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    Restructuring of Tata Motors: Will these 7 auto companies be forced to follow the same path sooner or later?

    Synopsis

    The moment Tata Motor raised money from a private equity fund for its EV part of the business it was apparent that sooner or later, the demerger of EV business is bound to follow. But it will come so soon is not something which the street was expecting. Why was the demerger imminent? Not only because there is a PE player who wants to have a road map for the exit even before investing. The other simple fact is that there is no sense in having a single entity for two businesses which are different from the word go. While it might appear that Tata Motors is restructuring the business due to vast differences in the two segments. The fact is that very soon, the difference between the traditional ICE vehicle business and the EV business of even two-wheeler maker or a passenger car maker would also get highlighted and would have a negative impact on the the valuations. So don't be surprised if the large auto players get into mode of restructuring the business to protect both the value and valuations.

    It is not every day that a large company like Tata motors goes through such a big restructuring. The more important question is whether this sort of vertical split is a company specific restructuring or this is something which indicates the beginning of a trend for many companies in the sector. On the face of it might appear it is because of the two businesses, commercial vehicles and passenger vehicles are very different in nature that is why
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    The Economic Times