Monitoring Agency Report for the quarter ended March 31,2025 with respect to the utilization of proceeds from Rights Issue I
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CARE Ratings, acting as Monitoring Agency, reported on the utilization of the Rs. 174.63 crore raised through a Rights Issue in April 2024. As of March 31, 2025, Rs. 169.84 crore (97%) has been deployed, leaving Rs. 4.79 crore unutilized — parked in fixed deposits and bank accounts. The funds were used to pay NCLT-approved resolution plan dues to dissenting financial creditors (Rs. 35.39 crore), employees (Rs. 17.08 crore), and operational creditors (Rs. 11.96 crore), besides working capital/banking needs (Rs. 56.20 crore), general corporate purposes (Rs. 42.89 crore), and issue expenses (Rs. 6.31 crore). The board extended the utilization deadline from March 31, 2025 to September 30, 2025, and reclassified Rs. 0.70 crore from issue expenses to general corporate purposes. The monitoring agency noted that proceeds were transferred from the monitoring account to the company's current account, causing commingling of funds, relying on CA certification and management confirmation.
Nearly all Rights Issue funds have been used as planned, primarily for repaying NCLT resolution plan obligations — a positive sign of disciplined deployment. However, the missed original March 2025 deadline, fund commingling, and a ~45% share price decline since the issue announcement raise governance and investor confidence concerns.