Executive Context & Challenge
A prominent automotive forging and casting enterprise in South India encountered severe working capital erosion following supply chain disruptions and escalating raw material costs. With outstanding consortium bank exposure exceeding ₹48 Crores, accounts slipped into non-performing asset (NPA) status.
The client was confronted with:
- Imminent SARFAESI possession notices and coercive recovery action by lenders.
- Chronic cash flow drying, threatening 400+ manufacturing jobs.
- Accumulation of penal and compound interest compounding liabilities exponentially.
Aakkam’s Strategic Intervention
Aakkam Corporate Solutions was mandated as the sole turnaround advisor to orchestrate enterprise survival and recapitalization.
1. Techno-Economic Viability (TEV) Study
We conducted an urgent ground-level operational audit, decoupling non-viable production lines and validating that the core forging machinery retained a robust customer order book if unburdened from unsustainable interest charges.
2. Consortium One Time Settlement (OTS) Negotiation
Representing the promoter group before the lead consortium bankers, Aakkam submitted a rigorous compromise proposal:
- Interest & Penalty Waiver: Advocated for waiver of 100% of accumulated penal interest and unapplied compound interest.
- Settlement Structuring: Negotiated an all-inclusive OTS quantum of ₹28 Crores (representing a 42% haircut on gross book liabilities).
- Staged Compliance Runway: Secured a 9-month phased payment schedule allowing the promoters to arrange liquidity without distress asset firesales.
3. Fresh Working Capital & Management Re-alignment
Simultaneously, Aakkam arranged ₹10 Crores in structured mezzanine funding and vendor bill discounting facilities to inject fresh liquidity upon OTS execution.
The Outcome
- Debt Relief: Total debt reduction of ₹20 Crores with full lender No Dues Certificates (NDC).
- Employment Preservation: 400+ specialized engineering jobs protected.
- Return to Profitability: The facility rebounded to positive EBITDA within 2 quarters post-settlement.