Tata Motors split: Who keeps the debt, and what it means for interest bills

After the Tata Motors split, TMPV inherits the passenger, EV, and JLR units with most of the group's debt, while the newly listed CV arm starts lighter, backed by strong liquidity and modest borrowing

Tata Motors’ long-planned split is now effective. The group has two listed companies: Tata Motors Passenger Vehicles Ltd (TMPV), which houses the India passenger vehicles (PV) business, the EV arm (Tata Passenger Electric Mobility), and Jaguar Land Rover (JLR); and a separate commercial vehicles (CV) company that will list under the legacy name Tata Motors Ltd.

 

The scheme provides that CV and PV assets, liabilities and employees sit with their respective companies; the “existing listco” is renamed TMPV, while the “new CV listco” is renamed Tata Motors Ltd.

 

The company told investors that, as of the appointed date, the asset split was expected at around 60:40 between TMPV and CV, and that all CV-related investments would move to the CV listco, while PV investments would remain with TMPV. Shareholders receive one share in the CV listco for every Tata Motors share held, mirroring ownership across both entities.

 

Where the debt sits now after the Tata Motors demerger? 

Tata Motors’ consolidated net automotive debt was around ₹13,500 crore in Q1 FY26, showing a decline from the ₹18,600 crore in Q1 FY25. Post-split, debt and liabilities attributable to each undertaking will also move with that undertaking, the company had announced. In effect, JLR-related debt and liquidity live within TMPV, while working capital and term borrowings for CV sit with the CV listco.

 

What are the rating agencies saying

 

Icra and CARE ratings note that the firm’s India PV/EV business is largely net-cash with minimal dependence on external debt. As of March 31 this year, TMPV’s PV business had a net cash surplus and negligible term debt. CARE adds that TMPV’s PV business still held around ₹5,200 crore net cash as of June 30, 2025. JLR ended FY25 net cash positive, then showed around ₹10,600 crore net debt at June 30, 2025, on working-capital movements and tariff headwinds.

 

Meanwhile, for the CV, Icra has assigned ratings to TML Commercial Vehicles Ltd (TMLCV) with proposed limits of Rs 17,600 crore (term loan, fund-based, NCDs, CP and non-fund-based). It highlights “minimal reliance on debt” for the underlying CV business, cash and liquid investments of around Rs 4,400 crore (June 2025), and working-capital lines that transfer from the old Tata Motors to TMLCV on effectiveness.

 

Taken together, TMPV carries most of the group’s financial liabilities via JLR, while domestic PV/EV begins near net-cash; the CV listco has modest on-balance-sheet debt with rated borrowing capacity aligned to its working-capital cycle.

 

Interest burden: who pays more? 

TMPV’s interest burden will be driven by JLR. JLR’s FY25 annual report shows gross debt of £4.4 billion, liquidity of £6.3 billion including an undrawn £1.66 billion revolving credit facility, and refinancing actions (repayments of £1.2 billion and a new $650 million term loan in early 2025), according to the company’s filings. This indicates that the finance costs and upcoming bond/loan service are concentrated at JLR inside TMPV. By contrast, the India PV/EV business’ “minimal external debt” reflects low standalone interest expense at that sub-level.

 

What is the bottomline?

 

In simple terms, TMPV holds JLR’s borrowings and liquidity while India PV/EV remains near net-cash. Meanwhile, the CV listco starts with modest debt, ample bank lines and liquidity.

 

The interest burden will be higher on TMPV because of JLR’s bond and loan stack, while being lower at CV, given the minimal core debt and reliance on short-term working-capital lines.