Tata Motors to demerge its businesses into two separate listed companies

The Board of Tata Motors, on Monday, approved the demerger of Tata Motors (TML) into two separate listed entities—one for its commercial vehicle (CV) business and its related investments and the other for its passenger vehicle (PV) business, including PV, Electric Vehicle (EV), Jaguar Land Rover (JLR) and its related investments.

"The demerger will be implemented through an NCLT scheme of arrangement and all shareholders of TML shall continue to have the identical shareholding in both the listed entities," Tata Motors said in a regulatory filing.

The automaker said that the NCLT scheme of arrangement for the demerger will be placed before the Board of Directors of Tata Motors 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 not adversely impact employees, customers, and our business partners, it added.

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.

Shares of Tata Motors closed at ₹988.90, up 0.06% or ₹0.55, on Monday.