MUMBAI, AUG 31 : Amtek Auto Ltd., the New Delhi based auto component maker, extended its 68% fall this month amid concerns the company will be unable to repay bond holders
Amtek Auto earlier this month clarified it was facing temporary cash flow mismatch owing to drop in its sales and profit margins of the company.
Though the founders of the company have infused Rs 750 million to tide over the cash flow problem with a promise to infuse more funds when required some investors including the JP Morgan Asset Management company have written off their investment in debt of Amtek Auto after rating agencies suspended their rating citing lack of cooperation from the founders of the company.
Two of JP Morgan Mutual Fund's debt schemes, Short Term Income Fund's and India Treasury Fund had to take a hit on their portfolios which had Amtek Auto's debt papers. The schemes had to partially write-down the value of their investments in these schemes.
As a result of this partial write-off, Short Term Income Fund's net asset value (NAV) showed a drop of 3.4% while its India Treasury Fund's NAV showed a drop of 1.7%.
AMFI, the industry trade body and Value Research, a fund industry analytics company, showed that JP Morgan MF had a combined exposure of Rs 2 billion in Amtek Auto's debt papers.
Amtek Auto debt earlier this year was rated AA- by Care Ratings. However, earlier this month Care suspended its coverage of the company saying the company was not sharing information crucial for its continuing ratings opinion.
Bond holders of Castex Technologies Ltd, the overseas unit of Amtek Auto's, are planning to sue the company alleging manipulation of the stock price, Mint newspaper reported earlier this month.
At 11:55AM, Amtek Auto slipped 2.3% to Rs 51.95 on the Mumbai stock exchange extending its 67% drop earlier this month. The 30-share Sensex index rose 0.03% to 26,400.22. The index has fallen 6.12% this month.
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