Amarnath Securities proposes Rs 86.0591 lakh debt conversion

Amarnath Securities Limited has proposed converting Rs 86.0591 lakh of unsecured loans into equity through a non-cash preferential issue for 14 lenders, subject to shareholder and regulatory approvals. At an illustrative issue price of Rs 21.70 a share, the conversion would result in 3,96,586 shares and a combined 11.68% post-issue holding for those lenders.

What has Amarnath Securities proposed?

Amarnath Securities has proposed issuing up to 5 lakh fully paid equity shares of face value Rs 10 each to convert verified outstanding unsecured loan balances rather than repay them in cash. Its board approved the proposal on 14 November 2026, subject to shareholder approval through a special resolution by postal ballot and other applicable statutory and regulatory approvals.

The proposed issue covers unsecured loans aggregating to Rs 86.0591 lakh and would be made for consideration other than cash. Amarnath Securities said the set-off of lender balances against new shares is intended to reduce outstanding loan liabilities and strengthen its capital structure.

How will Amarnath Securities convert the loans into shares?

Amarnath Securities plans to set off each proposed allottee's verified unsecured loan balance against the value of shares allotted under the preferential issue. The transaction will be governed by Chapter V of the Securities and Exchange Board of India, or SEBI, Issue of Capital and Disclosure Requirements Regulations, 2018.

The final issue price cannot be lower than the price determined under the applicable SEBI pricing provisions. As a result, the final number of shares, the paid-up share capital after allotment and each lender's ownership percentage remain unresolved despite the board's approval of a ceiling of up to 5 lakh shares.

At the illustrative price of Rs 21.70 a share, the Rs 86.0591 lakh loan amount would convert into 3,96,586 shares, leaving 1,03,414 shares of headroom under the proposed 5 lakh-share limit. Amarnath Securities said it will recalculate the number of shares and post-issue shareholding once the final price is determined under the required valuation provisions.

Which lenders would receive Amarnath Securities shares?

Amarnath Securities has listed 14 proposed allottees, led by Kinnari Chetan Patel with a loan balance of Rs 19.88101 lakh. At Rs 21.70 a share, that balance would result in 91,618 shares and a tentative 2.70% post-issue holding, the largest individual allocation in the disclosed schedule.

Chetan Balubhai Patel has the second-largest proposed conversion balance at Rs 12.88583 lakh, corresponding to 59,382 illustrative shares and a 1.75% holding. Shakti Parekh's Rs 9.75 lakh balance would convert into 44,931 shares and 1.32%, while Munish, Pritam Dham and Gunjan Singh each have Rs 7.50 lakh balances, equivalent to 34,562 shares and 1.02% each.

The other disclosed balances range from Rs 99,000 for Neeraj Rathod to Rs 5.399 lakh for Hardee Chetan Patel. Awadhesh Kumar Sitaram Gupta is proposed to convert Rs 4.50001 lakh, Prarthee Chetan Patel Rs 3.85325 lakh and Priya T Raichana Rs 3 lakh, while Binesh Kiran Desai, Nikesh Kiran Desai and Swati Kiran Desai each have Rs 1.10 lakh balances.

What would Amarnath Securities' post-issue ownership look like?

Amarnath Securities' provisional schedule puts the 14 lenders' combined post-issue holding at 11.68%, based on 3,96,586 shares issued at Rs 21.70 each. This is an illustrative calculation rather than a final ownership outcome because a change in the SEBI-compliant issue price would change both the share count and percentage holdings.

Kinnari Chetan Patel and Chetan Balubhai Patel would together hold 1,51,000 shares, or 4.45%, under the tentative calculation. Adding the three lenders with Rs 7.50 lakh balances would take the five allottees' combined illustrative holding to 7.51%, consisting of 2,54,686 shares.

Amarnath Securities has not confirmed whether the preferential issue would cause a change in control. It said that assessment will be made only after finalising the pre- and post-issue shareholding pattern and determining promoter and promoter-group classification.

How does the proposal compare with Amarnath Securities' reported liabilities?

Amarnath Securities reported total financial liabilities of Rs 79.83 lakh as at 30 September 2026, compared with Rs 57 lakh as at 31 March 2026. The proposed conversion amount of Rs 86.0591 lakh is therefore larger than the financial-liability total shown in the 30 September balance sheet, and the announcement does not explain the difference between the two disclosures.

The company reported borrowings other than debt securities of Rs 78.55 lakh at 30 September 2026, while its other payables were Rs 1.27 lakh. Its total equity remained negative at Rs 72.13 lakh at that date, compared with negative Rs 73.04 lakh at 31 March 2026.

For the quarter ended 30 September 2026, Amarnath Securities reported profit of Rs 0.38 lakh, down from Rs 5.29 lakh in the quarter ended 30 September 2025. The financial statements also state that the company's entire net worth has been eroded, while identifying finance and investment as its only operating segment.

What approvals and details are still pending for Amarnath Securities?

Amarnath Securities requires members to approve the preferential allotment through a special resolution in a postal ballot. The board fixed 20 November 2026 as the cut-off date for determining shareholders eligible to receive the postal-ballot notice by email and to vote electronically.

The board appointed Jagannath Bhunia, a practising company secretary, as scrutiniser for the e-voting process. It also approved an increase in authorised share capital and an alteration to Clause V of the memorandum of association, although the announcement does not state the proposed revised authorised-capital amount.

The final issue price, actual allotment, number of shares and subscription outcome will be disclosed to the stock exchange after allotment is completed. Amarnath Securities has also made final confirmation of any change in control conditional on the eventual shareholding pattern and promoter-group classification.

Conclusion

Amarnath Securities' proposal would replace Rs 86.0591 lakh of unsecured lender balances with equity rather than a cash payment, if shareholders and applicable authorities approve it. The illustrative Rs 21.70 price produces 3,96,586 shares and an 11.68% combined stake for 14 lenders, but the final pricing exercise could alter both figures.

The next disclosed event is the 20 November 2026 cut-off date for postal-ballot eligibility. The key matters to watch are the shareholder vote, the final SEBI-compliant issue price, the actual shares allotted and Amarnath Securities' subsequent determination on control and promoter-group classification.