Mumbai: Automotive Axles, an automotive parts maker, recently faced strong opposition from its shareholders. The company, which is a partnership between the Kalyani Group and Cummins, wanted approval for a deal worth ₹2,500 crores (about $300 million) with Meritor HVS India (MHVSIL) for the financial year 2026. However, a large majority of investors—79% of public institutions and 88% of individual investors—voted against this plan.
Proxy advisory groups, which help investors make decisions, were against the deal. They believed all business should be done through the main company instead of a separate joint venture to benefit all shareholders. MHVSIL is a partnership between Meritor Heavy Vehicle Systems, a subsidiary of Cummins, and BF Investment, part of the Kalyani Group. MHVSIL plays a crucial role in selling Automotive Axles’ products both in India and abroad.
A corporate governance firm called Institutional Investor Advisory Services India (IiAS) also opposed the deal, stating that there was no clear need to use a separate company for distribution. They suggested that the business should be conducted directly through Automotive Axles to ensure all shareholders receive profits. Although MHVSIL and Automotive Axles share the same partners, the Kalyani Group and Meritor have larger stakes in MHVSIL than they do in Automotive Axles.
IiAS emphasized that the distribution network should work directly with Automotive Axles, allowing all shareholders to benefit from earnings. Automotive Axles’ shares have fallen 7.3% in the past three months, while the Nifty Auto index dropped 9.4%. The proposed deal included sales and purchases of goods, tools, and assets, as well as trading export licenses and other transactions.
In defense of the agreement, Automotive Axles claimed that this partnership would help speed up the development of new products and improve their chances of gaining more business.
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