The demerger of Tata Group’s automobile company, Tata Motors, has been approved. This decision was made during the meeting of the Board of Directors of Tata Motors. After this demerger, Tata Motors’ commercial vehicle business will be included in a separate entity. In contrast, a separate company will be formed in the second entity by combining passenger vehicles, electric vehicles, JLR, and related investments.
Information Given In Regulatory Filing
Tata Motors said in its regulatory filing with the stock exchange that this demerger will be implemented through the scheme op arrangement of NCLT. Also, all the shareholders of Tata Motors Limited will have shares in both companies.
Tata Motors said that in the last few years, Tata Motors’ commercial vehicles and passenger vehicles, including electric vehicles (EV) and Jaguar Land Rover, have shown very strong performance. Since 2021, all these businesses have been working independently under the supervision of their respective CEOs.
This Will Help In Expanding Both Businesses
Tata Motors stated that this demerger process is a further outcome of the decision to create separate subsidiaries of passenger and electrical businesses in 2022. Through this decision, both companies can pursue their strategies and achieve high growth with better methods and accountability.
Apart from this, there is limited coordination between commercial and passenger vehicles. But the demerger will greatly benefit passenger vehicles, EVs and JLR, especially EVs, autonomous vehicles and vehicle software.
Value Will Increase For Shareholders
On this decision of the Tata Motors board, Tata Sons Chairman N Chandrasekaran said Tata Motors has scripted a strong transformation in the last few years. All three automotive business units operate independently and continue to perform well. This demerger will help them take better advantage of opportunities. This will provide better services to customers, increase growth opportunities for employees, and increase shareholder value.
This news came after the market closed. Earlier in today’s session, Tata Motors’ stock fell by 0.12 per cent and closed at Rs 987.
