Unitec Fibres allocates ₹31 crore to repay company debt

Unitec Fibres will allocate ₹31 crore of net proceeds from its fresh issue to repay or prepay borrowings in FY 2026-27. The three listed Kotak Mahindra Bank facilities had outstanding balances totalling ₹55.9096 crore on August 31, 2026, leaving the company to select which debt to retire or reduce.

How will Unitec Fibres use ₹31 crore of IPO proceeds?

Unitec Fibres will use ₹31 crore of net proceeds from the fresh issue for repayment or prepayment of all or certain borrowings. Its board took note of this proposed use on June 12, 2026. The prospectus identifies debt repayment and general corporate purposes as the issue’s two objects, but debt repayment is the only object with a stated amount.

The final gross proceeds, issue expenses and net proceeds were not specified because the issue price had yet to be finalised. The balance net proceeds are intended for general corporate purposes, which include operating expenses, project development costs, business development, marketing and unforeseen ordinary-course requirements. Under Regulation 230(2) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, this use cannot exceed 15% of the amount raised or ₹10 crore, whichever is lower.

Unitec Fibres expects to deploy all net proceeds in FY 2026-27. If the planned use is not completed in that fiscal year, the unutilised amount may be carried into FY 2027-28, subject to a board decision and applicable law. The company says its deployment estimates depend on factors including issue completion, interest rates, commercial conditions and negotiations with lenders, and have not been appraised by a bank, financial institution or independent agency.

Which Kotak Mahindra Bank borrowings could Unitec Fibres repay?

Unitec Fibres has identified three Kotak Mahindra Bank facilities with combined outstanding balances of ₹55.9096 crore as of August 31, 2026. The proposed ₹31 crore allocation equals about 55% of that listed balance, but the company has not assigned a repayment amount to any individual facility. The outstanding amounts may also change as instalments fall due before IPO proceeds are deployed.

The largest facility is a ₹51.42 crore term loan carrying interest at the repo rate plus 2.75%. The 72-month facility was initially sanctioned on December 18, 2019, with limits revised on November 10, 2025, and financed plant and machinery purchases, land and building construction, and capacity expansion. That balance accounts for about 92% of the ₹55.9096 crore total, making it the principal disclosed source of the listed debt concentration.

The remaining facilities are linked to working capital and business continuity. An on-demand cash-credit facility had an outstanding balance of ₹3.6057 crore and was priced at the repo rate plus 2.70%, while a 60-month term loan had ₹88.39 lakh outstanding at 8.65% interest. The latter was sanctioned on May 31, 2022 for working capital and business continuity under the Guaranteed Emergency Credit Line. Unitec Fibres’ statutory auditors certified on September 11, 2026 that the loans were used for their stated purposes.

Why is Unitec Fibres prioritising debt repayment?

Unitec Fibres says repayment or prepayment should reduce indebtedness and debt-servicing costs, improve its debt-to-equity ratio and allow more internal accruals to be used for business growth and expansion. Aggregate outstanding secured borrowings stood at ₹63.1792 crore on March 31, 2026. The later August 31, 2026 list of facilities was lower at ₹55.9096 crore, although the two disclosures use different dates and the prospectus does not provide a reconciliation.

The company’s debt-to-equity ratio increased from 0.32 in FY24 to 1.19 in FY26. Debt-to-equity measures borrowings relative to shareholders’ equity, so the reported change means debt increased relative to net worth over those two financial years. A lower ratio after the proposed repayment would require the ₹31 crore to be deployed as planned and would also depend on subsequent borrowings, profits retained in the business and changes in equity.

Unitec Fibres says an improvement in its debt-to-equity ratio could help it raise funds at competitive rates for future business-development plans. This is a stated objective, not a commitment from any lender. Kotak Mahindra Bank issued a no-objection certificate for the proposed initial public offer on May 13, 2026, and Unitec Fibres says it has received no repayment waiver or concession from the lenders.

How will Unitec Fibres monitor and restrict IPO proceeds?

Unitec Fibres says the ₹31 crore repayment will not directly or indirectly benefit its promoters, promoter group or related parties. It also says its promoters, directors, key managerial personnel and senior management have no interest in the repayment. The disclosed secured borrowing arrangements include loans against company property, personal guarantees from directors and promoters, and hypothecation of current assets.

The company will not appoint a monitoring agency because its issue size does not exceed the ₹50 crore threshold under Regulation 262(1) of the SEBI ICDR Regulations. Instead, its audit committee will monitor use of the proceeds under Section 177 of the Companies Act, 2013. Under Regulation 32 of the SEBI Listing Obligations and Disclosure Requirements Regulations, 2015, Unitec Fibres will make half-yearly disclosures to the audit committee and stock exchanges on utilisation and any material deviations.

Pending use, Unitec Fibres will deposit net proceeds with scheduled commercial banks included in Schedule II of the Reserve Bank of India Act. It says the proceeds will not be used to buy or trade listed-company shares, invest in equity markets, or invest in real-estate products. Any variation in the issue objects would require shareholder approval through a special resolution under Sections 13(8) and 27 of the Companies Act, 2013.

Conclusion

Unitec Fibres has structured its only quantified IPO use around debt reduction: ₹31 crore is earmarked for repayment or prepayment against ₹55.9096 crore of listed Kotak Mahindra Bank balances as of August 31, 2026. The allocation therefore cannot eliminate all of the listed balances on the disclosed figures, while the final effect on leverage depends on the facilities selected and the company’s debt position at deployment.

The disclosed plan is to deploy the proceeds in FY 2026-27, with any unused amount potentially carried into FY 2027-28. The final prospectus is expected to update the net-proceeds figure and relevant loan balances, while later half-yearly disclosures should show the amounts actually repaid, any variation from the issue objects and the proceeds remaining unutilised.