The Competition Commission of India recently granted approval for the merger between Tata Motors Finance Limited and Tata Capital Limited. As a result of this merger, Tata Motors will have a 4.7% ownership stake in the combined entity. Tata Motors Finance, the vehicle financing arm of Tata Motors, primarily focuses on providing financing solutions to support the sales of Tata vehicles.
Both Tata Motors Finance Limited and Tata Capital Limited's boards had previously unanimously approved the merger proposal back in June. The terms of the merger dictate that Tata Capital Limited will issue its equity shares to TMFL shareholders, effectively leading to Tata Motors holding a 4.7% stake in the newly formed entity. This move is seen as a strategic step towards consolidating Tata Motors' position in the industry.
This merger aligns perfectly with Tata Motors' broader strategy of divesting from non-core operations. By reallocating resources towards the advancement of cutting-edge technologies and innovative products, Tata Motors aims to enhance its success and sustainability in the automotive sector. The company's restructuring includes plans to separate its operations into distinct entities catering to commercial vehicles and passenger vehicles, ultimately resulting in both entities being publicly listed.