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The UK arm is one of the leading manufacturers of single-decker, double-decker buses and electric buses for Britain and other markets.
Then in phases, it has increased its stake to 75.11% over the years.
ALL has said that Optare would help the company to access technology including a modern range of mid-size and full-size city buses which can appeal to both domestic and global markets.
"The conversion of loans into the equity has no impact on profits and cashflows for the current financial year of Ashok Leyland as the investments in the equity shares and the loans given to Optare was fully impaired as of March, 2017," said the company.
Optare reported a revenue of £35 million in FY17 and loss of £15.7 million as against revenue of £38.3 million and £9.3 million loss in FY16.