Tata Motors Approve Demerge of Two Listed Companies

In a significant corporate restructuring, Tata Motors Ltd. has revealed a comprehensive scheme of arrangement aimed at optimizing its business operations. The board has approved the demerger of its Commercial Vehicle (CV) business into a newly formed and separately listed entity, while Tata Motors Passenger Vehicles (TMPV) will merge with the existing listed company.

Demerger of Commercial Vehicle Business

Under the newly approved scheme, Tata Motors will transfer all assets, liabilities, and employees related to its CV business to the newly created TMLCV. Shareholders of Tata Motors will receive one share of TMLCV for every share they hold in Tata Motors, ensuring a 1:1 share entitlement ratio. This move is designed to allow the CV business to pursue its unique strategic goals with greater agility and focus, ultimately aiming to enhance shareholder value. The process aligns with Sections 230-232 of the Companies Act, 2013, and is expected to take 12-15 months to complete, pending necessary approvals from shareholders, creditors, and regulatory bodies.

Merger of Passenger Vehicle and EV Businesses

Tata Motors Passenger Vehicles (TMPV), which includes the Passenger Vehicle (PV) and Electric Vehicle (EV) segments, along with Jaguar Land Rover (JLR), will merge into the existing listed company, Tata Motors Ltd. (TML). This reorganization will streamline operations, enabling the PV, EV, and JLR businesses to operate under one umbrella, thereby focusing solely on these segments while TMLCV will concentrate on the CV business. The restructuring is supported by PwC Business Consulting Services LLP for the share entitlement report, with SBI Capital Markets providing the fairness opinion. AZB & Partners and Deloitte Touche Tohmatsu India LLP are acting as legal and tax advisors, respectively.

Conclusion: This strategic restructuring by Tata Motors Ltd. aims to empower its distinct business segments to pursue their individual strategies more effectively. By creating two distinct publicly traded entities, the company seeks to enhance operational agility and drive greater shareholder value. The demerger and merger process marks a pivotal step in Tata Motors’ journey towards optimized business performance and strategic focus. Tata Motors Ltd.’s stock currently trades at Rs.1,105.20 per share.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.