Tata Motors made public its intention to undergo a significant structural transformation by demerging into two distinct listed entities, as revealed through an exchange filing on Monday.
The board of directors of the company has greenlit the proposal to divide Tata Motors' operations into two separate listed companies. One entity will be dedicated to commercial vehicle businesses and their associated investments, while the other will oversee passenger vehicle operations, including PV, EV, JLR, and related investments.
The demerger process will be facilitated through the National Company Law Tribunal (NCLT) scheme of arrangement, ensuring that all shareholders of Tata Motors Limited (TML) maintain identical shareholdings in both listed entities.
Chairman N Chandrasekaran expressed optimism about the demerger, citing Tata Motors' notable turnaround in recent years. He emphasized the autonomy and consistent performance of the company's three automotive business units, asserting that the demerger will enable them to capitalize more effectively on market opportunities, enhance focus and agility, and ultimately deliver a superior experience for customers, foster growth prospects for employees, and augment shareholder value.
The proposed scheme of arrangement for the demerger will be presented to the Tata Motors Limited (TML) Board of Directors for approval in the forthcoming months. Subsequently, the process will be subject to obtaining requisite approvals from shareholders, creditors, and regulatory bodies, which may extend the timeline by an additional 12-15 months for finalization.
Tata Motors has assured that the demerger will not adversely affect employees, customers, or business partners. The company emphasized in its exchange filing that there will be no adverse impact on any of these stakeholders due to the demerger.
