Assets to be transferred; central functions to remain at TML
The board of Tata Motors Ltd. (TML) has given in-principle approval to turn the company’s Passenger Vehicle (PV) business (including electric vehicles) into a subsidiary by transferring relevant assets, intellectual property rights and employees directly related 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 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,” TML said in a statement.
“The PV business landscape is seeing rapid transformation in the form of tightening emission norms, push towards electrification, enhanced disruptions from autonomous and connected technologies,” it said.
“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,” it added.
Over the last few years, the PV business has implemented a turnaround and launched a slew of products like Tiago, Tigor, Nexon, Hexa, Harrier, Altroz and Nexon EV.
The company said the move towards subsidiarisation 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.
Along with this move, TML has announced the appointment of Shailesh Chandra, president, EV and Corporate Strategy, as president, PV business, including EVs, with effect from April 1, 2020.
He will be assuming responsibility for the PV business from Mayank Pareek who will be superannuating from Tata Motors at the end of February 2021.
“Mr. Chandra’s appointment at the start of the new financial year gives him the opportunity to shape the organisation as we ready to operate as a subsidiary once the necessary approvals are in place,” the statement added. TML shares closed with a loss of 0.21% at ₹70.65 on the BSE.
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