The Board of Directors of TVS Motor Company Limited (TVSM) has given the green light for the merger of its wholly-owned subsidiary, Sundaram Auto Components Limited (SACL), with TVSM. This strategic move is aimed at simplifying the corporate structure, achieving operational efficiencies, and driving long-term value for stakeholders.
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ToggleApprovals and Documentation
The merger is subject to requisite approvals from the National Company Law Tribunal (Chennai Bench) and other regulatory authorities. The complete amalgamation scheme will be accessible on the TVS Motor Company website following its submission to the BSE and NSE.
Company Profiles
Sundaram Auto Components Limited (Transferor Company)
- Net Worth: ₹156.90 Cr
- Turnover: ₹421.72 Cr
- Business Focus: Specializes in manufacturing injection-molded plastic components for automotive and non-automotive applications.
TVS Motor Company Limited (Transferee Company)
- Net Worth: ₹8,877.25 Cr
- Turnover: ₹17,603.83 Cr
- Business Focus: A leading global manufacturer of two-wheelers and three-wheelers.
Rationale Behind the Merger
- Simplification of Structure: The merger aims to consolidate SACL’s assets and liabilities into TVSM, streamlining the group’s corporate structure.
- Operational Synergies: By integrating operations, TVSM seeks to enhance efficiency and achieve sustainable growth.
- Reduced Compliance: The merger will simplify legal and regulatory obligations, easing compliance requirements.
- Cost Efficiency: Administrative overheads will be reduced, and duplicate expenses eliminated, ensuring better capital and operational management.
Transaction Highlights
- Related Party Transaction:
As SACL is a wholly-owned subsidiary, the merger is classified as a related party transaction. However, under the Companies Act, 2013, it is exempt from Section 188 compliance per the MCA Circular. - No Consideration Issued:
TVSM will not issue any shares for the merger. Shares held by TVSM in SACL will be canceled post-merger. - Unchanged Shareholding Pattern:
The shareholding pattern of TVSM will remain unaffected both before and after the merger. - Dissolution of SACL:
Post-merger, SACL will be dissolved without undergoing the winding-up process.
Sale of Plastic Component Division
As part of the restructuring, SACL has entered into an agreement to sell its injection-molded plastic components division to Pricol Precision Products Private Limited. This division contributed 95.10% of SACL’s turnover in FY 2023-24.