Tata Sons Chairman N Chandrasekaran has said that the recent demerger of Tata Motors’ passenger and commercial vehicle divisions will enable both businesses to pursue their own growth paths with greater focus and financial independence.

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Commercial vehicles earlier funded passenger car expansion March 2024 demerger set the stage for independent growth Focus on efficiency and long-term value creation

He was speaking at the listing ceremony of the commercial vehicle division, which is now officially known as Tata Motors. The event marks a major milestone in the automaker’s transformation journey.

Commercial vehicles earlier funded passenger car expansion

Reflecting on the company’s structure before the demerger, Chandrasekaran highlighted how the profits from the commercial vehicle division often supported the capital expenditure of the passenger car business.

“There was always support for Tata Motors Passenger Vehicles (TMPV) from the performance of Tata Motors Commercial Vehicles (TMCV); that was the reality,” he said.

He further explained that this internal dependence limited each unit’s ability to invest and grow independently.

“Cash flows were coming from commercial vehicles and were subsumed in the capital expenditure of TMPV. So, we had to make sure that both the companies were fit and we said that directionally both companies had to be very strong,” he added.
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March 2024 demerger set the stage for independent growth

In March 2024, Tata Motors announced its plan to demerge the passenger and commercial vehicle businesses into two listed companies. The move aims to give each business strategic freedom to focus on its core market, innovation, and capital allocation priorities.

The restructuring is expected to enhance operational efficiency and unlock shareholder value, aligning with the broader growth vision of the Tata Group.

Focus on efficiency and long-term value creation

The demerger allows both divisions to chart their own growth journeys, adapt to changing market conditions, and accelerate decision-making without internal financial constraints.

The move also reflects Tata Motors’ commitment to sustainable growth, innovation, and operational strength in both the passenger and commercial vehicle segments.

Highlight:

The Tata Motors demerger is a defining moment that empowers both the passenger and commercial vehicle businesses to grow independently, drive efficiency, and deliver long-term value for shareholders.

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