Tata Motors has announced plans to undergo a demerger, dividing its operations into two publicly listed companies, as part of a scheme of arrangement through the National Company Law Tribunal (NCLT). This strategic move involves creating distinct entities for its commercial vehicle (CV) business and related investments, as well as its passenger vehicle (PV) business, which encompasses passenger vehicles, electric vehicles (EV), Jaguar Land Rover (JLR), and associated investments.
The demerger ensures that all existing shareholders of Tata Motors Limited (TML) will maintain identical shareholding in both newly listed companies. This decision comes after several years of successful independent operation for the commercial vehicles, passenger vehicles (PV+EV), and JLR businesses, each led by their respective CEOs since 2021.
Tata Motors to demerge its businesses into two listed companies
— Stocktwits India 🇮🇳 (@StocktwitsIndia) March 4, 2024
• Passenger Vehicles (PV, EV & JLR)
• Commercial Vehicles pic.twitter.com/xjtdeIayQo
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Highlighting the logical progression from the earlier subsidiarisation of PV and EV businesses in 2022, Tata Motors emphasizes that the demerger will empower each business unit to pursue its distinct strategies with increased agility and accountability. While there are limited synergies between commercial vehicles and passenger vehicles, significant synergies exist across PV, EV, and JLR, particularly in areas such as electric vehicles, autonomous vehicles, and vehicle software, which the demerger aims to capitalize on.
N. Chandrasekaran, Chairman of Tata Sons, acknowledges Tata Motors’ strong turnaround in recent years, with the three automotive business units operating independently and consistently performing well. He sees the demerger as a means to better leverage market opportunities, enhancing focus and agility for superior customer experiences, improved growth prospects for employees, and increased value for shareholders.
Content Contributor: Sridhar Naresh
