The management of debt-laden auto-component maker Amtek Auto is in talks with financial investors to get equity investments into the troubled company. With this move, combined with the earlier announced partial stake sale in its overseas business and sale of non-core assets in India, the management is aiming at reducing the company’s debt by almost two-thirds from its current level of close to Rs 15,000 crore.
“We recognise as a company and as the management team that we need to further reduce our debt. We recognise the importance of matching our debt with the future operating income. With this in mind, we feel we need to further reduce the debt of the company. Therefore we have already entered in talks with a number of financial investors to disclose a significant capital contribution in to Amtek Auto,” Amtek Auto vice-chairman John Flintham told investors in a post earnings call.
“Informal due diligence has already begun with potential investors, and we are limiting that to probably two or three. Our target is to reduce our debt by close to two-thirds from where we are today,” he said. At the end of March, the company had a net debt of Rs 14,725.3 crore on its books, compared to Rs 13942.7 crore at the end of September 2014. With the high level of debt, finance costs for the beleaguered company jumped 69% during the quarter ending March from the same period last year.
For the January-March quarter, Amtek Auto reported a net loss of Rs 528.7 crore compared to a net profit of Rs 129.8 crore in the same period last year. The steep decline in performance came in mainly due to an exceptional loss of Rs 439 crore, along with a sharp fall of 32% in its top-line, taking its total income to Rs 651 crore as against Rs 955 crore in the period last year. In the January-March period of 2015, the company had posted an exceptional gain of Rs 180 crore. Ebitda for the company saw a fall of 53% and stood at Rs 120.6 crore compared to Rs 255 crore.
After the earnings, shares of Amtek Auto lost 7% of its value intra-day on Tuesday, and closed 6.78% lower on the BSE. The stock has declined nearly 80% in last one year from Rs 160 level due to losses for last four quarters.