Hinduja Group flagship Ashok Leyland Ltd has announced plans to acquire upto 19 per cent of additional equity shares in Hinduja Leyland Finance Ltd (HLFL), the Non-Banking Finance Company (NBFC) part of the Group, from the existing shareholders, for a consideration of up to Rs 1,200 crore. It may be noted that Ashok Leyland in February this year had said that the company and other investors have entered into a Supplemental Share Purchase Agreement with Everfin Holdings, an arm of Everstone Group, to acquire the latter's seven per cent stake in HLFL.
The acquisition will effect consolidation of its holding in HLFL. The company in a regulatory filing today said that its board of directors has approved acquiring upto 19 per cent additional equity shares in HLFL, from the existing shareholders, in tranches within a period of 12 months from the date of approval, subject to necessary approvals, consents, sanctions and permissions of the appropriate authorities. The cost of acquisition will be not be exceeding Rs 1,200 crore, on cash consideration.
"The agreement(s) to acquire the equity shares in HLFL from the existing shareholders will be entered by the company in due course. As and when the company completes acquiring shares in tranche(s) and if the said acquisition exceeds two per cent or more of the equity shares of HLFL, the company will inform the stock exchanges, as required," it said.
The company's Chief Financial Officer and Whole-Time Director Gopal Mahadevan in a recent analyst call said that Hinduja Group and Ashok Leyland have jointly decided to buy off Everstone's stake in the NBFC because Everstone had invested into this in 2012 or 2013. While there was no written commitment to buy off the shares, there was an in-principle agreement that in the event an IPO does not happen, an exit will be provided to Everstone.
While the company tried for an Initial Public Offer (IPO) twice, the market was not conducive and it did not made sense to conduct the IPO just for the sake of an IPO. According to HLFL's annual report for 2018-19, Ashok Leyland, the promoter of the company has more than 61 per cent share in the company.
HLFL has registered a revenue of Rs 2,560.64 crore in 2018-19 with a 30 per cent growth from Rs 1,961.27 crore during the previous quarter. Profit after tax grew almost 51 per cent to Rs 275.64 crore in 2018-19 as compared to Rs 182.04 crore during the previous year.