Tata Motors’ passenger vehicles biz hive-off comes into effect

The hiving off and transfer of Tata Motors’ entire passenger vehicle undertaking to Tata Motors Passenger Vehicles Ltd have come into effect from Saturday, the homegrown auto major said on Saturday.

In a regulatory filing, Tata Motors said its board at a meeting held on Saturday approved the settling of Rs 9,417 crore payable for the purchase of its passenger vehicle undertaking under the scheme by allotment of 941.7 crore equity shares of Rs 10 each in Tata Motors Passenger Vehicles Ltd to it.

The scheme is effective from January 1, 2022, and the appointed date as per the scheme is the ‘effective date’, Tata Motors said.

“Therefore, the entire passenger vehicle undertaking of the company stands transferred under the scheme to Tata Motors Passenger Vehicles Ltd with effect from January 1, 2022,” it added

As an integral part of the scheme, Tata Motors said a portion of the securities premium account has been written down by adjusting against the accumulated losses of the company to the extent of Rs 11,173.59 crore as on January 1, 2022.

In August last year, the company had received approval from the National Company Law Tribunal (NCLT) Mumbai bench to hive off its passenger vehicles business unit into a separate entity.

Before that, in March 2021, the shareholders of the company at an extraordinary general meeting convened as per an order of the NCLT had voted and approved the transfer of the passenger vehicles business unit to TML Business Analytics Services Ltd, presently known as Tata Motors Passenger Vehicles Ltd, as a going concern on a slump sale basis for a lump sum consideration.

Tata Motors had said its passenger vehicles business unit has been valued at Rs 9,417 crore.

In 2020, Tata Motors had said it would turn its domestic PV business unit into a separate entity and seek a strategic partnership in order to help the unit secure its long-term viability.

In October last year, Tata Motors said it would raise USD 1 billion (Rs 7,500 crore) in its passenger electric vehicle business from TPG Rise Climate at a valuation of up to USD 9.1 billion. Under the agreement, TPG Rise Climate along with its co-investor ADQ, will invest in a subsidiary of Tata Motors that will be newly incorporated.

Tata Motors had maintained that as part of an overall business reorganisation plan and in order to provide for the optimum running, growth and development of the PV undertaking and its interests, it was necessary to realign the PV business.

This will help in providing a differentiated focus for the PV and commercial vehicle businesses separately. It will also help each of them realise their potential while also unlocking business value and enhanced management focus and operational flexibility in each of the businesses, the company had said.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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