NCLT Hyderabad Approves Demerger Of AP-Telangana Automobile Dealership Business Of Automotive Manufacturers

The order was passed by a bench comprising Judicial Member Rajeev Bhardwaj and Technical Member Sanjay Puri under Section 230 of the Companies Act.

Automotive Manufacturers Pvt Ltd, incorporated on 1 December 1948 is engaged in automobile dealership and trading of passenger and commercial vehicles, construction equipment, spare parts. Automotive Mobility Pvt Ltd, the resulting company was incorporated on 12 February 2025 and carries on similar dealership and automobile trading activities.

Under the scheme, the Andhra Pradesh and Telangana Division of the demerged company will be transferred to the resulting company on a going-concern basis with an appointed date of 1 April 2025. The division includes dealership operations for brands such as Mahindra & Mahindra, KIA Motors, JSW MG Motor, and Kobelco Construction Equipment across several states.

The companies submitted that the restructuring would facilitate focused growth, improved operational efficiency and better strategic management of the transferred undertaking.

The tribunal recorded that all statutory requirements were complied with, including publication of notices in newspapers and issuance of notices to regulatory authorities. The Regional Director and the Income Tax Department filed reports with certain observations, to which the companies gave undertakings ensuring compliance with applicable laws.

Concluding that the scheme was not contrary to public interest and was beneficial to shareholders, employees and creditors, the tribunal sanctioned the arrangement.

It also directed the companies to complete all statutory compliances, including filing the order with the Registrar of Companies within the prescribed period.

For Petitioner: Advocates Prashant Kumar Jainand

For Respondent: Kusum Yadav, Assistant RD, B. Swapna for Income Tax Department