Sundaram Finance is in the midst of a major restructuring exercise in a bid to move towards a less cumbersome structure.
“The objective is to reduce the complexity of the SFL balance sheet structure,” said a note circulated internally by the company.
The revamp exercise will see “the number of direct subsidiaries and associates on SFL balance sheet reduce to seven and one, respectively, in 2017-18,” it said. Currently, the SFL balance sheet mirrors the performance of 13 subsidiaries and seven associates as well.
The reorganisation exercise involves three crucial components - merger of Sundaram Insurance Broking Services Ltd and Infreight Logistic Solutions Ltd. with SFL; de-merger of the shared services division of Sundaram BPO into SFL; and de-merger of select shared services business, non-financial services investments, along with select real estate assets, to Sundaram Finance Investment Ltd.
SFL has already announced that all shareholders of SFL will be offered one share in Sundaram Finance Investments Ltd. for every SFL share held by them. “After the de-merger, SFL will hold 26.47% shares in Sundaram Finance Investments Ltd. and the public, 73.53% shares,’’ it said.
In all, SFL proposes to de-merge 18 non-financial services investments into Sundaram Finance Investments Ltd. These investments are in Flometallic (40.63%), Sundaram Hydraulics, Axles India (38.82%), IMPAL (18.52%), Transenergy, Vishnu Forge, Delphi TVS (3.19%), Dunes Oman (43.69%), Sundaram Clayton (11.24%), Wheels India (11.08%), Turbo Energy (32%), Sundaram Dynacast, Lucas TVS (5.32%) and Brakes India (6.67%). Besides, it has investments in Sundaram Business Services Ltd (100%) and Sundaram BPO India Ltd. (84.25%), which are subsidiaries of SFL. Also, it has investments in TVS Investments (14.98%) and Techtran Polyenses.
The current exercise “will maintain the primary role and obligation of SFL as a co-promoter in its non-financial services investments,” the note said. It went on to add that “the current regulatory framework allows an opportunity to create a shareholder-friendly transaction with an appointed date of April 1, 2016.”
At the end of March, 2016, the total assets under management for SFL stood at ₹17,895 crore. Of this, commercial vehicles accounted for 51.7% and cars 32.9%. The balance comprised construction equipment, tractor and the rest.
