■Tata to split■

March 20, 2024 ARI_lg https://www.dhirubhai.net/in/luis-gregan-04399b268/

■Tata Motors, India's leading automotive manufacturer and the parent company of Jaguar Land Rover (JLR) has recently announced a significant restructuring move to split the company into two distinct publicly listed entities. Tata Motors' decision to split into two separate listed companies reflects a strategic evolution to enhance operational efficiency, foster innovation and drive sustainable growth across its diverse automotive portfolio.

■Natarajan Chandrasekaran, CEO of Tata Motors, underscored the rationale behind the demerger, emphasising the company's commitment to delivering value to its stakeholders. He highlighted Tata Motors' transformational journey and the pivotal role played by its distinct automotive divisions in driving consistent performance. By enabling each division to sharpen its focus and responsiveness to market dynamics, the demerger is expected to unlock value for customers, employees and shareholders.

The commercial vehicles (CV), passenger vehicles (PV) and JLR businesses have all demonstrated robust performance, with each division operating independently under its respective leadership since 2021. This action underscores Tata Motors' dedication to maximising its varied portfolio's operational efficiency while bolstering accountability and agility within every business unit.

The decision builds upon Tata Motors' earlier restructuring efforts in 2022 when the passenger vehicle and electric vehicle businesses were subsumed under separate entities. By further streamlining its organisational structure through this demerger, Tata Motors aims to empower each division to pursue tailored strategies to drive growth and effectively capitalise on emerging market opportunities.

In a statement released by Tata Motors, the rationale behind this strategy is grounded in the successful performance of its various divisions in recent years. Areas such as electric vehicles, autonomous driving technology and vehicle software present fertile ground for leveraging synergies and driving innovation across these businesses. The demerger is strategically positioned to preserve and capitalise on these synergies, enhancing each entity's competitiveness and innovation capabilities.

The proposed demerger will be implemented through a scheme of arrangement under the oversight of the National Company Law Tribunal (NCLT). While the process is subject to approvals from the Tata Motors Board of Directors, shareholders, creditors, and regulatory authorities, it is anticipated to be completed within 12 to 15 months.

By capitalising on the strengths of each division and preserving synergies where applicable, Tata Motors can adapt to changing market conditions while strengthening its competitive position. This strategic alignment builds upon existing successes and positions Tata Motors to seize future opportunities and drive innovation.

March 19, 2024 ARI_lg