In March 2020, Tata Motors had said that it intends to form a separate subsidiary for its PV (Passenger Vehicles) business. Forming a new subsidiary for its PV (that will include EV) would be an important step in the company’s search for a strategic partner that enables sharing of products, architectures, advanced technologies, powertrains, and capital. It is reported that Tata Motors is currently holding discussions with potential partners.
Citing PB Balaji, CFO, Tata Motors Group, a new report from The Economic Times says that Tata Motors expects to complete separating its passenger vehicle business by June this year. Balaji was speaking to reporters in an earnings call.
On the 5th of next month, as per a National Company Law Tribunal (NCLT) order, Tata Motors will call an extraordinary general meeting (EGM) to seek approval from shareholders for separating the passenger vehicle business unit. Having a strategic partner isn’t need of the hour, but it will enable the company to “seize the opportunity” in the future.
“The current mental time plan we are working (is) maybe it may happen sometime in May-June,” Balaji said. He assured the company isn’t on the lookout for a partnership because of lack of performance.
Last year, there came various rumours about the potential strategic partner of Tata Motors. Tata Motors had issued a media statement that the news about the company planning to sell up to 49% stake in PV business and the names of potential partners/investors given in the related reports were misleading and incorrect. At the same time, the company had acknowledged that a mutually beneficial alliance is a priority and called it an opportunity to be secured for tomorrow.
Reports had hinted that Tata Motors is considering selling a chunk of its PV business to one of the Chinese companies, either Geely, Changan or Chery. France’s Groupe PSA, who started series production of the first Citroen model in India (Citroen C5 Aircross) a few days ago, was also rumoured to be holding talks with Tata Motors.
In June 2020, ETNow had reported that Tata Motors is putting talks with Chinese carmakers on hold due to the prevailing geopolitical situation with China. It had been in the news for several years that Tata Motors has been engaging with its joint venture partner in China, Chery Automobile, to serve the interest of both companies in the Indian market. Reports had picked-up last year since Tata Motors planned to hive-off its passenger vehicle business (including electric vehicles division) into an independent entity and scout for a partner. The partner was expected to acquire up to 49 per cent stake and collaborate on the development of new products including EVs.
Tata Motors is contemplating to put the pitch or the initial talks which they have with the Chinese car makers on hold, reviewing the current situation. We have been told that the current Chinese car makers, whether it is Chery which is also a partner of Tata Motors for Jaguar and Land Rover in China and also Geely which earlier tied-up with JSW Energy for electric vehicles and is eyeing a spot in India for a very long time, both were in talks with Tata Motors. Now they were initial talks with Tata Motors regarding the passenger vehicle business, but what we have been told is that now the company wants to assess the geopolitical situation before moving ahead with talks with both of these players.ETNow deputy news editor Uttkarsh Chaturvedi said in a news report on Youtube.com played on 24 June 2020.
The Board of Tata Motors approved the plan to make its passenger vehicles division including the EVs as a separate subsidiary to benefit domestic business and multi-brand partnerships last year.
The transfer was to include IPs, relevant assets and staff directly relatable to the PV business but certain shared services and central functions will be retained by Tata Motors Limited for cost efficiency. Implementation of this plan should complete by around June after the necessary approvals including those from creditors and shareholders.