Intimation for Loan Agreement.
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Suraj Industries Ltd has executed a new loan agreement to lend Rs. 20 crore to its 85.75%-owned material subsidiary, Carya Chemicals & Fertilizers Pvt Ltd. The funds will be used by Carya for its Distillery Project. The loan is unsecured, carries an interest rate of 9.85% per annum, and has a maximum tenure of 3 years (extendable by mutual consent). A notable feature is that the loan is convertible into equity shares of Carya at any point during the loan tenure. As of the disclosure date, no amount has been disbursed under this new agreement, though Rs. 2.60 crore remains outstanding from earlier loan agreements dated October 2023, January 2024, and September 2024. The transaction is classified as a related party transaction conducted at arm's length.
This is a routine inter-corporate loan to a subsidiary for project funding and is unlikely to impact Suraj Industries' stock price. Shareholders should note the equity conversion option, which could dilute Suraj's stake in Carya if exercised, but it also signals management's confidence in the subsidiary's Distillery Project.