Tata Motors demerger: How does it affect shareholders? - Hindustan Times
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Tata Motors demerger: How does it affect shareholders?

Mar 04, 2024 06:54 PM IST

Tata Motors has decided to demerge its commercial vehicle business from the passenger vehicle arm.

Tata Motors has decided to demerge its commercial vehicle business from the passenger vehicle arm. Following the split, one listed company will house the the passenger and electric vehicles as well as Jaguar Land Rover businesses. The second firm will have the commercial vehicle business and related investments.

“The three automotive business units are now operating independently and delivering consistent performance. This de-merger will help them better capitalise on the opportunities provided by the market by enhancing their focus and agility,” Tata Motors Chairman N Chandrasekaran said.

File photo of a Tata Motors logo installed at one of its showroom is pictured in Mumbai.(AFP file)
File photo of a Tata Motors logo installed at one of its showroom is pictured in Mumbai.(AFP file)

What next for Tata Motors shareholders?

After more than doubling last year, the stock of Tata Motors has surged by about 27 per cent in this year so far. After the demerger, the company's shareholders will continue to have an identical shareholding in both the listed companies.

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"The spinoff proposal, which will be placed before the board for approval in the coming months, won’t have any adverse impact on the company’s employees, customers or business partners, it added. All shareholders of Tata Motors will “continue to have the identical shareholding in both the listed entities,” the company said in its regulatory filing.

On Monday, the company's shares opened at 992.95 and hit a 52-week high of 995.75. The stock, however, closed in red at 987.20. The company is riding high after its re-emerged as India's most valuable carmaker last month. Tata Motors will invest around $2 billion in electric models by 2027.

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JLR is also gearing a major shift toward electric vehicles. It’s due to launch the first electric Range Rover this year and has already had more than 16,000 sign-ups for the model after opening the waiting list in December.

According to the company's filing, the split is a ‘logical progression’ after Tata Motors separated its passenger vehicle and electric mobility businesses in 2022 and since 2021, these businesses have been under different CEOs, according to the filing.

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