Tata Motors demerger: The carmaker stated that the business for commercial cars will be housed in one entity, and the business for passenger vehicles will be part of another organization.
The plan to divide Tata Motors into two distinct publicly traded companies has been approved by the board of directors. A statement from the corporation stated that two businesses will be created as a result of the demerger: one for passenger vehicles and one for commercial vehicles.
“The demerger is a logical continuation of the subsidization of PV and EV businesses that occurred earlier in 2022, and it will further empower the two businesses to pursue their plans to produce stronger growth with greater agility while strengthening responsibility. Furthermore, while there are limited synergies between the Commercial Vehicles (CV) and Passenger Vehicles (PV) businesses, there are significant synergies to be realized across PV, EV, and JLR, particularly in the areas of EVs, autonomous vehicles, and vehicle software, which the demerger will help secure,” it added.
Tata Motors is demerging; why?
The company's three automotive business segments are currently running independently and performing consistently, according to N Chandrasekaran, chairman of the Tata Group. According to him, the demerger will enable the three businesses to take advantage of the prospects with greater agility and focus.
“This will lead to a superior experience for our customers, better growth prospects for our employees, and enhanced value for our shareholders,” stated the company's CEO.
The demerger procedure could take 12–15 months to complete.
Tata Motors stated that the demerger will have no negative impact on employees, customers, or business partners.