- Tata Motors Ltd (TML) has announced its decision to demerge its businesses into two separate listed entities: commercial vehicles (CV) and passenger vehicles (PV) businesses.
- The demerger aims to empower the respective businesses to pursue their strategies with greater agility and reinforce accountability.
- Since 2021, the CV, PV+EV, and Jaguar Land Rover (JLR) businesses have been operating independently under their respective CEOs.
Tata Motors Demerger News
Tata Motors Ltd (TML) has revealed plans to demerge its businesses into two separate listed entities, namely the commercial vehicles (CV) and passenger vehicles (PV) businesses. The decision comes as a logical progression of the subsidiarisation of PV and EV businesses undertaken earlier in 2022.
The demerger is expected to empower the respective businesses to pursue their strategies more effectively and deliver higher growths with greater agility while reinforcing accountability.
The commercial vehicles (CV), passenger vehicles (PV+EV), and Jaguar Land Rover (JLR) businesses of Tata Motors have demonstrated strong performance over the past few years by successfully implementing distinct strategies. The businesses have been operating independently under their respective CEOs since 2021, contributing to Tata Motors’ overall success.
Tata Motors Demerger Date
Tata Motors’ scrip on the Bombay Stock Exchange (BSE) closed flat at Rs 989 following the announcement of the demerger. The demerger will be implemented through an NCLT scheme of arrangement, and all shareholders of TML will maintain identical shareholding in both listed entities. However, necessary shareholder, creditor, and regulatory approvals could take a further 12-15 months to complete the demerger process.
The demerger proposal, approved by the Board of Directors of TML, involves segregating Tata Motors Ltd into two separate listed companies. One entity will house the commercial vehicles business and its related investments, while the other will encompass the passenger vehicles businesses, including PV, EV, JLR, and their related investments.
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. This will lead to a superior experience for our customers, better growth prospects for our employees and, enhanced value for our shareholders.”
While there are limited synergies between commercial vehicles and passenger vehicle businesses, significant synergies exist across PV, EV, and JLR, particularly in the areas of electric vehicles, autonomous vehicles, and vehicle software. The demerger is expected to help secure these synergies without adversely impacting employees, customers, or business partners.