Tata Motors car business accumulated losses of Rs 11,173 crore

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26 Aug, 2025 12:21

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The passenger vehicle (PV) division of Tata Motors has piled up losses to the tune of Rs 11,173 crore as at end of June 2020 while the division's valuation has been fixed at Rs 9,417 crore, a notice to the company’s shareholders stated.

The PV division is being hived off into a separate entity for allowing the company to sell its stake in it to a strategic partner. The PV division also controls the electric vehicle business unit of Tata Motors.

The other division under the stand-alone entity of Tata Motors is the commercial vehicle business which would remain unchanged. A meeting of the equity shareholder of the company will be held on March 5 for the purpose of considering and approving the scheme of arrangement.

Tata Motors is seeking shareholder approval to transfer its PV business to TML Business Analytics Services, which would be later renamed to Tata Motors Passenger Vehicles (TMPVL), subject to regulatory approvals. The net worth of TMPVL, where Tata Motors will hold nearly 100 percent shares after the hive off, will stand reduced to Rs 8,589 crore.

“This (hive off) shall help in providing a differentiated focus for the passenger vehicle business and commercial vehicle business and help each of them realise their potential and unlock business value and enhanced management focus and operational flexibility in each of the businesses”, Tata Motors said in the notice.

The valuation of the PV business unit was arrived at on the basis of a fair valuation undertaken by a registered valuer, independent chartered accountants Vikrant Jain

“Based on the relevant factors and circumstances as outlined in the valuation reports M/s. S R B C & Co LLP and Vikrant Jain have determined the fair value of the passenger vehicles undertaking at Rs 9,417 crores”, said the company. The said consideration would be settled through the issuance of 941,70,00,000 equity shares of the transferee company (TML Business Analytics Services) at Rs 10 each.

The transfer of the PV unit does not mean giving up control of the business entirely. In August 2020 Tata Motors had announced its intention to retain control over the hived-off unit even after accommodating the strategic and equity partner.

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 struggled in the recent past in the face of strong competition.

However, 2020-21 has seen Tata Motors excel in pushing sales to new recent highs. As per data supplied by the Society of Indian Automobile Manufacturers (SIAM), PV sales of Tata Motors grew by 32 percent to nearly 140,000 units even as India’s PV segment recorded a fall of 16 percent.

“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,” Tata Motors P B Balaji had said speaking to Moneycontrol.