Tata Motors allowed to hive off its passenger vehicle business

Indian vehicle manufacturer Tata Motors has received approval from the National Company Law Tribunal (NCLT) Mumbai bench to transfer its passenger vehicles business into a separate entity. The carmaker has been looking for collaboration to carve out passenger vehicle (PV) business as a separate standalone unit for some time now.

"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 regulatory filing. Tata Motors will now file the order along with a copy of the scheme with the Registrar of Companies, Mumbai within 30 days of the date of receipt of the order.

The approval comes a year after Tata Motors' board had approved to form a separate entity which would house the PV business, worth ₹9,417 crore including the electric vehicle unit, by transferring relevant assets, IPs and employees directly relatable to the vertical for it to be fully functional on a standalone basis.

Earlier in March this year, Tata's shareholders had voted and approved the transfer of the passenger vehicles business unit to TML Business Analytics Services Ltd as concerns grew over slump in sales. The management of the Tata Motors has been maintaining that it has not taken a final call on the new partner who will handle the passenger vehicle business for them.

Tata Motors has recently become the fourth largest carmaker in India in terms of sales in the passenger vehicle segment. It offers cars ranging from small hatchbacks like Tiago to bulky SUVs like Harrier or Safari. It also offers electric vehicles like Tigor and Nexon and boasts of best-selling electric cars in India. It is going to launch the new generation Tigor EV next week, while a new sub-compact SUV called Punch is on its way to hit the markets soon.

Tata Motors had earlier said that it is necessary to realign the PV business as part of an overall business reorganisation plan for growth and development. Tata Motors also has commercial vehicle business, which it is likely to keep with itself.