The board of TVS Motor Company, part of the TVS Venu Group, on Wednesday approved the demerger of its consumer finance and related businesses into a separate entity, Harita ARC Ltd. It also approved the merger of its wholly owned subsidiary, TVS Motor Services Ltd, with TVS Motor Company.
Under the composite scheme of arrangement, the company’s consumer finance and related activities, including lending, investments, leasing and associated support services, will be transferred to Harita ARC. Shareholders of TVS Motor will receive an equal number of shares in the resulting company, allowing them to participate in the future growth of both the mobility and consumer finance businesses.
The consumer finance business recorded a turnover of Rs 3,921 crore in the first six months of FY27, compared with TVS Motor’s total turnover of Rs 35,770 crore during the period.
The scheme provides for a 1:1 share entitlement ratio. For every fully paid-up equity share of TVS Motor held on the record date, eligible shareholders will receive one fully paid-up equity share of Harita ARC, with a face value of Rs 1 each.
As part of the demerger, TVS Motor has approved the acquisition of Harita ARC from TVS Credit Services Ltd for Rs 25,000 in cash. Harita ARC will become a wholly owned subsidiary of TVS Motor and house the consumer finance business following the demerger.
TVS Group’s non-banking financial company, TVS Credit, along with Home Credit India, serves more than 45 million customers through 100,000 touchpoints. In July last year, Home Credit India Finance, a subsidiary of TVS Holdings, acquired a 100% stake in education finance company Varthana Finance for Rs 967 crore in an all-cash deal. Earlier this year, TVS Motor also acquired a minority stake in Jana Small Finance Bank.
“The businesses being demerged have developed strong capabilities, customer relationships and platforms that position them well for the future. The demerger will allow them to pursue opportunities across consumer finance and related sectors and allocate capital in line with their growth priorities. It positions them to realise the full potential of their assets and capabilities while enabling TVS Motor Company to remain focused on strengthening its leadership in mobility globally,” said Sudarshan Venu, chairman of TVS Motor Company.
The demerger is subject to the requisite statutory, regulatory, shareholder and other approvals.
Separately, the board approved the acquisition of a controlling interest in STPL Trading and Services Pvt Ltd, which is in the process of merging with TVS Credit Services. Following the merger, STPL Trading will effectively hold an additional 2.4% stake in TVS Credit Services.