From a different perspective, Prakash industries already has 74.4 % of their shareholding pledged. What kind of interest would GPIL receive for giving intercorporate loan to a B rated company? GPIL can comfortably get 6 to 7 % for a bank deposit. Is it worth the risk? Secondly, if things go south, market cap could go down pretty fast. The company has a borrowing of 600 odd crores as well. So, banks will be most probably having first charge on most of the assets. As the amount involved is small it doesn’t matter much. But I would say its not the best use of cash unless strategic in nature somehow.
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