 "Tata Motors")
Tata Motors announced on Monday its decision to demerge its business into two separate listed entities, segregating its commercial vehicles (CV) and passenger vehicles (PV) businesses.
The auto major's board meeting saw the approval of the demerger proposal. Under this arrangement, one entity will encompass the commercial vehicles business and its related investments, whereas the other will comprise the passenger vehicles businesses, including PV, Electric Vehicles (EV), Jaguar Land Rover (JLR), and related investments.
"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," Tata Sons Chairman N Chandrasekaran said.
The NCLT scheme of arrangement for the demerger shall be placed before the company's 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 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, Tata Motors said in a regulatory filing.
It further said that while there are limited synergies between CV and 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.
