Overhaul of TVS Group to pave way for easy transition to fourth gen

The key reason behind the proposed restructuring of the $8.5-billion TVS Group is said to be to pave way for a smooth transition of the business to the fourth generation, according to sources close to family members of the group.

On Thursday, family members of the group decided to go for restructuring by giving each family group complete ownership of businesses they manage and scrapping the holding company. There won't be any cross-holdings, the family agreed, according to the new terms.

The restructuring will involve nine listed companies including TVS Motor, Sundaram Clayton, Sundram Fasteners, TVS Electronics, TVS Srichakra, and others.

Senior family members declined to comment on the matter since deliberations on the steps to be taken to implement this arrangement is going to start. Besides shareholdings, they are also expected to discuss non-competing clauses.

Some of the members and people close to the development have said the arrangement is also aimed at decluttering the shareholding in the three holding arms — T V Sundram Iyengar & Sons, Sundaram Industries, and Southern Roadways. 

The shareholding structure was also a bit complicated, people close to the family said. They said the family believes the new structure is the need of the hour to make the companies more nimble-footed with a more agile structure.

According to documents from Registrar of Companies (RoC), in T V Sundram Iyengar & Sons, 56 shareholders represent all the four generations of the group. All four families from the group holding are spread equally.

T V Sundram Iyengar & Sons is a leading automobile distribution company in India and has fuel outlets in Tamil Nadu. In Sundaram Industries there are 45 shareholders from the TVS family, RoC documents show. The company is a manufacturer of automotive rubber components. Shareholder numbers for Southern Roadways could not be ascertained. 

These companies in turn hold stakes in different firms in the group, which means each of the shareholders hold shares in different group companies indirectly, which are run by different family members.

THE FOUR FAMILIES

Started by T V Sundaram Iyengar in 1911, the group is represented by his sons T S  Krishna, T S Srinivasan, T S Rajam, and T S Santhanam. He had 4 more children who are not part of TVS business

Srinivasan family has Iyengar's sons Venu & Gopal, and their brother-in-law T K Balaji. Venu manages Sundaram Clayton, TVS Motor, & others, while Gopal manages TVS Capital, TVS Electronics, & others

Santhanam family has his sons Ram & Viji. They established own group comprising Sundaram Finance, Wheels India, Sundaram Homes, Brakes India, & other firms

Krishna family has his sons Ramesh, Suresh, & late Mahesh. They run and manage Sundram Fasteners, Sundram Brake Linings, & other firms

Rajam family’s sons Ratnam, Sridharan, & Ramachandran are no more. The group is now represented Ramachandran's children by Dinesh (manages TVS Iyengar & Sons, TVS Supply Chain Solutions, and TVS Automobile Solutions), Shobhana, and Naresh (manages TVS Tyres)

As part of the agreement, the family which manages and operates a business will buy out the stakes held by the holding companies in their respective companies.

This will involve the process of four family members buying out the shares of the TVS holding firms in their companies. This arrangement will not include Sundaram Finance as it is already de-linked from the holding companies.

For example, in Sundaram Clayton, which owns 57.4 per cent in TVS Motor, promoter companies — TV Sundaram Iyengar & Sons, Sundaram Industries, and Southern Roadways — hold 18.82 per cent, 29.96 per cent, and 14.98 per cent, respectively. 

Some of the other family members hold shares indirectly in Sundaram Clayton as they have invested in the holding companies. These shares will now be bought over by Venu Srinivasan family that manages Sundaram Clayton.

Similarly, Suresh Krishna’s family will buy stakes held by holding companies in Sundram Fasteners and Sundaram Brake. Shobhana Ramachandran and her brothers will buy out stakes held by the holding companies in TVS Tyres.