EIL approves Bank Guarantee for RFCL

EIL approves Bank Guarantee for RFCL

New Delhi: During its meeting on April 10, 2024, the Board of Directors of Engineers India Limited (EIL) approved the provision of an undertaking for the bank guarantee taken by Ramagundam Fertilizers & Chemicals Limited. This company is a joint venture between EIL, NFL, and FCIL.

Ramagundam Fertilizers & Chemicals Limite.d (RFCL) is a joint venture promoted by Engineers India Limited (ElL), National Fertilizers Limited (NFL), and Fertilizer Corporation of India Limited (FCIL) for producing urea & ammonia. The RFCL plant was declared commercial on 22nd March 2021.

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As per the terms of sanction of RTL facility by lenders to part fund project cost, RFCL had to create a cash Debt Service Reserve Account (DSRA) or provide a Bank Guarantee (BG) without any recourse on project assets amounting to 90 days of ensuing Principal repayment and Interest on the RTL facility. In this regard, RFCL decided to furnish a BG to the project lenders ·(SBI consortium) in place of funding the DSRA account in cash. The Bank Guarantee for DSRA of Rs. 175 Crore was established with IndusInd Bank Ltd. As per the terms of sanction of this Bank Guarantee, the Bank has sought a letter of Undertaking from sponsors i.e. Ell & NFL.

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Engineers India Limited holds a 26% share in the Borrower. The company must not reduce the shareholding below 26%, until the expiry of the DSRA BG Facility which is currently available until 31.03.2025, without prior written permission of the Bank.
Further, it will not pledge the shareholding to any other Bank, NBFC/institution without the permission of the Bank.

This undertaking is being issued to Induslnd Bank Limited and shall remain in full force and effect as long as the DSRA BG Facility is outstanding or any sum due from the Borrower to Induslnd Bank Limited.

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