POWERMECHPower Mech Projects Limited
Power Mech Projects issues a corporate guarantee of up to ₹469 crore for its mining subsidiary’s loans
- Agreement
- Infrastructure
Power Mech Projects Limited has told the exchanges that it has issued a corporate guarantee of up to ₹469 crore on behalf of its subsidiary, Kalyaneswari Tasra Mining Private Limited (KTMPL), in favour of CTL Trusteeship Limited, which acts as security trustee. The guarantee secures the financing facilities that KTMPL has taken for project capital expenditure.
The capex covers a coal handling plant, a railway siding and the construction of a rehabilitation and resettlement colony. The underlying facilities are loans from RBL Bank Limited of ₹175 crore and IDFC First Bank Limited of ₹294 crore, which together make up ₹469 crore.
Inference
A corporate guarantee means that if the subsidiary does not repay, the parent can be called on to pay up to the guaranteed amount. It is not a payment made now, but it is a contingent obligation of up to ₹469 crore for Power Mech.
The filing does not give the project's cost or timeline, or Power Mech's own assessment of the risk. Shareholders may want to follow how the company discloses guarantees and the progress of the mining project in its results.
Reference: Original filing (PDF)
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