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Interpreter | A look at TVS Group’s proposed repurchase

The reorganization would lead to a merger and then each business merging into the holding company of the respective family.

Story so far: The TVS group has been in existence for 110 years. Given the interests and priorities in the various businesses in the group and the third and fourth generations of its founder TV Sundaram Iyengar, the family has decided to align the ownership of individual group companies with the respective arms that manage them. A look at the background and some details of the planned structure:

What is the first phase of the family system?

The group mainly consists of three holding companies – TV Sundaram Iyengar & Sons Limited (referred to as TVS & Sons), Sundaram Industries Private Limited (SIPL) and Southern Roadways Private Limited (SRPL), called TV Holding Company.

TVS & Sons holds a majority stake in both other holding companies and the remaining amount in both of them is held by the respective arms of the TVS family. Together, these three firms have funded, and therefore have stakes in, group companies that have emerged over the years.

The first phase of the arrangement is to merge SIPL and SRPL into TVS & Sons on a share exchange ratio on an appraisal basis. Such a merger is necessary because different family arms run separate businesses, whose stakes are held separately by 3 holding firms. Each business will be disposed of in a merger and then in the holding family of the family concerned.

Interpreter |  A look at TVS Group's proposed repurchase

The family armament is also a piece of the distribution business, which belongs to their part of the overall business, which will be demolished under their ownership as part of the process.

Sources close to the family say that at the end of the family arrangement, there will be no single holding company, but there will be separate holding companies for each of the family branches that have been managing related businesses for decades, sources close to the family he said.

Will there be other agreements that family members will enter into?

In addition, the arrangement will likely see a number of ancillary agreements – for example how the TVS brand will be used in the future, and a non-compete agreement – as the former family has been in decades, sources said. . Partition in our country.

What changes will the group’s listed firms witness?

While companies that run the business themselves are not directly part of the family settlement, a change in their holdings will be seen. TVS Motor Company is run by Veenu Srinivasan and his family members. As of the January 27 exchange filing by TVS Motor, TVS Holding Companies holds 63.76% in Sundaram Clayton (SCL), the holding company for TVS Motor.

It added that after the merger of the holding companies of the group, the business of two-wheeler auto parts and die casting would be demolished into TVS Investments & Holdings Pvt. Ltd. (TVSIHPL). In addition, 63.76% shares of SCL held by TVS holding companies will be formed with TVSIHPL, in which Mr. Srinivasan and his family members hold a majority stake.

Similarly, Sundaram Fasteners, run by Suresh Krishna and his family, will be a witness to the business of fasteners from TVS holding companies to TVS Sundaram Fasteners Pvt. Ltd. 49.53% shares held by holding companies in Sundaram Fasteners TVS Sundram Fasteners Pvt. Ltd., in which the family of Shri Krishna holds a majority.

Likewise, k. Mahesh’s family runs Sundaram brake linings, in which TVS holding companies hold 32.66%. Post merger of three TVS holding companies, a demerger of the break lining business will have an impact on Madurai Algar Enterprises Private Limited. Ltd. (MAEPL). Therefore, 32.66% of Sundaram brake linings held by holding companies will form with MAEPL, with Mr. Mahesh’s family holding a majority.

TVS Investments (TVSI) holds 59.84% in TVS Electronics, run by Gopal Srinivasan and family. TVS holding companies hold 85% stake in TVSI. TVSI will merge with the family holding company Geeses Family Holdings Pvt. Ltd (GFHPL) and stake held by TVS holding companies will vest with GFHPL.

The TS Rajam and TS Santhanam families will have only one holding firm, which will respectively hold stakes in the companies they manage. TS Santhanam Family Holding Company Sundaram Santhanam & Family Pvt. Ltd. (SSFPL). TVS Holding Companies will have a 29.69% stake in Wheels India with SSFPL. Break India is partly organized by TVS & Sons, Southern Roadways and Sundaram Industries. After the merger of the holding firms, their entire stake in Break India will be shifted to TVS & Sons. Breaker will come to India in the holding firm of Mr. Santhanam of the family through the holding of Deezer, TVS & Sons, as Sundaram Motors and Madras Auto Service, which are divisions of TVS & Sons.

As per the arrangement, the tire business, TVS division of TVS & Sons and TVS Logistics will go to TS Rajam family.

At the end of the exercise, all the shareholders of TVS holding companies will hold equity shares in the respective family holding firms, but the family running the business will have a majority stake in the respective family firms.

How was the ‘fair price’ found?

“There are a lot of factors and family histories that go into it, so that it is impossible to relate the value of the business to the settlement. It is not that business value does not matter, but it is much more complex right now, ”the sources said.

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