Tata Motors to demerge its business
Tata Motors has recently announced its decision to split its commercial vehicle and passenger vehicle businesses into separate entities. This strategic move, approved by the Board of Directors of Tata Motors Limited, marks a significant development in the company’s organisational structure.
Under the proposed demerger, the company will bifurcate its commercial vehicle and passenger vehicle businesses into distinct entities. The latter will encompass passenger vehicles, electric vehicles, Jaguar Land Rover (JLR) and associated investments. This restructuring is aimed at enhancing focus and agility within each business unit to better capitalise on market opportunities.
N Chandrasekaran, Chairman of Tata Motors, expressed confidence in the company’s turnaround journey, highlighting the independent and consistent performance of its automotive business units. He emphasised that the demerger aligns with the company’s objective of optimising operational efficiency and delivering superior value to stakeholders.
The demerger process will be facilitated through an NCLT scheme of arrangement, ensuring that all shareholders maintain identical shareholding in both listed entities. However, the implementation of this scheme is subject to various approvals, including those from shareholders, creditors and regulatory authorities, which may take approximately 12-15 months to complete.
While Tata anticipates no adverse impact on employees, customers or business partners due to the demerger, the company remains committed to ensuring a seamless transition throughout the process.
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