Intimation regarding Loan Agreement with Related Party for availment of upto Rs. 20 Crores loan for working capital requirements.
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Rungta Irrigation Limited's board, at its May 9, 2025 meeting, approved a loan agreement with Gladiolus Finance Consultants Private Limited, a related party and 15.81% shareholder, for an unsecured loan of up to Rs. 20 Crores for working capital needs. The loan is payable on demand and backed by a personal guarantee, and notably the company has stated it was not done at arm's length. Separately, the board approved audited FY25 results with an unmodified auditor opinion, showing revenue rising to Rs. 221.35 Cr from Rs. 152.63 Cr, and net profit increasing to Rs. 6.22 Cr from Rs. 5.65 Cr (EPS Rs. 3.12 vs Rs. 2.84). The company also appointed Mr. Subhash Kataria as Internal Auditor and M/s S. Shekhar & Co. as Cost Auditors for FY26.
The Rs. 20 Crore loan from a related-party shareholder provides short-term working capital support but is unsecured, payable on demand, and explicitly not at arm's length, raising corporate governance concerns for minority shareholders. FY25 results show strong top-line growth of ~45%, but operating cash flow turned sharply negative (Rs. -14.41 Cr vs Rs. -2.82 Cr) and current borrowings nearly tripled, suggesting the working capital loan addresses real liquidity pressure.