Acquisition of 70% stake of Khushbu Auto (NBFC) by Atul Atul Auto for ~45 Cr is something that requires further investigation. Why?
Although this is not a huge amount for the company, this 70% stake was owned by Promoters / Promoters relatives / Mr Kedia (see below). So, I want to investigate if this transaction is done on arms lenght basis or not?
Now why its difficult to understand this transaction is because of the preference shares issued to the erstwhile promoters of Khushbu Auto (for 70% stake)
So, does it mean that this is a cashless transaction? Atul Auto is not paying 45 Cr in cash , rather issuing preference shares for 70% stake that’s equivalent to 45 Cr and will be paid after five years? I was not able to get clarity if I this is the right way to look at this deal.
By the way, when Khushbu Auto was owned by Atul Auto (30% stake) and Promoter related Parties (70%), why was this deal required at all? They were controlling the NBFC the way they wanted as they were the complete owners.
Khushbu Auto is well capitalized based on its balance sheet (below), but still no bank lends it without Atul Auto guarantee (see below). Can it be the case banks get more comfort to lend to Khushbu if Atul Auto has complete ownership? I am not sure, sorry, I have many curious questions but no answers. Please write back if you have more insights:
Khushboo Balance Sheet
