In a significant development, the 109-year-old TVS Group has decided to restructure its family holdings in the group companies. On Thursday, it announced that the restructuring will be done in a manner that will “align and synchronise” the ownership of shares in various companies with the management of the respective businesses.
Presently, the $8.5-billion group — started in 1911 by TV Sundaram Iyengar — is in diversified businesses including auto, auto component, logistics and finance (see chart), and over the years family members had invested in them either directly or through the holding companies (TV Sundram Iyengar & Sons Pvt Ltd, Sundaram Industries Pvt Ltd and Southern Roadways Pvt Ltd).
Post the family agreement, existing management of the various listed and unlisted businesses in the Group will continue to be managed by the same family members. Thus, Suresh Krishna and his family will continue to manage Sundram Fasteners while Venu Srinivasan’s family will run TVS Motor Company and Sundaram Clayton. Ram and his son Srivats Ram will manage Wheels India while S Viji and his son Sriram Viji will handle Brakes India. R Dinesh will continue to run the logistics and the after-market service businesses.
“The various businesses/ entities of the TVS Group have been traditionally managed by members of the different branches of the TVS family. With the passage of time, the members of the TVS family felt that the ownership of shares in various companies/businesses should align and synchronise with the management of the respective companies and, therefore, the memorandum of family arrangement has been entered into,” said Suresh Krishna, the senior-most member of the family and chairman of Sundram Fasteners, in a letter issued to stock exchanges.
“Furthermore, the terms of the family arrangement do not envisage any royalty or brand usage payments from the operating businesses/companies to the TVS family members/their holding companies,” he added. In other words, the group companies will get to use the TVS brand on a perpetual royalty-free basis.
In consolidation phase
“It is bit of a complex structure in TVS Group when compared to other conglomerates. In my view, it is one of the strong points for TVS and immensely helped in the consolidation phase. Now, as they embark on a rapid growth agenda, and as the younger generation occupy the helm, they may want more freedom to do what they want in their businesses and are taking responsibility for that,” says Narayanan Ramaswamy, partner, KPMG India.
TVS Group, known for stakeholder trust, believes this arrangement will further enable the management of respective companies to continue to engage with its stakeholders even more effectively.