The board of directors of Tata Motors has approved the demerger of Tata Motors into two listed companies which will house the business of commercial and industrial vehicles (CVs) and passenger vehicles respectively, including Tata (PV+EV) and JLR which are already operating from 2021 with two separate CEOs.
The separation into two entities (similar to that made by Daimler for cars and heavy vehicles) was - we read in a note from Tata - a logical progression of the recognition of the independence of the activities and "will give further power to the respective activities to pursue their respective strategies to achieve greater growth with greater agility, while strengthening accountability."
Tata said there is limited synergy between the CV and PV businesses, while there are "considerable synergies to be exploited between PV, EV and JLR, particularly in the areas of electric models, autonomous models and vehicle software".
Shareholder, creditor and regulatory approvals may take 12-15 months to complete.
“The split will have no adverse impact on employees, customers and our business partners,” the company said.
Tata Motors, which is part of the large Tata group, was founded in 1945 and is one of the largest manufacturers of cars and industrial vehicles in India but also boasts an important presence in South Korea, South Africa and Thailand.
Listed on the Bombay Stock Exchange and the National Stock Exchange of India, its market capitalization is approximately $9.5 billion.
It acquired South Korean truck maker Daewoo Commercial Vehicles Company in 2004 and Jaguar Land Rover in 2008
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