Tata Motors demerger seen boosting CV arm’s global push

Tata Motors Ltd’s proposed move to demerge its passenger and commercial vehicles segments into two listed entities will help make the latter agile and capitalize on opportunities globally, the company said.

The company, which had in March announced the demerger, had said that its commercial vehicles business and related investments would be housed in one entity, while its passenger vehicles businesses, including electric vehicles, Jaguar Land Rover (JLR) and related investments, would be folded into the other.

“The proposed demerger will help us improve focus and make us more agile to capitalise on opportunities in the CV market globally,” Tata Motors’ executive director Girish Wagh said in the company’s annual report.

“Our focus will be to create a world-class company operating in the CV space, providing superior experience to our customers, better growth prospects for our employees, and enhanced value for our shareholders,” Wagh added.

Over the past few years, the commercial vehicles, passenger vehicles, and JLR businesses of Tata Motors have delivered a strong performance, the company said, adding that since 2021, these businesses have been operating independently under their respective chief executives.

The commercial vehicles segment generated revenues to the tune of ₹78,791 crore (about $9.5 billion) in fiscal 2024, up 11% year-on-year (y-o-y), and had an 18% share in consolidated revenue.

In comparison, the company’s passenger vehicles vertical reported an annual revenue of ₹52,353 crore (about $6.3 billion), up 9.4% y-o-y, and had a 12% share in consolidated revenue. JLR, which had a 69% share in consolidated revenues, posted annual sales of £29 billion ($37 billion).

The company said it sees limited synergies between the CV and PV businesses, but significant potential in PV, EV, and JLR, especially in autonomous vehicles and software, which the demerger aims to unlock.

The passenger vehicle and commercial vehicle business units will be demerged via a national company law tribunal (NCLT) scheme of arrangement, and all shareholders of Tata Motors shall continue to hold identical shareholding in both listed entities, the company said.