Shareholders raise queries on TaMo dividend

MUMBAI: Tata Motors shareholders have questioned the company’s leadership on goals for dividend payments, even as they lauded the management’s commitment to make the company debt-free by fiscal 2024. The flagship of India’s largest conglomerate, the Tata Group, hasn’t paid dividends to shareholders for the last five fiscals.
At Tata Motors’s 76th AGM on Friday, shareholder Hiranand Kotwani asked when the company would pay dividends.“Though it is heartening to know that the company is sticking to its target of bringing the automotive debt to zero by fiscal 2024, are we going to get dividends then?” Kotwani asked. Another shareholder, Smita Shah, remarked that “the company’s share price is doing good, but please think about dividends too”. Long-time shareholder Adil Irani said, “I do mind if I don’t get a dividend.”
Responding to the shareholders, Tata Motors chairman N Chandrasekaran said, “We understand your concerns about dividend. We too have that concern. We want to make Tata Motors a dividend-paying company.” Companies pay dividends out of profits or from reserves of accumulated profits. To pay dividends from the reserves of accumulated profits, shareholders’ approval is required. Tata Motors was in the red for the last three fiscals. At last year’s shareholder meeting, Tata Motors had declared that it would become debt-free by fiscal 2024. Though Tata Motors has managed to reduce the net automotive debt by Rs 7,300 crore to Rs 40,900 crore in fiscal 2021, its financial obligations shot up to Rs 61,300 crore by June-end.
But the management is confident of reducing the debt as it expects improved cash flows from the business. “As the impact of the pandemic recedes with more people getting vaccinated, we expect demand to remain strong with consumer preference shifting towards personal mobility,” the chairman informed shareholders.
“The supply situation, however, is expected to be adversely impacted for the next few months due to disruptions from Covid lockdowns in India and semiconductor shortage worldwide,” Chandrasekaran said, adding that this will impact production volumes, sales and margins in the near term. “We expect the situation to improve in the second half of fiscal 2022.”