India's third largest heavy commercial vehicle (HCV) manufacturer Asia Motor Works Ltd (AMW) with its manufacturing plant is Kutch district has got nod from Gujarat High Court for demerger into two companies for for better and efficient management and attracting investments.
The Scheme of Arrangement for demerger under Sections 391 to 394 of the Companies Act, 1956 was approved by the Justice Abhilasha Kumari last week.
Following this approval the AMW would demerge into AMW Motors Ltd (AMWML) and AMW Auto Components Ltd (AACL).
AMW is primarily engaged in the business of manufacturing, retailing, buying, selling, importing, exporting, and dealing in motor vehicles, components, trucks, tractor chassis, machineries, automobile fitment, to name a few.
After the demerger the heavy commercial vehicle division of AMW would vest with AMWML while the auto component divisions would go to AACL. The demerger was sought for better and efficient management of the resulting undertakings. AMW had further contended that demerger would lead to pooling of investment interest in the resulting companies and would increase the ability to make use of, and benefit from, the asset base in a more efficient way. It had further said that the scheme of arrangement would enhance the equity value of the demerged company's shareholders directly and reduce its liabilities due to the transfer of entire liabilities and obligations pertaining to the demerged undertakings, thereby resulting in lower debt serving and support from the undertakings.