Interesting Revelations In Cox & Kings’ Disclosures
Cox & Kings (India) Ltd. failed to repay Rs 150-crore debt in June despite having a cash balance of Rs 700 crore just three months earlier. And the defaults continued. Spooked investors have been offloading shares, wiping off nearly 90 percent of its market value.
But it’s still not clear what led to the Cox & Kings defaults despite the cash pile. An analysis of its related-party transaction disclosures, however, shows the tour operator generates most of its revenue through sales to promoter-controlled firms. And receivables from third parties have ballooned in the last two years.
Overdependence On Promoters
Of the standalone income from operations of Rs 2,752 crore in the year ended March, promoter-owned entities contributed 87.65 percent. That share was 92.61 percent in the previous fiscal.
Cox & Kings had receivables or pending payments worth Rs 2,031 crore as of March, according to its filings. Related parties contributed Rs 581 crore and non-related parties accounted for Rs 1,450 crore.
The proportion of the receivables from non-related parties is disproportionately high, given that the segment contributed Rs 280-crore revenue in FY19. Therefore, for every Rs 100 worth of revenue generated from non-related parties in a year, Cox & Kings had Rs 518 pending.
Cox & Kings provided services worth Rs 86.04 crore to non-related parties in 2017-18, according to its disclosures. What that means is that bulk of its receivables from such entities are due for at least two years. And the combined receivables for FY18 and FY19 are four times the revenue generated from this segment.
Did the promoter entities have a role in Cox & Kings defaults? And why did receivables from non-related parties spike?
The company and its erstwhile statutory auditors DTS & Associates have yet to respond to BloombergQuint’s queries.