Hinduja Group flagship Ashok Leyland Ltd will acquire a lower amount of stake in Hinduja Leyland Finance Ltd than originally planned.
The announcement came amid heightened uncertainty resulting from the coronavirus outbreak roiling the market and minority shareholders questioning the initial proposal.
The board has decided to buy 6.99% for over Rs 390 crore (about $51 million at current exchange rate).
Automaker Ashok Leyland would now hold 69% in Hinduja Leyland Finance, which is valued at about Rs 5,600 crore, as compared with 62% before.
The tweak led to a sharp fall in the Monday trading as Ashok Leyland shares tanked nearly 20% to a 52-week low of Rs 34 on the BSE.
Shares closed 18% lower at Rs 36.
Last week, the board of Ashok Leyland had approved the acquisition of 19% stake for Rs 1,200 crore ($160 million at current exchange rate) from existing shareholders.
It said the stake will be bought from the non-banking financial company’s existing shareholders in stages over the next 12 months.
Existing shareholders of Hinduja Leyland Finance include private equity firm Everstone Capital and Hinduja Group entities
The day after the 18 March announcement, the stock price crashed more than 26% to hit one-year lows.
During the conference call on 19 March, investors raised questions on the timing, valuations, and the rationale of the deal.
On 20 March, the stock fell a further 9% to Rs 44.
Hinduja Leyland Finance largely gives loans to Ashok Leyland's customers.
The firm, which was set up in 2008, offers loans for vehicles, farm equipment and construction equipment. For 2018-19, it reported a profit of Rs 275.6 crore on revenue of Rs 2,560.6 crore.
