Tourism Finance Corporation tanks 24% in 2 days on exposure to Cox & Kings

Shares of Cox & Kings were locked in the 5 per cent lower circuit for the sixth straight day at Rs 31 per share.

Shares of Tourism Finance Corporation of India (TFCI) skid 5 per cent intra-day to hit an over two-year low of Rs 83 on the BSE on Wednesday after concerns surfaced over the company’s substantial exposure to Cox & Kings. The financial institute's stock was trading at its lowest level since April 2017, having tanked 24 per cent in the past two trading sessions.

The company said its exposure to Cox & Kings, which was repayable over a period up to three years, was adequately secured through a mix of charge on tangible current assets & mortgage of fixed assets, pledge of shares of the borrower's associate company which have substantial intrinsic value. 

“Cox & Kings, due to its dependence on money market instruments (commercial papers) for its working capital, has been temporarily impacted. The tour operator is taking required measures to resolve the temporary cash flow mismatches... The account is standard in our books,” TFCI said in a regulatory filing.

Meanwhile, Cox & Kings shares were locked in the 5 per cent lower circuit for the sixth straight day at Rs 31 per share. The price was the scrip's new low on the BSE after rating agencies CARE Ratings and Brickwork Ratings revised the company's rating due to delay in servicing of obligations with respect to some of the company's commercial papers.

According to rating agencies, the working capital situation at Cox & Kings got stretched in the last few months which got further impacted due to its inability to replace the short term loans with long term loans/regular working capital lines.

“The company is taking all required measures to resolve the temporary cash flow mismatch. It is evaluating each business and is identifying ways to improve operational performance," Cox & Kings said in a regulatory filing.

The company is focusing on cash flow generation from each business and working at the highest priority to free working capital, it said.

Till 10:40 am, a combined 46,626 shares had changed hands on the Cox & Kings counter. There were pending sell orders for 16.7 million shares representing 9 per cent of total equity capital of the company on the BSE and NSE.

TFCI shares were down 1 per cent at Rs 87 on the BSE. The trading volumes on the counter jumped over five-fold with a combined 2.56 million shares changing hands on both the exchanges.