Mumbai, August 1, 2024: In a groundbreaking move aimed at enhancing agility and shareholder value, the Board of Directors of Tata Motors Ltd has greenlit a Composite Scheme of Arrangement, marking the demerger of its Commercial Vehicle (CV) business and the merger of Tata Motors Passenger Vehicles (TMPV) with the parent company. This strategic realignment will result in the creation of two distinct listed entities, each poised to pursue specialized growth trajectories.
Under the approved scheme, Tata Motors Ltd will demerge its Commercial Vehicle business, transferring all related assets, liabilities, and employees to a newly established entity, Tata Motors Commercial Vehicles Limited (TMLCV). Concurrently, the Passenger Vehicle segment, including the Electric Vehicle (TPEM) business and Jaguar Land Rover (JLR) operations, will merge into the existing Tata Motors entity, which will be rebranded accordingly.
Shareholder Implications and Strategic Benefits
In a move designed to ensure seamless transition and shareholder continuity, the entitlement ratio has been set at 1:1. This means shareholders of Tata Motors Ltd will receive one fully paid-up share of TMLCV for every share held in Tata Motors, maintaining identical shareholding across both entities.
This restructuring aims to empower the newly formed entities to execute their specialized strategies with enhanced focus and agility, driving greater value creation for shareholders. The scheme promises to bolster accountability and streamline operations, with no adverse impacts anticipated for employees, customers, creditors, or business partners.
Regulatory and Advisory Oversight
The implementation of the scheme is contingent upon requisite approvals from shareholders, creditors, and regulatory bodies, a process expected to span 12-15 months. PwC Business Consulting Services LLP has provided the share entitlement report, with SBI Capital Markets offering a fairness opinion on the share entitlement ratio. Legal advisement is being provided by AZB & Partners, while Deloitte Touche Tohmatsu India LLP serves as the tax advisor.
This strategic maneuver represents a significant evolution in Tata Motors’ corporate structure, positioning both the CV and PV segments for focused growth and innovation in their respective markets.
