Tata Motors Finance to be merged with Tata Capital

Tata Motors in a filing to the exchanges said on Tuesday that the Board of Directors of Tata Motors, Tata Capital and Tata Motors Finance have approved a merger of Tata Motor Finance with Tata Capital through an NCLT scheme of arrangement.

The transaction is in-line with Tata Motors' stated objective of exiting non-core businesses and focus its capital spends on emerging technologies and products, the company said.

As consideration for the merger, Tata Capital will issue its equity shares to the shareholders of Tata Motor Finance resulting in Tata Motors effectively holding a 4.7% stake in the merged entity.

Tata Capital is one of the largest diversified NBFCs in India with an asset under management of Rs1.6 lakh crore with over 25 product offerings across retail, SME and corporate segments. Tata Motor Finance with an asset under management of 32,500 crore predominantly provides financing solutions for new and old commercial vehicles(CV), passenger vehicles (PV), dealers and vendors.

In FY 24, Tata Capital and Tata Motors Finance reported a profit after tax of Rs 3,150 crore and Rs52 crore respectively.

Tata Capital has limited presence in CV/ PV financing. With this merger it 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 scheme of arrangement will be subject to approval of SEBI, RBI, NCLT ( National Company Law Tribunal) amongst others and all shareholders and creditors of Tata Capital and Tata Motors Finance will take ~9-12 months to complete. The merger will not have any adverse impact on customers or creditors of Tata Motors Finance.