Tata Motors has taken a significant step forward by approving a Composite Scheme of Arrangement that will lead to the demerger of its business into two distinct listed entities. The Board of Directors of Tata Motors Limited (TML) gave the green signal to this plan, which involves TML, TML Commercial Vehicles Limited (TMLCV), Tata Motors Passenger Vehicles Limited (TMPV), and their respective shareholders. This strategic move is expected to reshape the company’s structure and impact shareholders positively.
Demerger Details:
The demerger plan, as approved by Tata Motors’ Board, will result in the separation of the company’s commercial vehicle (CV) business from its passenger vehicle (PV) business. The CV business, along with related investments, will be transferred to TML Commercial Vehicles Ltd., while the PV business, including the electric vehicle (EV) division, Jaguar Land Rover (JLR), and other related investments, will be integrated under Tata Motors Passenger Vehicles Ltd.
Renaming and Listing:
Once the demerger is effective, both TML Commercial Vehicles and Tata Motors will undergo renaming, leading to the creation of two separate listed entities. The process is anticipated to be completed within the next 12 to 15 months.
Impact on Shareholders:
Under the approved scheme, shareholders of Tata Motors will receive one fully paid-up share of TML Commercial Vehicles for every one fully paid-up share of Tata Motors they hold. This Entitlement Ratio ensures that shareholders will have stakes in both the newly formed entities, potentially benefiting from the focused growth of each segment.
Market Implications:
The approval of the demerger comes at a time when Tata Motors is gearing up for the launch of its highly anticipated Tata Curvv coupe SUV. Positioned as a stylish competitor to popular models like the Hyundai Creta and Kia Seltos, the Curvv is expected to further enhance Tata Motors’ market presence. The company’s valuation has already seen an uptick, and the introduction of the Curvv could drive it even higher.
Tata Motors’ demerger marks a pivotal moment in the company’s journey, promising focused growth and enhanced value for shareholders. As the demerger process unfolds over the next year, the market will keenly observe how these changes, along with the launch of the Tata Curvv, will shape the future of Tata Motors.
