After executing the Memorandum of Family Arrangement (MFA) in December, the family members of the $8.5 billion TVS Group have decided to implement the arrangement, inter alia, through a composite scheme of amalgamation and arrangement (Scheme) to be filed with the National Company Law Tribunal.
On December 10, 2020, an MFA was executed amongst various members of the TVS family who are shareholders of T V Sundram Iyengar & Sons Private Limited (TVSS), Sundaram Industries Private Limited (SIPL) and Southern Roadways Private Limited (SRW) (TVSS, SIPL and SRW collectively referred to as the TVS Holding Companies).
According to sources in the Group, pursuant to the MFA, senior members of the TVS family were nominated to discuss the implementation of the family arrangement.
Today, these members have decided to implement the family arrangement, inter alia, through a composite scheme of amalgamation and arrangement (Scheme) to be filed with the National Company Law Tribunal, Chennai.
The family members have said that the present shareholders of TVS Holding Companies primarily consist of the third and fourth generations of the original founder, T V Sundaram Iyengar.
The Group currently has over 50 companies, traditionally managed by members of different branches of the TVS family. With time, members of the TVS tree felt the ownership of shares in each enterprise in the group should vest with the branch managing that particular business, as is currently being done.
The family arrangement pursuant to the MFA is envisaged primarily to bring about amity and maintain goodwill among the members of the family in order to preserve the memories of the founder, and to maintain overall peace and harmony within the TVS family, said the members.
The MFA has been executed amongst various members of the TVS family who are shareholders of the TVS Holding Companies including TVSS and SIPL.
The restructuring will give each family group complete ownership of businesses they manage and scrapping the holding company. There won't be any cross-holdings, the family agreed, according to the new terms. The restructuring will involve nine listed companies including TVS Motor, Sundaram Clayton, Sundram Fasteners, TVS Electronics, TVS Srichakra, and others.
As part of the agreement, the family which manages and operates a business will buy out the stakes held by the holding companies in their respective companies.
This will involve the process of four family members buying out the shares of the TVS holding firms in their companies. This arrangement will not include Sundaram Finance as it is already de-linked from the holding companies.
For example, in Sundaram Clayton, which owns 57.4 per cent in TVS Motor, promoter companies — TV Sundaram Iyengar & Sons, Sundaram Industries, and Southern Roadways — hold 18.82 per cent, 29.96 per cent, and 14.98 per cent, respectively.
Some of the other family members hold shares indirectly in Sundaram Clayton as they have invested in the holding companies. These shares will now be bought over by Venu Srinivasan family that manages Sundaram Clayton.
Similarly, Suresh Krishna’s family will buy stakes held by holding companies in Sundram Fasteners and Sundaram Brake. Shobhana Ramachandran and her brothers will buy out stakes held by the holding companies in TVS Tyres.
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