In a recent announcement to the exchanges, Tata Motors disclosed its strategic move to merge Tata Motor Finance with Tata Capital, aligning with its strategic vision of divesting non-core assets and concentrating capital investments in burgeoning technologies and products.

The board of directors of Tata Motors, Tata Capital, and Tata Motors Finance greenlit the merger through an NCLT scheme of arrangement, with Tata Capital issuing equity shares to Tata Motor Finance shareholders. Post-merger, Tata Motors will possess a 4.7% stake in the combined entity.

Tata Capital, a leading diversified NBFC in India boasting assets under management of Rs 1.6 lakh crore and an array of over 25 product offerings across retail, SME, and corporate sectors, will absorb Tata Motor Finance, whose asset under management stands at Rs 32,500 crore, predominantly focusing on financing solutions for both new and used commercial and passenger vehicles, as well as catering to dealers and vendors.

The fiscal year 2024 saw Tata Capital and Tata Motors Finance posting profits after tax of Rs 3,150 crore and Rs 52 crore, respectively.

With Tata Capital's limited footprint in CV/PV financing, the merger presents an opportunity to tap into the rapidly expanding CV/PV financing markets, intending to deliver innovative products and digital solutions while providing avenues for employee growth.

The scheme of arrangement necessitates approval from regulatory bodies such as SEBI, RBI, and NCLT, alongside consent from shareholders and creditors of both Tata Capital and Tata Motors Finance, with an estimated completion timeline of 9-12 months. The merger is anticipated to have no detrimental impact on customers or creditors of Tata Motors Finance, ensuring a seamless transition into the new entity.