Ravindra Energy Ltd

- Ravindra Energy Ltd (REL) provided a corporate guarantee of ₹135 crore. - Guarantee supports financial assistance from YES Bank to associate company Energy In Motion Ltd (EIM). - REL holds 49.5% stake in EIM, promoter is common director. - Guarantee aids EIM’s business expansion with credit facilities.

🔍 Overview of Corporate Guarantee:

A corporate guarantee means REL promises to back financial loans taken by its associate company, Energy In Motion Ltd (EIM), up to ₹135 crore. This ensures YES Bank has added security on the loan.

🏢 About the Entities:

• REL is a listed company.
• EIM is an associate entity (REL owns 49.5%).
• A promoter, Mr. Narendra Murkumbi, is a director in both REL and EIM, indicating connected party involvement.

💰 Financial Details:

• YES Bank sanctioned ₹296 crore in credit and ₹32 crore in hedge facilities to EIM.
• REL provided a guarantee only for ₹135 crore of this credit.

💼 Purpose & Impact:

• The guarantee helps EIM secure loans on competitive terms, aiding expansion plans.
• Since it’s a corporate guarantee (contingent liability), REL does not immediately pay but may be liable if EIM defaults.
• EIM is financially stable with ₹100 crore paid-up capital.

⚖️ Governance & Compliance:

• The transaction has board and shareholder approvals.
• The guarantee is provided at arm’s length, signifying fair terms despite related party connection.

🤔 What This Means for Investors:

• The guarantee supports a related company’s growth while potentially posing contingent risk to REL.
• As of now, no immediate cash outflow for REL occurs.
• It reflects REL’s support to its associate for business development.

Overall, this update informs investors about REL’s financial support arrangements with its associate, enhancing transparency about potential contingent liabilities and strategic investments.