Tata Motors CV listing "a defining moment", says N Chandrasekaran

Tata Motors listed its Commercial Vehicle arm (TMCV) on the bourses today, which, according to N Chandrasekaran, Chairman, Tata Sons, marked a defining moment not only in Tata Motors' journey but also in the automotive industry in India.

Chandrasekaran, speaking at the listing event at the Bombay Stock Exchange today said that the plan to split the two businesses—passenger vehicles (PV) and commercial vehicles (CV) has been a plan charted out eight years ago. 

 "(But) it was clear to me, eight, nine years ago, that this company has to have a different path. It's had its ups and downs; it's had its heydays. It also has had its problems. And we had to go through a major transformation journey, which we did," he said. 

Chandrasekaran said that Tata Motors was always considered to be among the top companies in the group, and he admitted that to do any structural changes in an "iconic company" is not easy. 

"To do any structural changes to the iconic company is always difficult for many reasons. First, the people in the company very passionately believe, this is one good solid company and we should not touch it. Second, there is also a group-wide perspective that it's one iconic company. Third, there are a million people who love Tata Group and have a million views. So, it's always very difficult to make changes to a company which has been there for a very long time and is considered to be an icon," he said. 

The demerger of the two entities was on the back of fundamental and financial structures. "The fact of the matter is that Tata Motors commercial vehicles were always comfortable. Tata Motors passenger cars were not so," he said. 

"There was always a support for Tata Motors passenger cars from the performance of Tata Motors commercial vehicles. Cash flows were coming from commercial vehicles and was subsumed in the capital expenditure of passenger vehicles." 

Therefore, the group had to make sure that both companies were fit, and directionally, both have to become very strong. 

He elaborated further on the restructuring process, which led to the culmination of the demerger and listing. "Whether it is ADR or DVR, or creating functions, which some would call it as duplicate, I would call it as efficient."

He said that the two entities are different from each other in terms of engineering, technology, and business models. 

"They have different platforms, customer segments, and dealer partners. They have different investors. And they have the right to pursue different ambitions," he said, highlighting the importance of splitting the company. The decision could have been taken earlier, but the COVID-19 pandemic slowed down the momentum. 

Chandrasekaran took the opportunity to thank all the participants—vendors, bankers, advisers, who stayed with them and took the enormous amount of work and heavy lifting.

A new chapter for TMCV 

"Tata Motors Commercial Vehicles has always innovated. They have been the backbone of Indian economy. And they will be more so going forward," believes Chandrasekaran. The company, now debt-free, will make bold bets, by directing resources to electrification, hydrogen trucks, new energy buses, and other new technologies. 

"And hopefully, we should close the Iveco transaction in the next few months. Then Tata Motors Commercial Vehicles will be on its way. They will have fantastic balance sheet ratios, return ratios on capital deployed. And that journey will give them enormous ability to invest and make the transformation that is required for the new sustainable mobility," Chandrasekaran stated. 

Concluding his statement, the chairman of Tata Sons assured that both the companies have a very exciting future. "I will be behind them, to support them, challenge them, and push them to create benchmark companies."