In a trend setting move, Tata Motors, India’s largest automobile firm is hiving off its sales and distribution operations into a separate entity, as part of a restructuring exercise. The development comes at a time when the company is readying to launch the worlds ultra cheap car Nano.

The new entity, TML Distribution Company, a wholly owned subsidiary of Tata Motors, will now take on the operations of sales, logistics and distribution of both commercial vehicles and passenger vehicles to its 200 odd dealers across the country.

Tata Motors is transferring approximately 100 people to TDCL, which is expected to start operations shortly. It is looking to curtail its costs and one way to do that is through tierisation. Logistics requires specialized skills and greater attention; a separate entity also helps in unlocking value in the future. TDCL has been formed with a capital of Rs 25 crore.

The dealership network itself is being expanded. In line with the growth, breadth and reach required for the product portfolio and multi-locational operations, it is necessary to bring focus and greater efficiency in the selling and distribution operations and processes. It is speculated that new entity has the potential to become as big an entity like Tata Motors, considering TDCL will procure vehicles from Tata Motors and the sale will be reflected on books of TDCL.

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