Mar 08, 2018 07:57 PM IST | Source: CNBC-TV18

Amtek Auto deal will be our first big entry into India auto sector: Sanjeev Gupta

Liberty House has emerged as the top bidder for Amtek Auto. In an interview with CNBC-TV18, Sanjeev Gupta, Chairman of Liberty House Group spoke about the latest happenings in his company and sector.

CNBC TV18 @moneycontrolcom

Liberty House has emerged as the top bidder for Amtek Auto. In an interview with CNBC-TV18, Sanjeev Gupta, Chairman of Liberty House Group spoke about the latest happenings in his company and sector.

Will now go through the formalities of completing the Amtek Auto transaction, he said.

Amtek Auto is a good business. We have already acquired Amtek Auto’s UK business, he added.

The deal is all-cash and we will not take on any debt, said Gupta.

This deal will be our first big entry into Indian auto sector, he further mentioned.

Below is the verbatim transcript of the interview.

Prashant: You have emerged as H1 for Amtek assets, could you talk to us a little bit about that, where does it go from here, what is the haircut, have you been asked to sort of come up with a revival plan or where does it stand as of now?

A: We have been chosen as H1 preferred bidder which means we now have to basically complete the transaction. We have been chosen as the company to buy that business. Our resolution plan has been accepted and we need to now go through the formalities of completing the acquisition.

Ekta: Could you share with us the details of the transaction or what it might entail in terms of say taking over debt and what kind of equity value would you see in the company?

A: Those details will be disclosed once the acquisition actually completes. They are still confidential.

Prashant: Broadly could you talk to us in the ballpark, what is the kind of haircut, etc. that banks are taking on this?

A: Some of that information is there in the public domain and we are bound by agreements not to talk about it.

Prashant: Could you tell us how much debt will you take on?

A: It is all cash bid, there is no debt.

Prashant: What is the turnaround plan for the company, at least the broad outlines for it?

A: This business is a good business. It is one of the leading automobile component businesses. We have already the leading auto components business in the UK which actually includes some of Amtek's units which we acquired through the UK administration process. So it combines very well with our business, we have a clear plan on how to revive this business and how to increase efficiency and increase volumes. So as soon as we complete the process, we will implement those plans.

Ekta: Just wanted to touch upon the fact with regards to the UK assets which you had taken over of Amtek. Can you just tell us how exactly that is performing at this point and what exactly was the turnaround plan that was implemented there?

A: They are performing extremely well. The turnaround plan there was -reasonably simple, it required engagement with the OEMs. We are already the largest OEM supplier in the UK so we had already an existing great relationship with them. So in partnership with them, we made certain further investments, certain changes to the business and we got the business on a place which is now performing extremely well.

Ekta: This would mark your entry into India, in the auto component segment?

A: It will mark our entry into India. This is our first big step into India and we are all very excited about it.

Ekta: Can you tell us what kind of prospects do you see for the auto component business in India specifically and what are the synergies that we could see between Amtek Auto UK as well as your India business? I am sure there might be some cost savings that you are considering already?

A: India is one of the most prospective markets for auto. It is expected to grow rapidly and it is expected to become a key market for the sector. We have been eyeing this for some time. There is great synergy between India and UK and other parts of our portfolio, there is a lot of products which can be made in various jurisdictions - the infrastructure side, technology transfers, and platform transfers. So there is a lot of cross vertilization. Also of course there is a great deal of synergy with our businesses in steel and aluminium.

Prashant: I am going to circle back to what I began by asking you which is essentially if you could give us some outline on the bid itself. What is the structure, you said it is in all cash, you do not assume any debt, is the payment deferred payment over a number of years, just some outline of what the bid is going to look like, has looked like?

A: There is no deferred payment. Quantum and details I cannot go into but there is no deferred payment, there is no debt being taken.

Prashant: I want to ask now turn to Bhushan Power, you made the bid after the deadline ended, right? Banks rejected it, you went to NCLT, what is the status now?

A: I think the next hearing is tomorrow.

Prashant: What is your primary sort of argument going to be because you are essentially saying you are the highest bidder?

A: Our argument is that we are making a bid which we believe is a superior bid and in interest of all stakeholders - creditors and employees, it should be considered that is our basic argument.

Prashant: We understand that the confusion arose because there was some and this we understand from people in the process, that there was some confusion aabout the deadlines for the Bhushan Steel bid and the Bhushan Power bid, is that what happened, just to understand the background to this?

A: There is lot of confusion in many of these processes I do not blame anybody for that because it is the first time India is going through this, it is historic event. So obviously there will be some degree of confusion. We got caught up in that also. We chose to focus on Bhushan Power but we got caught up in some of that confusion.

Prashant: What is your understanding as far as Amtek is concerned, how much haircut are banks having take? You are saying that your bid is going to be superior, so you have some idea?

A: We have made the highest bid and we have been accepted as highest.

Ekta: I just wanted a quick comment with regards to the subsidiaries that Amtek has currently. I think Castex Technologies and Metalyst Forgings, any plans for that?

A: Yes they are synergetic businesses and it is just how they were structured previously but they all work together. So we will be targeting those as well.

Prashant: Any other assets you are looking at apart from these two?

A: I think it is fairly well known there are three assets we chose to focus on one was Bhushan Power and Steel, other was Amtek, and third was ABG Shipyard. Those are the three we focused on in the first round. Second round, we have some targets also, but it is still early days.

Ekta: You can divulge the other sectors that you might be interested in in the Indian market.

A: Sector wise, as far as NCLT process, these are the sectors actually but beyond that we are interested in financial services and we are interested in construction, we are interested in further engineering, so all the sectors we are in, which is steel, aluminium, auto, aerospace, defence, renewable energy.

Ekta: Would it primarily be an inorganic route that you are adopting to enter these sectors that you are interested in?

A: Not only inorganic, although there is a good opportunity at the moment with this turnaround which is happening in India, the focus on inorganic. However, we are globally a mixture of both organic and inorganic.

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