The Boards of two Tata Group companies, HV Transmissions Ltd (HVTL) and HV Axles Ltd (HVAL), have decided on a merger of the two firms for better synergies and increased efficiencies.

The new company will be named ‘TML Drivelines Ltd', said a joint press release issued on Monday. The merger, which is subject to approval of shareholders of Tata Motors and Tata Capital (which hold 85 per cent and 15 per cent of equity, respectively, in each of the two companies) and statutory approvals, will be effective from April 1 this year. Both companies mostly supply to Tata Motors.

“The Boards of HVTL and HVAL have decided to amalgamate HVTL into HVAL to harness synergies and graduate the two entities as a total driveline solutions provider, backed with appropriate skills and expertise. The amalgamation will not result in any redundancies. Terms and conditions of employment will remain unchanged,” said the joint statement.

Commonalities

The facilities of the two companies, which are located in Tata Motors' Jamshedpur plant complex, already function with a great degree of commonalities, said the statement. The merger will ensure harmony, optimal utilisation of resources and integrated R&D base to create new products to respond to emerging market opportunities. The new entity will operate with two business verticals, transmissions and axles, but will have common top management.

HV Transmissions currently makes gear boxes and gear box parts while HV Axles manufactures axles and axle parts for medium and heavy commercial vehicles. During the first nine months of 2010-11, HVTL and HVAL reported a turnover of Rs 205 crore and Rs 221 crore, respectively, and net profit of Rs 59 crore and Rs 65 crore, respectively.

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