Amtek Auto fresh loans : Not coming from the debt trap

Amtek Auto (AML) has sought an additional loan of Rs 2400 crore from its lenders. The conditions have been set for the fresh loan requirement such as capital infusion and pledging of promoter shares. AML is seeking a fresh loan for working capital and to repay the higher expense towards existing debt.

AML's consolidated total debt stood at Rs 15169 crore as of FY15. There are about 32 banks that have an exposure towards the the the Amtek group. On the company's fresh loan requirement, lenders, led by IDBI Bank have demanded capital infusion of Rs 6000 crore instead of Rs 2400 crore loan. The lender consortium requirement is based on personal guarantee and pledging of promoters shares.

The fresh requirement for the AML's loan arises in the recently held meet with its officials and senior bankers. The lenders already appointed TR Chadha an accounting and audit firm to study the books of the company. The lenders consortium will decide further plan of action depending upon findings of AML.

According to the media reports, the AML is working on its current and projected cash flows. The company is also in the negotiating for its debt repayment schedule.

During the first week of December, JPMorgan Asset Management Company (AMC) managed to sell its debenture to the private equity firm at 15 per cent loss. The AMC had about Rs 200 crore exposure towards the AML. There were two debt schemes such as Short Term Income Fund's and India Treasury Fund.

Securities and Exchange Board of India (SEBI) is also examining the Amtek group debt crisis. In corporate governance event organised by the Confederation of Indian Industry UK Sinha, the chairman of SEBI told that the regulatory will have very important remedial measures very soon.

The share price of the AML increased by 2.84 per cent on bourses in the early trade and is trading at Rs 49.7 on intraday basis. Its stock price is almost consolidating the current market price since last three months. The company's FII holdings contracted by 556 basis points to 13.17 per cent and DII holdings too contracted by 871 basis points to 7.76 per cent during September 2015 quarter. AML's recent shareholding pattern indicates that, majority of the institutional investors will lose until the debt is not sorted out by the company and lenders consortium.

Amtek Auto is in the business of automotive components manufacturing and commercial sales. The Company is engaged in forging, grey and ductile iron casting, gravity and high pressure aluminum die casting and machining and sub-assembly. It has facilities across India, the United Kingdom, Germany, Brazil, Italy, Mexico, Hungary and the United States. The Company also manufactures components for non-auto sectors, such as the railways, specialty vehicles, aerospace, agricultural and heavy earth moving equipment.