Lakshmikumaran & Sridharan Guides Toyota Group on Ravindu Motors Dealership Acquisition

There has been a significant change in the Karnataka Automotive Market.

In the Indian automotive market, a major strategic step that has recently taken place concerns one of the largest car manufacturers in the world. The Toyota Group has already made the acquisition of car dealership business in Ravindu Motors Private Limited successful. This is a significant development to the car market in Karnataka, in particular, Bangalore which Ravindu Motors has been part of over a long period.

Over the years, the Toyota customers in the area were having much contact with Ravindu Motors who developed a massive base of clients. The acquisition will be a shift in the manner the brand will relate with its local market. The Toyota Group is likely to harness its direct presence by acquiring this well-established network and providing the same high-quality and standardized experience to its customers.

The deal is now rebranded as Bharat Toyota after the successful deal closure. This new personality is an indication of a new beginning and a new dedication towards the market. It is a well thought-out merger of Toyota that enables them to gain a more intimate control of sales and services in a crucial economic center such as Bangalore.

They played a key role in driving the legal complexities of the deal. The company served as the lead legal counsel of the Toyota Group and they helped the company through the entire process of the acquisition process.

The Complexity of Business Transfer Arrangement.

The legal format which was selected in this deal was a business transfer arrangement. This is not equivalent to mere purchase of shares in a company. During a business transfer, the purchaser purchases the particular assets, liabilities and operational capabilities that comprise the business, and not the entire legal person of the seller.

The structuring of this particular arrangement was greatly facilitated by Lakshmikumaran and Sridharan. Their assignment was to find out precisely what assets will be transferred at Ravindu Motors to the Toyota Group. This encompasses all the physical stocks such as cars and spares as well as intangible products such as customer files and goodwill.

It takes remarkable accuracy in drafting the transaction documents to such a transfer. The legal team was forced to make sure that the contracts were clear in outlining the extent of transfer. This will avoid future quarrels over property ownership and make sure that the business operates smoothly on the first day with the new management.

Another important aspect of this stage is negotiation. The lawyers of LKS were used to defend the interests of Toyota and make the conditions of the deal acceptable and reasonable. They needed to strike the balance between the business aspirations of the Toyota Group and the legalities of the acquisition of an operating venture.

Strict Legal Due Diligence and Compliance.

A procedure referred to as due diligence must be undertaken before any deal as big as this is signed. It is basically a legal health check up of the business that is being purchased. In the case of the Ravindu Motors deal, LKS sent a dedicated group to investigate all the activities of the dealership.

Any car dealership business includes a huge portion of real estate. The size of showrooms and service centers is huge plots of land and buildings. The legal team was required to confirm the ownership of the properties, lease documents and land use permits that the properties included in the transfer had no latent legal risks.

The other critical aspect of the due diligence process was litigation checks. The attorneys were required to research whether Ravindu Motors had any pending cases or legal actions on which cases. It is expensive to buy a business whose legal baggage is not resolved and thus determining such risks at an early stage can enable the purchaser to make wise decisions.

Another issue was employment which was central during the review. A car dealership is largely dependent on its sales team, mechanics and the administrative support. The legal department was forced to look into the employment contracts and benefits to make sure that the process of transferring employees to the new organization was in line with the stringent labor laws in India.

Assuring level Competition and regulatory authorization.

Acquisitions of large proportions are usually a point of interest to the regulatory authorities that check fairness in the market. Lakshmikumaran and Sridharan Competition and Antitrust team was engaged to make sure that the deal was not against any anti-competitive laws. They needed to determine whether they would have an unfair monopoly in the local car market by acquiring it.

This is an important aspect of the deal to multinational companies such as Toyota. They have to work with the rigid limits of the Indian competition legislation to evade substantial fines and reputational losses. The law firm consultants offered the clearance strategies required to facilitate the deal without interference by the regulating bodies.

In addition to the competition law, other regulatory compliances that are necessary in the automotive industry are many. These include environmental clearances of service centers to special trade license of selling vehicles. All these licenses were valid and could be transferred or re-applied with ease by the regulatory team at LKS.

The successful completion of this deal is evidence that a multi disciplinary legal team is important. Real estate, litigation, employment, and corporate law experts collaborated. This cooperation meant that no stone was left unturned and all the possible risks in the law were handled before the final signature.

Future of Toyota in Karnataka.

The new dealerships of Bharat Toyota with the complete acquisition achieved will now have a direct strategic vision of the Toyota Group. This will introduce new levels of operational efficiency and customer service levels in the region. It makes Toyota capable of utilizing its global best practices at the grassroots level better.

To the customer, the customer transition is meant to be simple. Rebranding to Bharat Toyota is a quality promise and trust. It also guarantees the current Ravindu Motors clients that they will still receive the same level of service, with a potential of being served at a higher level supported by a more refined set of values directly provided by the manufacturer.