Tata Motors has announced that the Board of Directors of Tata Motors Limited (TML) has finally approved its proposal to expand its vehicle businesses. The brand’s Board of Directors held a meeting on March 4, 2024. Under the approved plan, the company will be split into two different listed entities. The first one will manage the CV (commercial vehicles) business and other related investments, whereas the latter will house the PV (passenger vehicles) businesses, incorporating EV, PV, and JLR (which was earlier known as Jaguar Land Rover) and its related investments.
The demerger procedure will be carried out via a National Company Law Tribunal (NCLT) scheme of arrangement. The company stated that TML’s shareholders will retain the same shareholding in the upcoming listed companies. Also, the auto giant has assured the stakeholders that the recent move will have no negative impact on customers, employees, or business partners.
The TML Board of Directors will now review the demerger plan, which will be approved in the upcoming months. After that, it will need to receive the required approvals from creditors, shareholders, and regulators; this process is likely to take an extra 12 to 15 months.
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Tata Motors said in a statement that the brand’s PV, EV CV, and JLR businesses have been independently operating since 2021, under their respective CEOs, displaying their capability for efficiency and autonomy.
The Chairman of Tata Motors, N Chandrasekaran, commented on the approval for the company’s demerger and said, “Tata Motors has scripted a strong turnaround in the last few years. The three automotive business units are now operating independently and delivering consistent performance. This demerger will help them better capitalise on the opportunities provided by the market by enhancing their focus and agility. This will lead to a superior experience for our customers, better growth prospects for our employees and enhanced value for our shareholders.”
According to the auto giant, the demerger is a logical step forward from the 2022 subsidiarization of passenger and electric vehicle companies. The move will further strengthen the companies’ businesses, and the entities will pursue their respective strategies and deliver higher growth. The brand stated in its statement that although there aren't many synergies between its CV and PV divisions, there are many between PV, EV, and JLR, especially in areas like electric vehicles, autonomous technologies, and vehicle software.
