WionDrive News Desk 
The Boards of Directors of Tata Motors Limited (TML), Tata Capital Limited (TCL), and Tata Motors Finance Ltd (TMFL) have approved a merger of TMFL with TCL through an NCLT scheme of arrangement. As consideration for the merger, TCL will issue its equity shares to the shareholders of TMFL, resulting in TML effectively holding a 4.7 per cent stake in the merged entity.
TCL, rated AAA by all leading rating agencies, is one of the largest diversified non-banking financial companies (NBFCs) in India, with an asset under management (AUM) of approximately INR 1.6 lakh crore.
TCL caters to customers with over 25 product offerings across retail, small and medium enterprises (SME), and corporate segments. On the other hand, TMFL, with an AUM of around INR 32,500 crore, predominantly provides financing solutions for new and used commercial vehicles (CVs), passenger vehicles (PVs), dealers, and vendors.
In the financial year 2024, TCL and TMFL reported a profit after tax of INR 3,150 crore and INR 52 crore, respectively.
The transaction aligns with TML’s stated objective of exiting non-core businesses and focusing its capital expenditure on emerging technologies and products.
Currently, TCL has limited presence in the CV/PV financing segment. Through this merger, TCL will gain access to new customers in the fast-growing CV/PV financing segments, which it aims to serve with innovative products and digital offerings, while providing differentiated growth opportunities to employees.
The scheme of arrangement will be subject to approval from various authorities, including SEBI, RBI, NCLT, and all shareholders and creditors of TCL and TMFL. The process is expected to take approximately 9-12 months to complete. The merger will not have any adverse impact on customers or creditors of TMFL.
E&Y, ICICI Securities, and Wadia Ghandy & Co are the transaction advisors to TCL, while PwC, Axis Capital, and AZB & Partners are the transaction advisors to TMFL.
