Tata Motors Demerger Plan Ensures Flexibility for EV Investors' Exit Options

Tata Motors Group CFO P B Balaji announced that the company's demerger plan will create distinct entities for its passenger vehicles and commercial vehicles, maintaining flexibility for investors seeking an exit from the electric vehicles (EV) business. This was revealed during a media interaction in Mumbai.

The passenger vehicle entity, which will emerge from the demerger, will include Tata Passenger Electric Mobility Ltd and the Jaguar Land Rover business. In October 2021, TPG Rise Climate and ADQ committed to investing Rs 7,500 crore in Tata Motors' EV business, valuing it at up to $9.1 billion.

Although different media reports have speculated about potential exit strategies, including an IPO for the EV business, Balaji emphasized that various options remain open. He stated, "Giving them an exit where the topco (passenger vehicle business) is the exit is very much a possibility. The exact route will depend on when the investors wish to exit because they see value in the business. Flexibilities are being retained to ensure all options remain available."

Balaji expressed confidence in the performance of the company’s various business units, projecting that Jaguar Land Rover would become debt-free next year. He also noted that the consolidated domestic auto business is already debt-free, although the standalone commercial vehicles segment carries a debt of around Rs 6,000 crore.

Executive Director Girish Wagh discussed the commercial vehicles business, highlighting a focus on product superiority, multi-fuel options, value selling, and increased penetration of value-added services. He also mentioned that 40% of this year's capital expenditure will be invested in futuristic mega trends.

Shailesh Chandra, head of Tata Motors Electric Mobility, predicted that the Indian auto industry would reach six million units by FY30, driven by rising disposable incomes and an increasing number of car buyers and upgraders. He stated that Tata Motors aims to capture an 18-20% market share in the Indian EV market by FY30.