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As part of its restructuring plan, commercial vehicle major Ashok Leyland has divested its entire stake in company's Czech Republic subsidiary Avia Ashok Leyland. The company made a cash realisation of $10.96 million.
As part of its move to sell its non-core assets, Ashok Leyland placed two of its foreign subsidiaries on sale including Albonair GmbH and Avia.
In an announcement today, Ashok Leyland said that it had divested its entire stake to a strategic investor as part of restructuring of investment in subsidiaries.
It may be noted, due to the current global economic slowdown, Ashok Leyland Limited ceased production activities at the Avia's plant at Letnany, Prague as of July 31, 2013.
In 2006, Ashok Leyland had acquired the Avia Truck Business Unit, a leading vehicle manufacturer in Europe, for around $35 million. According to Ashok Leyland's balance sheet diminution in the vlaue of investments in AVia Ashok Leyland Motors was Rs 4.87 crore in 2013-14 as compared to Rs 1.17 crore a year ago.
Earlier the management said, Avia was bought for two reasons; first, it will serve the European market and second, its cab technology. The Entire Boss platform that the company launched was done through Avia's cab, otherwise it could not have been launched.
"We would have incurred huge money in developing this cab, if we didn't have Avia's strengths. We earned value of the acquisition by way of the new cabin," said a company official.
Earlier, the company said that after bringing down the debt level by nearly 36 per cent, commercial vehicle major Ashok Leyland is now looking to reducing by 50 per cent from the current level in the medium term. The company has been selling its non-core assets, and has taken measures to reduce working capital and optimise costs, which it said it will continue.
Ashok Leyland said that the company had set a target to bring down the debt-equity ratio to 1:1, by end of March 2015, but was able to achieve it by December 31, 2014 itself.
The company said its medium-term (around three years) plan is to bring down the debt:equity ratio to 0.5:1.
The company's debt was reduced to around Rs 4,000 crore from a peak of Rs 6,280 crore in August 2013. This was done through working capital reduction, selling non-core assets, improving profitability, funding through QIP, cost optimisation, cost reduction, reducing material cost and other steps that the company would continue to take, a company official said earlier.
The company has also divested 48.5% equity stake held in Ashok Leyland Wind Energy Limited (ALWEL), consequent to which, the shareholding of the Company in ALWEL has come down from 60% to 11.5%. As part of the transaction, the company has also sold its windmill assets on slump sale basis.
Both Avia Ashok Leyland Motors. and ALWEL have ceased to be subsidiaries of the Company with immediate effect.
