M.K. Sons targets three facilities with Rs 30 crore IPO funds

M.K. Sons proposes to use Rs 30 crore of net fresh-issue proceeds to repay or prepay two Kotak Mahindra Bank overdrafts and an Abans Finance cash-credit facility. The allocation equals 51.61% of the Rs 58.127 crore outstanding across seven disclosed bank and non-banking financial company facilities as of October 19, 2026.

Which facilities will M.K. Sons repay with Rs 30 crore IPO funds?

M.K. Sons has earmarked Rs 30 crore for three working-capital facilities: two overdrafts from Kotak Mahindra Bank and one cash-credit facility from Abans Finance. An overdraft and cash-credit line are facilities used for working capital, and the borrowing table identifies working capital as the purpose for each of the three selected facilities. The proposed repayments are Rs 6.50 crore, Rs 12.50 crore and Rs 11 crore, respectively.

The three selected facilities had Rs 30.665 crore outstanding on October 19, 2026, meaning the stated allocation would not fully repay them based on those balances. The Kotak Mahindra Bank overdraft sanctioned on May 30, 2024 had Rs 6.95 crore outstanding; the overdraft sanctioned on February 24, 2026 had Rs 12.65 crore outstanding. Abans Finance's cash-credit facility, sanctioned on February 3, 2026, had Rs 11.065 crore outstanding.

How much borrowing would M.K. Sons retain after repayment?

M.K. Sons has not earmarked net proceeds for the four disclosed Kotak Mahindra Bank term loans. Those four term loans had aggregate outstanding borrowings of Rs 27.462 crore on October 19, 2026, compared with Rs 30.665 crore across the three facilities selected for repayment. Each term loan was sanctioned for working capital, but the current repayment allocation differentiates between them and the overdraft and cash-credit lines.

On the October 19, 2026 balances, a Rs 30 crore payment would reduce total disclosed bank and non-banking financial company borrowings from Rs 58.127 crore to Rs 28.127 crore, before later drawings, repayments, interest or fees. The selected facilities would retain Rs 66.50 lakh in aggregate: Rs 45 lakh on the May 2024 overdraft, Rs 15 lakh on the February 2026 overdraft and Rs 6.50 lakh on the Abans Finance line. The proposal is therefore a targeted repayment of specified facilities rather than a disclosed plan to remove all borrowings.

The four term loans had individual outstanding balances from Rs 3.857 crore to Rs 9.625 crore as of October 19, 2026. Two had 120-month tenures and two had 144-month tenures, with rates from the repo rate plus 2.55% to the repo rate plus 2.90%. Each disclosed a prepayment charge of 2% of the outstanding amount, but M.K. Sons has not allocated net proceeds to these term loans.

Why did M.K. Sons choose overdrafts and cash credit?

M.K. Sons says it selected the facilities after considering interest costs, operating convenience, repayment and prepayment terms, penalties, remaining tenor, outstanding amounts, lender consents and the mix of credit facilities. The company also cited applicable laws and other commercial considerations. These disclosed criteria explain the distinction between the two overdrafts and one cash-credit facility selected for repayment and the four term loans that are not allocated proceeds.

The selected facilities have differing terms. Both Kotak Mahindra Bank overdrafts disclose a prepayment charge of 2% of the outstanding amount, whereas the Abans Finance cash-credit facility discloses no prepayment penalty. M.K. Sons says any applicable prepayment charge or premium will be met from internal accruals, as will any amount required above the Rs 30 crore earmarked for the repayment object.

M.K. Sons also confirms that net proceeds under this object will not repay loans primarily availed from promoters, promoter group members, directors or other body corporates. Paresh Rakesh & Associates LLP, the statutory auditor, issued a certificate dated October 22, 2026 certifying each listed loan's stated use and its outstanding amount as of October 19, 2026. The identified facilities are borrowings from banks or a non-banking financial company.

What could change before M.K. Sons repays the facilities?

M.K. Sons says the outstanding amounts can change before allotment because it may repay, refinance or obtain additional borrowings under the relevant repayment schedules. The company may use net proceeds for the identified facilities, refinanced facilities or additional facilities availed before allotment. However, it says total deployment for repayment or prepayment cannot exceed Rs 30 crore.

The company schedules the repayment allocation for FY 2026-27, the same year in which it plans Rs 152.836 crore of inventory funding for one new Maharashtra showroom and an expansion in Gujarat. The stated fund requirements are management estimates based on its business plan, market conditions and commercial factors, and have not been appraised by a bank, financial institution or external agency. If scheduled deployment is not completed in the financial year, M.K. Sons says the amount may be used in the next financial year in accordance with applicable law.

A shortfall in net proceeds or an increase in an object's actual cost may require internal accruals or additional equity or debt arrangements, according to M.K. Sons. If actual use for an object is lower than planned, the balance may fund other existing fresh-issue objects or general corporate purposes. General corporate purposes, including any such excess amount, cannot exceed 25% of gross fresh-issue proceeds under the Securities and Exchange Board of India Issue of Capital and Disclosure Requirements Regulations.

How will M.K. Sons report the use of proceeds?

M.K. Sons has appointed Acuite Ratings & Research Limited as monitoring agency because the fresh issue exceeds Rs 100 crore, the threshold under Regulation 41 of the Securities and Exchange Board of India Issue of Capital and Disclosure Requirements Regulations. The monitoring agency and M.K. Sons' Audit Committee will monitor gross-proceeds utilisation. The company says monitoring reports will be placed before the Audit Committee without delay.

M.K. Sons must disclose use of gross proceeds, including interim use, in its balance sheet for the required financial-year periods. It will also report quarterly to its Audit Committee on applications and uses of gross proceeds under the Securities and Exchange Board of India Listing Regulations. The company must also prepare an annual statement of funds used for purposes other than those stated in the red herring prospectus.

Conclusion

M.K. Sons has specified Rs 30 crore for two Kotak Mahindra Bank overdrafts and one Abans Finance cash-credit facility, whose combined disclosed balance was Rs 30.665 crore on October 19, 2026. The allocation leaves four Kotak Mahindra Bank term loans outside the repayment object and would leave Rs 28.127 crore of total disclosed bank and non-banking financial company borrowings on the stated balances.

The next point to watch is deployment in FY 2026-27 and the facility balances when payment occurs. M.K. Sons has disclosed that it may refinance, repay or obtain additional facilities before allotment, while prepayment charges and any amount above Rs 30 crore are to be funded from internal accruals.