Ashok Leyland company decision to merge the loss making Hinduja Foundries Ltd with the company was not received well by the investors. Ashok Leyland Limited Company has announced the merger Hinduja Foundries Limited with itself. On Wednesday in meeting, Director of Ashok Leyland Board has approved an exchange ratio by which 100 fully paid
Hinduja Foundries Limited fairness shares of 10 will get 40 fully paid equality shares of 1 of Ashok Leyland Company. Also 1,000 2008 series GDRs of HFL will get 133 fully paid equity shares of 1 of Ashok Leyland. And 1 2016 series GDR of HFL will get 4,800 fully paid equity shares of 1 of Ashok Leyland.
Ashok Leyland CEO and managing director Vinod K Dasari said, “The integration will result in significant cost synergies. We are confident that the roll out of the best practices of Ashok Leyland will benefit Hinduja Foundries. Hinduja Foundries Limited will continue its focus to enhance its associations with other customers or customers. In fact the new arrangement will assist in providing a wider range of solutions to them”.
The truck and bus maker holds 7.57% stake in Hinduja Foundries which is part of the 53.25% promoter stake in the company. Hinduja Foundries has been in the red for a while. Net loss before tax during the 18 month period from October 2014-March 2016 was 394.25 crore including exceptional items of 136.51 crore, compared to 262.44 crore including exceptional items of 11.3 crore during the 18 month period April 2013 to September 2014. In fact, back in February 2012 itself, the company had informed the BIFR about erosion of more than 50% of its top networth.
Earlier this year Hinduja Foundries Limited’s MD & CEO Markus Wermers resigned and the company appointed D M Reddy as CEO with effect from April 4, 2016.