Tata Motors board approves demerger of CV business

Tata Motors’ Board of Directors on Tuesday greenlit the demerger of its commercial vehicles business into a distinct, wholly-owned subsidiary. The company disclosed this decision in a regulatory filing, proposing the name “TML Commercial Vehicles Limited” for the subsidiary, subject to approval by the Ministry of Corporate Affairs.

Meanwhile, Tata Motors’ other ventures, including passenger vehicles, electric vehicles, and Jaguar Land Rover (JLR), will continue under a separate entity.

Natarajan Chandrasekaran, Chairman of Tata Motors, emphasized in the company’s latest annual report that segregating the commercial vehicle and passenger vehicle businesses will enhance their autonomy and accountability. He underscored the importance of this demerger in enabling each business to pursue tailored strategies and capitalize on individual strengths and market prospects.

Addressing shareholders in the company’s 79th annual report, Chandrasekaran reiterated the strategic significance of this move, highlighting its potential to foster greater agility and focus within each business unit.

In a separate development, Tata Motors came third in terms of sales in India in May with 46,697 cars shipped, reflecting a 2 per cent growth compared to the 45,878 cars sold in May 2023. Out of this, 5,558 cars sold were electric vehicles, registering a 4 per cent year-on-year decline from the 5,805 EVs sold in May 2023. The company’s export performance saw a remarkable 257% increase, shipping 386 cars during May 2024.

Separately, the company significantly raised its investment outlay for FY25 to INR 43,000 crore, with a substantial portion directed towards its British arm, Jaguar Land Rover (JLR). This strategic move is aimed at advancing new products and technologies across the company’s portfolio.

In FY24, Tata Motors had projected a total investment of approximately INR 38,000 crore, with INR 30,000 crore allocated to JLR and INR 8,000 crore to Tata Motors. However, actual investments exceeded expectations, reaching INR 41,200 crore. JLR’s investment alone totalled more than INR 33,000 crore, while Tata Motors’ investment surpassed INR 8,200 crore.

For FY25, Tata Motors Group CFO PB Balaji announced an increased investment of 3.5 billion pounds (around INR 35,000 crore) for JLR, representing a 6% increase. Tata Motors’ investment will remain steady at approximately INR 8,000 crore. Balaji emphasised that this investment focuses on launching new products and advancing technologies.