New Delhi, Oct. 15 -- The demerger of Tata Motors' passenger and commercial vehicle divisions has created two distinct global automotive entities, each with a clear focus and international footprint.

On 14 October, Tata Motors Ltd formally became Tata Motors Passenger Vehicles Ltd (TMPVL) and began trading separately from its commercial vehicle unit. The discovered value of the passenger vehicle business came at around Rs.395 per share, roughly 40% below the price at which the consolidated company previously traded.

At 12:15pm, the stock traded at Rs.392.60 apiece on the BSE.

Mint explains why the split was executed and what it means for the company and investors.

A demerger allows a company to separate distinct business units with en...