 "Hindujas' share sale plan takes off")
The disinvestment of shares held by Ashok Leyland follows a weak December quarter in which the company made a Rs 82 crore loss and saw low demand for its trucks from Indian consumers. Company sources say the group expects to generate Rs 500 crore through the sale of shares in Hinduja Finance and a minority stake in Indusind Bank and ICICI Bank over the next 12 months.
The company has a debt of Rs 5,000 crore, and the stake sale will help it tide over the current crisis. Stake sale is important as the company is saddled with 10,800 vehicles as inventory and is giving massive discounts to push sales.
During the December quarter, the company even sold shares in IndusInd and ICICI Bank, which led to a one-time gain of Rs 75 crore. Further, the firm sold stake in Hinduja Leyland Finance to Ashley Holdings/Investments (group companies) and booked gains of another Rs 75 crore. According to company sources, the pricing of the Hinduja Leyland Finance transaction was in line with the recent private equity deal in the company.
According to analysts, the implementation of stake sale is important for the company before the investors turn constructive on the business prospects of the firm.
The group is also in the process to sell its 49 per cent stake in Saudi Arabia-based lubricant company Petromin for close to Rs 1,860 crore. This money was to help the group to fund the takeover of Houghton International, which the group bought for about Rs 5,580 crore or $ 1.05 billion in November 2012. A group official said they are still awaiting any news on the sale of shares in Petromin.
According to sources, in spite of the slowdown faced by Ashok Leyland, the group is still looking for merger and acquisition (M&A) opportunities in automobiles. Two of its major joint ventures with Nissan and John Derre are expected to break even in the next two years.