We also provide a supplementary History of Tata Steel Share in this article. The 1954 Tata Steel Bonus History. How many bonus shares do Tata Steel’s stockholders receive?
With operations in 26 countries and a market capitalisation of more than $30 billion, Tata Steel is one of the top steel makers in the world. The company has a history of rewarding its shareholders with bonus shares, which are additional shares issued to existing shareholders for free. Bonus shares increase the number of shares outstanding, but do not change the total value of the company or the share price.
This essay will look at the background of Tata Steel bonuses, the reasons for granting bonus shares, their benefits and drawbacks, as well as some frequently asked questions.
Tata Steel Bonus History Chart
The following chart shows the Tata Steel bonus history from 1981 to 2004. The company has issued bonus shares five times in this period, with a total bonus ratio of 1:40. This means that for every one share held in 1981, a shareholder would have received 40 additional shares by 2004.
Tata Steel Share Bonus History
The following table summarizes the Tata Steel bonus history, with the announcement date, bonus ratio, record date and ex-bonus date for each bonus issue. The record date is the date on which the shareholders are eligible to receive the bonus shares, and the ex-bonus date is the date on which the share price adjusts to reflect the bonus issue.
Why Does Tata Steel Issue Bonus Shares?
Tata Steel issues bonus shares for various reasons, such as:
- To increase the liquidity and affordability of its shares in the market, by reducing the share price and increasing the number of shares available for trading.
- To reward its loyal shareholders and increase their confidence and trust in the company.
- To signal its strong financial position and growth prospects, by showing that it has enough retained earnings to issue bonus shares.
- To align its capital structure with its business needs, by reducing its equity share capital and increasing its reserves.
Tata Steel Fundamental
- Revenue and Profitability: Tata Steel generates revenue in part because of its substantial position in the world steel market. The sale of various steel products in a variety of industries, such as the automotive, building, infrastructure, and engineering, generates income for the corporation.
- Global Operations: Tata Steel has operations in a number of nations, including those in Southeast Asia, Europe, and India. The company’s dependency on any one location is decreased by its exposure to many markets and varied client base due to its worldwide presence.
- Product Portfolio: Flat steel, long steel, tubes, and specialty steel are just a few of the steel goods that Tata Steel provides. With such a broad range of products, the business can meet various consumer needs and adjust to shifting market conditions.
- Iron and steel production facilities, iron and coal mining activities, downstream processing facilities, and distribution capabilities are all parts of Tata Steel’s integrated value chain. The organisation can better manage its supply chain and save money thanks to this integration.
- Tata Steel makes investments in research and development (R&D) initiatives to innovate and create new steel products, better the efficiency of manufacturing, and improve product quality. Innovative and sustainable steel solutions are in high demand from customers, and R&D initiatives help the firm stay competitive.
What are the Benefits and Drawbacks of Bonus Shares?
Bonus shares have both advantages and disadvantages for shareholders, such as:
- Bonus shares increase the number of shares held by shareholders, without any additional cost or tax implications.
- Bonus shares reduce the share price and make it more affordable for new investors, which can increase the demand and liquidity of the shares.
- Bonus shares indicate that the company is confident about its future performance and profitability, which can boost the shareholder sentiment and market value of the company.
- Bonus shares do not increase the intrinsic value or earnings per share of the company, as they are merely a book entry and do not represent any real cash inflow or outflow.
- Bonus shares may dilute the voting power and control of existing shareholders, as they increase the number of shares outstanding.
- Bonus shares may reduce the dividend per share of the company, as they increase the number of shares eligible for dividend distribution.
Q: How do I get bonus shares from Tata Steel?
A: To get bonus shares from Tata Steel, you need to be a shareholder of the company on the record date of the bonus issue. You can buy Tata Steel shares from any stock exchange where they are listed, such as BSE or NSE, through a broker or an online trading platform. You will receive your bonus shares in your demat account within a few days after the ex-bonus date.
Q: How do I calculate my new shareholding after receiving bonus shares from Tata Steel?
A: To calculate your new shareholding after receiving bonus shares from Tata Steel, you need to multiply your existing shareholding by (1 + bonus ratio). For example, if you had 1000 shares of Tata Steel before the bonus issue in 2004, and the bonus ratio was 1:2, then your new shareholding would be:
New shareholding = Existing shareholding x (1 + bonus ratio)
= 1000 x (1 + 1/2)
= 1000 x (3/2)
Therefore, you would have received 500 additional shares as bonus, and your total shareholding would be 1500 shares.
Q: How do bonus shares affect the share price of Tata Steel?
A: Bonus shares affect the share price of Tata Steel by reducing it proportionately to the bonus ratio. This is because the total market value of the company remains unchanged, but the number of shares outstanding increases. For example, if the share price of Tata Steel was Rs. 1000 before the bonus issue in 2004, and the bonus ratio was 1:2, then the new share price would be:
New share price = Old share price / (1 + bonus ratio)
= 1000 / (1 + 1/2)
= 1000 / (3/2)
= Rs. 666.67
Therefore, the share price of Tata Steel would have dropped by Rs. 333.33 after the bonus issue.
Q: Are bonus shares taxable?
A: Bonus shares are not taxable in the hands of shareholders, as they are not considered as income or capital gain. However, if you sell your bonus shares in the future, you may have to pay capital gains tax on the difference between the sale price and the cost of acquisition. The cost of acquisition of bonus shares is zero, as they are issued for free. Therefore, the entire sale proceeds will be treated as capital gain, and taxed accordingly.
Q: What is the difference between bonus shares and stock split?
A: Bonus shares and stock split are both methods of increasing the number of shares outstanding and reducing the share price, but they have some differences, such as:
- Bonus shares are issued from the retained earnings or reserves of the company, whereas stock split is a division of the existing shares into smaller units.
- Bonus shares increase the share capital and reserves of the company, whereas stock split does not affect the balance sheet of the company.
- Bonus shares are a reward for existing shareholders, whereas stock split is a neutral event that does not affect the value or ownership of shareholders.
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