Tata Motors Says Split Will Help Unlock Potential

Tata Motors announced that splitting its businesses will help them grow better. The company’s commercial vehicles (CV) unit has been the main money-maker so far. After the split, it will be able to use its cash for its own growth plans.

The passenger vehicles (PV) business, which is now self-sustaining, aims to reach 10% EBITDA margins in both its traditional and electric vehicle segments.

As part of the split, the CV business and its assets will move into a new company. The PV business will merge back into Tata Motors. The electric vehicles business and Jaguar Land Rover will stay as subsidiaries.

“It’s about having more focus. A large business like CV needs dedicated management and board time,” said P.B. Balaji, Tata Motors’ group chief financial officer.

The total debt of Tata Motors will be divided between the two new companies based on their assets. The CV business currently holds about 60% of the assets. The split is expected to take 12 months.

During this time, Jaguar Land Rover is expected to become debt-free. There are no plans to split JLR into a separate company at this time.

Tata Motors’ India business had zero net debt as of FY24.

After the split, the CV business will have eight segments, including new ones like smart city mobility and digital business. Tata Motors is the largest CV maker in India.

“This split will let the CV business focus on its own goals and access capital more freely,” said Girish Wagh, head of the commercial vehicles unit.

The PV business will work on increasing its market presence, said Shailesh Chandra, managing director of Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility.

Currently, Tata Motors’ PV portfolio covers 53% of India’s market. The company plans to increase this to 80% by 2030 with new products.

To boost EV adoption, Tata Motors plans to partner with Tata Power and sell electric cars with rooftop solar as a package.