Tata Motors Limited (TML) has unveiled a strategic move today with its Board of Directors greenlighting the demerger proposal, aiming to split Tata Motors Ltd into two distinct, publicly listed entities. This restructuring will segregate the company’s operations into two main divisions: A) Commercial Vehicles (CV) business and related investments, and B) Passenger Vehicles (PV), Electric Vehicles (EV), Jaguar Land Rover (JLR), and their associated investments.
The decision stems from a trajectory of success witnessed across the CV, PV+EV, and JLR sectors of Tata Motors over recent years. Notably, since 2021, each of these businesses has been functioning autonomously under their respective CEOs.
This demerger initiative marks a logical continuation of the previous subsidiarization of PV and EV businesses in 2022. It aims to provide greater empowerment to individual businesses, enabling them to pursue tailored strategies for heightened growth and enhanced accountability. While the synergy between CV and PV businesses is limited, significant opportunities exist within the PV, EV, and JLR domains, particularly in areas like electric vehicles, autonomous technology, and vehicle software.
Chairman N Chandrasekaran emphasized, “Tata Motors has undergone a significant transformation in recent years. With our automotive units now operating independently and consistently performing, this demerger will enable them to capitalize on market opportunities with increased focus and agility. Ultimately, this will translate into a superior experience for our customers, brighter growth prospects for our employees, and enhanced value for our shareholders.”
The proposed NCLT scheme of arrangement for the demerger will undergo scrutiny by the TML Board of Directors in the forthcoming months. Subsequently, it will be subject to requisite approvals from shareholders, creditors, and regulatory bodies, a process anticipated to conclude within 12-15 months. It’s important to note that this demerger is projected to have no adverse ramifications on employees, customers, or business partners associated with Tata Motors.
