The Securities and Exchange Board of India on Friday imposed a fine of ₹15 lakh on Amtek Auto for failing to make NCD redemptions on due date, redeeming funds to select investors and not disclosing to the bourses about the rating downgrade.

Amtek Auto, in September 2010, issued non-convertible debentures to the tune of ₹800 crore by way of private placement. The debentures were due for redemption in September 2015. However, it was widely reported that debt-ridden Amtek Auto had failed to make the redemption on the due date (September 2015). Besides, it was alleged that the company had paid back to select rich investors such as Aishwarya Rai, David Dhawan, banks and others.

Rating downgrade

Further, it was alleged that Amtek Auto had not notified the exchanges about downgrade of the credit rating firms.

The regulator in 2016 had appointed an adjudicating officer to inquire into alleged violations by the company.

According to SEBI investigation, the company failed to make the redemption on the due date of payment. Further, the regulator found that 56 NCD holders were paid ahead of the total 212 NCD holders in the issue.

“Thus, there is a clear admission of the company on records that it had redeemed NCDs of select investors over others,” it added.

SEBI investigation has also revealed that the company has not informed the exchange about the downgrade of its rating by CARE or any other credit rating agency. “However, it had intimated the exchange in October 2015 about the reasons for the downgrade of its rating by Brickwork Ratings,” SEBI noted.

As these actions on part of the company were in violation of the SEBI norms, the regulator has imposed a penalty of ₹15 lakh on Amtek Auto and ordered it to pay the same within 45 days.