Tata Group firms HV Transmissions and HV Axles today said they plan to merge into single entity -- TML Drivelines -- in order to become a total driveline solutions provider.
The boards of HV Transmissions (HVTL) and HV Axles (HVAL) have decided to amalgamate HVTL into HVAL to harness synergies and make the two entities a total driveline solutions provider, backed with appropriate skills and expertise, the two firms said in a joint statement.
"With the pooling and more efficient utilisation of resources, the amalgamated company, proposed to be renamed TML Drivelines, will emerge as a stronger company," it added.
The merger plan will, however, be subject to the approval of the shareholders of Tata Motors and Tata Capital, which hold an equity stake of 85% and 15%, respectively, in the two companies, besides statutory approvals, it added.
If approved, the amalgamation will be effective from April 1, 2011, it said, adding that the new entity will operate under two business verticals, transmissions and axles, with common corporate functions.
The amalgamation will ensure complete harmony, optimal utilisation of resources and an integrated R&D base to create new products and respond to emerging market opportunities, the joint statement said.
The facilities of the two companies are located at Tata Motors' Jamshedpur plant complex and they already function with a great degree of commonalities.
"The amalgamation will not result in any redundancies. Terms and conditions of employment will remain unchanged," it said.
HVTL is currently engaged in the manufacture of gear boxes and gear box parts, while HVAL manufactures axles and axle parts in the medium and heavy commercial vehicles segment. The major customer of the two companies is Tata Motors.
During 2009-10, HVTL and HVAL reported turnovers of Rs 209.84 crore and Rs 240.15 crore, respectively, and profit after tax (PAT) of Rs 52.64 crore and Rs 63.85 crore, respectively.
In the first nine months of 2010-11, HVTL and HVAL reported a turnover of Rs 205.41 crore and Rs 221.14 crore, respectively, and a PAT of Rs 58.70 crore and Rs 64.93 crore, respectively.
