Tata Motors to carve out PV biz as separate entity, to see change of guard

Tata Motors will split its passenger vehicle (PV), including electric vehicle (EV) activities into a separate subsidiary through a down sale, the company said on Friday in a stock exchange notification.

The move aims to secure “mutually beneficial strategic alliances” that provide access to products, architecture, powertrains, new age technologies and capital, he added. Selling in recession means that the photovoltaic business will not carry any debt from the existing business.

The company will also see a change of custody. Shailesh Chandra, President of EV and Corporate Strategy, will replace Mayank Pareek as President of Photovoltaic Activities, including EV, effective April 1. Pareek will leave the company after six years at the end of February 2021. Chandra and Pareek will work on the transition in the coming weeks.

“The board of directors of TML (Tata Motors) has in principle approved the company’s PV subsidiary (including electric vehicles) by transferring the relevant assets, IP and employees directly related to the photovoltaic activity so that it be fully functional on a stand-alone basis through a recessionary sale, “the company said in the release. All changes are subject to the approval of regulators, creditors and shareholders, and the process is expected to be completed within a year.

The PV activity has weighed on the company for many years in terms of financial performance. He suffered an operational loss of Rs 500 crore during the first nine months of the current financial year. “This is a bold and positive move from a strategic point of view and it will help them (photovoltaic business) find a partner. It will allow them to focus more on commercial and passenger vehicle activities,” said Mitul Shah, vice president of Reliance. Securities.

However, certain shared services and central functions will be retained within the company in order to achieve cost savings for the entire group. The proposed transfer will be implemented through a plan of arrangement, which will be submitted to the company’s board of directors for approval in the coming weeks, he said.

This decision comes in a rapidly changing landscape of photovoltaic activity in the form of tighter emission standards, a push towards electrification, increased disruption of autonomous and connected technologies.

“In addition, India continues to remain an attractive market for global OEMs while the aspirations of the Indian consumer continue to rise, necessitating increased investment in contemporary products in a competitive market,” said the society.

Some are skeptical about this decision, given the company’s track record. “I don’t know if this will work in favor of shareholders, given their experience in finding strategic partners”, Mahantesh Sabarad, head of equity at SBICAP Securities.

Tata Motors has ousted several companies in the past to find a strategic partner, but has not had much success. The only notable example is the construction equipment sector, which it managed to sell to Hitachi Construction after transforming it into a separate entity, he said.

In recent years, its PV activity has implemented a strong turnaround in terms of products. It has earned its right to grow by launching a series of successful products such as the Tiago, the Tigor, the Nexon, the Hexa, the Harrier and, more recently, the Altroz ​​and the Nexon EV.

While a fully updated BS-VI ready-to-use product portfolio based on the Impact 2.0 design philosophy has helped the entire company, the recent COVID-19 increases the challenges the business faces. The company will take decisive steps to strengthen its business over the long term.

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