05-Dec-2023
2 mins read
L&T Finance Holdings Ltd (LTFH) has announced the successful consolidation of its following subsidiaries with itself, effective from December 4, 2023:
- L&T Finance Limited (LTF),
- L&T Infra Credit Limited (LTICL), and
- L&T Mutual Fund Trustee Limited
The regulatory filing confirmed the completion of this strategic merger post approval from shareholders, creditors, and regulatory authorities, including the RBI (Reserve Bank of India), NCLT (National Company Law Tribunal), SEBI (Securities and Exchange Board of India), and Stock Exchanges.
Rationale Behind Merger
This integration marks a significant milestone in LTFH’s strategic initiatives aimed at optimising its structure, aligning with its ‘Right Structure’ strategy developed over the last seven years. The decision to merge these entities into a single operating Non-Banking Financial Company (NBFC) was carefully crafted, considering market dynamics, internal synergies, and a vision for sustained growth.
Dinanath Dubhashi, Managing Director & CEO of LTFH, emphasised that the merger aligns with the company’s vision for sustained growth, innovation, and long-term success. This consolidation is expected to unlock new avenues for growth while enhancing governance and creating sustainable value for stakeholders.
Key Advantages of Merger
The merger’s primary benefit lies in the creation of a streamlined ‘Single Lending Entity,’ consolidating all lending businesses under one NBFC umbrella. This move not only simplifies the corporate structure but also eliminates redundant processes present across multiple subsidiaries.
Moreover, the integration streamlines liquidity management, enhancing operational efficiency and reducing costs associated with managing liquidity across various entities. With LTFH transitioning from a holding company (Core Investment Company) to an operating lending entity, it will directly benefit from the profits generated by its lending businesses, promising enhanced returns for shareholders.
Additionally, this merger strategically avoids the creation of two separately listed entities within L&T Finance, ensuring compliance with RBI regulations on listing within three years from categorisation as an NBFC-Upper Layer.
Impact on Operations and Efficiency
By adopting a single-entity structure, LTFH anticipates improved governance, better utilisation of management resources, consolidated systems, enhanced controls, and reduced administrative costs. This consolidation optimises operational efficiency and administrative expenses while maximising management bandwidth for more effective decision-making processes.
Market Response
The company’s shares opened at Rs 154.80, hit a day high of Rs 155.50, and as of 3:15 pm, the stock was trading positively at Rs 154.55 on NSE and closed on the higher side at Rs 154.20 on NSE as compared to previous trading session.