The board of directors of Tata Motors Limited (TML) has given the green light to a proposal to split the company into two distinct listed entities.
Under this plan, the commercial vehicles (CV) business and associated investments will form one entity, while the passenger vehicles (PV) businesses, encompassing PV, EV, JLR, and related investments, will constitute another.
This demerger, to be executed through an NCLT scheme of arrangement, ensures that all TML shareholders will maintain the same shareholding in both listed entities. Both entities will be publicly traded on stock exchanges.
TML highlighted that over recent years, its CV, PV+EV, and Jaguar Land Rover (JLR) businesses have demonstrated robust performance, each implementing unique strategies under their respective CEOs since 2021. Notably, JLR operates as a subsidiary of TML in the UK.
The demerger represents a natural evolution from the earlier subsidiarization of PV and EV businesses in 2022. It aims to empower each business to pursue its distinct strategy independently, fostering agility and accountability.
TML Chairman N Chandrasekaran emphasized that the demerger aligns with Tata Motors’ strong turnaround in recent years. He anticipates enhanced focus and agility to capitalize on market opportunities, benefiting customers, employees, and shareholders.
The NCLT scheme of arrangement for the demerger will undergo approval by the TML board of directors in the coming months, followed by necessary shareholder, creditor, and regulatory approvals. The process is estimated to take 12-15 months. TML assures no adverse impact on employees, customers, or business partners.
On the financial front, TML shares closed with a marginal loss on Monday. However, the company has seen substantial gains over the past year. In the December 2023 quarter, TML reported a net profit of Rs 4,570 crore and revenue of Rs 18,668 crore.
Looking ahead, Tata Motors plans to introduce new products driven by cutting-edge design and R&D centers across India, the UK, US, Italy, and South Korea. With operations in multiple countries and an extensive market presence, Tata Motors remains a significant player in the automotive industry.
