The Company has issued corporate guarantee on behalf of its wholly-owned subsidiary from the Lender.
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Soma Papers and Industries Limited has issued a corporate guarantee to City Union Bank for up to INR 95 crores on behalf of its wholly-owned subsidiary, KS Smart Solutions Private Limited (KSSPL). The guarantee serves as security for credit facilities that KSSPL has availed from the bank. The company clarifies that none of the promoters or group companies have any interest in this transaction. The guarantee is treated as a contingent liability for Soma Papers and Industries Limited, meaning the parent company is only on the hook if the subsidiary fails to repay.
No immediate impact on the parent company, but it has taken on a contingent liability of up to INR 95 crores. If the subsidiary defaults, Soma Papers will need to honor the guarantee, which could affect its financials. Shareholders should monitor the subsidiary's debt repayment performance.