Power Mech Projects Limited has informed the Exchange about Giving guarantees/indemnity/ becoming a surety for third party
POWERMECH · price
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On the reaction day the stock moved 0.8 pts less than Nifty Microcap 250 and 0.1 pts less than its Civil Construction peers, over the same two closes: a difference in percentage points, not a measure of what the filing did.
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Power Mech Projects has issued a corporate guarantee of up to Rs. 455 crores in favour of HDFC Bank Limited on behalf of its wholly owned subsidiary, Deoghar Ring Road Projects Private Limited (DRRPPL). The guarantee has been given to secure financing facilities that HDFC Bank has sanctioned to DRRPPL. The transaction is at arm's length and the promoter group has no interest in it. As per the terms, the guarantee will be released once DRRPPL receives its second annuity payment. The guarantee constitutes a contingent liability for Power Mech, meaning if the subsidiary fails to repay, the parent company may have to step in and honour the obligation.
This is a contingent liability of Rs. 455 crores tied to a subsidiary's loan. While it does not immediately affect Power Mech's financials, it exposes the parent to potential repayment risk if DRRPPL defaults. The guarantee is expected to be released after the second annuity, limiting the long-term exposure.