Tata Motors Gets NCLT Nod for Demerger Plan, Paves Way for Separate Listings

Tata Motors Gets NCLT Nod for Demerger Plan, Paves Way for Separate Listings

Introduction

Tata Motors Ltd has received approval from the Mumbai bench of the National Company Law Tribunal (NCLT) for its long-awaited restructuring plan. The approval paves the way for the formal demerger of its passenger vehicle (PV) and commercial vehicle (CV) businesses from October 1, 2025.

Factual Background

The restructuring plan involves the spin-off of Tata Motors' CV business into a new entity named TML Commercial Vehicles Ltd (TMLCV), while the PV business will continue under Tata Motors, which will be renamed Tata Motors Passenger Vehicles Ltd. Furthermore both companies will be independently listed on the stock exchanges.

Key Highlights

• Demerger Plan: Tata Motors' CV business will be spun off into TMLCV, while the PV business will continue under Tata Motors.
• Listing: Both companies will be independently listed on the stock exchanges.
• Shareholding: Shareholders will receive one share of TMLCV for every share they hold in Tata Motors.
• Debt Transfer: Non-convertible debentures worth Rs 2,300 crore will be transferred to the CV entity.

Rationale Behind Restructuring

The restructuring is expected to unlock value, provide sharper strategic focus, and improve agility and capital allocation for both businesses. By operating as separate listed entities, each company will be able to pursue growth paths tailored to its business model.

Leadership Changes

• Girish Wagh: Will become Managing Director and CEO of TMLCV.
• Shailesh Chandra: Will take over as MD and CEO of Tata Motors, overseeing PV operations.
• P B Balaji: Will step down as Group CFO on November 17 to assume the role of CEO at Jaguar Land Rover Plc in the UK.
• Dhiman Gupta: Will succeed P B Balaji as Group CFO of Tata Motors.

Board Restructuring

Independent Directors: Hanne Sorensen, K V Chowdary, and Guenter Butschek will move to the TMLCV board.

New Independent Director: Sudha Krishnan has joined Tata Motors as an independent director.

Implications

The restructuring is expected to have a positive impact on both businesses, allowing them to focus on their respective growth paths and attract investor attention with clearer focus.

Conclusion

Tata Motors' restructuring plan has received NCLT approval, paving the way for the demerger of its PV and CV businesses. The restructuring is expected to unlock value and provide sharper strategic focus for both businesses.