The Board of Directors of Tata Motors Limited (TML), at its meeting on Monday, has approved the proposal of demerger of Tata Motors Ltd into two separate listed companies housing: the Commercial Vehicles business and its related investments in one entity; and the Passenger Vehicles businesses including PV, EV, JLR and its related investments in another entity, the company announced through an exchange filing.
The demerger will be implemented through an NCLT scheme of arrangement and all shareholders of TML shall continue to have the identical shareholding in both the listed entities.
Tata Motors to demerge into two listed entities
According to the regulatory filing, the demerger is a logical progression of the subsidiarisation of PV and EV businesses done earlier in 2022 and shall further empower the respective businesses to pursue their respective strategies to deliver higher growths with greater agility while reinforcing accountability. Furthermore, while there are limited synergies between Commercial Vehicles (CV) and Passenger Vehicles (PV) businesses, there are considerable synergies to be harnessed across PV, EV and JLR particularly in the areas of EVs, autonomous vehicles, and vehicle software which the demerger will help secure.
“Tata Motors has scripted a strong turnaround in the last few years. The three automotive business units are now operating independently and delivering consistent performance. This demerger will help them better capitalise on the opportunities provided by the market by enhancing their focus and agility. This will lead to a superior experience for our customers, better growth prospects for our employees and, enhanced value for our shareholders,” said chairman N Chandrasekaran.
The NCLT scheme of arrangement for the demerger shall be placed before the TML Board of Directors for approval in the coming months and will be subject to all necessary shareholder, creditor and regulatory approvals which could take a further 12-15 months to complete. The demerger will have no adverse impact on employees, customers, and our business partners, said the company in the filing.
Tata Motors shares
The shares of Tata Motors on Monday at 3:30 pm IST closed at Rs 988.90, up by 0.056 per cent.
