Tata Motors board approves demerger; scheme to take up to 15 months to complete

Tata Motors, on Thursday, announcing that its board has approved the demerger of its business into two entities, stated that the scheme is expected to take around 12-15 months to complete. “The Scheme is subject to all the necessary shareholder, creditor and regulatory approvals which can take around 12-15 months to complete,” the automaker said in a filing. 

The Tata Motors board of directors approved the composite scheme of arrangement among TML, TML Commercial Vehicles Limited (TMLCV), Tata Motors Passenger Vehicles Limited (TMPV) and their respective shareholders. 

Meanwhile, Tata Motors shares slipped 1.02 per cent to settle at Rs 1,144.60 on Thursday. Turnover on the counter came at Rs 77.14 crore, commanding a market capitalisation (m-cap) of Rs 3,80,540.42 crore. At today's closing price, the stock was up 44.79 per cent on a year-to-date (YTD) basis.

As part of the scheme, Tata Motors will demerge its commercial vehicle undertaking involving the commercial vehicle business (all the assets, liabilities and employees relating to the commercial vehicle business) and all its related investments into TMLCV.

The existing passenger vehicle business in TMPV will be merged into TML, the existing listed entity. 

Once the demerger is complete, TMLCV and TML will be renamed, resulting in two separate listed entities: The commercial vehicle business will come under the name TML, and the passenger vehicle business, the electric vehicle business, JLR and their related investments, under the name TMPV.

Shareholders of TML will receive “one share of TMLCV of face value Rs 2 fully paid up for every one fully paid-up share of Rs 2 held in TML of the same class”, the company said.  

The demerger will not have any adverse impact on employees, customers, creditors and other business partners, it said.