Tata Motors gets NCLT nod for demerger of passenger and commercial vehicle businesses from October 1

Tata Motors said the restructuring will help unlock value and give both businesses sharper strategic focus, improved agility, and more efficient capital allocation.

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Tata Motors Ltd on Friday received approval from the Mumbai bench of the National Company Law Tribunal (NCLT) for its long-awaited restructuring plan, clearing the way for the formal demerger of its passenger vehicle (PV) and commercial vehicle (CV) businesses from October 1.Under the composite scheme of arrangement, Tata Motors’ CV business will be spun off into a new entity — TML Commercial Vehicles Ltd (TMLCV) — while the PV business will remain under Tata Motors, which will be renamed Tata Motors Passenger Vehicles Ltd.Both entities will be independently listed, and shareholders will receive one share of TMLCV for every Tata Motors share held. The scheme also provides for the transfer of non-convertible debentures worth ₹2,300 crore to the CV entity.

Tata Motors’ restructuring

Tata Motors said the restructuring will help unlock value and give both businesses sharper strategic focus, improved agility, and more efficient capital allocation.Ahead of the split, the company has undertaken a top-level management reshuffle. Girish Wagh, who has been leading the CV division, will assume charge as Managing Director and CEO of TMLCV. Shailesh Chandra, currently heading Tata Passenger Electric Mobility, will become MD and CEO of Tata Motors, which will now house the PV operations.As part of the transition, Group CFO P B Balaji will step down on November 17 to take over as CEO of Jaguar Land Rover Plc in the UK. He will be succeeded by Dhiman Gupta, currently CFO of Tata Passenger Electric Mobility, who will move into the Group CFO role. Balaji will continue as a non-executive director on Tata Motors’ board.The company has also reconstituted its board. Independent directors Hanne Sorensen, K V Chowdary, and Guenter Butschek will move to the TMLCV board, while Sudha Krishnan, a former officer of the Indian Audit and Accounts Service, joins Tata Motors as an independent director.

Road ahead

The automaker said the creation of two listed entities with mirrored shareholding will enable each business to pursue its own growth path, attract focused investor attention, and align more closely with its market priorities.Additionally, Tata Motors approved the second tranche of its 2024 long-term incentive plan, granting 4,79,746 performance share units (PSUs) to 384 employees across the company and its subsidiaries. Each PSU can be converted into equity within a year of vesting.

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