Editor’s Note: The story has been updated to include the denial of the development from Tata Motors.

Tata Sons is in the process of setting up a holding company for the passenger and commercial vehicle businesses of Tata Motors, which are being split and registered as two separate entities, as per an ET report.

What Happened: The boards of these entities will be restructured following the formation of the new entity, the report added citing sources. The holding company will be chaired by Tata Group chairman, N Chandrasekaran, along with other key executives.

However, the auto giant has denied the claims calling them factually incorrect and misleading. The company stated that the demerger is proceeding via a composite scheme of arrangement, pending approval from the National Company Law Tribunal (NCLT). The process is currently underway.

The demerger marks a natural step following the 2022 subsidiarisation of the passenger vehicle (PV) and electric vehicle (EV) units, allowing each to operate independently and focus on tailored growth strategies. This move aims to accelerate strategic differentiation between the two businesses. At present, the revenue mix leans significantly towards the PV segment, with UK-based luxury automaker JLR being a major contributor.

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Tata Motors’ CFO, PB Balaji, who played a crucial role in the successful restructuring of the automobile business, is expected to take up a leadership position in the PV entity, which has ambitious plans for its electric vehicle business.

The demerger is slated to be finalized in the first quarter of 2025-26, creating independent capital structures for both businesses.

Earlier in the month the auto giant posted its earnings for the quarter ended September. Tata Motors reported an 11% drop in net profit for the September quarter, missing analyst estimates.

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