PC Jeweller share price hit its all-time low in trade today after ratings agency CRISIL downgraded the firm's long-term and short-term rating to the bank loan facilities to CRISIL D. The stock fell 10.1% intra day to Rs 22.25 compared to the previous close of Rs 24.75 on BSE. PC Jeweller stock erased some losses and closed 8.08% lower at Rs 22.75 on BSE. On NSE, PC Jeweller share ended 8.06% lower to Rs 22.80.
The stock has lost 63.77% during last one year and fallen 73.59% since the beginning of this year.
The micro cap stock has lost 19% in four days.
Citing the weak liquidity profile of the jewellery firm, Crisil said, "The downgrade in the rating factors in the instances of devolvement of Letter of Credits (LC) and overutilisation 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."
However, the jewellery firm in a clarification said, "Indian jewellery demand during Q2 at 101.6 tonnes was almost a third lower Y-0-Y due to weaker consumer sentiments and there was a decline of nearly 51% in Indian bullion imports on Q-o-Q basis.
The situation has however, changed with the onset of festive season from October, 2019 onwards. The cash flows have started and the company by the end of November, 2019 has adjusted 90% of the devolved standby letter of credit (SBLCs). There is no further invocation of any SBLC.
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 March 1, 2019 and September 30, 2019.
The promoter of the company has infused Rs 215 crore of his personal funds in the company to improve its net working capital."
By Aseem Thapliyal