Tata Motors Board Approves Demerger into Two Listed Entities

By siliconindia  |  Monday, 04 March 2024, 06:21:14 PM IST

Tata Motors Board Approves Demerger into Two Listed Entities
In a significant move, the Board of Directors of Tata Motors Ltd (TML) has greenlit the demerger proposal, paving the way for the separation of Tata Motors into two distinct listed entities. The demerger will segregate the commercial vehicles (CV) business and related investments into one entity, while the passenger vehicles (PV), electric vehicles (EV), Jaguar Land Rover (JLR), and associated investments will form another entity.
This strategic decision follows the successful independent operations of the CV, PV+EV, and JLR businesses, each under its respective CEO since 2021. The demerger is considered a logical progression, building upon the earlier subsidiarisation of PV and EV businesses in 2022. This move is expected to empower individual businesses, allowing them to pursue tailored strategies for accelerated growth with increased agility and accountability.
Tata Motors emphasized that while limited synergies exist between CV and PV businesses, substantial opportunities for collaboration lie within the PV, EV, and JLR sectors, particularly in areas like electric vehicles, autonomous vehicles, and vehicle software.
N Chandrasekaran, Chairman of Tata Motors, expressed confidence in the company's strong turnaround and highlighted the demerger as a means to capitalize on market opportunities, fostering enhanced focus and agility. He anticipates this move will result in a superior experience for customers, improved growth prospects for employees, and increased value for shareholders.
The National Company Law Tribunal (NCLT) scheme of arrangement for the demerger will be presented to the TML Board of Directors in the coming months. The entire process, contingent on obtaining necessary shareholder, creditor, and regulatory approvals, is anticipated to take 12-15 months. Importantly, Tata Motors assured that the demerger would have no adverse impact on employees, customers, or business partners. The development signifies a strategic evolution for Tata Motors, positioning its various business units to navigate the evolving automotive landscape more effectively.

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