Tata Motors has started talks with potential partners but has refused to share further details
Tata Motors will retain control of the troubled passenger vehicle (PV) business unit even after finding a partner to jointly run the operations. The hiving off of the PV business will not reduce Tata Motors’ control over the business, a top company official said.
The company has kick-started the process of hiving off the PV and electric vehicle (EV) business and placing it as a subsidiary, a process which could take a year to complete. Tata Motors has started talks with potential partners but has refused to share further details.
Responding to a question from Moneycontrol, P B Balaji, Chief Financial Officer - Tata Motors said, “This (PV) is a business that we would want to run. We believe there is a long term potential in the business. The need for a partner is more from the point of view of accelerating the technology adoption and accelerating the product introduction roadmap. This is our business to run.”
In March, the board of Tata Motors in-principle approved to hive off the PV business (including EV) by transferring relevant assets, intellectual properties and employees directly relatable to the PV business for it to be fully functional on a standalone basis through a slump sale.
Though the spread of COVID-19 may have thrown a spanner in the works for Tata Motors, it is confident of completing the subsidiarisation process in less than a year.
"The board has approved the scheme for subsidiarisation and it will be filed with the NCLT in the coming weeks. We are expecting anywhere between 9-12 months for completing this process so it is a key priority for us in the coming months. We speak to a lot of OEMs and as and when we have something to share on that we will do it,” added Balaji.
A move towards subsidiarisation of the PV business is the first step in securing strategic alliances that provides access to products, architectures, powertrains, new age technologies and capital. In simple terms this will unlock value for the company for the PV business unit which has been struggling in the face of strong competition.
“The PV business will turn cash positive by FY23 and that will happen even without a partner that is the internal target we are working towards and we are confident of achieving that. Partnerships get us the momentum but that is not the base case,” added Balaji.
This is not the first time that Tata Motors undertook steps to revive its PV business. A couple of years ago, Tata Motors was in talks with Volkswagen for product and technology sharing. The deal, however, failed to fructify due to high costs.Since the past three years, news about Tata Motors joining hands with Chery Automobiles of China have been intermittently doing the rounds. Chery is Tata Motors’ joint venture partner in China and in control of assembling Jaguar Land Rover vehicles.