Sayaji Hotels (Indore) Ltd has initiated a postal ballot to seek shareholder approval for increasing its borrowing limit to Rs 500 crore and authorizing related party unsecured loans. The proposed financial maneuvers significantly impact the company's leverage, with projections showing a sharp rise in the Debt-to-Equity ratio to 2.26 and a concerning decline in the Debt Service Coverage Ratio (DSCR) to 0.28. Investors are encouraged to scrutinize the rationale behind this high-interest (18%) debt infusion and its potential impact on long-term capital stability.
Sayaji Hotels (Indore) Proposes Rs 500 Cr Borrowing Limit and RPTs
Borrowing Limit: Rs 500 Crores | Proposed DSCR: 0.28
Reader Takeaway: The company aims for expansion through high-cost debt, which materially weakens its debt-service coverage ratio metrics.
What just happened
Sayaji Hotels (Indore) Ltd has launched a postal ballot to secure shareholder approval for two major financial resolutions. First, the company seeks to increase its overall borrowing limit to Rs 500 crore. Second, it is requesting authorization for material related party transactions involving unsecured loans of up to Rs 50 crore per related party. These loans carry an 18% annual interest rate with a 12-month tenure.
Why this matters
The company’s own disclosures highlight a significant shift in its financial health. Post-transaction, the Debt-to-Equity ratio is projected to rise from 1.55 to 2.26. More critically, the Debt Service Coverage Ratio (DSCR) is expected to drop sharply from 1.42 to 0.28, suggesting an increased strain on the company's ability to cover its debt obligations using operating income.
Management Rationale
Management states the funds are necessary for general business operations, ongoing capital expenditure, and future expansion plans. The company maintains that these transactions are conducted at arm's length and are not detrimental to public shareholders.
Important Dates for Shareholders
- Cut-off date: 16th September 2026
- E-voting start: 21st September 2026
- E-voting end: 21st October 2026
What to track next
Shareholders should monitor the effective deployment of these funds and whether the business growth generated justifies the 18% interest burden and the resulting deterioration in debt-service metrics.