Shares of travel and tour company Cox & Kings were locked in a lower circuit at 5 percent on Tuesday for the third consecutive trading session after the company defaulted on another commercial paper worth Rs 50 crore, citing temporary mismatch in liquidity.

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In this month, the stock has already declined over 9 percent. This year, it fell 80 percent and in last one year, it has come down by over 83 percent.

In its BSE regulatory filing, the company said, "The working capital situation at Cox & Kings stretched in the last few months and was further impacted due to its inability to replace the short term loans with long term loans / regular working capital lines."

It further added that the company is taking all required measures to resolve the temporary cash flow mismatch. It is evaluating each business and identifying ways to improve operational performance.

> What has spooked Cox and Kings investors?

Last week, the company's creditworthiness was slashed to 'D' or default by credit rating agencies.

Brokerage firm ICICI Direct suspended coverage on the stock and advised investors to exit the counter.

"Cox & Kings has defaulted on the redemption of Rs 200 crore worth of its commercial papers citing cash flow mismatch issues. This comes as a big negative surprise as the company at the end of FY19 was sitting with cash in excess of Rs 1800 crore on its books with no concerns shown by the management with respect to cash flow mismatch. The amount of Rs 200 crore was liable to be repaid to two investors, out of which the company has repaid only Rs 50 crore. Further, the company said that the balance payment would be made from internal accruals when the cashflow position improves," the report added.

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First Published:Jul 2, 2019 12:03 PM IST