Tata Motors is a leading manufacturer of commercial vehicles, including trucks and buses, in India. File
| Photo Credit: P.V. Sivakumar

Tata Motors on June 19 said it will hike prices of its commercial vehicles by up to 2% from July 1, 2024 to offset the impact of rising commodity prices.

The price hike will be applicable across the entire range of commercial vehicles, and will vary as per individual model and variant, Tata Motors said in a statement.

Earlier this year, the company had announced a price hike by up to 2% from April 1, 2024 to offset the residual impact of the past input costs.

Tata Motors is a leading manufacturer of commercial vehicles, including trucks and buses, in India.

Chennai:

Tata Motors, India’s largest automobile company, on Wednesday signed a Memorandum of Understanding (MoU) with the government of Tamil Nadu to explore setting-up of a vehicle manufacturing facility in the state.

According to the MoU, the company will invest 9000 crore rupees to establish the plant in Tamil Nadu over the next five year.

The company said that the move can potentially create up to 5,000 jobs direct and indirect in the state.

The MoU was exchanged in the presence of Tamil Nadu Chief Minister M K Stalin and Industries Minister T R B Rajaa.

Announcing the pact on X, formerly Twitter, Tamil Nadu Chief Minister MK Stalin said that the landmark move further solidifies its position as the unrivaled automobile capital of India, reminiscent of the transformative impact of Hyundai’s investment during Kalaignar’s tenure.

In a landmark move, @TataMotors has inked an MoU with the Government of Tamil Nadu to establish a vehicle manufacturing facility, investing Rs. 9000 crores and creating over 5000 jobs.

With this investment, Tamil Nadu further solidifies its position as the unrivaled automobile… https://t.co/cAuSMe0wog

— M.K.Stalin (@mkstalin) March 13, 2024

Following the move, the state’s Industries Minister TRB Rajaa took to X and said that Tamil Nadu has attracted two big automobile manufacturing investments within a span of just 2 months.

“Over the past couple of years, Tamil Nadu has hit the fast lane and become the ultimate hub for investments, showcasing our Chief Minister’s dedication to fostering top-tier employment for our vibrant youth and amplifying our industrial prowess”, the minister wrote on X.

Another BILLION DOLLAR INVESTMENT comes into #TamilNadu !

#TataMotors and the Government of Tamil Nadu are revving up for an epic journey!

In the presence of our Honourable @CMOTamilNadu Thiru. @MKStalin avargal, @TataMotors today signed an MoU with the Government of… https://t.co/cAjpHJvUDdpic.twitter.com/K3RTTNewmK

— Dr. T R B Rajaa (@TRBRajaa) March 13, 2024

Tata Motors, however, did not specify in its exchange filing that what vehicles it would make at the Tamil Nadu’s new facility.

This is the second automobile major to sign an MoU in Tamil Nadu in two months. In January this year, Vinfast, Vietnam’s leading electric vehicle (EV) manufacturer, had committed 4000 crore investments in the first phase which could go up to 16000 crore.

The price increase will vary as per individual model and variant.
| Photo Credit: The Hindu

Tata Motors has announced that it will increase the price of its commercial vehicles effective from April 1, up to 2%.

“The price increase is to offset the residual impact of the past input costs. While the price increase will vary as per individual model and variant, it will be applicable across the entire range of commercial vehicles,” the company said in a statement.

Tata Motors recently announced the demerger of its commercial- and passenger vehicle segments into two separate listed entities to better capitalise on growth opportunities.

“The commercial vehicles business and its related investments would be housed in one entity and its passenger vehicle business, including electric vehicles, Jaguar Land Rover (JLR) and its related investments, would be part of the second entity,” the auto major said in a regulatory filing.

A file photo of N. Chandrasekaran, Chairman, Tata Motors.
| Photo Credit: PAUL NORONHA

Tata Motors on Monday announced the demerger of its commercial and passenger vehicle segments into two separate listed entities to better capitalise on growth opportunities.

The commercial vehicles business and its related investments would be housed in one entity and its passenger vehicle business, including electric vehicles, Jaguar Land Rover (JLR) and its related investments, would be part of the second entity, the auto major said in a regulatory filing.

Tata Motors Chairman N. Chandrasekaran said that Tata Motors has scripted a strong turnaround in the last few years. “The three automotive business units are now operating independently and delivering consistent performance. This demerger will help them better capitalise on the opportunities provided by the market by enhancing their focus and agility,” he added.

The demerger would lead to a superior experience for customers, better growth prospects for employees and enhanced value for shareholders, he stated.

According to the proposal approved by the company board in a meeting on March 4, the demerger will be implemented through an NCLT scheme of arrangement and all shareholders of Tata Motors shall continue to have identical shareholding in both the listed entities.

Move to empower the respective businesses

Mr. Chandrasekaran said the scheme of arrangement for the demerger shall be placed before the company board for approval in the coming months and will be subject to all necessary shareholder, creditor and regulatory approvals which could take a further 12-15 months to complete.

“The demerger will have no adverse impact on employees, customers, and our business partners,” he stated.

The auto major stated that the demerger is a logical progression of the subsidiarisation of PV and EV businesses done earlier in 2022. The move shall further empower the respective businesses to pursue their respective strategies to deliver higher growths with greater agility while reinforcing accountability, the company said in the filing.

Furthermore, while there are limited synergies between commercial vehicles and passenger vehicle businesses, there are considerable synergies to be harnessed across PV, EV and JLR particularly in the areas of EVs, autonomous vehicles, and vehicle software which the demerger will help secure, the company stated.

Part of the $128 billion Tata Group, Tata Motors is a manufacturer of cars, utility vehicles, pick-ups, trucks and buses. As of March 31, 2023, Tata Motors’ operations included 88 consolidated subsidiaries, two joint operations, three joint ventures and numerous equity-accounted associates, including their subsidiaries, in respect of which the company exercises significant influence.

Tata Motors shares on Monday ended 0.12% down at ₹987.20 apiece on the BSE.

Image used for representative purpose only
| Photo Credit: Reuters

The growth of the domestic passenger vehicle industry is likely to moderate to less than 5% in the next fiscal, according to Tata Motors Passenger Vehicles Managing Director Shailesh Chandra.

The company, however, expects electric vehicle sales to keep growing despite the slow pace of charging infrastructure development in the country.

Also Read | Expect two-wheeler industry to see double-digit revenue growth next fiscal: Hero MotoCorp

“We had seen a very strong growth in FY23 of 25%, which is likely to moderate in FY24 to about 8%. Therefore, we are seeing with this high base effect, and FY25 will be slightly challenging with less than 5% growth rate,” Mr. Chandra said in an analyst call.

He further said, “As far as EVs are concerned, I think the biggest challenge here is the pace at which the charging infra is growing. It is lagging behind the pace at which the EV adoption is happening.”

Citing other challenges, Mr. Chandra noted that while commodity prices have been stable in the past quarter or so, there is a risk that prices of certain items may go up going forward.

“So we are keeping a very close track of that,” he added.

Mr. Chandra noted that in 2023 while the overall passenger vehicle industry grew 8% year-on-year, while the EV sales grew by 95 to 100%.

“And I think this trend is likely to continue. So companies with stronger portfolios in CNG and EVs will grow,” Mr. Chandra said.

He noted that Tata Motors has adopted an open collaboration strategy to expand charging infrastructure for EVs.

“Given that the charging infra is crucial to the growth and expansion of EV market, we have gone for an open collaboration approach with all charge point operators as well as the oil marketing companies who are focusing on expansion of charging infra,” Mr. Chandra said.

Elaborating further, he said the automaker will expand its exclusive sales network for electric vehicles. The company currently has two such outlets in Gurugram.

“In the next 18 months, we believe that in most of the high-selling cities, we would have these exclusive channels,” Mr. Chandra said.

The company will be working on driving the penetration and expansion of the electric vehicle market through a micro market focus, he said.

“So we are focusing on about 15 to 20 cities and also leveraging the expanded range of products. With Punch EV launch, we have now four promising products in the personal segment so we’ll be utilizing that,” Mr. Chandra said.

Tata Motors plans to further expand the range this year by introducing electric SUV Curvv and Harrier EV in 2024.

File photo: A private security guard walks outside the closed Tata Motors Nano car factory in Singur in this April 27, 2011.
| Photo Credit: Reuters

The story so far: In what could serve as an epilogue to a long-drawn tussle between Tata Motors and the West Bengal Industrial Development Corporation (WBIDC), an arbitration panel on Monday directed the latter to compensate the automobile manufacturer for “the loss of capital investments” for the suspended Nano manufacturing facility at Singur. Tata Motors was forced to exit the town in southern Bengal following protests by Trinamool Congress leader Mamata Banerjee alleging “forcible acquisition of land” and forced displacements. 

In an exchange filing on Monday, Tata Motors revealed the conclusion of the arbitration panel’s proceedings in its favour. With unanimous agreement, Tata Motors was deemed eligible to recover a sum of Rs 765.78 crore at an interest of 11% per annum from the WBIDC until actual recovery. This would be for the period beginning from September 1, 2016 — when the Supreme Court declared the acquisition of the land in central Bengal as “void and unconstitutional.” It also directed the WBIDC to pay a sum of Rs 1 crore to Tata Motors towards “cost of proceedings” (or legal charges).

Reacting to the development, TMC MP from Dum Dum (West Bengal) Sougata Roy said the tribunal’s order was neither the final verdict nor a judgment of the Supreme Court. “Legal avenues are still open for the State government,” news agency PTI quoted him as saying.

What led to the legal battle?  

In 2006, the Left government in West Bengal headed by Buddhadeb Bhattacharya allocated 1,000 acres of land to Tata Motors for manufacturing the affordably-priced hatchback Nano in Singur. This was on a lease of 99 years and processed by the WBIDC. However, alleging forcible acquisition of the land and citing concerns about people being displaced from their lands, then opposition leader Mamata Banerjee launched the Singur land movement. 

Observing the disruptions at the site, Tata Motors began contemplating a move to another site in mid-2008. This was eventually finalised in October 2008. 

In 2011, the newly-elected Trinamool Congress government got the Singur Land Rehabilitation & Development Act, 2011 passed in the legislative Assembly. This became the epicentre of a legal battle as it proposed to take possession of the land leased out to Tata Motors. It also aspired to return the land to owners who had not accepted the compensation granted to them by the previous Left-front government. The balance portion, the Act stated, was to be utilised for “public interest and benefit of the State.”  

Observing the disruptions at the site, Tata Motors began contemplating a move to another site in mid-2008. This was eventually finalised in October 2008. 

How did Tata Motors react to the Singur Act?  

The automobile manufacturer challenged the Singur Act in the Calcutta High Court in June 2011. Since then, it has argued that it has not been provided with “reasonable compensation,” with the Act also taking away their rights over the land. 

Also read: Singur imbroglio

In fact, as reported widely in the press, Tata Group Chairman Ratan Tata, during a press conference with the then Minister of Commerce and Industries Nirupam Sen in 2009, had expressed his willingness to return the land in return for adequate compensation. “We have no plans for Singur but will cooperate with the government if they have a plan that makes sense to the government and us. We do not wish to sit on the land,” the now Chairman Emeritus of Tata Sons was quoted as saying. 

How have the legal proceedings panned out?  

The Division Bench of the Calcutta High Court delivered a setback to the TMC-administered State government. In June 2012, the Court declared the Act to be “void and unconstitutional.” It also observed that the Act had not received assent from the President of India. This was a shot in the arm for the automobile company, which had made investments of Rs 1,800 crore in the project. Furthermore, as also highlighted in the press conference mentioned previously, after recoveries, ‘sunk costs’ amounted to Rs 500 crore. “All the equipment had been installed and trial production had begun. In fact, about 15 to 20 cars were ready for roll-out,” a statement in June 2011 said.

The State government, however, decided to challenge the verdict in the Supreme Court. In August 2016, the Supreme Court deemed the acquisition of the land itself (for the car manufacturing facility) from cultivators and landowners to be “illegal and void.” It directed that the land be restored to the landowners and/or cultivators within 12 weeks from the date of the judgement. 

Furthermore, it held, “The compensation which has already been paid to the landowners/cultivators shall not be recovered by the State government as they have been deprived of the occupation and enjoyment of their lands for the last ten years.” 

How did the case reach the arbitration tribunal? 

The initial lease agreement signed with the Left-front government contained a clause that should the acquisition be declared illegal, the West Bengal government would have to indemnify Tata Motors.  Other than this, it also provided for arbitration as a mechanism to resolve disputes between the two coordinating parties, that is, Tata Motors and WBIDC. This was under the provisions of the Arbitration and Reconciliation Act, 1996.

Subsequently, the automobile manufacturer’s request for compensation was declined. It was then that Tata Motors exercised its right for initiating arbitration proceedings. The tribunal consisted of two retired judges from the Calcutta High Court and was presided over by a retired judge of the Supreme Court. The proceedings commenced in May 2019. After WBIDC’s counterclaim, the tribunal initiated proceedings in October 2021, heading towards cross-examinations of the parties.