Tata Motor’s demerger plan entails housing commercial vehicles in one entity and passenger vehicles in another.

Tata Motors’ board has approved a proposal to split the company into two separate entities, both of which will be listed. The demerger will result in two companies – one focused on commercial vehicles and the other on passenger vehicles. The company has stated that the demerger will be executed through an NCLT scheme of arrangement, ensuring that all TML shareholders maintain equal shareholding in both listed entities.

According to the company, the demerger is a logical progression from the earlier separation of PV and EV businesses in 2022. This move will empower each business to pursue its strategy with greater agility and accountability, encouraging higher growth. Although there are limited synergies between Commercial Vehicles (CV) and Passenger Vehicles (PV) businesses, significant synergies can be leveraged across PV, EV, and JLR, particularly in EVs, autonomous vehicles, and vehicle software.

Tata Group chairman N Chandrasekaran has highlighted that the company’s three automotive units now operate independently, ensuring consistent performance. He affirmed that the demerger will enable the companies to seize opportunities with enhanced focus and agility, leading to superior customer experiences, employee growth prospects, and shareholder value. The demerger process is expected to conclude in 12-15 months, with Tata Motors assuring no adverse effects on employees, customers, or business partners.

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