Tata Motors' passenger vehicles unit valued at ₹9,417 crore

Tata Motors' passenger vehicles business unit, which is in the process of being hived off into a separate entity, has been valued at ₹9,417 crore, according to a regulatory filing by the company.

The homegrown auto major has called a meeting of the secured creditors as well as equity shareholders of the company on March 5 to consider and approve the transfer of the passenger vehicles business unit to TML Business Analytics Services Ltd as a going concern on a slump sale basis for a lump sum consideration, Tata Motors Ltd (TML) said.

Upon the coming into effect of the scheme and upon transfer and vesting of the passenger vehicles undertaking in the transferee company -- TML Business Analytics Services Ltd, the total lump sum consideration payable to the transferor company (TML) shall be the purchase consideration, that is ₹9,417 crore and subject to withholding taxes under applicable Law, the filing added.

Tata Motors said the valuation of the passenger vehicles business unit has been arrived at on the basis of a fair valuation undertaken by registered valuer, independent Chartered Accountants M/s Vikrant Jain and various qualitative factors relevant to the company and the business dynamics and growth potentials of the unit, key underlying assumptions and limitations.

"Based on the relevant factors and circumstances as outlined in the valuation report, the fair value of the Passenger Vehicles Undertaking is ₹9,417 crore," the filing added.

This will be settled by way of issuance and allotment of 9,41,70,00,000 equity shares of the transferee company at ₹10 each, it added.

Last year, Tata Motors had announced that it would turn its domestic passenger vehicle (PV) business unit into a separate unit and seek a strategic partnership in order to help the unit secure its long term viability.

Explaining the rationale behind the move, Tata Motors said as part of an overall business reorganisation plan and in order to provide for the optimum running, growth and development of the passenger vehicles undertaking and its interests, it is necessary to realign the PV business.

This shall help in providing differentiated focus for the PV business and commercial vehicle business and help each of them realise their potential while also unlocking business value and enhanced management focus and operational flexibility in each of the businesses, it added.

Stating that India continues to remain an attractive market for global original equipment manufacturers (OEMs) while the aspiration levels of the Indian consumer continues to rise, requiring stepped up investments in contemporary products in a competitive market, Tata Motors said "this restructuring would facilitate mutually beneficial strategic alliances for the PV Business in the future."

The company has so far maintained that it has not yet taken a call on a potential partner for the business.

Tata Motors said upon the scheme becoming effective, the name of the transferee company shall be changed to 'Tata Motors Passenger Vehicles Limited' or such other name approved by the Registrar of Companies.