Tata Motors restructuring: Shares down 1% in early trade; NCLT clears composite scheme of arrangement; what you need to know

The scheme involves Tata Motors Limited, Tata Motors Commercial Vehicles Limited, and Tata Motors Passenger Vehicles Limited, along with their shareholders.

In its filing to stock exchanges on Monday, Tata Motors said, "The Hon’ble National Company Law Tribunal, Mumbai Bench (“Hon’ble NCLT”), was pleased to pass today, i.e., on August 25, 2025, an Order (“Order”) sanctioning the Composite Scheme of Arrangement amongst Tata Motors Limited (“the Company” or “TML” or “Demerged Company” or “Amalgamated Company”), TML Commercial Vehicles Limited (“TMLCV” or “Resulting Company”), and Tata Motors Passenger Vehicles Limited (“TMPV” or “Amalgamating Company”) and their respective shareholders under Sections 230-232 of the Companies Act, 2013 (“the Act”) and other applicable provisions of the Act and the Rules framed thereunder (‘Scheme’)."

The company said the scheme, sanctioned under Sections 230–232 of the Companies Act, 2013, will become effective once a certified copy of the NCLT order is filed with the Registrar of Companies, Mumbai.

The restructuring is part of Tata Motors’ broader corporate restructuring plan aimed at sharpening focus on core business segments.

Tata Motors Q1 FY26 Results

Tata Motors, the parent of luxury car maker Jaguar Land Rover (JLR) and the country's largest commercial vehicle maker, on Friday, August 8, reported a consolidated net profit of ₹3,924 crore in the first quarter of the current financial year (Q1FY26), marking a decline of 30% from ₹5,643 crore in the same period last year.

Tata Motors' revenue from operations declined 2.5% to ₹1.04 lakh crore in the April-June period from ₹1.07 lakh crore in the year-ago period.

The company's operating profit declined 33% to ₹10,224 crore, and its operating profit margin contracted to 9.79%.

Tata Motors' performance in the first quarter was impacted by a volume decline in all businesses and a drop in profitability primarily at JLR, the company said. JLR revenues were down by 9.2% to £6.6 billion with EBIT margins of 4.0% (-490 bps) affected by the US trade tariff impact.

"With the demand situation likely to remain challenging, we will continue to focus on strengthening the business fundamentals and mitigating the impact of tariffs by leveraging the brand strength to drive a better mix and targeted actions to improve contribution margins," Tata Motors said.

“Despite stiff macro headwinds, the business delivered a profitable quarter, supported by strong fundamentals. As tariff clarity emerges and festive demand picks up, we are aiming to accelerate performance and rebuild momentum across the portfolio. Against the backdrop of the upcoming demerger in October 2025, our focus remains firmly on delivering a strong second-half performance,” said PB Balaji, Group Chief Financial Officer, Tata Motors.

A look at Tata Motors' demerger plan

In March 2024, Tata Motors announced the demerger of its commercial and passenger vehicle segments into two separate listed entities to better capitalise on growth opportunities.

The commercial vehicles business and its related investments would be housed in one entity, while the passenger vehicle business, including electric vehicles, Jaguar Land Rover (JLR) and its related investments, would be part of the second entity, the auto major said in a regulatory filing.

Tata Motors chairman N Chandrasekaran said Tata Motors has scripted a strong turnaround in the last few years.

"The three automotive business units are now operating independently and delivering consistent performance.

"This demerger will help them better capitalise on the opportunities provided by the market by enhancing their focus and agility," the chairman added.

The demerger would lead to a superior experience for customers, better growth prospects for employees and enhanced value for shareholders, Chandrasekaran stated.

According to the proposal, the demerger will be implemented through an NCLT scheme of arrangement, and all shareholders of Tata Motors shall continue to have identical shareholding in both the listed entities, the company had said.