Tata Motors has revealed that its board of directors has given the green light to a plan to split the company into two distinct listed entities. One entity will focus on commercial vehicles and related investments, while the other will encompass passenger vehicles, including traditional and electric vehicles, as well as investments in Jaguar Land Rover. The demerger will be executed via an NCLT scheme of arrangement, ensuring that all shareholders of Tata Motors maintain the same shareholding in both listed entities, the company stated in an official announcement.

"Over the past few years, the commercial vehicles (CV), passenger vehicles (PV+EV) and Jaguar Land Rover (JLR) businesses of Tata Motors have delivered a strong performance by successfully implementing distinct strategies", the company said, adding that since 2021, these businesses have been operating independently under their respective CEOs.

Tata Motors stated that the demerger follows the subsidiary formation of its PV and EV businesses in 2022. While there are minimal synergies between CV and PV operations, significant synergies exist among PV, EV, and JLR, especially in the realms of electric vehicles, autonomous driving, and vehicle software. The demerger aims to capitalize on these synergies effectively.

"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", said N Chandrasekaran, Chairman, Tata Sons. "This will lead to a superior experience for our customers, better growth prospects for our employees and enhanced value for our shareholders", he added.

The NCLT scheme of arrangement for the demerger will undergo review by the Tata Motors board of directors in the upcoming months. It will also be contingent upon obtaining requisite approvals from shareholders, creditors, and regulatory authorities, a process which may extend over a period of 12 to 15 months. "The demerger will have no adverse impact on employees, customers, and our business partners", Tata Motors said.