An Indian Multinational automotive company, Tata Motors to demerge its businesses into two separate listed companies Commercial Vehicles and Passenger Vehicles.
The Board of Directors of Tata Motors Limited (TML) held a meeting and has approved the proposal of demerger of Tata Motors Ltd into two separate listed companies housing:
A) The Commercial Vehicles business and its related investments in one entity.
B) 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 the identical shareholding in both the listed entities.
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The decision to demerge the PV and EV businesses of Tata Motors is a natural next step after the earlier subsidiarisation in 2022.
This move will enable each business to independently focus on their unique strategies, driving increased growth and agility while also strengthening accountability.
Chairman N Chandrasekaran said, “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”, Chairman N Chandrasekaran added.
Chairman N Chandrasekaran further said, “This will lead to a superior experience for our customers, better growth prospects for our employees and, enhanced value for our shareholders.”
What will be effect of demerge businesses at Tata Motors?
The NCLT scheme of arrangement for the demerger will be submitted to the TML Board of Directors for their approval in the near future.
Following that, it will undergo a comprehensive process of obtaining necessary approvals from shareholders, creditors, and regulatory authorities, which may take approximately 12-15 months to finalize.
The demerger will have no adverse impact on employees, customers, and the business partners.
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