Tata Motors Shares Rise as Board Approves New Subsidiary and TMFL-TCL Merger

Tata Motors' stock rose by 1.92% to ₹921.50 after the company announced that its board has approved the establishment of a wholly-owned subsidiary, TML Commercial Vehicles (TMLCVL). TMLCVL will be incorporated with a paid-up capital of ₹10,00,000, comprising 5,00,000 equity shares with a face value of ₹2 each, fully paid-up in cash. The subsidiary will focus on manufacturing automotive vehicles.

Previously, Tata Motors announced plans to demerge into two separate listed entities: one for the Commercial Vehicles business and related investments, and another for the Passenger Vehicles business, including PV, EV, JLR, and related investments.

In addition, Tata Motors' board, along with the boards of Tata Capital (TCL) and Tata Motors Finance (TMFL), approved the merger of TMFL with TCL through an NCLT scheme of arrangement. As part of the merger, TCL will issue equity shares to TMFL shareholders, resulting in TML effectively holding a 4.7% stake in the merged entity.

TCL is one of India's largest diversified NBFCs with an AUM of ₹1.6 Lakh crore, offering over 25 product offerings across Retail, SME, and Corporate Segments. TMFL, with an AUM of ₹32.5 crore, primarily provides financing solutions for new and old commercial vehicles, passenger vehicles, dealers, and vendors.

This transaction aligns with Tata Motors' strategy to exit non-core businesses and focus capital on emerging technologies and products. The merger will allow TCL to expand its customer base in the growing CV/PV financing segments and offer innovative products and digital services, while providing growth opportunities for employees.

Tata Motors, part of the Tata group, is a global manufacturer of cars, utility vehicles, pickups, trucks, and buses. In Q4 FY24, the company reported a consolidated net profit of ₹17,528.59 crore, significantly higher than the ₹5,496.04 crore posted in Q4 FY23. Revenue from operations increased by 13.52% year-on-year to ₹1,19,213.35 crore in the quarter ended 31 March 2024.

BS