Tata Motors is planning to demerge into two separate listed companies. In an exchange filing, the automaker said a demerger is being planned to focus on passenger and electric vehicle segments.
The Board of Directors of Tata Motors Limited (TML) approved the demerger proposal in a meeting today (March 4, 2024). As such, the company will demerge into two separate listed entities:
- The first listed unit will have the Commercial Vehicles business and its related investments.
- Second unit will have Passenger Vehicles business including PV, EV JLR and its related investments.
Tata Motors Demerger Ratio/Share Distribution
According to the exchange filing, the demerger of Tata Motors’ will be implemented through an NCLT scheme of arrangement. Further, all shareholders of Tata Motors Limited (TML) will continue to have the identical shareholding in both the listed entities.
The automaker also said that its Commercial Vehicles (CV), Passenger Vehicles (PV+EV), and Jaguar Land Rover (JLR) have been operating independently under their respective CEOs since 2021. Further, it said the demerger will have “no adverse impact” on employees, customers, and business partners.
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Why this demerger?
TML says this demerger is a logical progression of the “subsidiarisation of PV and EV businesses done earlier in 2022.”
The company believes demerger will “empower the respective businesses to pursue their respective strategies to deliver higher growths”
Further, the automaker says there are limited synergies between CV and PV businesses. But there are considerable synergies across PV, EV and JLR.
“…while there are limited synergies between Commercial Vehicles (CV) and Passenger Vehicles (PV) businesses, there are considerable synergies to be harnessed across PV, EV and JLR particularly in the areas of EVs, autonomous vehicles, and vehicle software which the demerger will help secure,” TML said.
What is Tata Motors Demerger Date?
According to the statement, the complete demerger may take 12-15 months.
“The NCLT scheme of arrangement for the demerger shall be placed before the TML Board of Directors for approval in the coming months and will be subject to all necessary shareholder, creditor and regulatory approvals which could take a further 12-15 months to complete,” TML said.
