Tata Motors Demerger To Take Effect On Oct 1 — Check Record Date, Shareholder Ratio And More

The long-awaited demerger of Tata Motors Ltd. into its commercial vehicle business and passenger vehicle business, will take effect from Oct. 1, the company confirmed in a filing to the exchanges.

The move comes after board and regulatory approval, including a nod from the National Company Law Tribunal (NCLT).

As part of the demerger, shareholders will receive one share in the new commercial vehicle company for every fully paid Tata Motors share held on the record date.

The record date of Tata Motors' demerger has not been announced as of yet. It will be announced later, once statutory filings are complete.

As part of the demerger, Tata Motors will split into two separate listed entities. The commercial vehicle business arm housed in TML Commercial Vehicles Ltd. (TMLCV) is expected to be renamed to Tata Motors Limited once the demerger is complete.

Meanwhile, the existing listed company (Tata Motors Ltd.), which still retains the passenger vehicle business, including the electric vehicle operations and investments such as Jaguar Land Rover, will be renamed to Tata Motors Passenger Vehicles Ltd.

Girish Wagh, who currently heads Tata Motors' CV operations, will lead the new commercial vehicle company whereas Shailesh Chandra, the current head of the passenger vehicle and electric vehicle divisions, will spearhead the PV-focused company.

The main rationale behind the Tata Motors demerger corporate efficiency and value unlocking.

The CV and PV business each have their own dynamic, with different market opportunities and capital requirements. Therefore, the demerger would make an independent structure more effective, according to the company.

Tata Motors first announced plans for a demerger in 2024. The appointed date for accounting and valuation purposes is July 1, 2025, while Oct 1. marks the legal effective date.

Once Tata Motors confirms the record date, the 1:1 ratio means an average investor can expect one share of the PV and the CV company for each Tata Motors share.

Those holding shares of Tata Motors on the record date will automatically receive one share of the CV company in their demat accounts, once corporate action are processed.

Voting rights will remain proportionate across two entities while each company will set its own dividend policy.