Tata Motors Finance Merges with Tata Capital, Boosting Financial Services

11 Sep 2024 , 11:35 AM

The Competition Commission of India (CCI) approved the merger between Tata Motors Finance Limited (TMFL) and Tata Capital Limited (TCL), marking a major consolidation in Tata Group’s financial services.

Tata Capital Limited (TCL) will absorb Tata Motors Finance Limited (TMFL) through a scheme of arrangement filed with the National Company Law Tribunal (NCLT), with TCL emerging as the surviving entity.

Tata Motors Finance Limited (TMFL) focuses on providing vehicle financing solutions for both new and pre-owned Tata vehicles, and also functions as a non-banking financial company (NBFC-ICC), offering loans and working capital to transporters, dealers, and vendors.

Under the terms of the merger, Tata Capital will issue its equity shares to the shareholders of Tata Motors Finance, resulting in Tata Motors holding a 4.7% stake in the merged entity.

This merger aligns with Tata Motors’ strategy to exit non-core businesses and concentrate on core automotive operations, along with a focus on emerging technologies.

Tata Capital reported a profit after tax (PAT) of ₹3,150 Crore in FY24, compared to Tata Motors Finance’s PAT of ₹52 Crore, indicating the financial strength expected from the merger.

The merger is expected to be completed by June 2025, boosting Tata Capital’s offerings, particularly in vehicle financing, through innovative products and digital solutions.

This merger will also lead to improved operational efficiencies and offer growth opportunities for employees within Tata Group’s financial services.

After the merger, both Tata Capital and the newly merged entity are expected to list on the stock exchanges, increasing their market presence.

The merger supports Tata Motors’ broader strategy to streamline its operations and focus on core automotive segments, including the split into commercial and passenger vehicle businesses.