Chaman Metallics plans ₹75 crore promoter-loan repayment

Chaman Metallics Limited plans to use up to ₹75 crore from a proposed rights issue of up to ₹100 crore to repay or prepay six unsecured expansion loans, against ₹82.32 crore outstanding on October 31, 2026. The proposed repayments would direct most of the issue proceeds to promoters, promoter-group members and related entities that provided the loans.

How much will Chaman Metallics use for loan repayment?

Chaman Metallics proposes to deploy up to ₹75 crore of net proceeds for repayment or prepayment of unsecured borrowings, while the rights issue has a maximum gross size of ₹100 crore. The repayment allocation therefore represents 75.00% of the maximum gross issue size, before deduction of issue-related expenses that remain unspecified in the draft letter of offer.

The company has scheduled deployment of up to ₹75 crore for loan repayment in the financial year ending March 31, 2027. Its Board authorised the rights issue on November 5, 2026, while the issue price, rights entitlement ratio, final net proceeds and issue expenses were still blank in the draft document.

Chaman Metallics said any reduction in the amount raised when the issue price and rights entitlement are finalised would be adjusted against general corporate purposes. General corporate purposes will not exceed 25.00% of gross proceeds, which would equal ₹25 crore if the issue reaches its ₹100 crore maximum size.

The company said its funding requirements and deployment schedule are based on management estimates and have not been appraised by a bank, financial institution or independent agency. It also disclosed that its Board may revise funding requirements, timing and allocations in compliance with applicable law if business conditions or other factors change.

Which lenders will Chaman Metallics repay?

Chaman Metallics plans to repay six lenders with a combined proposed allocation of ₹75 crore, compared with aggregate outstanding loans of ₹82.32 crore as of October 31, 2026. Chairman and Managing Director Chetan Kumar Agrawal would receive the largest proposed repayment, at ₹23.77 crore against ₹24.64 crore outstanding.

The proposed repayment equals the full disclosed balance for four lenders: Keshav Kumar Agrawal, Ramesh Kumar Agrawal, Aryabhatt Sales Private Limited and G.R. Krishna Ferro Alloys Private Limited. The allocations to Chetan Kumar Agrawal and N.R. Sponge Private Limited are lower than their respective balances by ₹0.87 crore and ₹6.45 crore, based on the stated October 31, 2026 amounts.

At the aggregate level, the ₹75 crore proposed repayment is ₹7.32 crore below the ₹82.32 crore outstanding balance across the six loans. Chaman Metallics disclosed that its promoters, promoter-group members and related entities will receive part of the net proceeds because they are the lenders under these unsecured loan agreements.

What are the terms of Chaman Metallics’ unsecured loans?

Chaman Metallics said all six loans were availed for project expansion, and M/s. OPSinghania & Co., Chartered Accountants, certified on November 5, 2026 that the loans had been used for their stated purposes. The agreements were dated April 1, 2024 for four lenders, April 1, 2025 for G.R. Krishna Ferro Alloys Private Limited, and April 1, 2026 for N.R. Sponge Private Limited.

The disclosed annual interest rates range from 9.00% for G.R. Krishna Ferro Alloys Private Limited to 10.00% for Chetan Kumar Agrawal, Keshav Kumar Agrawal, Ramesh Kumar Agrawal and N.R. Sponge Private Limited. Aryabhatt Sales Private Limited’s rate is 9.50% with effect from February 28, 2025, and all disclosed rates may vary by plus or minus one percentage point a year for prevailing market-rate movements.

Five loans, including those from Chetan Kumar Agrawal and N.R. Sponge Private Limited, are repayable on demand. Chaman Metallics may defer repayment by up to three years from the agreement date for these arrangements, with renewal permitted on expiry of three years.

Aryabhatt Sales Private Limited’s ₹5.79 crore loan is repayable in 20 equal quarterly instalments. The agreement also allows Chaman Metallics to defer repayment by up to three years from the agreement date and provides for renewal on expiry of five years.

How will Chaman Metallics monitor the use of rights proceeds?

Chaman Metallics has appointed Brickwork Ratings India Private Limited as monitoring agency under Regulation 82 of the Securities and Exchange Board of India Issue of Capital and Disclosure Requirements Regulations. The monitoring agency and the Board will monitor utilisation of the gross proceeds, including the planned ₹75 crore repayment allocation.

The company said it will disclose use of the issue proceeds under a separate heading in its balance sheet and submit the monitoring agency’s report to the stock exchange. The monitoring arrangement applies even though the final issue price, issue expenses and net proceeds had not been determined in the draft offer document.

The loans are unsecured, and the agreements provide that lenders will not charge an additional interest amount or fees on early repayment, apart from proportionate interest accrued until the repayment date. That term applies to the proposed repayment or prepayment of the six loans totalling ₹82.32 crore outstanding as of October 31, 2026.

Chaman Metallics also said it would meet the stated funding requirement entirely from net proceeds. If proceeds prove insufficient for a particular object, the company said additional funding may be sourced through incremental debt or internal accruals, while lower use for an object may be redirected within the disclosed framework and applicable law.

Conclusion

Chaman Metallics’ proposed rights issue is principally a refinancing transaction: up to ₹75 crore is earmarked for unsecured project-expansion loans from promoters, promoter-group members and related entities. The planned amount is below the ₹82.32 crore total outstanding across the six specified loans, leaving the two largest partially repaid balances with Chetan Kumar Agrawal and N.R. Sponge Private Limited.

Investors should watch for the final issue price, rights entitlement ratio, expenses and net proceeds when the offer terms are completed. Chaman Metallics has targeted repayment deployment in the financial year ending March 31, 2027, but has disclosed that management may revise funding requirements and deployment timing subject to applicable law.