Tata Motors the favorite company of Ratan Tata is about to undergo a major restructuring by splitting into two distinct entities. Tata Sons is reportedly planning to create a holding company for Tata Motors that will encompass its two core businesses: Passenger Vehicles (PV) and Commercial Vehicles (CV). These two segments will be registered as separate entities allowing them to operate independently. Tata Motors Gets Debt-Free As of now Tata Motors has achieved a debt-free status and has accumulated a cash reserve of Rs 1000 crore. According to the TV9 Bharatvarsh report a new structure will be established for the separate entities along with newly constituted boards of directors.  Tata Group Chairman N. Chandrasekaran along with other key executives is expected to head this holding company. Additionally Tata Motors Chief Financial Officer PB Balaji who is credited with the successful restructuring of the automobile business may take on a leadership role in this new setup. Strategic Split Of PV and CV Businesses The separation of Tata Motors PV and CV businesses is anticipated to unlock greater value for shareholders by enabling each entity to pursue its growth strategy and attract independent capital. According to analysts the PV segment presents a more robust growth story and is likely to achieve better valuation compared to the CV segment. This split could potentially lead to a public listing of Tata Motors electric passenger vehicle (EV) division in the future. How Will Demerger Help Tata Motors? This demerger is seen as a logical progression from the subsidiary creation of Tata Motors PV and EV businesses in 2022 which aimed at fostering accountability and accelerating growth. There is limited synergy between the CV and PV segments whereas the PV EV and Jaguar Land Rover (JLR) divisions share significant synergies particularly in the areas of electric vehicles autonomous vehicles and vehicle software. Tata Motors Post Demerger Post-demerger separating the strategies of PV and CV will streamline their operations although the business focus remains inclined towards the passenger vehicle segment. The revenue contribution from JLR the UK-based luxury carmaker remains crucial for Tata Motors. The auto giant does not anticipate the demerger to impact its debt levels significantly. However Tata Motors gross debt will be allocated between the two new entities based on the proportion of their asset sizes. The current asset split between CV and PV is roughly 60:40. In the fiscal year 2024 Tata Motors achieved its highest-ever consolidated revenue of ₹4.38 lakh crore. JLR contributed 70% of this revenue followed by the CV business with 18% and the non-JLR PV business with 12%. The demerger will enable Tata Motors to sharpen its focus on its respective PV and CV segments aligning their strategies to better meet market demands and drive growth.