Tata Motors Plans To Demerge Passenger, Commercial Business Into 2 Separate Listed Companies

This demerger, to be executed through an NCLT scheme of arrangement, ensures that all shareholders of Tata Motors Ltd (TML) will maintain identical shareholding in both listed entities

Tata Motors announced on Monday that its board has given the green light to a plan to divide the company into two distinct listed entities. In a regulatory filing, the automotive giant outlined that one entity would encompass the commercial vehicles business and associated investments, while the other would comprise the passenger vehicles segment, including PV (Passenger Vehicle), EV (Electric Vehicle), JLR (Jaguar Land Rover), and related investments.

This demerger, to be executed through an NCLT scheme of arrangement, ensures that all shareholders of Tata Motors Ltd (TML) will maintain identical shareholding in both listed entities. According to Tata Motors, this strategic move follows the earlier subsidiarisation of PV and EV businesses in 2022, aiming to empower each business to pursue its unique strategies independently, fostering growth and accountability.

Tata Motors highlighted that in recent years, its commercial vehicles (CV), passenger vehicles (PV+EV), and Jaguar Land Rover (JLR) units have pursued distinct growth paths. Since 2021, these units have been operating autonomously under their respective CEOs.

In elaborating on the demerger proposal, Tata Motors stated that its Board of Directors has officially approved the division of Tata Motors Ltd into two separate listed companies. One will encompass the Commercial Vehicles business and its associated investments, while the other will house the Passenger Vehicles businesses, including PV, EV, JLR, and related investments.

N Chandrasekaran, chairman of Tata Sons, said, "Tata Motors has witnessed a robust turnaround in recent years. The three automotive business units are now functioning independently and consistently delivering results. This demerger will enable them to better seize market opportunities by sharpening their focus and enhancing agility. This, in turn, will lead to an improved experience for our customers, better growth prospects for our employees, and increased value for our shareholders."

Tata Motors' shares closed 0.12 per cent lower at Rs 987.20 apiece on the BSE on Monday.

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