Tata Motors Fin to merge with Tata Capital via NCLT scheme of arrangement

The boards of Tata Motors, Tata Capital, and Tata Motors Finance have approved a merger of Tata Motors Fin with Tata Capital through an NCLT (National Company Law Tribunal) scheme of arrangement, Tata Motors said on Tuesday.

As consideration for the merger, Tata Capital (TCL) will issue its equity shares to the shareholders of Tata Motors Finance (TMFL), resulting in the automobile company effectively holding a 4.7 per cent stake in the merged entity.

Tata Motors will hold the stake indirectly through its 100 per cent subsidiary TMF Holdings Limited, an RBI (Reserve Bank of India) registered non-banking finance company-core investment company (NBFC-CIC).

“The transaction is also in line with Tata Motors’ stated objective of exiting non-core businesses and focusing its capital spends on emerging technologies and products,” Tata Motors said.

 

Commenting that the merger will take 9-12 months to complete, Tata Motors said it will not have any adverse impact on customers or creditors of Tata Motors Finance.

The merger is subject to approval from the market and banking regulator, and also the National Company Law Tribunal.

E&Y (Ernst & Young), ICICI Securities, Wadia Ghandy & Co are the transaction advisors to TCL, while PwC (PricewaterhouseCoopers), Axis Capital and AZB & Partners are the transaction advisors to TMFL.

In FY24, Tata Capital and Tata Motors Finance reported a net profit of Rs 3,150 crore and Rs 52 crore respectively.

Tata Capital, an upper-layer non-banking finance company, has assets under management of Rs 1.6 trillion and offers products across retail, SME (small and medium-sized enterprises) and corporate segments.

Tata Motors Finance, with an AUM (assets under management) of Rs 32,500 crore, predominantly provides financing solutions for new and old commercial vehicles (CV), passenger vehicles (PV), dealers, and vendors.

“Tata Capital has limited presence in CV/PV financing. With this merger, Tata Capital will gain new customers in the fast-growing CV/PV financing segments, which it aims to serve with innovative products and digital offerings, whilst providing differentiated growth opportunities to employees,” the statement said.