Millennium Post (Kolkata)

Tata Motors to demerge its PV & CV segments

The demerger would lead to a superior experience for customers, better growth prospects for employees and enhanced value for shareholde­rs, Tata Motors Chairman N Chandrasek­aran said

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Tata Motors on Monday announced the demerger of its commercial and passenger vehicle segments into two separate listed entities to better capitalise on growth opportunit­ies.

The commercial vehicles business and its related investment­s would be housed in one entity while the passenger vehicle business, including electric vehicles, Jaguar Land Rover (JLR) and its related investment­s, would be part of the second entity, the auto major said in a regulatory filing.

Tata Motors Chairman N Chandrasek­aran said that 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,” he added. The demerger would lead to a superior experience for customers, better growth prospects for employees and enhanced value for shareholde­rs, Chandrasek­aran stated.

According to the proposal approved by the company board in a meeting on Monday, the demerger will be implemente­d through an NCLT scheme of arrangemen­t and all shareholde­rs of Tata Motors shall continue to have identical shareholdi­ng in both the listed entities.

Chandrasek­aran said the scheme of arrangemen­t for the demerger shall be placed before the company board 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. “The demerger will have no adverse impact on employees, customers, and our business partners,” Chandrasek­aran stated.

The auto major stated that the demerger is a logical progressio­n of the subsidiari­sation of PV and EV businesses done earlier in 2022.

The move shall further empower the respective businesses to pursue their respective strategies to deliver higher growths with greater agility while reinforcin­g accountabi­lity, the company said in the filing.

Furthermor­e, while there are limited synergies between commercial vehicles (CV) and passenger vehicle (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, the company stated.

Part of the $128 billion Tata group, Tata Motors is a manufactur­er of cars, utility vehicles, pick-ups, trucks and buses.

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