Lenders to the crisis-ridden Amtek Auto will soon decide on a corrective action plan (CAP) based on a special audit report likely to be submitted in the coming week.
After the company landed in a financial soup, bankers had entrusted the mandate of conducting a special audit to TR Chadha and Co., a city-based auditing and accounting firm.
The New Delhi-based auto component maker had defaulted on repayment of Foreign Currency Bonds (FCCBs) worth Rs 800 crore last month, signalling a crisis.
There are over 80 investors in the now-defaulted bonds.
The domestic subscribers to the bonds include Axis Bank, Karur Vysya Bank, Syndicate Bank, and Corporation Bank among others.
“The final special audit report on Amtek Auto will come out by end-October,” a senior official from a public sector bank told PTI.
Bankers said once the special audit is out, they will be in a position to decide on the quantum of fresh loans they would extend to the auto component manufacturer.
“The corrective action plan is being worked out but it is taking some time. Once the audit report is out we will decide on how much money we will be giving to the company,” said another state-run bank official.
Lenders had agreed to give additional funds to the debt-laden company but asked the promoters to bring in some equity first.
“We have made it clear to the promoters led by Arvind Dhamm, that they need to bring in some equity first and accordingly we will give them funds,” a public-sector banker had earlier told PTI.
Amtek Group owes over Rs 26,000 crore to 32 banks including State Bank of India, ICICI Bank, Axis Bank, Bank of Baroda, Bank of India, IDBI Bank, Bank of Maharashtra and UCO Bank, among others.
Banks have an exposure of around Rs 8,000 crore to Amtek Auto, which is the flagship of the Amtek Group.
Against this, its FY 2014-15 revenue stood Rs 20,000 crore.
The company, which has global presence, is in urgent need of a liquidity infusion of Rs 800 crore to redeem foreign bonds.
Trouble mounted for the company after leading fund manager JP Morgan Mutual Fund in August restricted withdrawals from two of its funds.
JP Morgan restricted withdrawal of two of its debt schemes — the short term income fund and India treasury fund — which have a collective exposure of about Rs 200 crore in Amtek Auto.
Majority of these lenders have exposure in form of term loans, while others have by way of bond subscriptions.
Last month, Amtek Auto had said it was considering selling some assets to overcome the financial crisis.
“As of date, the company is considering various means to de-leverage the balance sheet, including selling of non-core business, minority stake in overseas companies and some industrial real estate assets within the business,” the company had said in a BSE filing last month.
In September, the promoters of the Delhi-based company had infused Rs 75 crore to mitigate the “temporary cash flow mismatch”.
The promoters also said that they will infuse more funds in future if required.
The company had attributed the financial stress to the current market scenario “which caused decline in the sales and profit margins of the company”.
As the crisis deepened, global rating agency S&P in September cut Amtek Global’s, its Singapore-based international arm’s credit ratings, citing “heightened liquidity risks” at its parent Amtek Auto.
“The downgrade reflects heightened liquidity risks at India-based parent company Amtek Auto.
“We see a risk that Amtek Auto may not have sufficient liquidity to meet its interest or debt obligations, which could lead to a default at Amtek Auto, or a debt restructuring,” S&P Rating had said.
The group is also under the Sebi scanner after it has been found that its subsidiary Castex Technologies allegedly manipulated share prices.
During the crisis, the Amtek counter had fallen by 70 per cent, following exchange decision to exclude the company’s F&O contracts from equity derivatives segment, with effect from October 30.
On September 3 alone, the Amtek Auto counter had crashed 35 per cent.