Cox & Kings to take steps to fix temporary cash flow mismatch; to approach lenders

As its stock price fell by 30 per cent in the past five trading sessions due to payment default, travel services firm Cox & Kings July 1 said it is taking steps to resolve the "temporary" cash flow mismatch and will approach lenders to work out a "time-bound" solution to this emergency. On June 27, the company had said it defaulted on payment of commercial papers due to cash flow mismatch. Cox & Kings was required to pay Rs 200 crore, however, it was able to pay only Rs 50 and defaulted on Rs 150 crore.

The stock price fell further by 4.94 per cent to settle at Rs 34.65 a piece on the BSE on July 1. It stood at Rs 45 apiece five days ago.

In a regulatory filing, Cox & Kings said: "The company is taking all required measures to resolve the temporary cash flow mismatch."

The working capital situation at Cox & Kings stretched in the past few months and was further impacted due to its inability to replace the short-term loans with long-term loans, it said.

"The company will also be approaching its lenders to work out some time-bound program to meet this emergency," it said, adding that Cox & Kings is evaluating each business and identifying ways to improve operational performance.

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

"In the circumstances above, the company requests the co-operation and understanding of all its stakeholders, including employees, franchisees, shareholders, lenders, vendors and other partners," the company said.

Asserting that the company has robust operating businesses, Cox & Kings said it has a thriving and highly valuable hybrid hotels business in Meininger.

It has a niche business in Leisure International and is also an emerging player in the visa processing services business. Each of these businesses carries high intrinsic value, it said.