Ashok Leyland to Dispose of 23 Joint Ventures in Attempt to Cut Debt
Published On Mar 11, 2016
Ashok Leyland has been in the news for some time now over joint venture (JV) issues. Recently, the firm had faced a breakdown in its relationship with Nissan, its partner in an LCV collaboration. The two of them are currently locked in a legal standoff over the misuse of Ashok Leyland's factory in Chennai.
However, this isn't the only JV that the truck maker has been facing problems with. Reports have emerged that the firm is sweeping away 23 of its joint ventures in total, leaving only four intact. The brand is facing heavy debt, and hopes to relieve some of it by adopting this current strategy. It will now be narrowing its focus to ventures central to its business.
Over the past year or so, reports have surfaced about a continuous effort by the company to lighten debt by disposing non-core assets. Between 2013 to 2015, Ashok Leyland managed to bring its debt down from Rs.4,690.32 crore to Rs.3,349.72 crore. Apart from going after unfruitful ventures, it has also targeted employees, and axed a number of its executives through a voluntary retirement scheme.
In March last year, the brand had exited its shareholding in two major ventures, Ashok Leyland Wind Energy and Avia Ashok Leyland Motors. Prominent firms that the company will now be terminating include Ashley Alteams India, an aluminum die casting manufacturer and John Deere, a construction vehicles maker.
“We evaluate all subsidiaries continuously for their performance and relevance, and then take decisions on the basis of strategic fit. There is no such mandate to hive off all subsidiaries. This is normal procedure for any business,” said a spokesperson for the company.