Finolex Cables issues guarantee for JV's working capital

Finolex Cables Limited (FCL) has issued an irrevocable and unconditional corporate guarantee of Rs. 39,20,00,000 to ICICI Bank Limited. This guarantee supports Finolex J-Power Systems Limited (FJPSL), an associate company and joint venture, in availing working capital facilities. The estimated total value of the working capital facility is Rs. 80,00,00,000.

The transaction involves Mr. Deepak Chhabria, a promoter of Finolex Cables Limited and a director of FJPSL, ensuring it is conducted at arm's length. The guarantee, issued pursuant to a Memorandum of Understanding dated July 27, 2023, is proportionate to FCL's 49% shareholding in FJPSL. Sumitomo Electric Industries Limited, the parent company of the other JV partner, is responsible for the remaining 51% of the guarantee.

FCL has entered into a Memorandum of Association with the other JV partner, defining terms for a workable scheme where both parties bear risk pro-rata to their shareholdings in FJPSL. This arrangement, confirmed by FJPSL, ensures that FCL and its partner manage risk based on their respective direct or indirect interests in the joint venture.