The demerger of Tata Motors has been approved by the board.
Today approval has been given for the division of the company which Ratan Tata built with his stubbornness. Yes, the Tata Group company being talked about here is none other than Tata Motors. Which had recently overtaken Maruti Suzuki to become the largest company in terms of market cap. According to reports, approval to split Tata Motors into two parts has been received from the board of Tata Motors. Now passenger vehicle business will be a separate entity. The commercial vehicle entity will be separated. The special thing is that all the shareholders of Tata Motors will continue to hold equal stake in both the listed companies.
After the demerger, one unit will have the commercial vehicle business and related investments, while the other unit will have the passenger vehicle business including PV, Electric Vehicle, Jaguar and Land Rover and related investments. The company has said that the demerger will be implemented through the NCLT settlement scheme. The NCLT plan requires approval from the Tata Motors board, shareholders, creditors and regulators, all of which could be completed in 12-15 months.
Limited synergy between CV and PV business
Tata Motors’ CV, PV and JLR businesses are operating independently under their respective CEOs from 2021. Explaining the rationale behind the move, the company said that although there is limited synergy between the CV and PV business, what is there is sufficient. The company feels it can utilize the synergy, especially in the sectors of EV, autonomous vehicles and vehicle software. Tata Motors hopes that the merger will not have any adverse impact on our employees, customers and our business partners.
Tata Motors’ growth has been good
Tata Group Chairman N Chandrasekaran said that Tata Motors has seen an increase in growth in the last few years. The three automotive business units are now operating independently and performing consistently. This separation will help them better capitalize on the opportunities offered by the market by increasing their focus. Tata Motors closed with a slight decline on Monday. According to BSE data, the company’s shares closed at Rs 987.20 with a fall of Rs 1.20. At present the market cap of the company is Rs 3,28,071.40 crore.