In a significant move, Sundaram Finance Limited (SFL) has decided to hive off its investments in non-financial services into a separate company to ring-fence the regulated financial assets of the group.
“Sundaram Finance’s balance sheet and capital adequacy will remain robust post de-merger and we will continue to seek growth opportunities in the financial services landscape,” said T.T. Srinivasaraghavan, Managing Director, SFL.
The board of SFL has given its nod for the de-merger exercise.
The non-financial services investments of SFL will be de-merged into Sundaram Finance Investments Limited (SFIL).
The exercise will make the balance sheet and capital adequacy of SFL more robust, he said. The de-merger is being initiated through a composite scheme of arrangement as per the requirements of the Companies Act, 2013. SFIL would now be the holding company for all non-financial services investments of SFL.
As per the proposal, all shareholders of SFL would receive one share of SFIL for every share held in SFL as on the record date. The appointed date for the scheme is April 1, 2016. As a promoter, SFL would hold 26.47% stake in SFIL and the balance 73.53% will be issued to all shareholders of SFL. SFIL will be listed on the stock exchange.
The SFL Group had reported a revenue of ₹5,035 crore and a profit of ₹583 crore for FY16. Total assets stood at ₹28,027 crore. The net worth stood at ₹4,195 crore at a consolidated level.
Investments
In about six decades, SFL has invested in various non-financial services businesses, as a co-promoter along with TVS Group firms, including in Sundaram Clayton, Wheels India, IMPAL, Brakes India, Turbo Energy. The cumulative investment in these firms(in book value terms) has increased from ₹23 crore in FY06 to more than ₹150 crore in FY16.
