Deepika Agrawal 
Home-grown automaker Tata Motors has got an approval from the Board of Directors to demerge its businesses into two separate listed entities. One entity will include its commercial vehicles business and related investments while the other will manage its passenger vehicles business, including electric vehicles and Jaguar Land Rover (JLR), and associated investments. The demerger will be carried on through a National Company Law Tribunal (NCLT) scheme of arrangement and all shareholders of shall continue to have the identical shareholding in both the listed entities.
In the coming months, Tata Motors will place the NCLT scheme of arrangement for the demerger before the Board of Directors for approval. It will be subject to all necessary shareholder, creditor and regulatory approvals which could take about 12-15 months to complete. The company has revealed that the demerger is expected to have no adverse impact on employees, customers, and existing or new business partners.
Over the past few years, since 2021, Tata Motors’ CV, PV+EV, and JLR businesses have been operating independently under their respective CEOs and delivered a strong performance by implementing distinct strategies. “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,” said the company’s Chairman, N Chandrasekaran.
The company says that the demerger is a logical step in the aftermath of the subsidiarisation of its PV and EV businesses done earlier in 2022. The move is aimed to further empower the respective businesses to pursue their respective strategies to deliver higher growths. “This will lead to a superior experience for our customers, better growth prospects for our employees and, enhanced value for our shareholders,” Chandrasekaran added.
Furthermore, there are limited synergies between commercial vehicles and passenger vehicles businesses, but the company says that there are considerable synergies to be harnessed across PV, EV and JLR businesses, particularly in the areas of EVs, autonomous vehicles, and vehicle software which the demerger is expected to facilitate.
As of March 31, 2023, Tata Motors’ operations inter alia includes 88 consolidated subsidiaries, two joint operations, three joint ventures and numerous equity-accounted associates, including their subsidiaries.
