In a bid to improve sales, two-wheeler major TVS Motor Company Ltd (TVSM) is in the process of establishing a finance company. The company, which has been contemplating an aggressive approach to improve market share in its segment, along with its new launches and innovations, is betting big on proposed finance arm.
The company has been witnessing a major jump in its sales over the last few months through greater penetration and aggressive marketing strategy and a retail finance arm will help to capitalise on the ongoing demand. The company at one point of time had plans to float a finance arm with a capital base of Rs 100 crore, but in vain.
Against this backdrop, the company has looked at its portfolio in various investments including its equity and preference capital of TVS Finance & Services Limited (TVSF&S), a fellow subsidiary. The company which had made investments into TVS Finance & Services a few years ago, has decided to diminish its investments into the latter as per accounting standards with adequate one-time provision, as the latter’s networth completely eroded and its shares valuation become negative, TVS said in a statement here.
Keeping this in mind, the directors thought it prudent and have accordingly transferred the entire TVS Motor’s holding, both equity and preference in TVS Finance & Services, to another fellow subsidiary at a nominal price as substantiated by the valuers.