In a strategic move to streamline its operations and focus on emerging technologies, Tata Motors Limited (TML) announced today that its Board of Directors, alongside those of Tata Capital Limited (TCL) and Tata Motors Finance Ltd (TMFL), has approved a merger of TMFL with TCL. The merger will be executed through a National Company Law Tribunal (NCLT) scheme of arrangement.
As part of the merger consideration, TCL will issue equity shares to TMFL shareholders, resulting in TML holding a 4.7% stake in the newly merged entity. This transaction aligns with TML’s broader strategy to divest non-core businesses and reallocate capital towards innovative technologies and products.
TCL, boasting an AUM of approximately INR 1.6 lakh crore and rated AAA by leading rating agencies, is among India’s largest diversified non-banking financial companies (NBFCs). It offers over 25 product lines across retail, SME, and corporate segments. TMFL, with an AUM of about INR 32.5 thousand crore, specializes in financing for new and used commercial vehicles (CV), passenger vehicles (PV), as well as dealer and vendor financing.
For the fiscal year 2024, TCL and TMFL reported profits after tax of INR 3,150 crore and INR 52 crore, respectively. The merger is expected to significantly bolster TCL’s presence in the CV/PV financing market, enabling it to serve new customer segments with innovative and digital financing solutions. This consolidation is anticipated to create differentiated growth opportunities for employees and enhance service offerings to customers.
The proposed scheme of arrangement will require approvals from the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI), the NCLT, and the shareholders and creditors of both TCL and TMFL. The merger process is expected to take approximately 9-12 months to complete. Notably, the merger will have no adverse impact on TMFL’s customers or creditors.
E&Y, ICICI Securities, and Wadia Ghandy & Co are advising TCL on this transaction, while PwC, Axis Capital, and AZB & Partners are advising TMFL.
Through this strategic consolidation, TML, via its wholly-owned subsidiary TMF Holdings Limited, aims to strengthen its financial services arm and reinforce its commitment to innovation and customer satisfaction in the financial sector.
