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TVS Group begins the arduous task of simplifying ownership structure

The rearrangement of shareholding of TVS Group will help the next generation of entrepreneurs branch out to newer investment areas

December 11, 2020 / 05:30 PM IST

For the first time since the mid-1990s the century-old TVS Group laid bare its intentions of simplifying the ownership structure of group companies, which it believes will ensure that the control of group companies rests with the management.
Even as further details are awaited, the idea is to allow one promoter family that is holding shares in one entity to have control of the company it runs. This way the ownership structure of individual companies will also get clearer.

Presently, the ownership structure of over 50 group companies of the $6.5-billion group appears to be a maze of complex crossholding of shares. The group hopes to simplify this through the memorandum of family arrangement executed on December 10.

For instance, TVS Motor Company, the biggest company of the group, has Sundaram Clayton as its promoter entity. While Sundaram Clayton is an auto parts maker that produces over three dozen components, it is controlled by unlisted holding companies such as Sundaram Industries.

The shares in these holding companies are held by members of the family who have no direct bearing on the operations of two- and three-wheeler maker as well as the auto parts maker. For example, while Sundaram Industries is the single largest shareholder of Sundaram Clayton, its directors include Viji Santhanam and Ram Santhanam who head the financial services division of the group.

TVS Motor Company is run by Venu Srinivasan, the grandson of the group’s founder TV Sundaram Iyengar and cousin of Viji and Ram.

TVS’s fourth generation entrepreneurs such Sudarshan Venu and Lakshmi Venu, son and daughter of Venu Srinivsan, have joined the board of group companies. Sudarshan is the joint Managing Director (MD) of TVS Motor Company. Sriram Viji, son of Viji Santhanam is the Deputy MD at Brakes India.

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This 109-year-old group has a set of extremely diverse business interests ranging from insurance, mutual fund, financial lending services, distribution of automotive parts, tyres, tyre retreading services, logistics services, to electronics, textiles, and even sewing needles.

Formed in 1911, TV Sundaram Iyenger & Sons is the oldest company within the group. It is also the primary holding company having stakes in listed and unlisted companies of the group. It acts just like Tata Sons in the Tata group or Bajaj Holding and Investments in the Rahul Bajaj Group.

The difference here is that the TVS family has two more holding companies: Sundaram Industries and Southern Roadways. Now with the proposed rearrangement of shareholding, the future of these holding companies could come into the picture.

Besides producing bikes and scooters, TVS Motor Company has created its own set of subsidiaries in India and outside that are engaged in vehicle making, electric vehicles, fleet tracking using internet of things and many more. TVS’s group entities have forged alliances with overseas companies for operations in India and outside.

“Senior nominated members of the TVS family shall now deliberate on how best to further implement this arrangement," said Venu Srinivasan, Chairman and MD, TVS Motor Company.

The rearrangement of shareholding of the group will help the next generation of entrepreneurs branch out to newer investment areas.

Last year, TVS Motor Company, which is now actively run by Sudarshan Venu, announced multiple investments in startups engaged in artificial intelligence, industrial internet of things, and machine learning. Earlier this year TVS announced the buying of assets of one of Britain’s most iconic bike brand Norton. This was the first such buyout by the company.
Swaraj Baggonkar
first published: Dec 11, 2020 04:57 pm
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