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Cox & Kings had a total debt of Rs 3,238 crore at end of FY19 and this included both short-term and long-term loans.
Lenders have turned cautious after Cox & Kings defaulted on commercial paper of Rs 200 crore in the last few days and are looking at ways to address the tour operator’s debt issues.
Cox & Kings continues to be a standard asset, and banks have not yet taken a call on reworking on debt repayment terms and other conditions.
But two defaults (of Rs 150 crore and Rs 50 crore) last week have prompted banks to take steps for minimising their exposure.
A senior official said a public sector bank, which is under Prompt Corrective Action (PCA) regime, could not renew working capital facility for the tour operator.
“RBI rules on PCA put restrictions on financing corporates whose financial instruments are downgraded.
"This had a cascading effect and complicated matters and lenders are cautious now,” he said.
Cox & Kings had a total debt of Rs 3,238 crore at end of FY19 and this included both short-term and long-term loans.
The total debt of Cox & Kings as at FY19 stood at Rs 3,238 crores as against Rs 4,014 crores at FY18.
The company has been unable to replace its short-term debt with long-term loans, which has impacted its liquidity position.
Salaries and supplier payments have been delayed and International Air Transport Association has also suspended the tour operator from selling tickets under the billing and settlement plan, as it reviews the credit risk.
A sister concern eezego1 too has been suspended from selling tickets.
“There has been no defaults on airline payments. There are bank guarantees in place. IATA took the decision without any discussion with us and this is unfair,” a company executive complained.
Detailed queries sent to Cox and Kings management remained unanswered.
Earlier, Cox & Kings had said it was taking all required measures to “resolve temporary cash flow mismatch.
"It is evaluating each business and identifying ways to improve operational performance.
The company is focusing on cash flow generation from each business and working at the highest priority to free working capital.”
A senior public sector banker said the tour operator was in process of monetising some of its assets.
“So far, they have not hung up their boots. If they are able to do monetise assets, it will aid in getting over current resource constraint.”
The defaults have stumped lenders and stock market as the company had reported of a comfortable liquidity position.
According to a recent note by CARE Ratings, Cox & Kings had reported cash and bank balances of Rs 1,726 crore in June.
Of this, it told CARE, that there was about Rs 1,300 crore, which could be used for debt repayment at any point of time.
Photograph: Courtesy, Cox & Kings
