Tata Motors to Demerge into Two Listed Companies: Tata Motors Ltd (TML) has received approval from its board to demerge the company into two separate listed entities. One entity will focus on commercial vehicles (CV) and related investments, while the other will encompass passenger vehicles (PV), including domestic PV, electric vehicles (EV), Jaguar Land Rover (JLR), and their related investments.
Unlocking Value for EV Business:
Industry experts view this move as an opportunity for Tata Motors to unlock value for its EV business. However, they do not anticipate this demerger as a precursor to listing JLR and EV businesses separately in the future.
NCLT Scheme of Arrangement for Demerger:
The demerger will be executed through a National Company Law Tribunal (NCLT) scheme of arrangement. All TML shareholders will maintain identical shareholding in both listed entities. The scheme will be presented to the TML board for approval in the coming months and will require necessary shareholder, creditor, and regulatory approvals, which could take an additional 12-15 months.
Assurance on Impact and Performance:
Tata Motors has assured that the demerger will not adversely affect employees, customers, or business partners. N Chandrasekaran, chairman of the board of Tata Sons, emphasized that the demerger will enhance the focus and agility of the automotive business units, leading to a better experience for customers, improved growth prospects for employees, and enhanced value for shareholders.
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Independent Operation of Automotive Business Units:
Since 2021, Tata Motors’ PV (ICE and EV), JLR, and CV businesses have been operating independently under their respective CEOs. The company highlighted that these businesses have demonstrated strong performance by successfully implementing distinct strategies.
