Amtek Auto share selloff on FCCB trouble

business-standard-Share price of auto component maker, Amtek Auto, dropped 12.45% today on reports of a default in repayment of loan repayments related to foreign currency convertible bonds (FCCBs) of $70 million. The company, however, clarified that there is no such problem.

“The company has not issued FCCB of US$70 million. This statement is factually not correct. The company has been reporting all the significant and material information to the exchanges,” Amtek said in a filing to the Bombay Stock Exchange. The company’s share price closed at Rs 133.65, closer to its 52 week low of Rs 129.20.

Lenders to the company, however, are reported to have formed a joint lender forum (JLF) to discuss the issue of FCCB at Amtek Auto, CNBC-TV18 quoted RK Gupta, executive director of Bank of Maharashtra as saying. “They are facing some liquidity problem definitely and JLF has been formed. JLF will meet. Whatever corrective action plan is there, that we will decide and we will implement it”, Gupta said adding that the bank has Rs 1,200 crore exposure to the Amtek Group. Other lender banks in this forum are Bank of India, Karnataka Bank and Andhra Bank.

Last month, rating agency CARE Ratings revised the rating for long term loans and non-convertible debentures of Amtek Auto from “AA” to “AA-“. The long term bank facilities (loans) are pegged at Rs 7,398 crore. It includes the external commercial borrowings as well.

Elaborating on rating rationale, the rating agency said the revision in the LT rating takes into account the decline in financial profile marked by drop in sales and profitability. It also factors in the risks related to aggressive pace of acquisitions made by the company in the recent past.

Going forward, continued scale-up of operations, improvement in overall gearing and the extent of Amtek Auto’s exposure to its subsidiaries/business associates will be the key rating sensitivities. Further, the continuity of recovery of demand in the auto sector shall also be key rating sensitivity, CARE said.

Amtek, which follows the October-September accounting year, reported net sales of Rs 3,704 crore in the year ended September 2014 and a profit of Rs 323 crore during the year.

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Pramod Baviskar

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