InvestorQ : Why has Tata motors decided to hive off its passenger vehicle business into a separate entity?
ishika Banerjee made post

Why has Tata motors decided to hive off its passenger vehicle business into a separate entity?

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9 months ago
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Shareholders of Tata Motors have approved the decision to hive off its passenger vehicles or PV business into a separate entity. The meeting was fixed on 05 March to vote and approve the PV business of Tata Motors into TML Business Analytics Services. This sale would be done on a slump sale basis and the consideration would be lump-sum in nature. It has fixed the valuation of the PV business at around Rs.9,147 crore for the deal.

An official statement from Tata Motors has revealed that nearly 99.958% of the total votes, while were explicitly in favour of the resolution to transfer the PV business into a separate entity. The company expects to officially complete the process of hiving off its domestic PV business by June 2021. This is part of Tata Motors’ long-term plan to get a strategic partner for its PV business to ensure long term viability of the business.

This is part of the larger plan by Tata Motors to realign its business into more nimble verticals. The ideas is to provide a differentiated focus for the PV and commercial vehicle businesses as they both have a different set of economics and a different set of dependencies. This, according to the company, will ensure management focus and operational flexibility.

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