Three months after Amtek Auto Ltd was taken to the bankruptcy court, State Bank of India has initiated bankruptcy proceedings against its subsidiary Castex Technologies Ltd, three people familiar with the development said.
Castex Technologies, a Haryana-based iron casting company, was one of the 29 cases identified by the Reserve Bank of India (RBI) for early resolution through any of its schemes before 13 December, failing which cases will be filed against these companies under the insolvency and bankruptcy code at the National Company Law Tribunal before 31 December.
Amtek itself is one of the 12 companies identified by the Reserve Bank of India (RBI) for early bankruptcy proceedings.
The country’s largest lender is also looking to refer the two other Amtek units—Metalyst Forgings Ltd and Amtek Ring Gears Ltd—to NCLT, the people cited earlier said.
The move to refer these subsidiaries to the NCLT comes after Amtek Auto received interest from several investors to buy a strategic stake in the entire group.
Investors including Bharat Forge, Liberty House, Blackstone India, TPG Asia, Bain Capital, Farallon Capital Managment LLC, have submitted their expressions of interest in the group, said one of the persons cited earlier.
An email sent to Farallon Capital went unanswered. Amtek Group and all the other investors declined to comment. Lenders believe that it is easier to work out a resolution package if all the subsidiaries are admitted to NCLT.
“This is a good move as it consolidates assets. Big groups have different assets lie in different subsidiaries. To get a better value, assets need to be in one place,” said Shishir Mehta, partner, Khaitan & Co.
With consolidated assets worth Rs26,080 crore, Amtek Group has operations across forging, iron and aluminium casting, machining and sub-assemblies.
At the end of March 2017, Castex had a total debt of Rs6,285 crore, Metalyst had a debt of Rs3,473 crore and Amtek Ring Gears Ltd had a debt of around Rs2,000 crore.
Since the firm defaulted on bond repayments of close to Rs800 crore in September 2015, Amtek has been trying to sell various group businesses to reduce the debt on its books.
In February, its lenders are understood to have asked it to either repay loans or convert outstanding debt into equity shares or warrants. The holding company owed at least Rs14,074 crore to various lenders as of March 2017.
SBI Capital Markets and IDBI Capital Markets were appointed to find investors to acquire shares in the firms. On 22 July, its subsidiary Amtek Global Technologies Pte. Ltd agreed to sell its plants in the UK to Liberty House group.