Tata Motors – Adjustment of cost post demerger | All you need to know

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Tata Motors has announced the proportion of cost allocation for its equity shares following the demerger. Please refer to the circular for detailed information. Accordingly, you are requested to make the following changes in your portfolio to reflect the correct cost of acquisition.

From Geojit’s end, you will notice the new shares credited through the demerger. The Tata Motors Limited (TML) shares currently show an average rate of Rs. 335, for investors who have a Dmat a/c with Geojit,  which is derived from the opening rate on the listing day. Investors may edit this figure based on the cost calculation illustrated below.

How to calculate your average rate after the demerger ?

For example, Mr. Ram is holding 100 shares of Tata Motors Limited at Rs. 1,000 per share before the demerger.

Tata Motors Limited has undergone a demerger, resulting in the formation of two entities — Tata Motors Limited (formerly TML Commercial Vehicles Limited), and Tata Motors Passenger Vehicles Limited (formerly Tata Motors Limited).

As per the demerger plan, shareholders shall apportion their total cost of acquisition of the original Tata Motors Limited shares in the following manner:

Sl. No	Name of Entity	% of Total Cost of Acquisition of Ordinary Shares
1.	Tata Motors Limited (formerly TML Commercial Vehicles Limited)	31.15%
2.	Tata Motors Passenger Vehicles Limited (formerly Tata Motors Limited)	68.85%

Example Calculation

Mr. Ram’s total investment in 100 shares of Tata Motors Limited before the demerger is:

100 × Rs. 1,000 = Rs. 1,00,000

After applying the apportionment ratio:

Particulars	Quantity	% Allocation	Total Cost	Average Rate
Tata Motors Limited (CV business)	100	31.15%	Rs. 31,150	Rs. 311.50 per share
Tata Motors Passenger Vehicles Limited (PV business)	100	68.85%	Rs. 68,850	Rs. 688.50 per share

How to update the average rate in MyGeojit ? 

To reflect the correct average rates in your portfolio, the following entries can be made through MyGeojit:

• Sale Entry: 100 Tata Motors Limited (pre-demerger) shares sold @ Rs. 1,000 per share (original cost).
• Buy Entry:

1. 100 Tata Motors Limited (post-demerger) shares bought @ Rs. 311.50 per share.
2. 100 Tata Motors Passenger Vehicles Limited shares bought @ Rs. 688.50 per share.

By making these entries, your average rates will be correctly updated in MyGeojit and will also reflect accurately on your trading terminals.

Note: This adjustment is only for the purpose of cost apportionment following the demerger. It does not impact your total investment value or the number of shares held, but ensures that your average purchase prices reflect the correct post-demerger cost allocation.

Notes on Dates :

The dates on which these entries are posted should correspond to your original purchase date :
        * If your purchase was after April 2016, please use the same purchase date for these entries. 
        * If your purchase was before April 2016, it is advisable to post these entries with the date as April 2016.