Companies

‘We would like to see about ₹10,000 cr reduced from our debt’

Rajesh Kurup K Ram Kumar Mumbai | Updated on January 22, 2018 Published on September 14, 2015

JOHN FLINTHAM, Amtek Auto, Vice-Chairman and MD

Amtek Auto looking to sell non-core assets, minority stake in overseas business





Following its liquidity crisis, Amtek Auto has come up with monetisation plans that include selling of non-core businesses and real estate, a move that could fetch $500-600 million. The company is also exploring the option of selling a minority stake in its overseas business, raising another $500 million — all these in a bid to reduce its debt. Edited excerpts from an interview with Amtek Auto Vice-Chairman and Managing Director John Flintham.

Give us some details of your plans to sell non-core assets to repay debt.

We had plans in place even before the share price fell. There are two or three strings to that bow: one, we will look to sell non-core assets and non-core businesses.

Next, we will look to sell surplus industrial real estate, mainly in India. Together, we expect about $500-600 million.  The third option is 25-40 per cent stake sale in our overseas businesses to raise about $500 million. Our target is to raise about $1 billion (about ₹6,500 crore).

By how much are you planning to reduce debt and what is its impact on your debt-equity ratio?    

Ultimately, we would like to reduce it by about ₹10,000 crore in the next 12-18 months.

Our consolidated debt in Amtek Auto is at ₹12,000 crore, while the total is about ₹20,000 crore.

Right now, the debt equity is at 2:1 and post sell-off it may be much lower than one.

What are banks demanding? Are promoters required to pump in more equity in addition to ₹75 crore done already?

The banks are not asking us to sell non-core assets; that’s the management’s initiative. We have now created a $3.6-billion company of which 50 per cent is in India and 50 per cent overseas.

The investors (promoters) have always been prepared to invest in the business whenever needed. They did so in 2008, they also invested in the overseas business when it needed it. I am confident, if required, they would invest further.

Have the earlier string of acquisitions overstretched your balance sheet?

We completely disagree. We have created a $1.8-billion business overseas, we have a healthy EBITDA, we believe that we have an equity value of $2 billion.

We can sell 25-40 per cent of the business to raise quite a lot of money easily, that’s all being generated by the acquisitions we made and the synergies we brought in by combining them. I would argue that we had actually enhanced shareholder value by this.

When do you see your cash flow cycles getting streamlined?

I am seeing some green shoots in India but we are not going to see much recovery until 2016. Our overseas business continues to perform well, mainly in Germany, the UK and Japan.

Our EBITDA at 13-14 per cent is not a bad figure in the current circumstances. So, we are waiting and planning for the recovery.

Will you be able to generate the extra EBITDA to service your debt?

Firstly, we expect our customers to understand where we are. And we are not looking at increasing any prices and want to maintain good relations with our customers.

Will your tractor castings business get impacted with monsoon playing hide-and-seek this year?

We are seeing relatively flattened growth and I hope that the tractors business comes back stronger.

 

(With inputs from Beena Parmar and K Raghavendra Rao)

 

Published on September 14, 2015

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.