Tata Motors demerger approved: benefits to shareholders and

Tata Motors has approved a comprehensive scheme of arrangement to demerge its business into two distinct listed entities, a major step forward for the company. The board of Tata Motors Limited (TML) approved the scheme, 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 structure and have a positive impact on shareholders.

Spin-off details:

The demerger plan approved by the 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 and its related investments will be transferred to TML Commercial Vehicles Ltd, while the PV business, including the electric vehicle (EV) unit, Jaguar Land Rover (JLR) and other related investments, will be integrated under Tata Motors Passenger Vehicles Ltd.

Rename and List:

Once the demerger becomes effective, both TML Commercial Vehicles and Tata Motors will be renamed, thereby creating two separate listed entities. The process is expected to be completed in the next 12 to 15 months.

Impact on shareholders:

Under the approved scheme, Tata Motors shareholders will receive one fully paid up share of TML Commercial Vehicles for every fully paid up share of Tata Motors they hold. This equity ratio ensures that shareholders have a stake in both the newly created entities and have the potential to benefit from the focused growth of each division.

Market Impact:

The demerger approval comes at a time when Tata Motors is gearing up to launch the much-anticipated Tata Curvv coupe SUV. Positioned as a stylish rival to popular models like the Hyundai Creta and Kia Seltos, the Curvv is expected to further boost Tata Motors’ market presence. The company’s valuations have already risen and the launch of the Curvv is likely to further increase its valuations.

The demerger of Tata Motors marks a pivotal moment in the company’s journey, with the potential to deliver focused growth and enhanced value to shareholders. As the demerger process unfolds over the next year, the market will be watching closely to see how these changes and the launch of Tata Curvv will shape the future of Tata Motors.