the NYSE in September 2004. Rata Tata, the then Chairman of Tata Sons, rang the opening bell at the stock exchange to mark the listing. It was listed under the symbol TTM. Tata Motors was the first Indian automobile company to list on the NYSE..

Changes in the Business Environment

In 2004, when Tata Motors was listed on the NYSE, the Indian stock market was not very robust. But over the years, the stock market grew vibrant, and the Futures and Options segment also grew significantly. Foreign Institutional Investors, who used to buy Indian companies’ stocks through ADS till the mid-2000s, began investing in the Indian companies directly. Thus, the company was not deriving many benefits out of the NYSE listing..

Delisting

In November 2022, Tata Motors announced that it was planning to delist its ADS. It announced in an exchange filing, “Since the company’s ADS were issued in 2004, it has witnessed a considerable increase in liquidity and foreign shareholder participation in the equity stock markets in India. The company has considered the consistent drop in the number of ADS outstanding as a percentage of its outstanding ordinary shares. Therefore, the rationale for ADS listing in the United States has significantly diminished.”..

What next?

The delisting was expected to have several benefits for Tata Motors. Foremost would be the simplification of financial reporting. As the shares were no longer traded on the US stock exchanges, the reporting requirements did not need to meet the standards specified by the US. It had thus, become simpler than before. At the same time, the administrative costs also were expected to come down..

Exhibits

Exhibit I: American Depository Receipts/Shares
Exhibit II: Reporting Obligations for Companies*

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