Lenders to Amtek Auto (AAL) will consider a corrective action plan (CAP) to revive its fortunes, taking into account possible cash flow mismatches it could face over the next 18-24 months.

The lenders consortium, under the aegis of the joint lenders forum (JLF), has appointed merchant bankers to draw up CAP for not only for AAL but also some of its subsidiaries. A senior public sector banker said the Delhi-based auto components manufacturer is staring at cash flow mismatches arising from a downturn in demand in the global auto market, strain on the balance sheet due to a string of acquisitions it made over the last year or so, and impending redemption of bonds worth about ₹800 crore.

Banks are mandatorily required to form a JLF if principal or interest payment becomes overdue for 61-90 days in a loan account, where their aggregate exposure (AE) is ₹100 crore and above. They also have the option of forming a JLF even when the AE in an account is less than ₹100 crore and/or when the principal or interest payment is overdue for more than 30 days but account showing signs of incipient stress or when principal or interest payment overdue between 31-60 days.

The banker quoted above said “At a meeting of the JLF about a month-and-a-half ago, the promoters assured us that they will pump funds into the company.

“Though there could be cash flow mismatches ranging from 18-24 months, the company could come out of this situation much earlier,” the banker quoted above said. All loan accounts taken up by JLF or for corporate debt restructuring are required to undergo an audit as a matter of routine before fresh funds are sanctioned.

Meanwhile, the promoters seem to be making good on the promise of capital infusion. On Thursday, AAL allotted 44.37 lakh equity shares of face value ₹2 each at a premium of ₹167 aggregating to about ₹75 crore to promoters group companies by way of preferential allotment.

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