Tata Motors expects to complete PV biz hive-off by June this year

Tata Motors expects the process of hiving-off its domestic passenger vehicles (PV) unit to be completed around May-June this year, although it has not yet taken a call on a potential partner for the business, according to a senior company official.

The company will be calling an extraordinary general meeting (EGM) on March 5 to seek approval from shareholders on the same, as per an order of the National Company Law Tribunal (NCLT).

"We speak to many OEMs (original equipment manufacturers)...At this point in time, we have said it is not an imperative for today but more to seize the opportunity for tomorrow.

"And from that perspective the current focus of almost the entire business is to ensure the continued out performance of the PV business continues and a small portion of us continue to work on this," Tata Motors Group CFO P Balaji said in an earnings call with reporters.

Sharing an update on the progress of hiving off of the PV unit, he said, "The NCLT orders of calling EGM have already come and that happens on the 5th of March and that will be the next port of call."

Once the shareholders give approval, then it moves back to the NCLT for the final order, he added.

"The current mental time plan we are working (is) maybe it may happen sometime in May-June. We are preparing for that and we will be ready for the transition as and when we get the approval," Balaji said.

Last year, Tata Motors had announced that it would turn its domestic PV business into a separate unit and seek a strategic partnership in order to help the unit secure its long-term viability.

Reiterating that the company has not taken a decision on a partner, he said, "We talk to people, we do have conversation. This is about ensuring the meeting of the minds, and ensuring that we have the same view of long term future in the country. Therefore it is more about the long term opportunity of tomorrow."

When asked if the improving performance of the PV unit has changed the company's mind of roping in a partner, he replied in the negative.

"(The) partnership is about opportunity for tomorrow. It is not about imperative for today. Therefore, when we look at a partner, it is more about how can we drive capital productivity by sharing things that we have already invested in or fast-forward any other technology that could be coming in," Balaji said.

He asserted that it is not about performance or lack of it in a quarter.

"That's not the way we look at it. We do look at it long term and there is clearly a role for a partner in this business and that's the reason why we are going ahead with the subsidiarisation of the business," he said.

Commenting on the impact of Brexit on the company's British arm JLR, Balaji said the overall deal agreed between the UK government and the EU "is in line with our base plan".

While in the short-term there could be friction at the border, JLR is managing and will ensure that it does not have any material impact on production, he said.

The other issue is the rules of origin under which 55 per cent of internal combustion engine components are sourced from UK plus EU, and about 40 per cent for EV vehicles.

"This is something that needs to be sorted before 2024 and we have time in our hand. As far as immediate is concerned, we are compliant," he said.

The company would have to sort out issues on the EV side since a lot of batteries and components come from China and it will have to find sources that are based in the UK and EU, he added.

Asked about speculations that one of the JLR plants in the UK could be shut due to Brexit, Balaji said, "Brexit decision is just one month old. From our perspective, we will look at this from a holistic view but no decision has been taken with respect to any factory. All our factories are running and they will continue to run at this point in time.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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