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June 9, 2001
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Money > Business Headlines > Report June 9, 2001 |
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Escorts in a spot over Rs 5.5 billion loan grantKausik Datta & Aniek Paul Escorts Ltd, the Nandas-controlled two-wheeler and engineering major, will have to pass a special resolution pertaining to sanction of corporate guarantees for obtaining loans up to Rs 5.5 billion to its subsidiary, Escotel Mobile Communications. This follows an amendment in the Companies Act, 1956, nearly two years ago. If the special resolution is not carried by three-fourth majority of the members to be present at the extra-ordinary general meeting on June 15, Escorts will face difficulty in providing corporate guarantees to Escotel receiving loans up to Rs 5.5 billion crore in 1997. According to Section 372 A of the Companies (Amendment) Act, 1999, the aggregate investments in (loans to and guarantees on behalf of) other corporates, including subsidiary companies, shall not exceed 60 per cent of the paid-up capital and free reserves of the company or 100 per cent of the free reserves of the company, whichever is more, unless approval of the members, by way of the special resolution is obtained. "Since the guarantees for getting up to Rs 5.5 billion loans exceeds the prescribed percentage, it is proposed to seek the shareholders' approval," the EGM notice said. The Rs 5.5 billion loan consists of long-term loans of Rs 1.79 billion from offshore financial institutions and Rs 2.72 billion from on-shore institutions. The balance Rs 970 million was planned to receive from on-shore institutions on a short-term basis. The corporate guarantee will be given to the financial institutions including Export Import Bank of the US ( for Rs 350 million), Eksportinans ASA (for Rs 330 million), Chase Manhattan Bank AG (Rs 480 million), Chase Manhattan Bank (Rs 620 million) and Infrastructure Leasing and Financial Services (Rs 40 million). Guarantee is also required to be given to ICICI, HDFC and ILFS for a combined loan of Rs 2.67 billion as well as various banks and institutions for loans worth Rs 970 million. Powered by YOU MAY ALSO WANT TO READ:
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