Amtek Auto has a loan of Rs 12,600 crore which the company has defaulted on, sources say. Its group companies – Castex Tech, Metalyst Forging and Amtek Ring Gear – defaulted on additional loans of Rs 12,500 crore.
CNBC TV-18 reviewed Amtek Auto’s forensic audit report. The audit was conducted by EY and the review period was from July 2015 to July 2017. Amtek Auto was among 12 major companies identified by the Reserve Bank of India (RBI) for bankruptcy proceedings. Insolvency proceedings against Amtek Auto began in July 2017.
The group has been accused of taking huge amounts of loans from various banks and then funneling the money to shell companies and personal entities of the group’s leaders.
The forensic audit report mentioned that public domain searches of email ids, addresses and directions of related parties disclosed in the financial statements indicated that these additional parties were potentially related to Amtek.
This was done in order to establish the link between potentially related parties receiving loan amounts and the leaders of the group. The group’s promoters have been accused of using potentially related parties to funnel loan proceeds.
No interest income was recorded on most of these loans. The auditors also reviewed the potentially related parties and found that there were no buy/sell transactions from most of the potentially related parties, who received the loan proceeds.
The report adds that Amtek did not provide underlying documents for the loans, which were granted to its potentially related parties by Amtek. “No underlying supporting documentation was provided by Amtek auto for loans and advances,” the forensic audit report said.
The company has also been accused of showing inflated asset values to its creditors.
The report also mentioned that the company issued debit memos to original equipment manufacturer (OEM) customers due to the development of designs and prototypes of new products and their variants. But these debit notes could not be recovered because the customers had not accounted for these invoices.
The Ministry of Corporate Affairs was seeking to recover Rs 2,320 crores from the group’s promoters. The ministry also asked the Serious Fraud and Investigations Office (SFIO) to conduct an investigation into Amtek Auto’s non-payment case.
The Ministry of Corporate Affairs has requested the freezing of movable and immovable assets of Managing Director Arvind Dham, Trustees Gautam Malhotra, Deshpal Singh Malik, John Ernest Flintham, Chief Financial Officer Vinod Kumar Upal and Corporate Secretary Rajeev Raj Kumar.
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