Tata Motors to spin off commercial and passenger vehicle businesses

Tata Motors on Monday announced plans to spin off its commercial vehicle and passenger vehicle divisions into separate businesses. This will be done by demerging the two divisions and merging each with related businesses, Tata Motors stated in a stock exchange filing.

The commercial vehicles business will include trucks and buses and other heavy vehicles while the passenger vehicles business will bring together cars with IC engines as well as EVs and JLR and investments related to it.

Tata Motors said its commercial vehicles, passenger vehicles (PV+EV), and Jaguar Land Rover (JLR) businesses have already been pursuing separate strategies, functioning almost independently under separate CEOs, since 2021.

The demerger will formalise the spin-off and equip the two businesses with necessary powers to pursue business strategies independent of each other, Tata Motors added.

Tata Sons chairman N Chandrasekaran said the PV, CV and EV businesses of Tata Motors have delivered consistent performance working independently and that a formal split will provide the business to make full use of available opportunities.

This, in turn, will help enhance customer satisfaction and shareholder returns, he added.

The demerger will be carried out as per an NCLT scheme of arrangement and all shareholders of Tata Motors will continue to hold identical stakes in both the listed entities, Tata Motors stated further.

However, this needs necessary approvals from shareholders, creditors, and regulators and this could take a further 12-15 months to complete according to the stock exchange filing.