TVS Group begins restructuring, stock exchange intimated

With a clutch of businesses in the TVS group jointly opting to enter into a “family arrangement,” the bifurcation of the enterprises is aimed at enabling a distinct ownership in line with the current management. This would essentially mean that the shares held by the apex holding company, TVS & Sons, would need to be separated. 

On Thursday, Sundram Fasteners, Sundaram Clayton, TVS Electronics and TVS Eurogrip informed the stock exchange that the “members of the TVS Family have agreed to subscribe to the terms of a memorandum of family arrangement in order to record the terms of the family arrangement so agreed upon.” 

Besides veteran Suresh Krishna, Chairman of SFL, others helming the operations of their respective businesses – Venu Srinivasan, Gopal Srinivasan and R Naresh, have further intimated that “Senior nominated members of the ‘TVS Family shall now deliberate on how best to further implement this arrangement.” 

The rationale of getting into this new arrangement has been the need for aligning the share ownership “with the company or businesses apart from synchronizing with the management of the respective companies.” A corporate watcher, when contacted, said the management of the apex holding companies were separated over time. Now, in view of the latest development, the shareholdings from TVS and Sons would be moved to the respective families. 

“While the intent to separate family enterprises is welcome, the segregation of shareholdings family-wise is unlikely to be equal in value. Also, the exercise is complicated from a legal and tax perspective. Such being the case, there is every likelihood that cash considerations from one family to another is bound to happen. Also, the fracture of the group would lead to tax compliance issues,” the person noted. 

According to another explanation, the TVS family partitions align complete ownership with management, who are already in charge of existing companies. For instance, Venu Srinivasan and family, including son Sudarshan Venu will be steering TVS Motor and all group companies, including TVS Credit and Sundaram Clayton. The new arrangement also signifies that the brand is being allotted to each family group and company for their use in their lines of business on a perpetual, royalty-free basis. 

In January last year, the more-than century-old TV Sundram Iyengar & Sons, the parent company of the TVS group, had embarked on a restructuring strategy involving the holding company as reported by DTNext.