The company had admitted liability of over ₹1,675 crore, whereas the successful bidder proposed to pay over ₹138 crore as upfront cash for the acquisition of the company.
“The resolution plan so approved shall be binding on the corporate debtor (AMW Autocomponent) and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan,” an NCLT division bench of judicial member Chitra Hankare and technical member VG Venkata Chalapathy said in its October 12 order.
Before the tribunal’s approval, the committee of creditors of AMW Autocomponent had approved the revival plan with 98.55% voting in favour of Steel Strips Wheels.
Gujarat-based AMW Autocomponent is in the business of manufacturing wheel rims for passenger, commercial and agricultural vehicles and has the largest single-location steel wheel rim manufacturing plant in India. The average liquidation value of the company was ₹119.61 crore while the average fair value was ₹198.37 crore.
On September 1, 2020, the Ahmedabad bench of NCLT had admitted the company for the insolvency resolution process on an application filed by its lender Indian Overseas Bank and appointed Avil Menezes as its interim resolution professional.
The company’s primary lender is Arcelor Mittal Nippon Steel India with 18.45% voting power in the committee of creditors. Other lenders include Bank of Baroda, Punjab National Bank, EXIM Bank and IDBI.
“Both the target company and successful bidders are in the business of manufacturing steel and alloy wheels, and also the fact that AMW Autocomponent is located in a totally different geography makes lots of strategic sense for Steel Strips Wheels to acquire the company through the insolvency resolution process,” said independent counsel Ashish Pyasi. “When the law was envisaged, the primary object was to save the company and maximise all the stakeholders’ value, and that is what this transaction is doing.”
Besides Steel Strips Wheels, the lender had also received a revival plan from Gladiator Consortium.
Punjab-registered Steel Strips Wheels in the business of steel and alloy wheel rims manufacturing with a presence in the northern, eastern and southern parts of the country.