To maintain EBITDA margin of 20% for standalone India biz: Amtek

Amtek Auto is on track to raise USD 1 billion through asset monetisation programme which is expected to complete in next 2-3 months, said John Flintham, Vice Chairman and MD of the company.  

Speaking to CNBC-TV18, he said the banks are not going to take control over the business. The company is negotiating with 2-3 investors to invest money into the group and investors will come into Amtek Auto and Metalyst Forging, both.

Flintham expects the company will maintain EBITDA margin of 20 percent for standalone India business and EBITDA of 8-9 percent for overseas business.

Talking on the sales of the company, Flitham said the sales of German subsidiary Neumayer Tekfor has been delayed till October and sales are significantly down for Amtek in general. "Last quarter, passenger car market saw a big dip," he added.Below is the verbatim transcript of John Flintham’s interview to Latha Venkatesh and Nigel D’Souza on CNBC-TV18.Nigel: Just focusing on your numbers, operationally they have been pretty weak actually for the company but before we get to that can you give us an update with regards to the sale of your German subsidiary that is Neumayer Tekfor?A: I have reported last time that the processes had stalled slightly and mainly to understand the effect of the British vote in terms of exiting Europe and that stalled the process for few weeks whilst the ramifications could be understood. That is now completely being cleared and the processes are now back on fast-track. I would expect that we are not going to hit the original date of September but I would expect that sometime in October we would be having good news for you._PAGEBREAK_Latha: How much of deleveraging can we expect in October itself? A: The expectation is still the same as part of the debt restructuring plan, realignment plan. We have agreed that we would look to raise around about a USD 1 billion for the asset monetisation program of which a big portion of that is the sale of Neumayer Tekfor and the balance being sale of non-core assets in India. All of the projects are on track and we confidently predict that we will achieve the target of raising that level of money. Nigel: We also hear that banks might assume control of two subsidiaries, that is of Castex as well as Metalyst Forgings due to some default on bonds by these companies? A: There has been quite a lot of miss reporting and it gives me a good chance to tell the real story. Fundamentally, we are in discussions with the banks as being widely reported and a further development is that now we have strategically decided to bring in a key investor in to the business who will take equity as well and the banks are looking to convert some of the debt to equity. However, to say the banks are taking control of the businesses is ill-informed, incorrect. So, we are looking at and still discussing of course, a restructuring where a new investor will come in alongside banks with equity and alongside the promoters. So, all of that is happening as we speak. Latha: Who is this equity investor you are talking about and in which company of yours? A: I cannot reveal on the name of the investor. We are talking to two or three investors and we will home down on a particular investor in the very near future. In terms of where they are investing in they are going to invest all into the group. Latha: On the equity funding side how much exactly are you targeting to raise even if you cannot tell us the name of the funds? A: I think it is too early to reveal the equity stakes. It is safe to say that our target is to achieve a sustainable business going forward. The pleasing side of all this is that both the investors, all the investors in the banks have been satisfied with the business plans that we have put together, the five year business plan showing that the business is a very sustainable business and obviously what we want to do is restructure the business in-line so that the interest rate and the debt levels are sustainable for the business going forward. I think that certainly will be achieved under the new structure. Nigel: Just to clarify and put things into perspective, you are looking for an equity investment and later on convert the debt into equity held by banks, am I right on that one? A: We are looking at Amtek Auto, Metalyst, all the main ones we are looking at first and they are the ones that the investors are going to come in and we are talking to banks. We will follow that immediately afterwards by talking Catsex and all the subsidiaries. Latha: What about business, volumes, sales in the various geographies? A: Two or three things to mention, first of all, the sales are significantly down. Last quarter we did see a dip in the commercial vehicle and passenger car revenues in-line with the market and I think year-on-year (YoY) you know that the passenger car market has been relatively flat. Our revenues have deteriorated alongside that but it is pleasing to know that from operational point of view, the management teams around the world have done a pretty good job in terms of maintaining the EBITDA margins. We are looking at an EBITDA margin for India, standalone around about 20 percent which in the current climate is very good. International business has been very steady on new business coming in. The new acquisitions are proving to be very successful and we are running at around about 8-9 percent EBITDA in our overseas business which as you probably are aware is anything between 8-10 percent is reasonably good in our overseas businesses. So, overseas businesses are very stable, good EBITDAs, volumes are holding up, mainland Europe in particular, Germany and Italy volumes are extremely good and although the volumes in UK on paper are flat, if you look behind the volumes, Jaguar Land Rover (JLR) are outstripping the market and JLR is one of our biggest customers from our overseas businesses. So, I think it is a bit of mix and match in terms of who you are actually with in terms of a customer. However, overall I am pleased that the EBITDA margins are holding up. It means that management teams are addressing the volume fall off and reducing costs accordingly.