Mukta Arts Proposes Rs 107.69 Crore Deal With Mukta A2 Cinemas

Mukta Arts Limited will seek shareholder approval for a Rs 107.69 crore material related party transaction involving its 70%-owned subsidiary, Mukta A2 Cinemas Private Limited.

The centerpiece of the proposal is the conversion of Rs 100.15 crore in outstanding unsecured loans and accrued interest into 10,015,440 Compulsorily Convertible Preference Shares (CCPS).

Reader Takeaway: Conversion of debt strengthens parent stake in cinema arm, pending shareholder approval through postal ballot process.

What just happened

The board of Mukta Arts has initiated a postal ballot and e-voting process to formalize dealings with Mukta A2 Cinemas for FY 2026-27. Beyond the debt conversion, the proposal covers ongoing inter-corporate deposits, rental income, and expense reimbursements totaling Rs 7.54 crore. The e-voting window opens on October 19, 2026, and concludes on November 17, 2026.

Terms of the CCPS

The CCPS issued will carry a non-cumulative dividend coupon of 0.001% per annum with a 20-year tenure. These shares are designed to convert into equity upon specific triggers, such as an IPO of the subsidiary, an investment event by an external third party, or automatically 30 days before the tenure expires.

Why this matters

Management views this restructuring as a strategic consolidation. By converting debt into preference shares, Mukta Arts positions itself to capture the future growth of its cinema vertical. The move effectively cleans the balance sheet of the subsidiary while deepening the parent company's capital commitment.

What to track next

Investors should watch for the results of the e-voting process. Since this is classified as a material related party transaction, interested related parties are excluded from voting. The Scrutinizer, M/s. KDA & Associates, will manage the process, and the resolution will be considered passed if it secures the required majority support.