Tata Motors announced on Tuesday that its Board of Directors, along with those of Tata Capital and Tata Motors Finance, have approved a merger of Tata Motors Finance with Tata Capital through an NCLT scheme of arrangement. This move aligns with Tata Motors’ strategy to focus on core businesses and invest in new technologies and products.
In exchange for the merger, Tata Capital will issue its equity shares to Tata Motors Finance shareholders, giving Tata Motors a 4.7% stake in the combined company.
Tata Capital, a leading diversified NBFC in India, manages assets worth ₹1.6 lakh crore, offering over 25 products across retail, SME, and corporate segments. Tata Motors Finance manages ₹32,500 crore in assets, mainly providing financing for new and used commercial vehicles (CV), passenger vehicles (PV), and support for dealers and vendors.
For the fiscal year 2024, Tata Capital and Tata Motors Finance reported profits of ₹3,150 crore and ₹52 crore, respectively.
Tata Capital has a limited presence in CV/PV financing. This merger will allow it to gain new customers in these fast-growing segments and offer innovative products and digital services. It also provides new growth opportunities for employees. The merger requires approvals from SEBI, RBI, NCLT, and the shareholders and creditors of both companies. The process is expected to take 9-12 months to complete. There will be no negative impact on customers or creditors of Tata Motors Finance.
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