Venus Remedies shares slump 20% after Crisil downgrade

Shares of Venus Remedies slumped 20 per cent today after ratings agency Crisil downgraded its ratings on the company's bank facilities.
Following this, Venus Remedies' scrip tumbled 20 per cent to settle at Rs 302.80 on the BSE.
At the NSE, the stock plunged 19.99 per cent to close at Rs 302.10.
Led by the dip in the stock, the company's market value fell by Rs 86.54 crore to Rs 346.46 crore.
On the volume front, 10.80 lakh shares of the company changed hands at the BSE, while over 31 lakh shares were traded at the NSE during the day.

Crisil has downgraded its ratings on the bank facilities of Venus Remedies to Crisil D/Crisil D' from 'Crisil BB+/Stable/Crisil A4+'.

The rating downgrade reflects delays in repayment of term loan by the company driven by a stretched liquidity, the rating agency said.
VRL's stretched liquidity is on account of the significant increase in total cost of the large debt-funded capital expenditure over the past one year and high working capital requirements, CRISL said in a report issued yesterday.
The company is undertaking capex towards setting up marketing office. The total cost of this capex is estimated to have increased by about Rs 100 to 150 million. In addition to the above company's liquidity has also deteriorated on account of the high working capital requirements reflected by inventory of about 131 days as on March 31, 2014.

The ratings continue to reflect VRL's comfortable financial risk profile, marked by a healthy net worth and strong debt protection metrics.
The ratings also factor in the company's strong presence in the high-value critical care segment and the healthy growth in its domestic and export sales.
For arriving at the ratings, Crisil has combined the business and financial risk profiles of VRL and its wholly owned subsidiary, Venus Pharma GmbH (VP), based in Germany. VP provides out-licensing services of common technical documents, and warehousing and logistical support to VRL. The two entities have together been referred to as VRL, Crisil added.