Leyland To Hive Off Castings Subsidiary
In a restructuring move, commercial vehicle giant, Ashok Leyland Ltd has mooted the hiving off of its ductron castings unit. The company also proposes to transfer its investment portfolio to separate holding companies.
Ashok Leyland is planning to transfer its ductron castings unit in Hyderabad to a separate subsidiary company to be promoted soon.
The company plans to seek shareholders' approval to invest up to Rs 25 crore in the equity capital of the subsidiary. The operational details of the hive-off proposal are expected to be finalised by the board of directors within the next few months. This is part of the overall strategic plans drawn up by the company for the ductron castings unit. It is learnt that the hive-off of the castings unit is being considered to exploit its full potential. Expansion and fresh infusion of technology are also being considered for the unit. Ashok Leyland had taken over the Hyderabad castings unit as a sick company in 1980. The unit currently employs over 700 workers, and generated a revenue of Rs 35 crore last year. In another unrelated exercise, group companies Ashok Leyland, Ennore Foundries and Ashok Leyland Finance have decided to consolidate all their investments by transferring them to separate holding companies. The three companies have jointly promoted Ashley Holdings Ltd and Ashley Investments Ltd for the consolidation of investments.
Ashok Leyland plans to seek shareholders' nod to invest up to Rs 15 crore each in the equity capital of these two companies. "The transfer of investments into a holding company is purely an issue of corporate governance and will not have any impact on the profit and loss account," says officials of Ashok Leyland. Ashok Leyland holds investments in over a dozen companies including Automotive Coaches and Components, Shriram Transport Finance, Lanka Ashok Leyland, Ashok Leyland Information Technology and the Hinduja-owned Gulf Oil India. Similarly, Ashok Leyland Finance holds sizeable investments in Aasia Securities, IndusInd Bank, Hinduja Finance, Techtran Polylenses and Ashok Leyland Information Technology. All these investments are now proposed to be consolidated gradually under the two holding companies.