The Board of Directors of Tata Motors Ltd (TML) has approved a composite scheme of arrangement amongst TML, TML Commercial Vehicles Limited (TMLCV), Tata Motors Passenger Vehicles (TMPV) and their respective shareholders, taking the demerger plan of entities announced in March 2024, further, the company said in a filing to the stock exchanges.
As a part of the scheme, TML will demerge its commercial vehicle undertaking involving the CV business including all the assets, liabilities and employees relating to the business and all its related investments into TMLCV. Further, the existing passenger vehicle business in TMPV, will be merged into TML, the existing listed entity.
Once scheme takes effect, both TMLCV and TML will be renamed, resulting in two separate listed entities– the commercial vehicle business and its related investments, under the name TML, and the passenger vehicle business, the Electric Vehicle (TPEM) business, JLR and their related investments, under the name TMPV. Tata Motors Limited’s total income relating to commercial vehicles business was ?73,116.64 crore, representing ~99% of the total income for FY 2023-24, as per the company’s standalone financial results.
Pursuant to the scheme, shareholders of TML will receive one share of TMLCV of face value INR 2/- fully paid up for every 1 fully paid-up share of INR 2/- held in TML of the same class (“Entitlement Ratio”).
These actions would further empower the respective business groups to pursue their differentiated strategies with greater agility while reinforcing accountability and will enhance shareholder value. The arrangement will not have any adverse impact on employees, customers, creditors, and other business partners. The completion of the scheme is subject to all the necessary shareholder, creditor and regulatory approvals which can take around 12-15 months to complete.
PwC Business Consulting Services LLP has provided the share entitlement report for the transaction, with SBI Capital Markets acting as fairness opinion provider for share entitlement ratio for the demerger. AZB & Partners are the legal advisors to the transaction. Deloitte Touche Tohmatsu India LLP are the tax advisors for the transaction.
