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Automotive Axles surged 5.86% to Rs 1,729.60 after the company has entered into a binding memorandum of understanding (MOU) with Meritor HVS (India) to restructure its commercial operations.
According to the company's stock exchange filing, the revised agreement will allow Automotive Axles to directly supply products to certain customers who were previously serviced through MHVSIL.
These customers, primarily original equipment manufacturers (OEMs), have been sourcing products manufactured by Automotive Axles through MHVSIL under an older supply agreement dating back to 27 February 1999.
Under the new arrangement, the company will now engage with them directly, ensuring business continuity without any changes to product specifications, pricing, or service terms.
The agreement comes after shareholders rejected certain related-party transactions between Automotive Axles and MHVSIL, necessitating this revised commercial understanding. The MoU also supersedes prior arrangements concerning supply and technical assistance between the two entities.
Additionally, the company has proposed a services agreement with MHVSIL, under which the latter will provide marketing, business development, engineering, product development, account management, and relationship-related services to Automotive Axles.
The development is expected to strengthen Automotive Axles' customer base and operational independence, positioning it for greater market control while leveraging MHVSIL's technical expertise.
Automotive Axles (AAL) is a joint venture of Kalyani Group and Meritor Inc., USA. With manufacturing facilities located at Mysore (Karnataka), the company is currently the largest independent manufacturer of rear drive axle assemblies in India. The company has also expanded its footprints in North India with its plants at Pantnagar and Jamshedpur.
The company's standalone net profit rose 1.1% to Rs 39.58 despite a 2% decrease in revenue from operations to Rs 530.74 crore in Q3 FY25 over Q2 FY24.
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