Auto parts maker Amtek Auto Ltd., one of the 12 stressed companies flagged by the central bank for insolvency proceedings, is in urgent need of funds to run its operations, according to a professional appointed to chart out a resolution plan.
Dinkar Venkatasubramanian, partner at EY, who has been entrusted with the management of the company, said in an exchange filing that Amtek Auto appears to be operating at a very low level of capacity utilisation for the past few months.
“There is an immediate working capital requirement in the company,” he said.
The National Company Law Tribunal in July appointed Venkatasubramanian to helm the affairs of the company after proceedings were initiated against Amtek Auto under the insolvency code and its board of directors stood suspended.
The car parts maker is the only large stressed account from the automobile and ancillary sector on the list. While its peers gained from a steady growth in India’s passenger vehicle sales to 3 million units over the last five years, Amtek’s fortunes went in reverse gear. A string of overseas acquisitions left it under a pile of debt. The figure stood at Rs 7,800 crore at the end of March 2016, as per its annual report. Amtek Auto also owes Rs 2,100 crore to bondholders and overseas lenders, the report added.
The company’s losses widened to Rs 889 crore in the quarter ended June, as its operating margin halved on faltering sales. To cut interest costs and debt, the company’s unit Amtek Global Technologies Pte. Ltd. had agreed to sell its U.K.-based plants to Liberty House Group.
The resolution professional has sought cooperation of stakeholders to keep the company afloat and avoid any possible delisting of shares for non-payment of charges.
I request you to not initiate any action for delisting of shares of AAL for non-payment of any fee till completion of CIRP process within 280 days from the date of admission or with extensions for a maximum period of 90 days under IBC.Dinkar Venkatasubramanian, Interim Resolution Professional, Amtek Auto
The interim professional will first form a committee of creditors of Amtek Auto, including banks and bondholders, following which the committee will appoint a final professional to work on a resolution plan. The plan would need approval of over 75 percent committee members within a maximum 270 days from July 24, when the case was admitted. If that fails, the company goes into liquidation.
Three hours before Venkatasubramanian’s letter was submitted to the Bombay Stock Exchange at 5.41 p.m. on Wednesday, shares of Amtek Auto jumped as much as 10.2 percent and ended the day 9.8 percent higher on the BSE. The stock has seen an increase in volatility since it was selected as one of the 12 large bad accounts by the RBI for insolvency action.
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