Everonn crashes 8% as CARE cuts rating to default

Moneycontrol Bureau

Shares of Everonn Education slumped 8 percent to Rs 54.50 after rating agency CARE downgraded the company’s credit rating to default. CARE said the company has been unable to pay interest on Rs 810 crore worth of loans to banks.
Speaking to CNBC-TV18, T N Arun Kumar, general manager, CARE, said delay in payment from public sector clients was the main reason for the company not being able to service its debt. Kumar added that this could be a one-off situation and that further rating actions would depend on liquidity situation.

The receivable days for the quarter ended March 2012 was 348 days (company gets payment 348 days after making the sale), compared to 211 days in the March quarter last year.
The company’s operating performance has been under pressure, with revenues declining. In an interview to Business Standard last year, the management attributed the decline to "untoward incidents"
After touching a high of Rs 723 in April 2011, the shares have been going downhill from the time erstwhile managing director P Kishore was arrested by the CBI in August that year, on charges on trying to bribe an Income Tax official to suppress the company’s taxable income.
That sparked a sell-off in the stock as it raised questions about the credibility of the company’s numbers. A few months later Dubai-based Varkey Group, picked up 12 percent in the company for Rs 138 crore through a preferential allotment. This was followed by an open offer and currently the Varkey Group, its promoters and associate firms own around 43 percent of Everonn Education.