Announcement under Regulation 30 of LODR for proving a loan upto Rs. 10 crore to WOS.
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Bai-Kakaji Polymers has signed a loan agreement with its wholly-owned subsidiary Mundada Polymers Private Limited (MPPL) to lend up to Rs. 10 crore. The loan carries an interest rate of 7.50% per annum, has a tenor of up to 5 years, and is unsecured. The purpose is to fund MPPL's acquisition of plant & machineries and raw materials. This is classified as a related party transaction since MPPL is a 100% subsidiary, but the company states it is at arm's length. Notably, the loan proceeds will ultimately be used by MPPL to acquire a sole proprietorship owned by a relative of the company's Promoter.
The loan ties up up to Rs. 10 crore of the listed company's funds in its subsidiary for up to 5 years, which could limit cash available for shareholders. Retail investors should watch for the unusual end-use — funding the acquisition of a promoter-family proprietorship through a subsidiary — as a potential related-party governance concern.