Kalpataru Projects to Convert Outstanding Loan into Equity Shares for KPBPSA

Kalpataru Projects International Limited (KPIL) has announced a significant financial manoeuvre involving its wholly-owned subsidiary, Kalpataru Power Do Brasil Participações S.A. (KPBPSA) in Brazil. The Executive Committee of KPIL’s Board of Directors has approved the conversion of an outstanding loan granted to KPBPSA into equity shares. This decision was made during a board meeting held today, leveraging the powers delegated by the Board.

KPBPSA, a key subsidiary of KPIL, has reported a consolidated turnover of approximately BRL 415 million (around USD 83 million) for the fiscal year ending March 31, 2024. However, the company experienced a consolidated loss after tax of about BRL 33 million (approximately USD 7 million) for the same period. As of March 31, 2024, KPBPSA’s consolidated net worth stood at approximately BRL 41 million (around USD 8 million). The consolidated order book of KPBPSA, as of June 30, 2024, was approximately BRL 779 million (around USD 155 million).

The loan conversion into equity shares constitutes a related party transaction, but it is being conducted at arm’s length. Notably, the promoter/promoter group of KPIL does not have any interest in KPBPSA, ensuring the transaction’s fairness.

KPBPSA is a holding company that owns 100% of Fasttel Engenharia S.A. (Fasttel), further strengthening the relationship between the two entities. The primary objective of converting the loan into equity is to enhance the consolidated financial position of both KPBPSA and Fasttel. This move is expected to improve their ability to secure larger projects and access local financing more effectively. Despite this financial restructuring, KPBPSA will remain a wholly-owned subsidiary of KPIL.

The conversion of the loan will be completed in the second quarter of FY 2024-25, with the equity shares being subscribed at a price of BRL 2.10 per share. KPBPSA, established on January 27, 2021, is registered with Sao Paulo’s State Government and is affiliated with the Secretariat for Economic Development and the Commercial Board of the State of São Paulo.

On September 5, 2024, the share price of Kalpataru Projects International Ltd opened at ₹1,414.00, touching the day’s high at ₹1,414.95, as of 10:00 AM on the NSE.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.