BH Correspondent: Tata Motors said on Friday that it would spin out its passenger vehicles business into a separate unit within the company, as a coronavirus pandemic disrupts production and demand for cars. The carmakers’ Board has in-principle approved to subsidiarize TML’s passenger vehicle business (including electric vehicles) by transferring relevant assets, IPs and employees directly relatable to the passenger vehicle business for it to be fully functional on a standalone basis through a slump sale.
However, certain shared services and central functions will be retained at TML to deliver cost efficiencies for the entire group. 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. We expect the transfer process to be completed in the next one year.
Tata Motors say that the passenger vehicle business landscape is seeing rapid transformation in the form of tightening emission norms, push towards electrification, enhanced disruptions from autonomous and connected technologies.
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. This is not the first time that the company has taken steps to revive its passenger business.
Current president of the passenger car business Mayank Pareek will be replaced by Shailesh Chandra, the current president of EV and corporate strategy. Chandra’s appointment will take effect from April 1.