The boards of automobile parts maker Hinduja Foundries Ltd and heavy commercial vehicle maker Ashok Leyland Ltd have approved a proposal to merge the companies.
Both Hinduja Foundries and Ashok Leyland are part of the Hinduja group. Hinduja Foundries makes grey iron castings for automobiles.
“The amalgamation will result in operational efficiencies and help realize significant cost synergies. We are confident that the roll-out of the best practices of Ashok Leyland Ltd will benefit Hinduja Foundries Ltd,” said Vinod K. Dasari, chief executive officer and managing director, Ashok Leyland Ltd.
The boards also approved the share-swap ratio in which shareholders of Hinduja Foundries will get 40 equity shares of Ashok Leyland for 100 shares held in the auto parts maker.
“1,000 2008 series GDRs (global depositary receipts) of Hinduja Foundries Ltd will get 133 equity shares of Rs.1 each fully paid of Ashok Leyland Ltd,” said the statement. “One 2016 series GDRs of Hinduja Foundries will get 4,800 equity shares of Rs.1 each fully paid of Ashok Leyland Ltd. Hinduja Foundries will continue to grow its relationships with other customers,” said Dasari.
The date for the proposed amalgamation is 1 October.
At the close on Thursday, stocks of Ashok Leyland fell 3% to Rs.81.55, while Hinduja Foundries shares were down 19.93% at Rs.44. The benchmark Sensex rose 0.14%, to close at 28,412.89 points.