Tata Motors (TML) has announced that the company board has given an in-principle approval to subsidiarize the company’s passenger vehicle (PV) business. This also includes electric vehicles.
“… by transferring relevant assets, IPs and employees directly relatable to the PV business for it to be fully functional on a standalone basis through a slump sale,” the company said in a statement.
Tata Motors also announced the appointment of Shailesh Chandra, President EV and Corporate Strategy as President PV business including EV with effect from April1, 2020.
While the subsidiary aims to be functional on a standalone basis, 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. Tata Motors expects the transfer process to be completed in the next one year.
“A fully refreshed BSVI ready product portfolio based on the Impact 2.0 design philosophy, consistently improving NPS scores, improved retail market shares and an exciting entry into the EV space coupled with improved profitability makes the business ready to realise its potential,” the company said in a statement.
However, the recent outbreak of COVID-19 virus increases the challenges faced by the business. The automaker says that in sync with its strategy, it will take decisive steps to strengthen business over the long-term. “A move towards subsidiarization of the PV business is the first step in securing mutually beneficial strategic alliances that provide access to products, architectures, powertrains, new a.ge technologies and capital,” it added.
Shailesh will be assuming responsibility for the PV business from Mayank Pareek, who will work on transition over the next few weeks and will then be retiring from Tata Motors at the end of February 2021.