Tata Motors to demerge its businesses into two separate listed companies

Tata Motors demerger:  Leading automobile maker Tata Motors Limited (TML), is set to witness the demerger of Tata Motors Ltd into two separate listed companies housing. One of the new entities as per a company communique, is the Commercial Vehicles (CV) business and its related investments. Besides, Passenger Vehicles (PV) businesses including PV, EV, Jaguar and Land Rover (JLR), and its related investments have been clubbed in another entity, as per a company release. 

As per the company communique, the Board of Directors 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 demerger will be implemented through an NCLT scheme of arrangement and all shareholders of TML shall continue to have identical shareholding in both the listed entities," said the statement 
 

CV, PV and JLR business 

As per the Tata Motors communique, during the last few years, the Commercial Vehicles, Passenger Vehicles (PV+EV), and Jaguar Land Rover businesses have delivered a healthy performance by implementing varying strategies. Notably, since 2021, these businesses have been operating independently under their respective CEOs.

“This 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,” said the company communique quoting a spokesman. 

As per the Tata Motors release, while there are limited synergies between CV and PV businesses, a huge scope lies in harnessing of potential synergies across PV, EV, and JLR particularly in the areas of Electric Vehicles, autonomous vehicles, and vehicle software which the demerger will help secure,” said the release. 

“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.  

Tata Motors spokesperson said that the National Company Law Tribunal (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, the company release further added.