Shares of Chennai-based Everonn Education on Thursday plunged 10% intra-day on the Bombay Stock Exchange after rating agency Care downgraded the company's credit rating to default on inability to pay interest on Rs. 808 crore of loans to banks.
Shares, however, recovered a portion of early losses and ended down 6% to Rs. 55 on the BSE.
The firm, in which the Dubai-based Varkey Group Ltd has a controlling stake, is engaged in the development and sale of educational products and services for schools and colleges.
"The revision in the ratings factors in instances of delays in debt servicing of its bank obligations by Everonn Education consequent to significant deterioration in the liquidity position of the company on account of delay in the realisation of receivables," said Care.
Everonn posted a net loss of Rs. 17 crore on operating income of Rs. 304 crore in 2011-12, and a loss of Rs. 186 crore on a Rs. 101 crore income in the first nine months of 2012-13.
Co-founder P Kishore stepped down from the board and resigned as MD in February 2012. The board decided to declassify him and his family members as promoters in March, seven months after Kishore was arrested on bribery and tax evasion charges.