CORPORATE GUARANTEE GIVEN TO ASSOCIATE COMPANY
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Agribio Spirits Ltd has extended a Corporate Guarantee of Rs. 70.00 Crores to a consortium of banks led by Punjab National Bank on behalf of its associate company, Agribiotech Industries Limited. The guarantee covers Cash Credit facilities availed by Agribiotech Industries Limited. The transaction is described as being done at arm's length basis, though promoters have an interest through their shareholding and directorship in the associate company. The company states there is no immediate impact on Agribio Spirits Ltd, except in the event the associate company fails to meet its repayment obligations.
Shareholders should note that Agribio Spirits is exposing itself to a contingent liability of Rs. 70 Crores for its associate company. If Agribiotech Industries defaults on its loans, Agribio Spirits would be liable to cover the amount, which could affect its own financial position.