NELCO Limited has informed the Exchange about Giving guarantees for wholly owned Subsidiary Company
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NELCO Limited's board has approved a corporate guarantee of INR 45 crore in favour of IDFC Bank for its wholly owned subsidiary, Nelco Network Products Limited (NNPL). The guarantee is to facilitate working capital borrowings by NNPL. The transaction is at arm's length, and promoters or group companies have no interest in it. NELCO has stated there is no immediate financial impact on the company, though the guarantee represents a contingent liability.
This is a contingent liability of INR 45 crore that NELCO takes on for its subsidiary. While there is no immediate impact, shareholders should monitor the subsidiary's ability to service its working capital needs, as any default could convert this guarantee into an actual liability for NELCO.