Tata Motors Mulls Merger Of EV Subsidiary With PV Business After Demerger The passenger vehicle business, to be created post-demerger, will include the two subsidiaries—Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility —and the JLR business.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
Tata Motors is planning to merge its electric vehicles business – a step-down subsidiary with the PV unit with the passenger vehicle unit after the demerger exercise of company's commercial vehicle and PV businesses concludes.
On March 4, Tata Motors announced a value-unlocking exercise to demerge its businesses into two separate listed entities. One would be the CV business and its related investments, and the other would be the PV businesses, including the EV unit, JLR (Jaguar Land Rover), and related investments.
The proposed merger of the EV business—Tata Passenger Electric Mobility Ltd—with the PV business is being looked at as creating liquidity for existing investors in the EV business such as TPG, as well as future investors.
The passenger vehicle business, to be created post-demerger, will include the two subsidiaries—Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility —and the JLR business.
According to the information available in public domain, the company intends to turn its PV division fully electric not so far in the future, there will be no need to maintain separate EV entity. As of May 9, Tata Motors had a market capitalisation of Rs 3.4 lakh crore.
In October 2021, Tata Motors announced that TPG Rise and its co-investor ADQ would invest INR 7,500 crore in the EV subsidiary for an 11-15 per cent stake at a valuation of USD 9.1 billion. Tata Motors received the second and final tranche of INR 3,750 crore from the two investors in January 2023.
Over recent years, Tata Motors' CV, Passenger Vehicles and Jaguar Land Rover (JLR) businesses have implemented distinct growth strategies, and since 2021, these businesses have been functioning independently under their respective CEOs.
While there are limited synergies between commercial vehicles and passenger vehicles businesses, there are considerable synergies to be harnessed across PVs using petrol and diesel, EVs, and JLR, particularly in the areas of autonomous vehicles, and vehicle software which the demerger will help secure, the company said.
The demerger will be implemented through an NCLT scheme of arrangement and all shareholders of Tata Motors shall continue to have identical shareholding in both the listed entities. Regulatory approvals could take a further 12-15 months to complete the demerger.
