A quick look at the JP Morgan - Amtek Auto's Debt Scheme collapse and impact.

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COLLAPSE OF JP MORGAN'S AMTEK AUTO
DEBT SCHEMES
MyValueTrade

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CONTENTS SLIDES
Amtek Auto 3 - 4
JP Morgan Chase 5
Amtek & JP Morgan 6 - 8
Amtek Auto Default 9
Impact on JP Morgan 10 - 11
Impact on Asset Management Industry 12
About MyValueTrade 13 - 15

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Amtek Auto Ltd., incorporated in the year 1988, is a Small Cap
company (having a market cap of Rs 949.59 Cr.) operating in Auto
Ancillaries sector.
Amtek Auto Ltd. key Products/Revenue Segments include Auto
Components which contributed Rs 3704.61 Cr to Sales Value
(93.77% of Total Sales), Other Services which contributed Rs
246.07 Cr to Sales Value (6.22% of Total Sales), for the year ending
30-Sep-2014.
For the quarter ended 30-Jun-2015, the company has reported a
Standalone sales of Rs. 854.22 Cr., down -5.93% from last quarter
Sales of Rs. 908.09 Cr. and down -12.73% from last year same
quarter Sales of Rs. 978.80 Cr. Company has reported net profit
after tax of Rs. -157.60 Cr. in latest quarter.
AMTEK AUTO LTD.

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
Amtek Auto released two commercial papers to raise short term
liquidity.

Both papers were given a credit rating AA-*
by CARE [Credit
analysis and research]
*
The evaluation made by a credit rating agency of the debtor's ability to pay back the debt and the likelihood of default.
AA- is a high grade rating description

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JP Morgan Chase
In 2002, JPMorgan Chase established its Global Service Center in
Mumbai, providing 24x7 middle- and back-office support for every line
of business at JPMorgan Chase.
In recent years, J.P. Morgan launched commercial banking in India in
2007; in the same year, J.P. Morgan Asset Management in India
received a license to sell to retail investors in the country and launched
its first mutual fund, the J.P. Morgan India Equity Fund.
Since 2008, through the financial crisis, J.P. Morgan has helped raise
more than US$20bn for Indian corporates through domestic and
international offerings.

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AMTEK AUTO & JP MORGAN

JP Morgan bought Amtek Auto papers forming two debt schemes

JP Morgan India Treasury Fund

JP Morgan Short term Income Fund

JP Morgans total exposure to Amtek is 200 crores.

Portfolio holdings of JP Morgan as of end July shows 15.4% of
India short term income fund (430 cr) & 5.3% of India Treasury
Fund (2,534 cr) was invested in Amtek Auto

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Mid-August, Amtek reported temporary cashflow mismatch.

39% share price drop on a single day.

The auto components company's stock lost 67% in 3 weeks.

Short term income fund's NAV slid by 3.4%

India treasury fund's NAV slid by 1.7%

Credibilty rating of the Amtek bonds was slashed was slashed
from “BRW A+” to “BRW C” by Brickwork Ratings.

The reference price of the bond held by the two JPMorgan
schemes was reduced to 75% by the valuation agencies CRISIL
& ICRA.

JP Morgan restricted redemption of its two Amtek Auto debt
schemes.

Withdrawals have been limited to a percentage limit not
exceeding one per cent of the total number of units outstanding
on any business day.

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Amtek Auto Default
Amtek Auto defaulted payment in September 2015 on the 2 bonds
held by JP Morgan.

Amtek defaulted on a total bond payments of 800cr.

Credibility rating of the Amtek Bonds was further slashed.

Amtek may stand out among the biggest corporate bond
defaults in years as its acquisition binge squeezed its cash
flows.

Amtek to initiate sale of it assets to create cash flow, and also
talks are being held with many banks to arrange repayments
outstanding matured bonds and soon-to-be matured bonds.

On a relative front, one of Amtek Auto subsidiary – Castex
Technologies is under investigation for possible manupulation
of its share prices.

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Impact of on JP Morgan

JP Morgan is seeking approval from unit holders for
segregation of assets in two of its debt mutual fund schemes
namely JP Morgan India Short Term Income Fund and JP
Morgan India treasury Fund.

NAV of the existing units in the schemes would drop by the
value representing the illiquid segregated asset and all
unitholders on the record date will receive proportionate units
to reflect their interest in the value of the segregated asset.

End August, JP Morgan had allowed 3 of its corporates to exit
schemes by making 80cr available while 5 of its other large
corporates had 300cr outstanding.

Unhappy corporates are considering legal action against JP
Morgan.

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Impact on Asset Management Portfolio

Companies issuing corporate papers below AAA rating will be
most affected as investors will be wary of short term debt
schemes in future.

SEBI has got a number of MF houses and listed companies on
its scanner.

SEBI has issued directiveto keep trustees updated on quality of
debt investments and their subsequent decrease in credit
ratings.

Rationale for initiating investment in corporate bonds to be
explained in detail.

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