In a strategic move to enhance agility and shareholder value, the Board of Directors of Tata Motors Ltd has approved a Composite Scheme of Arrangement involving the demerger of its Commercial Vehicle (CV) business and the merger of Tata Motors Passenger Vehicles (TMPV) with the existing listed company. This will result in the creation of two separate listed entities for the CV and Passenger Vehicle (PV) businesses.
Under the new scheme, shareholders of Tata Motors Ltd will receive one share of the newly formed TMLCV (Tata Motors Commercial Vehicles Limited) for every share held in Tata Motors Ltd, ensuring an identical shareholding in both listed entities.
Key Highlights of the Scheme:
- Demerger and Merger Details:
- TML will demerge its Commercial Vehicle undertaking, including all assets, liabilities, employees, and related investments, into TMLCV.
- The existing Passenger Vehicle business in TMPV will merge into TML, the current listed entity.
- Post-Scheme, TMLCV will handle the Commercial Vehicle business, while TML will focus on the Passenger Vehicle business, Electric Vehicle (TPEM) business, JLR, and their related investments.
- Share Entitlement:
- Shareholders will receive one fully paid-up share of TMLCV (face value Rs 2) for every one fully paid-up share of TML (face value Rs 2).
- Strategic Benefits:
- This restructuring will allow each business segment to pursue differentiated strategies with increased agility and accountability.
- The scheme aims to enhance value for shareholders without adversely impacting employees, customers, creditors, and other business partners.
- Approval and Timeline:
- The Scheme is subject to necessary approvals from shareholders, creditors, and regulatory authorities, expected to take around 12-15 months.
Advisors and Reports:
- PwC Business Consulting Services LLP provided the share entitlement report.
- SBI Capital Markets acted as the fairness opinion provider for the share entitlement ratio.
- Legal advice was provided by AZB & Partners, with Deloitte Touche Tohmatsu India LLP as tax advisors.
Mr. Sitaram Kandi, Chief Human Resources Officer (CHRO), Tata Motors, remarked, “This Scheme represents a significant milestone in our journey to streamline operations and create focused entities that can pursue their respective business strategies with greater clarity and efficiency. We are confident that this move will unlock substantial value for our shareholders and stakeholders.”
The restructuring marks a pivotal step in Tata Motors’ continued efforts to align its business operations with market dynamics and shareholder expectations, paving the way for future growth and innovation.
