The Board of Directors of the Tata Motors convened a meeting on Monday and approved the demerger of the entity into two distinct listed entities, marking a strategic shift for one of India’s leading automakers.

Post the demerger, the Tata Motors will segregate itself into two listed entities: The first entity will house the commercial vehicles and its related investments, while the second entity will control the passenger vehicles (including PV, EV, JLR) and its related investments.

The move to demerger stems from the successful independent operations of commercial vehicles, passenger vehicles and Jaguar Land Rover in the recent years which have been functioning autonomously since 2021 under their respective CEOs. This demerger is also a natural progression following the earlier subsidiarisation of PV and EV businesses in 2022.

N Chandrasekaran, Chairman of Tata Sons, lauded the company's recent achievements, stating, "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 capitalize on the opportunities provided by the market by enhancing their focus and agility. This will lead to a superior experience for our customers, better growth prospects for our employees, and enhanced value for our shareholders."

It must also be noted that all the shareholders of Tata Motors Limited (TML) will retain identical shareholding in both the entities, ensuring the continuity for the shareholders. Further, the demerger will also be done through a NCLT scheme of arrangement.

The NCLT scheme of arrangement will put in front of the TML Board of Directors for approval in the coming months and will be subject to all necessary shareholder, creditor and regulatory approvals which will take around 12-15 months.

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