On March 4, Tata Motors Ltd (TML) disclosed to the stock exchanges its strategic move to split its operations into two distinct listed entities: one focusing on commercial vehicles (CV) and the other on passenger vehicles (PV).
In a significant announcement made to the stock exchanges today, Tata Motors Ltd (TML) unveiled its plan to divide its businesses into two independent listed entities: commercial vehicles (CV) and passenger vehicles (PV).
“The decision to demerge our commercial and passenger vehicle businesses represents a natural evolution following the subsidiarisation of PV and EV operations earlier in 2022. This move will empower each business to pursue its unique growth strategies with increased agility and accountability,” stated the carmaker.
Tata Motors further noted that its CV, Passenger Vehicles (PV+EV), and Jaguar Land Rover (JLR) divisions have been operating independently under separate CEOs since 2021, each implementing distinct growth strategies.
On Monday, Tata Motors’ stock on the BSE remained unchanged at Rs 989.
The demerger process will be executed through an NCLT scheme of arrangement, ensuring that all shareholders of TML maintain identical shareholding in both listed entities. However, the carmaker cautioned that obtaining necessary approvals from shareholders, creditors, and regulators could extend the demerger timeline by 12-15 months, as mentioned in the stock exchange filing.
“Tata Motors’ Board Approves Demerger into Two Listed Companies: Commercial Vehicles and Passenger Vehicles Businesses to be Separate Entities”
Tata Sons Chairman, N Chandrasekaran, expressed, “Tata Motors has undergone a substantial transformation in recent years, with our automotive units operating independently and delivering consistent results. The demerger will enable each entity to sharpen its focus and agility, capitalizing on market opportunities more effectively. This strategic move will enhance customer experiences, foster employee growth, and create enhanced value for our shareholders.”
Tata Motors emphasized that while synergies between Commercial Vehicles and Passenger Vehicles businesses are limited, significant opportunities exist across PV, EV, and JLR, particularly in EVs, autonomous vehicles, and vehicle software. The demerger is expected to unlock these synergies and secure future growth prospects, the company stated.
Tata Motors reassures that the demerger will have no adverse effects on employees, customers, or our business partners.