Tata Motors Limited (TML) has approved the demerger of its Commercial Vehicles and Passenger Vehicles businesses into two separate listed companies. The demerger will be implemented through an NCLT scheme of arrangement, with all shareholders maintaining their identical shareholding in both entities.
The demerger is a continuation of the subsidization of PV and EV businesses in 2022, allowing each business to pursue its strategies for higher growth and greater agility. While there are limited synergies between the two businesses, considerable synergies can be harnessed across PV, EV, and JLR, particularly in EVs, autonomous vehicles, and vehicle software.
The NCLT scheme of arrangement will be submitted to the TML Board of Directors for approval in the coming months, subject to shareholder, creditor, and regulatory approvals. The demerger will have no adverse impact on employees, customers, or business partners. Chairman N Chandrasekaran emphasized that the demerger will help Tata Motors capitalize on market opportunities, enhance focus and agility, and provide superior customer experiences, better employee growth prospects, and enhanced value for shareholders.
