Tata Motors Approves Demerger To Enhance Focus, Agility In Business Units

Mobility Outlook Bureau
04 Mar 2024
05:05 PM
1 Min Read

The NCLT scheme of arrangement for the demerger will undergo approval by the TML Board of Directors in the coming months. The entire process, including necessary shareholder, creditor, and regulatory approvals, is estimated to take approximately 12-15 months.

Tata Motors

In a strategic move, the Board of Directors of Tata Motors Limited (TML) has given the green light to the demerger of Tata Motors Ltd into two distinct listed companies. The demerger will segregate the Commercial Vehicles (CVs) business and its related investments into one entity, while the Passenger Vehicles (PVs) businesses, encompassing PV, EV, JLR, and their related investments, will form another entity.

According to the company statement, this decisive step aims to further streamline operations and enhance focus within each business unit and is expected to have no adverse impact on employees, customers, and business partners of Tata Motors.

Implemented through a National Company Law Tribunal (NCLT) scheme of arrangement, the demerger ensures that all shareholders of TML will maintain identical shareholdings in both listed entities. The demerger follows the successful independent operations of the CVs, PVs+EVs, and JLR businesses under their respective CEOs since 2021.

The move represents a logical progression, building on the earlier subsidiarisation of PV and EV businesses in 2022. This strategic shift empowers each business unit to pursue tailored strategies, fostering higher growth and agility while reinforcing accountability. While limited synergies exist between CV and PV businesses, significant synergies will be harnessed across PV, EV, and JLR, especially in areas like electric vehicles, autonomous vehicles, and vehicle software.

N Chandrasekaran, Chairman of Tata Motors, expressed confidence in the demerger, stating, 'Tata Motors has scripted a strong turnaround in the last few years. The 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.'

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