Greaves Cotton Limited has informed the Exchange about the issuance of corporate guarantee.
GREAVESCOT · price
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Greaves Cotton Limited has issued a corporate guarantee of up to Rs. 100 crores to IDFC FIRST Bank Limited on behalf of its material subsidiary, Greaves Electric Mobility Limited (GEML). The guarantee serves as security for the working capital and term loan facility availed by GEML from the lender. The transaction is on an arm's length basis and the promoter/promoter group has no interest in it. The guarantee represents a contingent liability for the parent company if GEML fails to meet its repayment obligations.
This adds a contingent liability of Rs. 100 crores on Greaves Cotton's books, exposing the parent to potential financial risk if its EV subsidiary defaults on its debt. Investors should monitor GEML's performance and debt servicing capability, as any trouble there could directly affect the parent company.