Ashok Leyland Ltd. announces an acquisition

Ashok Leyland’s stake will be 59.64% in NDL Ventures, down from 61.12% in HLFL after NDL issues shares to HLFL shareholders under the 25-for-10 swap ratio. ^[1]

The transaction does not change the accounting basis from consolidation to the equity method:

• Ashok Leyland’s consolidated financials: NDL remains a controlled subsidiary, as Ashok Leyland will retain a 59.64% stake and NDL will become Ashok Leyland’s material listed subsidiary once the scheme becomes effective. ^[2] Accordingly, the financial-services business should continue to be consolidated line by line; it does not become an equity-accounted associate merely because the operating entity changes from HLFL to NDL.
• Ashok Leyland’s standalone financials: Subsidiaries are not consolidated line by line in standalone accounts. The investment will continue to be presented as an investment in the relevant subsidiary—NDL after effectiveness—under Ashok Leyland’s existing separate-financial-statement accounting policy.

Implication: this is primarily a legal-entity and listing restructuring, with modest dilution of Ashok Leyland’s ownership, not a loss-of-control event or an accounting deconsolidation. The accounting transition would apply when the scheme becomes effective, rather than merely on the NCLT order date; the filing states that HLFL dissolves and NDL becomes the material listed subsidiary upon effectiveness. ^[2]

The NCLT-approved swap ratio is 25 equity shares of NDL Ventures for every 10 equity shares of HLFL, i.e. 2.5 NDL shares per HLFL share, with both shares having a face value of ₹10. The NCLT sanctioned the scheme by its order dated 3 November 2026. ^{[3] [2]}

A rupee valuation of HLFL cannot be calculated from the swap ratio alone. It would require either:

• the agreed value or market value assigned to each NDL share at the transaction date; and
• the number of HLFL shares outstanding, or a disclosed valuation report.

The NCLT/company disclosure specifies the share consideration but does not state a scheme value. ^[1] Consequently, the transaction’s implied HLFL valuation cannot be compared quantitatively with Ashok Leyland’s carrying value of its HLFL investment from the cited material. The carrying value itself is also not reported in the supplied Ashok Leyland balance-sheet extracts.

Conceptually:

`Implied HLFL value = 2.5 × value per NDL share × total HLFL shares`

Any difference versus Ashok Leyland’s carrying value would represent an implied premium or discount only after both values are established on a consistent date and basis. The share swap ratio should therefore not be interpreted by itself as evidence that HLFL was transferred above or below book value.

The NCLT sanction is not yet the final implementation step. The merger still requires filing the certified NCLT order and Scheme with the relevant RoC, after which the parties must complete the record-date and share-allotment formalities.

1. Obtain the certified NCLT order. The order currently available was downloaded from the NCLT website; the certified copy was still awaited in the filing. ^[4]

2. File the order and Scheme with the RoC. The NCLT has directed HLFL and NDL Ventures to electronically file the order and the Scheme in Form INC-28 with the concerned RoC within 30 days from receipt of the order. ^[5] This filing is the key procedural step for bringing the sanctioned Scheme into effect; the Scheme is described as taking effect after the certified order is filed and the related formalities are completed. ^[6]

3. Complete stamp-duty adjudication. Separately, an authenticated copy of the order and Scheme must be lodged with the Superintendent of Stamps within 60 days of receipt of the order, for adjudication of any stamp duty payable. ^[5]

4. Determine and announce the record date. The record date will identify the HLFL shareholders entitled to receive NDL shares. The Scheme provides that NDL will issue shares, without a separate application from shareholders, to those whose names appear in HLFL’s register of members on that record date. ^[7] The record date had not been disclosed in the material available. ^[8]

5. Issue and allot the NDL shares. Once the Scheme is effective and the record-date register is finalized, NDL will issue shares under the approved exchange ratio of 25 NDL shares for every 10 HLFL shares. ^[7] Ashok Leyland, as an HLFL shareholder, would receive its entitlement through this process; the shares are issued by NDL, not by Ashok Leyland. Ashok Leyland’s holding is expected to dilute from 61.12% in HLFL to 59.64% in NDL after the share issuance. ^[9]

Practical sequence: certified order → INC-28 filing with RoC → completion of stamp-duty and related corporate formalities → record-date announcement → determination of eligible HLFL shareholders → NDL allotment and subsequent listing/trading formalities. The two presently unconfirmed timing points are the date on which the certified order is received/filed and the record date.