AMW Auto Component’s lenders, led by IDBI Bank, seek to sell the firm
Mumbai: Eight lenders who jointly took control of debt-laden AMW Auto Component Ltd—a unit of truck maker AMW Motors Ltd—in June, have put it up for sale, two people aware of the development said.
AMW Auto Component had debt of Rs724 crore as of 31 March 2016, according to data from the company’s filings with the registrar of companies (RoC).
In June 2016, the lenders had converted some of their loans to the company into equity under strategic debt restructuring (SDR), ending up with a 51% stake. Lenders had approved invoking SDR in February.
“The consortium, which is led by IDBI Bank Ltd and which includes seven other state-owned banks, has taken over the company under the SDR mechanism and they have initiated the process to seek a buyer for a controlling stake in the company. IDBI Bank had invited expression of interest (EoI) from interested parties last month, to sell a controlling stake in the company,” said one of the two people mentioned above, declining to be named.
IDBI Bank holds around 10% stake in the company post-SDR, he added.
AMW Auto Component and lenders started work on a debt restructuring programme under a corporate debt restructuring (CDR) mechanism in 2013. However, the company could not comply with various conditions including financial milestones stipulated in the package, resulting in the lenders invoking the SDR mechanism.
AMW Auto Component reported a revenue of Rs332.6 crore in 2015-16, against Rs264.9 crore in the previous year, data from RoC filings show. In 2015-16, it reported a loss of Rs47 crore, as compared to a profit of Rs72 lakh in the previous financial year.
According to the second person cited above, who also requested anonymity, buyers will have to invest around Rs100 crore in the company to acquire a controlling stake. “In terms of enterprise valuation, they (consortium) are looking at a figure of around Rs800-900 crore,” he said.
Emails sent to IDBI Bank and AMW Motors went unanswered.
AMW Auto Component manufactures wheel rims for cars, trucks, tractors and other vehicle categories.
The company also manufactures components for general engineering industries. It also manufactures skin panels, inner panels and compressor shells.
The company has a factory at Bhuj in Gujarat. The company has an installed capacity of 15 million wheel rims per year for a range of automobiles.
Banks have been seeking buyers for the parent company AMW Motors too.
Last May, Business Standard reported that a consortium of lenders to AMW Motors was in discussions to sell a 51% stake in the debt-laden truck maker to Russia-based Kamaz Group for $50 million.
Earlier in December 2015, Mint had reported that the company was in talks with Kamaz to sell a significant minority stake.
AMW’s product range covers a range of heavy-duty applications in mining, construction, power, petroleum, roads and highways, other infrastructure projects and general cargo transportation.
The company competes with Tata Motors Ltd and Ashok Leyland Ltd in various segments of the truck market