Inject equity before additional funds, lenders tell Amtek

Mumbai: Lenders of Amtek Auto have agreed to give additional funds to the troubled auto component-maker but have asked the promoters to bring in some equity first.

"A corrective action plan (CAP) is being worked out," said a senior official from a state-run bank.

Bankers said a decision to give additional funds to the company has been taken.

"We have asked them to first set their house in order. We have made it clear to the promoters that they need to bring in some equity first and accordingly we will give them funds," a public-sector banker said.

Amtek Auto had defaulted on Rs 800-crore foreign currency bonds repayment that matured on September 20.

The company was in discussions with the banks to raise funds to repay bondholders but they had reservations about further lending due to lack of cash flows.

In a joint lenders' forum meeting held on September 10, lenders had ordered a special audit of Amtek Auto's books before taking a call on extending further loans.

Lenders have an exposure of around Rs 8,000 crore to Amtek Auto, which is a part of the Amtek Group, a component manufacturer with global presence.

However, 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.

Majority of the lenders have exposure in form of loans, while others have by way of bond subscriptions.

Earlier this month, Amtek Auto had said that it was considering selling some assets to overcome the financial crisis it was facing.

"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, 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".