Register to Subscribe

Home arrow News arrow Alliances and Joint Ventures arrow Sundaram Clayton demerges Brakes division to subsidiary, WABCO-TVS
Sundaram Clayton demerges Brakes division to subsidiary, WABCO-TVS Print E-mail
Written by Hari   
Wednesday, 09 April 2008
"WABCO, one of the world's leading providers of electronic braking, stability, suspension and transmission control systems to the global commercial vehicle industry and the TVS Group, a leading producer of automotive components, two- wheelers, electronic hardware and major distributors of automotives & spare parts in addition to operating goods transport & financial services, are joint venture partners in Sundaram-Clayton Ltd {SCL}.

SCL is a leader in the commercial vehicle brakes business, manufacturing aluminium die-castings and is holding investments in various other business activities.

The TVS Group and WABCO have decided to focus on their respective core competencies to more effectively capture future growth opportunities. The Brakes business requires new technology to maintain its market leadership position and respond to the future needs of the Indian commercial vehicle markets for enhanced braking and advanced safety and performance systems.

This is primarily driven by a significant increase of road and highway infrastructure and expected regulations for improved safety and environmental compliance. This will enable WABCO to provide access to technology as well as leadership to pursue growth opportunities in the overseas markets for the Brakes business. On the other hand, the Foundry business requires focused attention to enhance operations and further develop export markets, which will be pursued by the TVS Group.

SCL was established in 1962 between the TVS Group and Clayton Dewandre Holdings Ltd., U.K. (CDH). CDH was subsequently taken over by American Standard Inc., U.S.A. SCL issued shares to the public in 1983. In the share capital of SCL, the pattern of shareholding is TVS group 40.83%, CDH 39.17% and Public 20%. CDH is a part of the WABCO division of American Standard.

SCL is in the business of (a) air assist and full air actuation systems for automotive and non-automotive applications, and (b) aluminium die castings, besides holding investments, directly and through its subsidiaries, in TVS Motor Company Ltd., TVS Electronics Ltd and TVS Finance Ltd.

The joint venture partners have been discussing about de-merger of the brakes business in SCL and have reached an agreement.

Based on this, the Board of Directors, of SCL, at its meeting held on May 14, 2007 has approved the transfer of the Brakes business to its wholly owned subsidiary, WABCO-TVS (INDIA) LTD (WABCO-TVS) as on January 01, 2007 through a scheme of demerger.

The non-brakes business and investments will continue to remain with SCL.

As part of the Scheme, it is proposed that for every existing share of Rs 10/- paid up currently held in SCL shareholders will receive one share of Rs 5/- paid up of SCL (post re-organised capital) and one share of Rs 5/- paid up of WABCO-TVS.

Since all the shareholders of SCL will be issued shares in WABCO-TVS on a proportionate basis, there will be no change in the overall shareholding pattern on the date the demerger becomes effective. Post the demerger, shares of WABCO-TVS will be listed on the same Stock Exchanges on which the shares of SCL are listed.

Subsequent to the demerger, it is intended that within a period of two years from the date of listing of shares of WABCO-TVS, the majority control and management of SCL will be vested with the TVS Group, while the majority control and management of WABCO-TVS will vest with WABCO. In line with this objective, CDH will transfer the shares held by it in SCL to TVS Group and TVS Group will transfer its shares in WABCO-TVS to CDH.

The Scheme is conditional upon securing the approval of the Stock Exchanges, Shareholders, creditors and the Hon'ble High Court of Madras.

The Hon'ble High court of Madras vide its order dated February 20, 2008 has sanctioned the Scheme of Arrangement between the Company and WABCO-TVS (INDIA), Ltd and their respective shareholders and creditors.

The certified copy of the Hon'ble High Court of Madras has been filed with the Registrar of Companies, Chennai, Tamilnadu (ROC), on March 28, 2008, and hence the Scheme has become effective from March 28, 2008, being the 'effective date' as defined under the Scheme of Arrangement.

In pursuance to the said Order of the Hon'ble High Court of Madras, vide its order dated February 20, 2008, sanctioning the Scheme of Arrangement between the Company and WABCO-TVS and their respective shareholders and creditors, all the assets, liabilities, duties, rights, obligations of every description of the demerged undertaking, namely the brakes business of SCL, stands transferred to and vested in WABCO-TVS and in consideration of such vesting, the share capital of both WABCO-TVS and SCL are reorganized and shares are being issued to the shareholders of SCL in the following manner:

i. One equity share of Rs 5/- each, credited as fully paid up in WABCO-TVS; and

ii. One equity share of Rs 5/- each, credited as fully paid up in SCL (after reorganization).

for every one equity share of Rs 10/- each held by the shareholders in SCL as on the record date.

In terms of the Scheme sanctioned by the Hon'ble Madras High Court of Madras, the subscribed and paid up capital of SCL shall stand reduced to Rs 9,48,37,920/- and such reduction shall be effected by reducing the face value of the shares already issued by SCL viz., 1,89,67,584 equity shares, from Rs 10/- to Rs 5/- per equity share.

The Record Date has been fixed by the Board of Directors of SCL as May 02, 2008, to determine the equity shareholders of SCL entitled to receive the equity shares of WABCO-TVS and SCL (after reorganization)."

Related news
More recent
Earlier on
< Prev   Next >


Mazak - The world's largest machine tool builder
JYOTI - India's most dynamic machine builder
TaeguTec - Cost effective tooling solutions





Subscribe to MACHINIST by Email


RSS 1.0
This site is best viewed with Firefox 2.0 or higher at a minimum screen resolution of 1024x768