Tata Motors shares decline ahead of demerger voting

Shares of Tata Motors declined as much as 1.43% to hit an intraday low of ₹652 ahead of its virtual shareholders meeting to vote on proposal to demerge the business into two separate entities, Passenger Vehicles and Commercial Vehicles.

The company had informed about the meeting last month. The automaker said on April 4 that the meeting will be held via “video conferencing (VC) and other audio visual means (OAVM)” to deliberate and approve splitting Tata Motors into two separate entities.

The company had set March 28 as the cut -off date for the demerger. This means anyone who bought Tata Motors shares after March 28 will not be entitled to exercise their voting rights on the split.

Tata Motors’ board of directors in March last year approved the demerger of the company into two separate listed companies— one for its commercial vehicles business and the other for its passenger vehicles (PV), comprising PV, electric vehicles (EV), Jaguar Land Rover (JLR) and related investments.

Tata Motors’ commercial vehicle business will be demerged into Tata Motors Commercial Vehicles Limited (TMLCV).

Further, its existing PV business in Tata Motors Passenger Vehicles Limited (TMPV) will be merged into Tata Motors Limited (TML), the existing listed entity.

TMLCV and TML will be renamed upon receiving necessary approvals, resulting in two separate entities.

The commercial vehicles business and its related investment will be listed under the name TML. Its passenger vehicles, electric vehicles businesses, JLR, which will merge with the currently listed Tata Motors, will be listed under the name TMPV.

On the proposed demerger, Tata Motors’ Chairman, N Chandrasekaran, said “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. This will lead to a superior experience for our customers, better growth prospects for our employees and enhanced value for our shareholders".

In recent years, Tata Motors has achieved significant success in its CV, PV+EV, and JLR businesses by implementing effective strategies unique to each division. Starting from 2021, these businesses have been operating independently under the leadership of their respective CEOs.

As of 9:34 am, Tata Motors shares traded 0.40% lower at ₹658.95, underperforming the SENSEX which was trading on a flat note.