Rejig at Sundaram-Clayton

The TVS Group is kicking off a major restructuring process to help provide greater business focus to group company Sundaram-Clayton Ltd (SCL).

As part of the restructuring,the automotive and nonautomotive (electronic and financial ) businesses of Sundaram-Clayton would be demerged into two separate entities with identical shareholding structures, said a source with direct knowledge of the matter.

The restructuring process has been going on for three years now to separate Sundaram-Claytons auto and nonauto businesses.Sources say that this is a structural adjustment and has nothing to do with issues like a family settlement.This demerger was on the cards since the demerger of WABCO-TVS five years ago but it could not be done at that time since a three-way demerger would have been very complex, said the source.
Analysts say the restructuring would improve valuation given that these will now be more focused businesses.

According to a company document,the board of directors of Sundaram-Clayton and that of its 100% subsidiaries Anusha Investments Ltd (AIL) and Sundaram Investments Ltd (SIL) approved the restructuring plan in November and December 2011 respectively.
The restructuring plan involves first merging Anusha Investments into Sundaram-Clayton,then hiving off all the non-auto businesses from the amalgamated company,to Sundaram Investments.

The document said that the equity share capital of Sundaram Investments will remain unlisted providing exit opportunity to the shareholders of SIL after demerger of non-automotive related business of SCL into SIL.

Apart from Anusha Investments and Sundaram Investments,Sundaram-Claytons subsidiaries include TVS Investments (TVSIL).

An NBFC,Anusha Investments is an investment company with major stakes in group companies among other interests.It has both auto and nonauto investments.Anusha Investments holds 48.56% in TVS Motor,in which Sundaram-Clayton holds 8.84%.After the merger,Sundaram-Clayton will hold 57.4% in TVS Motor.

After the demerger of the non-auto businesses of SCL into SIL,the shares of TVSIL will be transferred to SIL, says the document.

After the transfer of TVSIL shares to SIL,the former will become a wholly-owned subsidiary of SIL.

VALUE ADDITION

The restructuring plan involves first merging subsidiary Anusha Investments into Sundaram-Clayton,then hiving off all the non-auto businesses from the amalgamated company,to Sundaram Investments Electronic and financial businesses to form Sundaram Investments After the merger,Sundaram-Clayton will hold 57.4% in TVS Motor