Sebi slaps Rs 1.5 mn fine on Amtek Auto over failing bond redemption target

Amtek Auto, in September 2010, issued NCDs of Rs 8 billion by way of private placement memorandum which was due for redemption in Sept 2015

Markets regulator Sebi Friday slapped a fine of Rs 1.5 million on debt-ridden Amtek Auto for failing to make NCD redemptions on due date and not disclosing to the bourses about rating downgrade.

It was alleged that the auto firm had not notified the exchanges about downgrade of the credit rating, the delay in redemption and payment of interest, and certain other violations of the listing agreement, including selective redemption.

The regulator in 2016 appointed an adjudicating officer to inquire into and adjudge the alleged violations of the relevant provisions of the Sebi Act and equity listing as well as debt listing agreement, among others by the company.

Amtek Auto, in September 2010, issued non-convertible debentures (NCDs) of Rs 8 billion by way of private placement memorandum which was due for redemption in September 2015.

According to Sebi, the company failed to make the redemption on the due date of payment.

Further, the regulator noted that 56 NCD holders were paid ahead of the total 212 NCD holders in the issue.

"Thus, there is a clear admission of the company on records that it had redeemed NCDs of select investors over others," it added.

Moreover, the company has not informed the exchange about the downgrade of its rating by CARE or any other credit rating agency. However, it had intimated the exchange in October 2015 about the reasons for the downgrade of its rating by Brickwork Ratings, Sebi noted.

These actions on part of the noticee were in violation of of the ILDS (Issue and Listing of Debt Securities) Regulations and Equity Listing Agreement, it added.

Accordingly, the Securities and Exchange Board of India (Sebi) has imposed a penalty of Rs 1.5 lakh on Amtek Auto.