The planned split of Tata Motors into two separate listed companies – one for commercial vehicles (CV) and one for passenger vehicles (PV) – could potentially set the stage for the group’s chief financial officer, PB Balaji, to act as unifying leader to ensure efficient allocation of capital for them. , said two people with knowledge of the discussions.

Although the companies will operate independently, Balaji will likely serve as chairman or vice chairman of the two upcoming entities, or even as executive director of the PV business, the sources said on condition of anonymity.

The demerger of the flagship automaker from Tata Sons is expected to be finalized in the next 12-15 months, subject to completion of processes and regulatory approvals.

Prepare the ground

The planned split of Tata Motors into two separate listed companies – one for commercial vehicles (CV) and one for passenger vehicles (PV) – could potentially set the stage for the group’s chief financial officer, PB Balaji, to serve as its leader unifying force to ensure efficient allocation of capital for them. , said two people with knowledge of the discussions.

Although the companies will operate independently, Balaji will likely serve as chairman or vice chairman of the two upcoming entities, or even as executive director of the PV business, the sources said on condition of anonymity.

The demerger of the flagship automaker from Tata Sons is expected to be finalized in the next 12-15 months, subject to completion of processes and regulatory approvals.

Emails to Tata Motors and Tata Sons seeking comments on the split and potential appointments were only responded to at the time of publication.

Although Balaji enjoys the support of Tata Sons Chairman N. Chandrasekaran for his successful role as group CFO, the final decision will rest with the boards of Tata Motors and Tata Sons, and no official decision has been made. has still been signed, said the people cited above. said. True, Chandrasekaran is also currently the chairman of Tata Motors.

Juggling leadership

Structurally, the split will also bring new challenges in leadership realignment. One of the key considerations is appointing a dedicated executive director for the new PV company, which will include both the Indian and JLR PV businesses.

“Tata Motors’ management structure has always been flexible to accommodate the company’s diverse global and domestic operations,” said one of the people cited above.

“Given Balaji’s deep involvement in Tata Motors’ capital strategy and Chandrasekaran’s confidence in his financial oversight, he could potentially take on a ‘dual hatting’ role as PV Managing Director, if necessary , or act as non-executive chairman of CV. division,” the person added.

Skillful Captain

Balaji’s potential role as Chairman reflects his strong track record of fiscal discipline and strategic decision-making at Tata Motors as Group Chief Financial Officer.

Since joining the company in 2017 from Hindustan Unilever, where he was chief financial officer, Balaji has overseen a massive debt reduction plan that has made the company largely debt-free. partly through disciplined capital allocation.

This included tough calls on the Jaguar brand, a reduction in further investment in the brand and the direction of the Indian passenger vehicle division’s TPG deal in 2021, which generated a billion-dollar investment for the Tata’s EV projects at a valuation of $9 billion.

Balaji’s reputation for financial discipline, cash flow optimization and improved return on capital employed (ROCE) has reinforced Tata Motors’ objectives of improving its financial stability and expanding into the automotive market. electric vehicles.

Certainly, Tata Motors saw its domestic automobile business turn positive in Q4FY24, successfully concluding a deleveraging process it had embarked on in 2020, when a huge debt of over ₹48,000 crores curbed its photovoltaic business.

New road to build

The restructuring also underlines Tata Sons’ expansion focus.

Chandrasekaran has expanded Tata’s presence in sectors such as semiconductors, infrastructure and defense manufacturing, areas that align with India’s industrial policy goals and growing demand for domestic manufacturing capabilities.

As these emerging projects require significant capital and attention, the appointment of Balaji to a leadership role in Tata Motors’ newly defined automotive category would allow Chandrasekaran to focus on these initiatives while ensuring that Tata Motors remains financially strong and strategically aligned on the group’s broader goals.

The demerger is expected to help Tata Motors unlock shareholder value and strengthen the market focus of both companies. By separating the two businesses, Tata Motors gives investors the opportunity to evaluate their performance on their own merits.

In addition, it can play on the themes of electrification and premiumization of passenger vehicles without the influence of an unrelated activity (commercial vehicles).

The new framework is expected to improve transparency, enable targeted investments and ultimately help both segments achieve long-term growth and profitability, said analysts Mint spoke to.