Shares of Eros International Media were hammered by heavy selling during the early morning deals on Thursday after ratings company CARE cut its long-term loan facilities ratings from 'BBB-' to 'D'. The stock was locked in the lower circuit of 20 per cent at Rs 53.10 per share on the BSE, which was also its lifetime low.
The ratings agency cited delays or likely defaults in serving the debt availed from banks as reasons for the downgrade.
“The revision in the ratings assigned to the bank facilities of Eros International Media is on account of ongoing delays/default in debt servicing due to slowdown in collection from debtors, leading to cash flow issues in the company,” CARE said in its rating rational.
The media entertaiment firm had tapped a credit line of Rs 750 crore through a combination of long-term and short-term bank loans, and other forms of bank credit.
"CARE had interacted with EIML's bankers and had obtained ‘Default if any’ statements from the company which mentioned delays/default in debt servicing (both principal and interest) in the terms loans availed by the company," a statement from the company said, adding that the ratings agency had also obtained statements regarding delay in servicing interest on cash credit and packing credit for more than 30 days, and a delay of more than 30 days in payment of bills.
Thus far in the current calendar year 2019, Eros has seen its market value plunge 39 per cent, as compared to an 11 per cent rise in the S&P BSE Sensex. In CY18, it tanked 56 per cent against a 6 per cent gain in the benchmark index.
The stock was listed on the bourses in November 2010 and touched an all-time high of Rs 644 on July 20, 2015, on the BSE in intra-day trade.
Till 10:07 am, a combined 5,08,988 shares had changed hands and there were pending sell orders for 1.37 million shares on the BSE and NSE, the exchanges' data showed.