Amtek Auto Ltd. - Quarterly/Annual Result Disclosures and Notes dated 30 Jun 2018

Background

1. The ‘Corporate Insolvency Resolution Process’ (CIRP) was initiated, on a petition filed by Corporation Bank, against the Company, which was admitted vide an Order of the National Company Law Tribunal (NCLT), Chandigarh dated July 24, 2017 under the provision of the Insolvency and Bankruptcy Code 2016(“Code / IBC”).

That pursuant thereto, on July 27, 2017, Hon’ble NCLT appointed Mr. Dinkar T. Venkatasubramanian as Interim Resolution Professional (IRP) in terms of IBC, who was subsequently confirmed as Resolution Professional (RP) by Committee of Creditors (CoC), constituted under IBC. Mr. Dinkar T. Venkatasubramanian, in his capacity as RP, has taken control and custody of the management and operations of the company with effect from July 27, 2017.

Under the CIRP, a resolution plan needs to be submitted by resolution applicant, which is to be approved by the CoC, and would further be approved by NCLT. As per the Code, the RP has to receive, collate and admit all the claims submitted by the creditors of the company. Such claims can be submitted to the RP during the CIRP, till the approval of a resolution plan by the CoC.

The ‘Resolution Plan’ wherein Liberty House Group Pte. Limited (LHG) would acquire the control in the company in accordance with the applicable laws and as defined in the resolution plan. The resolution plan was voted upon (between April 4, 2018 and April 5, 2018) & duly approved by the CoC and has further been approved by NCLT vide Order dated July 25, 2018.

Accordingly, as also covered in the ‘resolution plan’ read with the NCLT Order dated July 25, 2018, the statement of standalone unaudited financial results for the quarter ended June 30, 2018 have been continued to be prepared on a going concern basis.

As per NCLT Order read with the implementation provisions of the Resolution Plan, the Resolution Applicant and Resolution Professional shall jointly supervise the implementation of the Resolution Plan until closing date. The Resolution Professional shall act as Insolvency Professional and will be a member on the Monitoring committee till such closing date.

However, the Resolution Plan has not been implemented within the timelines as prescribed in the approved Resolution Plan. This Resolution Plan was approved by the Hon'ble NCLT and forms part of court order to be implemented. Accordingly, the lenders, who have formed the COC of the Corporate Debtors during CIRP, have sought directions from Hon'ble NCLT for reinstatement of CIRP by excluding the time spent in negotiating the Plant with LHG. This matter was last heard by the Hon'ble NCLT on January 23, 2019 and their order has been reserved. It is a consistent view of the Hon'ble NCLTs, that liquidation should be ordered only as a last resort after all avenues for a Resolution have been exhausted. It is likely that the Hon'ble NCLT will allow reasonable time to allow opportunity to negotiate with the Resolution Application who had submitted Resolution plans/ Expression of interest or to invite fresh resolution plans.

2. The above statement of standalone Unaudited financial results for the quarter ended June 30, 2018 have been prepared in terms of Regulation 33(2) of SEBI (Listing Obligation & Disclosure Requirements) Regulation 2015, read with SEBI Circular dated July 5, 2016. Since the powers of the Board of Directors stand suspended after commencement of CIRP, the above unaudited results for the quarter ended June 30, 2018 have been endorsed by Chief Financial Officer, confirming that financial results do not contain any material misstatements and thereafter approved by the Monitoring Committee and provided to the Insolvency Professional for his signing February 11, 2019 and for further filing with stock Exchanges.

3. During the Financial year 2017-18, the company has availed interim finance of Rs. 6,000/- Lakhs (Out of Total Sanction of Rs. 10,000 Lakhs) from ECL Finance Ltd at the interest rate of 15.90% p.a. The entire loan has become overdue since November 29, 2018, however, not paid till the approval of these results.

Exceptional Items and impairment losses

4. (i) During the financial year 2017-18, under the CIRP, the Resolution Professional (now designated as Insolvency Professional) and the lenders obtained valuation(s) of its entire assets from approved valuers. Based on such valuations obtained, the company assessed the need to carry out an impairment / diminution in the carrying value of all of its assets (i.e. Property, Plant and Equipment, Capital work-in-progress, Investments, Inventories, Trade Receivables, and Other Financial Assets). Company has recorded further impairment / diminution in its books of account during the current financial year, owing to no operations in few of its plants.

The provision for impairment has currently been worked out on the basis of valuations referred to in valuation reports and the Resolution Plan without any reference to determination of ‘value-in-use’. The company is in the process of determining the ‘value-in-use’.

The exceptional items as stated in Sr. No. 4 of the above financial results for the Quarter ended June 30, 2018, include adjustments on these accounts, as enumerated below: For Table, kindly refer Corporate Announcements on www.bseindia.com.

(ii) The fair value of company’s investment in Amtek Global Technologies Pte Ltd ("AGT")
has been worked out on the basis of company estimates which have been derived from:

- value from approved valuers, as obtained under the CIRP during the financial year 2017-18 and/or

- value assigned in the Resolution Plan, as pass-through to the existing financial creditors of the company, with no guarantee.

However, owing to continuing Receivership in AGT, thereby continuing non availability of latest financial statements and other financial information of the subject entity with the Company, the latest fair value could not be estimated and hence considered same as considered in previous quarter(s).


5. Creditors’ Claims:

(i) As a part of CIRP, creditors of the company were called to submit their claims to the Resolution Professional*. The summary position of the same is reproduced hereunder: For Table, kindly refer Corporate Announcements on www.bseindia.com.

(ii) The company has not provided liability towards interest and penal interest charges and any foreign exchange fluctuation on claims by financial creditors for the period post July 24, 2017, since as a part of CIRP, the claims for interest and penal interest charges and foreign exchange fluctuation can impact their claims in Form C only till the date of commencement of CIRP in the Corporate Debtor i.e. July 24, 2017. Accordingly no
provision has been considered for the same.

6. GDR Listing with London Stock Exchange:

In accordance to communication received by the Company from the London Stock Exchange (“LSE”) in respect of GDR Listing matter, pursuant to the approval of the Monitoring Committee, the company had initiated delisting process of its GDR with LSE. The necessary documents have been filed with LSE for the delisting and on February 4, 2019, company received communication from LSE. stating that the securities of the Company have been
cancelled from admission to trading on London Stock Exchange with effect from February 1, 2019.

7. The Vice Chairman and Managing Director of the Company was reappointed by the shareholders in the extra ordinary meeting held on 25th March, 2017 for a period of two years effective from 14th August, 2016. The Company based upon the legal opinion is of the view that for the purpose of the calculation of the minimum remuneration effective capital of the Company prescribed as per provisions of Schedule V of the Companies Act, 2013 would be based on the latest available audited financial statements at the date of meeting which was 31st March 2016 and same would be applicable for calculation of the minimum remuneration as per provisions of Schedule V of the Companies Act, 2013 for the year ended 31st March, 2018. The Company has accordingly calculated excess remuneration of Vice Chairman and Managing Director of the Company during the period from 01st April, 2017 to 23rd June, 2017 as Rs 3.31 Lakhs. The Vice Chairman and Managing Director of the Company has resigned during the year and therefore the excess remuneration paid/ charged to the statement of profit and loss account for the above mentioned period cannot be recovered from him, the Company will accordingly seek approval of writing off the same from the Ministry of Corporate Affairs with consequential penalty, if any and compounding fees as per provisions of Companies Act, 2013. In view of the above facts, in the absence of exact quantum of penalty and compounding fees, no adjustments for excess remuneration paid and provision for penalty and compounding fees have been made in these financials which shall be accounted in the year when the same is determined by the Ministry of Corporate Affairs.


Other matters:

8. In accordance with the requirement of Ind AS, revenue from operations for the quarter ended June 30, 2018 is net of Goods and Service Tax (GST). However, revenue from operations for the period upto June 30, 2017 is inclusive of excise duty. Accordingly revenue from operations for the quarter ended June 30, 2018 is strictly not comparable
with the corresponding quarter ended June 30, 2017.

9. The Ministry of Corporate Affairs (MCA), on March 28, 2018, notified Ind AS 115 “Revenue from Contracts with Customers" as part of the Companies (Indian Accounting Standards) Amendment Rules, 2018. The new standard is effective from April 1, 2018. The adoption of Ind AS 115 by the Company effective April 1, 2018 has no significant
impact on the financial results for the quarter ended June 30, 2018.

10. The Company is engaged in the manufacturing and sale of Auto Components for the transportation industry and considering the company’s nature of business and operations and the information reviewed by the Chief Operating Decision Maker (CODM) to allocate resources and assess performance, the company has only one reportable business segment as per the requirements of lnd AS 108 “Operating Segment" namely Auto components for
transportation industry.

11. The figures or the preceding quarter ended March 31, 2018, as reported in the Statement, are the balancing figures between the audited figures in respect of full financial year ended March 31, 2018 and published year to date unaudited figures upto the end of third quarter of that financial year. Also, the figures upto the end of third quarter of the financial year were only reviewed and not subject to audit. The figures for the quarter ended June 2017, as reported in the statement were reviewed by the predecessor auditor of the Company, whose report dated July 22, 2017 expressed an unmodified conclusion.

12. Previous period figures have been regrouped/ reclassified, wherever considered necessary to conform to the current period presentation.

Vinod Uppal
Chief Financial Officer

Dinkar T. Venkatasubramanian
Insolvency Professional