SCL Ltd has outstanding bank guarantee of ₹325 Lakh as per Audited Balance Sheet of March 31, 2023. During the year 2023-24 the Company availed additional bank guarantee of ₹125 lakh. The Company needs additional bank gu

CS Professional · Corporate Funding & Listings in Stock Exchanges · PYQS · June 2024
SCL Ltd has outstanding bank guarantee of ₹325 Lakh as per Audited Balance Sheet of March 31, 2023. During the year 2023-24 the Company availed additional bank guarantee of ₹125 lakh. The Company needs additional bank guarantee of ₹750 lakh in December 2023 in order to meets its one-time. The bank guarantees maturing and cancelled by December 2023 are worth ₹250 lakh and ₹120 lakh respectively. The Bank guarantees cancelled during the year are worth ₹150 lakh. The Company has ₹850 lakh as sanctioned Bank Guarantee Limit. Given these circumstances, you are required to assess whether the company should enhance its bank guarantee or if the existing bank guarantee will suffice to cover the additional requirement of ₹750 lakh.

Answer & Explanation:

Answer 2A(iii) Assessment of Limit of Bank Guarantee: - Outstanding Bank Guarantee as per Audited Balance Sheet of March 31, 2023 ₹325 Lakh Add: Bank Guarantee availed during the year 2023-24 ₹125 Lakh Add: Additional Bank Guarantee required for December 2023 ₹750 Lakh Total ₹1200 Lakh Less: Bank Guarantee Matured by December 2023 ₹250 Lakh Bank guarantee available ₹950 Lakh Less: Bank Guarantee cancelled by December 2023 ₹120 Lakh Requirement of Bank Guarantee by December 2023 ₹830 Lakh Hence, in the given circumstances the requirement of Bank Guarantee by SCL Ltd. is ₹830 Lakh which is within the sanctioned Bank Guarantee ₹850 lakh. As a result, there is no necessity to increase the Bank Guarantee limit.

Topics: Bank Guarantees

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