TATA Motors: CCI Approves Merger Of Tata Motors Finance, Tata Capital

As a member of the Tata Group, Tata Motors Limited is a multinational automotive company based in India with its headquarters in Mumbai. The company manufactures buses, vans, trucks, and cars. Tata Daewoo in South Korea and Jaguar Land Rover in Britain are examples of subsidiaries.

CCI approves of TMFL and TCL’s merger:

The Competition Commission of India (CCI) has approved the proposed merger of Tata Motors Finance Limited (TMFL) with Tata Capital Limited (TCL), marking a significant consolidation within the Tata Group’s financial services. The Indian Competition Commission has given its approval for Tata Capital and Tata Motors Finance to merge. With Tata Motors owning a 4.7% share in the combined company, the merger will increase Tata Capital’s market share in the vehicle financing industry.

TCL will acquire TMFL through a scheme of arrangement filed with the National Company Law Tribunal as a result of this merger, which was announced in June. TCL will come out on top. The companies filed a statement with the antitrust regulator stating that TCL would survive the merger of TMFL with it through a scheme of arrangement that would be submitted to the National Company Law Tribunal.

Tata Motors Finance Ltd.’s (TMFL) role:

Tata Motors’ vehicle financing division, TMFL, is dedicated to helping customers finance both new and used Tata cars. Additionally, as a non-banking financial institution known as Investment and Credit Company (NBFC-ICC), TMFL provides loans and advances, including working capital and invoice discounting facilities, to transporters, dealers, and vendors.

The boards of TMFL, TCL, and Tata Motors gave their approval to the merger plan earlier in June. Tata Motors will own a 4.7% share in the combined company when TCL issues its equity shares to TMFL shareholders in accordance with the terms of the merger. This deal is in line with Tata Motors’ strategic objective to divest from non-core businesses and concentrate more on its core automotive operations and developing technologies. Tata Capital’s FY24 profit after tax (PAT) of Rs. 3,150 crore contrasted with TMFL’s PAT of Rs. 52 crore, underscoring the anticipated financial enhancement resulting from the combination.

By 2025, a merger will take place:

It is anticipated that the merger will be completed by June 2025 and enhance TCL’s portfolio by merging TMFL’s specialized vehicle financing services with TCL. Tata Capital will be better equipped to service the rapidly expanding commercial and passenger vehicle financing markets thanks to this consolidation by providing cutting-edge products and digital services.

Advantages of TCL and TMFL Merger:

It is also anticipated that the merger will enhance operational efficiency in the Tata Group’s financial services and offer unique growth opportunities for staff members. The proposed split into the commercial and passenger vehicle segments, as well as Tata Motors’ overarching strategy to focus on streamlining its business operations, are all supported by the merger. It is anticipated that TCL and the combined company will list on stock exchanges following the merger, thereby increasing their market presence.

Tata Motors’ shares fell more than 5% intraday:

Tata Motors hit its day low of Rs. 975 per share and is now trading at Rs. 982.00 per share. From July 30, 2024, when it reached its all-time high value of Rs 1,179.05, it has decreased 17.30%.

Conclusion: The Tata group’s finances will eventually improve as a result of the merger of TCL and TMFL.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.