Tata Motors Finance Merges with Tata Capital to Streamline Business

Key Highlights:

• Tata Motors Finance Limited (TMFL) has merged with Tata Capital Ltd (TCL), following NCLT approval on May 6.
• TMFL is no longer a wholly owned step-down subsidiary of Tata Motors Ltd (TML).
• Tata Motors will now hold an effective 4.7% stake in the merged entity through share allocation.
• The merger helps Tata Motors exit non-core businesses and focus on emerging automotive technologies.
• TMFL's Rs 32,500 crore AUM will strengthen Tata Capital’s presence in commercial and passenger vehicle financing.

Tata Motors Finance Limited (TMFL) is no longer a subsidiary of Tata Motors Limited (TML) as of May 8, 2025. The Mumbai bench of the National Company Law Tribunal approved this change on May 6, allowing TMFL to merge with Tata Capital Limited (TCL). The boards of TML, TMFL, and TCL approved to this plan on June 4, 2024, marking a big shift in the Tata Group’s financial services.

This merger supports TML’s goal to focus on its main businesses, especially those involving new technologies and products, while moving away from non-core activities. As part of the deal, TCL will give shares to TMFL shareholders, and TML will own about 4.7% of the combined company.

About Tata Capital

Tata Capital, one of India’s top non-banking financial companies (NBFCs), manages assets worth Rs 1.6 lakh crore. By merging with TMFL, it will grow its business in financing commercial vehicles (CVs) and passenger vehicles (PVs). TMFL, which provides loans for new and used CVs, PVs, dealers, and vendors, has assets of Rs 32,500 crore. This merger will help TCL reach more customers in these growing markets.
The merger will not harm TMFL’s customers or creditors. Advisors for TCL include E&Y, ICICI Securities, and Wadia Ghandy & Co, while TMFL is guided by PwC, Axis Capital, and AZB & Partners.

Looking ahead, this merger strengthens Tata Capital’s position in India’s NBFC sector. It will expand its offerings in CV and PV financing, building on TMFL’s expertise. For Tata Motors, the move improves its focus on cutting-edge automotive technologies, like electric vehicles and smart systems, while ensuring a smooth transition for TMFL’s customers and partners. The merger is a smart step to make Tata Capital a stronger player in India’s financial world, while Tata Motors invests in the future of transportation.

This change shows how the Tata Group is reorganizing to stay competitive. Tata Capital gains a bigger role in vehicle financing, and Tata Motors can put more energy into innovation. Customers of TMFL will continue to receive the same services, now backed by TCL’s larger network and resources. The merger is a good move for both companies, helping them grow in their respective fields while keeping the Tata Group’s reputation for trust and quality.

Also Read: Tata Motors Opens New Vehicle Scrapping Facility in Kolkata

CMV360 Says

This merger reflects a smart move by Tata Motors to focus on its core automotive business while allowing Tata Capital to grow stronger in the vehicle financing space. It’s a well-planned step that benefits both companies without disrupting customer services.