Kajaria Ceramics Limited has disclosed the provision of a Standby Letter of Credit (SBLC) of INR 3.75 crores. This SBLC was issued through the State Bank of India in favor of Everest Bank Limited, the lead bank for a consortium of Nepalese banks. The SBLC is a commitment for a term loan being availed by Kajaria Ramesh Tiles Limited, Nepal, a joint venture company, to the tune of NPR 12 crores. The disclosure aligns with the SEBI Listing Regulations.
Standby Letter of Credit Issued for Joint Venture
Kajaria Ceramics Limited has formally announced the issuance of a Standby Letter of Credit (SBLC) amounting to INR 3.75 crores. This financial instrument was provided via the State Bank of India. The SBLC is in support of a Term Loan facility being secured by Kajaria Ramesh Tiles Limited, Nepal, a significant joint venture company.
Loan Details and Beneficiary
The SBLC has been issued in favor of Everest Bank Limited, which acts as the Lead Bank for the Consortium of Nepalese Banks. The Term Loan being availed by the Nepalese joint venture company totals NPR 12 crores, which is equivalent to approximately INR 7.50 crores. This transaction underscores Kajaria Ceramics’ commitment to supporting its international ventures.
Transaction at Arm’s Length
The company has confirmed that this SBLC provision was made following prior approval from its Audit Committee. Furthermore, the transaction is confirmed to have been conducted at an ‘arm’s length’ basis. This ensures that the deal was conducted with fairness and transparency, adhering to corporate governance standards.
Promoter Group Interest and Disclosure
The disclosure also notes the interest of the promoter group in this transaction. Mr. Chetan Kajaria, Vice Chairman, and Mr. Rishi Kajaria, Managing Director, who are part of the Promoter Group of Kajaria Ceramics, also serve as Directors of Kajaria Ramesh Tiles Limited, Nepal. This familial and professional connection highlights the strategic importance of the joint venture.
Financial Impact Assessment
Regarding the immediate financial implications, there is no direct financial impact on the listed entity. However, the company acknowledges a potential contingent liability to the extent of the SBLC amount of INR 3.75 crores. This aligns with the standard disclosures for such financial guarantees under the relevant regulations.
Source: BSE
