A major portion of the loans given to AMW Motors are set to be converted into equities. The decision has been taken by the bankers and they are looking into RBI (Reserve Bank of India)'s strategic debt restructuring (SDR) tool for this process.
Affected by the ban on mining in the states of Karnataka, Odissa and Goa, AMW Motors has witnessed losses in the recent years. And now, the company owes a consortium of nine lenders led by IDBI bank. According to the information available with Registrar of Companies (RoC), this Gujarat-based truck manufacturer has a gross debt of Rs.1432 crore as on March 2014, up by 25%, as against March 2013.
Fall in demand for its products led to turn down in production capacity. This further led to reduced cash in-flow and ultimately failure to clear the debt.
In the financial year 2014, the firm had Rs.840 crore as revenue but had a loss of Rs.103 crore. The company has referred its debt case to the corporate debt restructuring (CRD) cell in the month of March 2013, which helped it to restructure its debt of Rs.800 in September 2013. As a result of lowered demand, company's production fell to 30 % and ultimately resulted in cash flow problems.