NCLT approves Tata Motors’ landmark restructuring, demerger effective Oct 1

Tata Motors Limited on Friday announced that the National Company Law Tribunal (NCLT), Mumbai Bench, has sanctioned its Composite Scheme of Arrangement involving the demerger of its commercial vehicles business and the amalgamation of its passenger vehicles arm. The restructuring, which has been under consideration for over a year, will take effect from October 1, 2025.

In a regulatory filing to the BSE and NSE, Tata Motors said it had received the certified true copy of the NCLT order dated August 25, 2025, along with a rectification order dated September 10, 2025. These were placed before the boards of Tata Motors, TML Commercial Vehicles Limited (TMLCV), and Tata Motors Passenger Vehicles Limited (TMPV) at their respective meetings held on September 26.

Under the approved scheme, the commercial vehicles business of Tata Motors will be demerged into TMLCV, which will be listed separately on the stock exchanges. At the same time, Tata Motors Passenger Vehicles Limited, which operates the passenger vehicles business, will be amalgamated into Tata Motors Limited.

The restructuring also includes a mirrored shareholding structure to ensure continuity for investors. Shareholders of Tata Motors will receive one fully paid-up equity share of TMLCV (₹2 face value) for every one fully paid-up equity share of Tata Motors held on the record date, which will be announced separately.

In addition, the company said that certain Non-Convertible Debentures (NCDs) worth ₹2,300 crore would be transferred to TMLCV. These include listed and unsecured redeemable NCDs maturing between 2026 and 2028.

Rationale Behind the Restructuring

According to the NCLT order, the scheme is designed to give sharper strategic focus to both business verticals, enabling them to pursue independent growth trajectories. Tata Motors has argued that the commercial vehicles (CV) and passenger vehicles (PV) divisions, despite operating under one entity, have developed distinct business models and market strategies in recent years.

“The creation of two separately listed entities will unlock shareholder value, provide clarity in capital allocation, and attract focused investor interest,” the company said.

The tribunal noted that the arrangement will not adversely affect creditors, employees, or other stakeholders, as both entities have undertaken to honor all obligations. No objections were received from regulatory bodies including the Registrar of Companies, Regional Director, BSE, and NSE.

Once the restructuring takes effect, the current Tata Motors Limited will be renamed Tata Motors Passenger Vehicles Limited, while TML Commercial Vehicles Limited will be renamed Tata Motors Limited, effectively transferring the iconic brand identity to the CV-focused entity.

Both companies will remain within the Tata Group and retain identical shareholding patterns, including common promoters.

The scheme becomes effective upon filing the NCLT orders with the Registrar of Companies, Mumbai. Tata Motors’ board has resolved to make the scheme effective from October 1, 2025, after which the company will separately notify the record date for share allotment.

The NCLT, while approving the scheme, also directed that all permits, vehicle registrations, and related regulatory changes be expedited to ensure smooth functioning of the restructured businesses. It further clarified that the Income Tax Department retains the right to review tax implications if it suspects avoidance.

With this approval, Tata Motors moves closer to completing one of the most significant reorganizations in its history — a move expected to reshape India’s largest homegrown automaker into two specialized, agile, and independently listed businesses.