CCI Approves Proposed Merger Of Tata Motors Finance Limited With Tata Capital Limited

This merger was approved during the meeting held on June 4, 2024, by the Board of Directors of Tata Motors Limited (TML), Tata Capital Limited (TCL), and Tata Motors Finance Limited (TMFL). The proposed merger involves the integration of TMFL into TCL, with TCL being the surviving entity.

The merger will proceed through a scheme of arrangement to be filed with the National Company Law Tribunal (NCLT).

Further, as consideration for the merger, TCL will issue its equity shares to the shareholders of TMFL, resulting in TML effectively holding a 4.7% stake in the merged entity.

Tata Capital Limited

TCL, a subsidiary of Tata Sons Private Limited, operates as a non-banking financial company – Investment and Credit Company (NBFC-ICC). It is one of India's largest diversified NBFCs with an Assets Under Management (AUM) of approximately INR 1.6 lakh crore. It services customers with over 25 product offerings across Retail, SME, and Corporate segments. In FY 24, TCL reported a profit after tax of INR 3,150 crore.

Tata Motors Finance Limited

TMFL, also functioning as a NBFC-ICC, provides financial solutions primarily for new and pre-owned commercial vehicles (CV) and passenger vehicles (PV), as well as to dealers and vendors. With an AUM of approximately INR 32.5K crore, TMFL offers loans and facilities for vehicle financing and working capital. In FY 24, TMFL reported a profit after tax of INR 52 crore.

Strategic Implications of the Merger

The merger aligns with TML's strategy to exit non-core businesses and focus its capital on emerging technologies and products. TCL, with limited presence in CV/PV financing, will gain new customers in these fast-growing segments through the merger. This expansion will enable TCL to serve these markets with innovative products and digital offerings, providing differentiated growth opportunities for employees

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