Tata Motors hires consultants to draw up post-split management structure

Tata Motors has enlisted several leading consulting firms to guide its separation into two distinct entities, industry sources revealed. The automotive giant has appointed Egon Zehnder as the lead consultant, with additional support from TSMG, BCG, and McKinsey, to oversee the transition through initiatives dubbed Project Canvas and Project Everest.

The restructuring, announced in early 2024, will see the company split its operations, with Tata Motors Limited retaining control of the Passenger Vehicle (PV), Electric Vehicle (EV), and Jaguar Land Rover (JLR) businesses, while the Commercial Vehicle (CV) division will be spun off into a separate entity called Tata Motors Commercial Vehicles Ltd.

According to sources familiar with the matter, Egon Zehnder's mandate includes developing recommendations to enhance the autonomy of the CV division, with particular emphasis on its crucial trucks business. The consulting firm is also advising on creating a more manageable Strategic Business Unit (SBU) configuration for the combined PV and JLR operations.

The consultancy engagement extends beyond structural recommendations. Egon Zehnder has been tasked with conducting a comprehensive 360-degree assessment of the company's management and leadership teams, reporting directly to the board. This evaluation encompasses career achievements, reference checks, psychometric testing, and detailed personal interviews. A similar exercise was last conducted in 2017–18, and this assessment is believed to create two distinct leadership tiers within the organization.

Meanwhile, the organizational structures of the PV+EV and CV businesses are markedly different. Under Shailesh Chandra, the passenger vehicle division operates with a CXO model, featuring a unified channel-to-market approach. The EV retail front end is configured separately to cater to its unique requirements.

Currently, the PV and EV divisions operate under Managing Director Shailesh Chandra, while JLR maintains its independent operations under its own MD in the UK. Girish Wagh, who serves as Executive Director of Tata Motors Commercial Vehicles, is the only division head with a seat on the Tata Motors Limited board.

However, the CV division is organized into eight strategic business units (SBUs), each led by a business head. A Chief Operating Officer (COO) role may also be introduced to oversee manufacturing, procurement, and related functions, with all senior leaders reporting to the MD.

The consulting firms' recommendations are expected to shape the future organizational structure of both entities. The consulting firms are also addressing potential challenges in the separation, including manpower rationalization and the outsourcing of routine functions. Sources indicate that the physical separation of assets between the two future listed companies may have implications for plant operations and economies of scale. Manpower rationalization may accelerate, with routine functions increasingly outsourced.

An email sent to the company did not elicit a response.

Recent Managment Changes

The restructuring comes amid significant leadership changes, particularly in the Commercial Vehicle division, where all four business heads have recently departed. In response, the company has consolidated its trucks business leadership under Rajesh Kaul, formerly VP Sales & Marketing for CV, recognizing the segment's importance as the most profitable and highest-revenue generator.

Earlier in the year, media speculation suggested that P.B. Balaji, Group CFO of Tata Motors Limited, may be elevated to Vice Chairman of both companies. However, neither Tata Sons nor Tata Motors released an official statement.

With the fiscal year closing, a significant reshuffle across the top management tiers is widely expected, particularly for members of the Executive Committee overseeing the domestic business. This follows several strategic moves over the past year.

The CV division has also undergone substantial personnel change, with all four business heads—covering ILCV trucks, CV Passenger (buses), Small Commercial Vehicles, and International Business—exiting the company.