In a significant move, Tata Motors Ltd. has announced the demerger of its Commercial Vehicle business into a separate listed company. The Board of Directors has approved a Composite Scheme of Arrangement involving TML, TML Commercial Vehicles Limited (TMLCV), and Tata Motors Passenger Vehicles Limited (TMPV).

Under the scheme, Tata Motors Ltd. will transfer all assets, liabilities, and employees related to the CV business to TMLCV. Meanwhile, Tata Motors Passenger Vehicles will merge with Tata Motors Ltd., resulting in two distinct entities: TMLCV for commercial vehicles and TML for passenger vehicles, electric vehicles (TPEM), and JLR.

Shareholders of TML will receive one share of TMLCV for every share held in TML, maintaining identical shareholding in both entities. This move aims to empower the respective businesses to pursue differentiated strategies with greater agility, thereby enhancing shareholder value.

The scheme, which is subject to shareholder, creditor, and regulatory approvals, is expected to be completed within 12-15 months. PwC Business Consulting Services LLP has provided the share entitlement report, while SBI Capital Markets has offered a fairness opinion on the share entitlement ratio. AZB & Partners are the legal advisors, and Deloitte Touche Tohmatsu India LLP are the tax advisors for the transaction.

This strategic demerger will allow Tata Motors to focus on its core strengths in both the commercial and passenger vehicle sectors, reinforcing accountability and driving growth in their respective markets.