Tata Motors Will Separate Its Rs 9400 Cr Passenger Vehicle Unit Into Separate Entity

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On Monday, Tata Motors said that its shareholders have approved hiving off its passenger vehicles business into a separate entity.

There has been a growing concern about the a slump sale basis for a lump sum consideration and it is in the light of same that on March 5, the shareholders of the company voted to consider and approve the transfer of the passenger vehicles business unit to TML Business Analytics Services Ltd.

The passenger vehicles business has been valued at ?9,417 crore, said the company.

Majority In Favour Of Resolution : Polls
There was a poll taken by Tata Motors, wherein2,15,32,39,294 out of total 2,15,41,38,392 votes were in favour of forming a separated entity, while only 8,99,098 votes out of total were against the resolution according to the regulatory filing. This translates into 99.958 percent in favour while only 0.042 per cent against the decision.

15,11,77,808 votes out of total 15,20,76,906 votes, in the public non-institutional shareholders category, are in favour which translates into 99.409 per cent whereas 8,99,098 votes (0.591 per cent) against the move.

Though the call on the potential partner for the business has not been taken yet, the process of hiving off its domestic passenger vehicles (PV) business is expected by the company management to be completed around May-June 2021.

In order to help the unit secure its long-term viability, Tata Motors last year announced that it would turn its domestic PV business unit into a separate entity and seek a strategic partnership.

Realigning PV As A Part Of Overall Business Reorganization
Calling the decision of realigning PV business necessary, Tata Motors has justified this decision by saying that it was taken as a part of overall business reorganization plan. It was important for providing optimum running, growth and development of the PV undertaking and its interests. The company said that separating into different entities would give the entities, PV and commercial vehicles, the necessary differentiated focus which in turn would help these businesses to their potential while also unlocking business value and enhanced management focus and operational flexibility

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