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Tata Motors to demerge CV business undertaking into separate listed company

02 Aug 2024 Evaluate

Tata Motors (TML) has received an approval for a Composite Scheme of Arrangement amongst TML, TML Commercial Vehicles (TMLCV), Tata Motors Passenger Vehicles (TMPV) and their respective shareholders under Sections 230-232 and other applicable provisions of the Companies Act, 2013 (Scheme). The Board of Directors of Tata Motors at its meeting held on August 1, 2024 has approved the same. 

As a part of the Scheme, TML will demerge its Commercial Vehicle undertaking involving the Commercial Vehicle business (all the assets, liabilities and employees relating to the Commercial vehicle business) and all its related investments into TMLCV. Further, pursuant to the Scheme, the existing Passenger Vehicle business in TMPV, will be merged into TML, the existing listed entity. 

Upon the Scheme becoming effective, both TMLCV and TML will be renamed, resulting in two separate listed entities: 1) The Commercial Vehicle business and its related investments, under the name TML, and 2) The Passenger Vehicle business, the Electric Vehicle (TPEM) business, JLR and their related investments, under the name TMPV. Pursuant to the Scheme, shareholders of TML will receive 1 share of TMLCV of face value Rs 2 fully paid up for every 1 fully paid-up share of Rs 2 held in TML of the same class (Entitlement Ratio).

These actions would further empower the respective business groups to pursue their differentiated strategies with greater agility while reinforcing accountability and will enhance shareholder value. The Scheme will not have any adverse impact on employees, customers, creditors and other business partners. The Scheme is subject to all the necessary shareholder, creditor and regulatory approvals which can take around 12-15 months to complete.

PwC Business Consulting Services LLP has provided the share entitlement report for the transaction, with SBI Capital Markets acting as fairness opinion provider for share entitlement ratio for the demerger. AZB & Partners are the legal advisors to the transaction. Deloitte Touche Tohmatsu India LLP are the tax advisors for the transaction.

Tata Motors is India’s largest automobile company. Through subsidiaries and associate companies, Tata Motors has operations in the UK, South Korea, Thailand, South Africa and Indonesia. Among them is Jaguar Land Rover, the business comprising the two iconic British brands.


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