PC Jeweller hit a new low at Rs.23.50 and continues to remain around the same levels.
Rating agency, CRISIL downgraded the company’s long as well as short term bank loan rating to ‘default,’ which is stated as ‘CRISIL D’. This indicates that instruments with this rating are in default or are expected to be in default soon.
As per the Rating Rationale "the downgrade in the rating factors in the instances of devolvement of Letter of Credits (LC) and overutilization in working capital limits for more than 30 days. The same is reflective of the fact that the liquidity profile of the group has deteriorated in past few months on account of cash flow mismatches. The ratings reflect instances of LC devolvement and overutilization in working capital limits, large working capital requirement and the risk of unfavourable regulatory changes. These weaknesses are partially offset by PCJ group's strong market position in manufacturing and retailing gold and diamond jewellery and the above-average capital structure."
The Company also clarifies that there was no increase in the absolute amount of working capital limits even after SBLC invocations and there was only an intra facility exposure mismatch. There is no increase in the bank borrowing of the company and there is actually a decline of Rs.248 crore between 1st March 2019 and 30th Sep 2019.
The promoter of the company has infused RS.215 crore of his personal funds in the Company to improve its NWC. These funds are non-interest bearing and though the same are currently classified as unsecured loan and taken as liabilities, they will be converted in due course into equity or equity like instrument subject to receipt of necessary approvals and compliance with applicable laws and will further improve the net worth of the company.
CRISIL stated that the financials of the company as at 30th September 2019 shows that it has a healthy CR and TOL/TNW. The company's debt service coverage ratio (EBIT/lntt) for the half year ending September 30, 2019 is also positive.