Pritika Auto Industries Limited has approved to give Corporate Guarantee to Bank of India ( Lender) for an amount of Rs. 34.50 Crores, for the credit facilities sanctioned to Pritika Engineering Components Limited, material subsidiary of the Company.
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Pritika Auto Industries Limited's board has approved giving a corporate guarantee of Rs. 34.50 Crores to Bank of India on behalf of its material subsidiary, Pritika Engineering Components Limited. This guarantee is tied to credit facilities that the bank has sanctioned to the subsidiary. By standing as guarantor, the parent company becomes liable if the subsidiary fails to repay. The move reflects continued financial support to the subsidiary for its borrowing needs.
This increases the parent company's contingent liability by Rs. 34.50 Crores, exposing shareholders to the subsidiary's debt obligations. While it signals confidence in the subsidiary, it also raises the financial risk profile of Pritika Auto Industries.