Tata Motors, India’s third largest carmaker, said on August 27 that it has secured approval from the Mumbai bench of National Company Law Tribunal (NCLT) to hive off its passenger vehicle (PV) business into a subsidiary.
“This is with further reference to our letters dated March 27, 2020, July 31, 2020 and March 5, 2021 regarding the scheme of arrangement. We are pleased to inform you that, the Hon'ble NCLT vide its order dated August 24, 2021, has sanctioned the said scheme,” Tata Motors said in a stock exchange filing.
The company would be filing the said order along with a copy of the scheme with the Registrar of Companies, Mumbai, it further informed.
The PV division is being hived off into a separate entity for allowing the company to sell stake in it to a strategic partner. The PV division also controls the electric vehicle business unit.
The other division under the stand-alone entity of Tata Motors is the commercial vehicle business which would remain unchanged.
Tata Motors had sought shareholder approval in February 2021 to transfer its PV business to TML Business Analytics Services, which would be later renamed to Tata Motors Passenger Vehicles (TMPVL), subject to regulatory approvals.
The PV division of Tata Motors has piled up losses to the tune of Rs 11,173 crore as at end of June 2020 while the division's valuation has been fixed at Rs 9,417 crore, a notice to the company’s shareholders stated.
The net worth of TMPVL, where Tata Motors will hold nearly 100 percent shares after the hive off, will stand reduced to Rs 8,589 crore.
A move towards subsidiarisation of the PV business is the first step in securing strategic alliances that provides access to products, architectures, powertrains, new-age technologies and capital. In simple terms, this will unlock value for the company for the PV business unit which has struggled in the recent past in the face of strong competition.Tata Motors gets NCLT approval to hive off PV business - Moneycontrol.com
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