Tata Motors to demerge its businesses into two separate listed companies

Shareholders will maintain the same ownership proportion in both new companies.

In a major restructuring move, Tata Motors Ltd. (TML) announced that its board approved a demerger plan today. The plan will create two separate publicly traded companies, aiming to empower individual business units and unlock potential synergies across key segments.

The demerger will split Tata Motors into two distinct entities: a company focused on the commercial vehicle (CV) business and its related investments; and a company encompassing all passenger vehicle (PV) businesses, including electric vehicles (EVs) and Jaguar Land Rover (JLR), along with their related investments.

This decision follows strong individual performances by each business unit within Tata Motors over the past few years. Since 2021, the CV, PV+EV, and JLR segments have operated independently under their respective CEOs.

The demerger offers several key advantages. It empowers individual businesses to pursue their own growth strategies with increased agility and accountability. It also facilitates collaboration between the passenger vehicle, electric vehicle, and JLR businesses, particularly in areas with high growth potential like electric vehicles, autonomous vehicles, and vehicle software development. This allows both new companies to benefit from a sharper focus on their respective core markets and customer segments.

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."

Shareholders of Tata Motors will retain identical ownership proportions in both new companies after the demerger is complete. The demerger will be implemented through an NCLT scheme of arrangement, with further details to be announced in the coming months. Additionally, it will require approval from shareholders, creditors, and regulatory bodies, which could take approximately 12-15 months to finalise. Importantly, Tata Motors assured that the demerger will have no adverse impact on employees, customers, and its business partners.

Tata Motors, a global automaker, is a leader in cars, trucks, buses and electric vehicles. The company has a strong presence in India, UK and other international markets.

The auto major reported a consolidated net profit of Rs 7,025.11 crore in Q3 FY24, steeply higher than Rs 2,957.71 crore in Q3 FY23. Revenue from operations rose 25.07% YoY stood to Rs 1,09,799.22 crore in the quarter ended 31 December 2023.

Tata Motors briefly touched an all-time high of Rs 995.75 today but ended the day nearly unchanged at Rs 987.20.

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