Commercial vehicle major Ashok Leyland is planning to offload stake in some of its subsidiaries and also in IndusInd Bank Ltd. Ashok Leyland hopes to garner about Rs 500 crore from the stake sale over the next 12 months, said a senior company official. The firm will use proceeds of the sale to pay off part of its Rs 3,500-crore debt.
The process is expected to start once the merger of two of its associate companies, Ashley Holdings and Ashley Investments, with Ashok Leyland are completed.
K Sridharan, chief financial officer, Ashok Leyland, told analysts the company would either partially or totally divest its stake in the companies.
He said that the firm hired investment bankers and consultants to find strategic customers and buyers. Consulting firm McKinsey is advising Ashok Leyland on better working capital management.
Among the companies in which Ashok Leyland will be diluting its stake include IndusInd Bank (in which it holds shares worth Rs 700 crore), Hinduja Leyland Finance Limited (HLFL), Albonair GmbH, Defiance Technologies and Defiance Testing & Engineering.
Ashok Leyland is the major shareholder in HLFL with 60 per cent holding, which it plans to bring down to below 50 per cent, said Sridharan. The NBFC company is also in talks with private equity firms for stake sale. Meanwhile, Ashok Leyland has partially diluted its stake in IBL and in ICICI and booked a profit of Rs 75-76 crore during the current financial year, said Sridharan.
He added that the company’s long term borrowing level currently stands at around Rs 3,500 crore and in the next two-to-three months, it will swell to Rs 4,100 crore. “If we succeed in offloading the stake, it will reduce our loan book and asset base,” said Sridharan.
He noted that in the next financial year, the firm has to repay around Rs 700 crore of debt. The offloading will help the company meet the target, said Sridharan.