Tata Motors’ Passenger Vehicle Business To Function On A Standalone Basis

Tata Motors Limited(TML) has decided subsidize TML’s passenger vehicle(PV) business, including electric vehicles(EV) by transferring relevant assets, IPs and employees directly relatable to the PV business

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Tata Motors Limited (TML) Board has in-principle agreed to subsidize TML’s passenger vehicle (PV) business, including electric vehicles (EV), by transferring relevant assets, IPs and employees directly relatable to the PV business for it to be fully functional on a standalone basis through a slump sale. However, certain shared services and central functions shall be retained at TML to deliver cost efficiencies for the entire group.

In a press released statement, TML said that the proposed transfer shall be implemented through a scheme of arrangement, which will be tabled for approval to the TML Board over the next few weeks. Implementation of the scheme will be subject to regulatory and statutory approvals as applicable, including approval of shareholders and creditors. The transfer process is set to be completed in the next one year.

The Passenger Vehicle business landscape has seen a rapid transformation in the recent past in the form of tightening emission norms, push towards electrification, enhanced disruptions from autonomous and connected technologies. Additionally, India continues to remain an attractive market for global OEMs while the aspiration levels of the Indian consumer continue to rise requiring stepped up investments in contemporary products in a competitive market.

Over the last few years, TML’s PV business has implemented a strong turnaround and has earned its right to grow by launching a slew of successful products like the Tiago, Tigor, Nexon, Hexa, Harrier and most recently the Altroz and Nexon EV. Tata Motors has a range of newly updated and refreshed BS6 products based on the Impact 2.0 design philosophy up its sleeve. Tata Motors believes that with such a line of products, they hope of consistently improving NPS scores, improved retail market shares and exciting entry into the EV space coupled with improved profitability which might make the business ready to meet its potential.

However, the recent outbreak of the novel coronavirus has increased the challenges faced by the business. TML said that in the current situation, their first priority is to secure the health and safety of their people while continuing to serve their customers and securing the viability of our ecosystem. The statement added that a move towards subsidization of the PV business is the first step in securing mutually beneficial strategic alliances that provide access to products, architectures, powertrains, new age technologies and capital.

TML also announced the appointment of Shailesh Chandra, President EV and Corporate Strategy as President PV business including EV with effect from April 1, 2020, and will be assuming his new responsibility for the PV business from Mayank Pareek adding that his appointment at the start of the new financial year would give him the opportunity to shape the organization as they ready it to operate as a subsidiary once the necessary approvals are in place.

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