NEW DELHI, Mar 5
The board of directors of Tata Motors Limited (TML) on Monday approved the proposal of demerger of the company into two separate listed companies. While the commercial vehicles (CV) business and its related investments will be one entity, the passenger vehicles businesses including PV, EV, JLR and its related investments will be hived off as another entity. “The demerger will be implemented through an NCLT scheme of arrangement and all shareholders of TML will continue to have the identical shareholding in both the listed entities,” the company said. These two entities will be listed on the stock exchanges.
“Over the past few years, the commercial vehicles (CV), passenger vehicles (PV+EV), and Jaguar Land Rover (JLR) businesses of Tata Motors have delivered a strong performance by successfully implementing distinct strategies,” TML said. Since 2021, these businesses have been operating independently under their respective CEOs, it said. JLR is currently TML’s subsidiary based in the UK.
The demerger is a logical progression of the subsidiarisation of PV and EV businesses done earlier in 2022 and will further empower the respective businesses to pursue their respective strategies to deliver higher growths with greater agility while reinforcing accountability, the company said.
Furthermore, while there are limited synergies between commercial vehicles and passenger vehicles (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.
TML 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,” he said.
The NCLT scheme of arrangement for the demerger will 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 said.
TML shares closed with a marginal loss of 0.12 per cent at Rs 987.20 on the BSE on Monday. The share has gained over 146 per cent in the last 52 weeks. TML posted a net profit of Rs 4,570 crore and a revenue of Rs 18,668 crore for the December 2023 quarter.
Tata Motors has planned to bring new products, fuelled by state-of-the-art design and R&D centres located in India, UK, US, Italy and South Korea, it said. With operations in India, the UK, South Korea, Thailand, South Africa and Indonesia, Tata Motors’ vehicles are marketed in Africa, Middle East, Latin America, South East Asia and SAARC countries. As of March 31, 2023, Tata Motors’ operations includes 88 consolidated subsidiaries, 2 joint operations, 3 joint ventures and numerous equity-accounted associates, including their subsidiaries, in respect of which the company exercises significant influence.
