Hazoor Multi Projects Limited (“Company”), a prominent player in the infrastructure and project execution sector, has extended a Corporate Guarantee worth ₹75 crore on behalf of its Associate Company, Rappture Projects Private Limited (RPPL). The guarantee has been given to Kotak Bank Limited for a term loan facility availed by RPPL. This move is part of Hazoor's strategic support for its associates, aiming to bolster financial flexibility and growth in ongoing projects.

No Promoter Involvement in the Transaction

In the official disclosure, Hazoor Multi Projects has clarified that neither the promoter, promoter group, nor group companies have any interest in this transaction. This point is crucial from a corporate governance and regulatory standpoint, ensuring there is no conflict of interest and that the guarantee has been provided strictly on an arm's length basis.

Such declarations are vital in maintaining transparency and accountability, especially when significant corporate guarantees are involved. By stating that the transaction is done at an arm’s length, the company ensures compliance with financial reporting standards and avoids any inference of biased dealings that might affect shareholders' interest.

Key Details of the Guarantee

The company has confirmed that it has provided the Corporate Guarantee/Security for an amount of ₹75 crore, which serves as security for the term loan facilities extended to RPPL by Kotak Bank. While the exact details of the agreement signed were not elaborated in the disclosure, it was confirmed that the security is in connection with the loan RPPL has availed for its project development or operational requirements.

Guarantees of this magnitude typically signify either:

• The company’s confidence in the viability of RPPL’s operations, or

• The need to strengthen the creditworthiness of the associate to secure loans at better terms.

Nature and Purpose of the Transaction

RPPL being an Associate Company means Hazoor Multi Projects likely holds significant influence, generally a stake between 20% to 50%. While RPPL is not a wholly-owned subsidiary, the support shown through this guarantee suggests strong operational and strategic ties.

The guarantee allows RPPL to raise debt from Kotak Bank under favorable conditions, using Hazoor’s credit strength as backing. This method is common in cases where associates or subsidiaries are undergoing expansion or require immediate liquidity for project implementation but lack sufficient collateral or credit standing on their own.

Impact on Hazoor Multi Projects Limited

From a financial risk perspective, Hazoor Multi Projects has indicated that currently, there is no impact on the company due to the issuance of this guarantee. However, it’s important to note that:

• A corporate guarantee is a contingent liability.

• If RPPL defaults on the loan, Hazoor may be obligated to repay the debt under the terms of the guarantee.

• While there is no immediate cash outflow, the risk exposure exists until the loan is fully repaid.

That said, in financial reporting, such guarantees are disclosed in the notes to accounts and carefully monitored by analysts and rating agencies for signs of over-leverage or potential liabilities.

Why Corporate Guarantees Matter

Corporate guarantees are strategic financial tools that companies often use to:

• Support group entities or associates in securing funding

• Strengthen the credit profile of smaller or less creditworthy affiliates

• Facilitate larger projects or infrastructure undertakings

However, excessive or poorly managed guarantees can lead to financial strain if the associate fails to meet its repayment obligations, placing the guarantor (in this case, Hazoor) under pressure.

Regulatory and Disclosure Compliance

Listed companies like Hazoor Multi Projects Limited are required to disclose all material transactions, including the provision of guarantees, under SEBI’s Listing Obligations and Disclosure Requirements (LODR) Regulations. This ensures:

• Transparency for investors

• Protection of shareholder interests

• Early warning for potential financial risks

Hazoor has complied with this by disclosing:

• The name of the beneficiary (Rappture Projects Private Limited)

• The lending bank (Kotak Bank Limited)

• The total amount guaranteed (₹75 crore)

• Confirmation of arm’s length nature and no promoter involvement

This reflects positively on Hazoor’s governance standards and financial discipline.

Industry Implications and Strategic Importance

Hazoor’s decision to back RPPL could hint at:

• Large infrastructure or EPC (Engineering, Procurement, Construction) projects in the pipeline

• Need for additional liquidity to complete or initiate new works

• A long-term partnership strategy between Hazoor and RPPL for project execution and contract management

The Indian infrastructure sector often relies on such collaborative financial support, especially when executing government or public-private partnership (PPP) projects.

Conclusion

In summary, Hazoor Multi Projects Limited has strategically extended a ₹75 crore corporate guarantee to its associate, Rappture Projects Private Limited, aiding the latter in securing a term loan from Kotak Bank. The company has ensured full compliance with regulatory norms, affirming that the transaction was made at arm’s length and without any promoter involvement.

While the immediate impact is neutral, the transaction does underscore Hazoor’s financial support strategy towards its associates and confidence in RPPL’s operational viability. Stakeholders and investors will keenly watch for further updates, particularly on RPPL’s project execution and loan servicing performance.

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