Lloyds Metals Q1FY27 Monitoring Agency Report: No Deviation in Fund Utilization
Lloyds Metals and Energy Limited's Monitoring Agency Report for Q1FY27 confirms no deviation in the utilization of funds from QIP and Preferential Issue. QIP proceeds of ₹1,218 crore are fully utilized for a pellet plant and general corporate purposes. Preferential issue proceeds of ₹2,722.83 crore are used for plant expansion and general corporate purposes. The reports from India Ratings and ACER highlight project cost overruns and some observations on related party transactions and fund management.
The report addresses the utilization of significant funds raised through QIP and Preferential Issue, impacting investor confidence. While no major deviations are found, the observations on cost overruns and related party transactions warrant attention.
The report confirms no deviation in fund utilization, which is positive. However, it also raises concerns about cost overruns, related party transactions, and documentation, leading to a neutral sentiment.
Lloyds Metals and Energy Limited has submitted its Monitoring Agency Report for the quarter ended June 30, 2026. The report, issued by India Ratings and Research Private Limited for Qualified Institutional Placement (QIP) proceeds and ACER Credit Rating Private Limited for Preferential Issue of Warrants, confirms that there has been no deviation from the stated objects for the utilization of funds raised through these issuances.
The QIP, which raised ₹1,218.00 crore, was used for setting up a 4 MTPA pellet plant at Konsari, Maharashtra, and for general corporate purposes. The report indicates that the entire QIP proceeds have been utilized. However, it notes an overall cost overrun for the pellet plant project from ₹1,625 crore to ₹2,236 crore, with the company obtaining an Independent Chartered Engineer certificate for the revised cost.
The report also highlights certain observations regarding the utilization of funds, including payments to related parties and temporary investments in ICDs. While the company has provided management declarations and representations, the monitoring agencies noted a lack of detailed documentation in some instances and indirect receipt of funds by a promoter entity, which appears contrary to affirmations in the placement document. The company has been advised to separately disclose unutilized amounts and their investments, as well as utilization details as required by regulations.
The Preferential Issue, which had a total issue size of ₹2,960.00 crores, saw a subscription of 3,67,95,000 convertible warrants amounting to ₹2,722.83 crore. These funds were allocated for funding capital expenditure for increasing the capacity of the existing sponge iron manufacturing plant and power plant at Ghugus, Chandrapur, setting up a 1 X 4 MTPA Pellet Plant at Konsari, Gadhchiroli, and for general corporate purposes. The report confirms that the issue proceeds are utilized for the stated objects, with no deviation observed. The pellet plant project at Konsari was commissioned in Q4 FY 2025-26, with a portion of the funds remaining unutilized.
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