Tata Motors Unveils Demerger Plan: Splitting Business into Dual Listed Entities

Tata Motors disclosed in an exchange filing on Monday that it will demerge into two distinct listed businesses. The plan to demerge Tata Motors' operations into two distinct listed companies was accepted by the board of the firm.

One will concentrate on commercial vehicle companies and the investments that go along with them under one roof. The other entity will manage the passenger car firms, which include PV, EV, JLR, and its related investments.

The National Company Law Tribunal (NCLT) plan of arrangement will be used to carry out the demerger, guaranteeing that each and every TML shareholder would retain the identical percentage of shares in both listed companies.

The past three years have seen a significant turnaround planned by Tata Motors. As of right now, the three automobile business divisions are running separately and producing results that are reliable.

They will be more focused and agile as a result of this demerger, which will allow them to take advantage of the opportunities presented by the market.

Chairman N Chandrasekaran stated, "This will result in a better experience for our customers, better growth prospects for our employees, and enhanced value for our shareholders."

In the next months, the Tata Motors Limited (TML) Board of Directors will be provided with the demerger plan of arrangement, as approved by the National Company Law Tribunal.

After then, the procedure might take another 12 to 15 months to complete if all necessary clearances from creditors, shareholders, and regulatory agencies are obtained.

According to Tata Motors, there would be no effects on consumers, workers, or our business partners from the demerger.

The exchange filing stated, "There will be no negative effects from the demerger on our business partners, employees, or customers."

what is the National Company Law Tribunal (NCLT)?

As a kind of quasi-judicial tribunal to resolve disputes involving Indian firms, the National Company Law Tribunal (NCLT) was founded. This serves as the substitute for the Company Law Board. It is governed by regulations that have been created by the Central Government. The special court known as NCLT is not able to hear cases related to civil courts.

Authority and Purpose of NCLT

The business can face limitations:

from engaging in any activities that are outside the scope of the AOA and MOA,

from breaking any of the terms of the AOA and MOA, and its directors from acting upon such resolutions, taking any action that is either against

this act or any other act that is temporarily in effect, or proclaiming any resolution that, if approved, would change the MOA and AOA and would be null and invalid.