Tata Motors announces demerger plans: separate entities for passenger & commercial vehicles
The Board of Directors of Tata Motors Limited (TML) has given its approval for a significant corporate restructuring â" the demerger of Tata Motors into two distinct listed companies. This strategic move aims to segregate its commercial vehicle business and related investments, and the passenger vehicles business, including PV, EV, JLR, and its related investments, into two separate entities.
The demerger will be executed through an NCLT scheme of arrangement, which will be presented before the TML Board of Directors for approval in the coming months. Notably, the process is subject to necessary approvals, including those from shareholders, creditors, and regulatory bodies. The expected timeline for completion is a up to 15 months. Meanwhile, this decision follows the successful independent operation of Commercial Vehicles (CV), Passenger Vehicles (PV+EV), and Jaguar Land Rover (JLR) businesses since 2021, each under the leadership of respective CEOs, said TML.
The demerger is seen as a logical progression, building on the earlier subsidisation of PV and EV businesses in 2022. This move is expected to empower each business segment to pursue individual growth strategies with increased agility while reinforcing accountability. Since 2021, the businesses have operated independently, demonstrating strong performance and implementing distinct strategies, the brand said in a release.
While there are limited synergies between Commercial Vehicles (CV) and Passenger Vehicles (PV) businesses, the demerger is likely to unlock considerable synergies for PV, EV, and JLR and is relevant in areas, such as electric vehicles (EVs), autonomous vehicles, and vehicle software. The restructuring is said to have aligned to secure and leverage these synergies effectively. Meanwhile, Tata Motors has stated that this demerger will not affect its employees, customers, and business partners.
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