CRISIL downgrades credit rating of Madhav Copper following alleged evasion of Rs137cr GST; Stock slumps 5%

SGST has temporarily seized MCL's land, bank accounts, stocks by following the continued absence of the Chairman from meeting the authorities despite summons.

Jul 23, 2021 10:07 IST India Infoline News Service

CRISIL Ratings has downgraded its rating on the long-term bank facilities of Madhav Copper Ltd. (MCL) to CRISIL BB+ / Negative from CRISIL BBB- / Stable.

The company stock was under selling pressure on Friday. At around 10.40 AM, Madhav Copper Ltd. stock was trading at Rs48.80 per piece down Rs2.65 or 5.15% on the NSE.

“The rating action follows alleged evasion of Rs137cr goods and service tax (GST) by MCL. Pursuant to the matter, the state goods and service tax (SGST) department has temporarily seized MCL's land, bank accounts, stocks by following continued absence of Nilesh Patel (Chairman) from meeting the authorities despite summons,” the company shared CRISIL’s rating rationale on Thursday.

It further said, as per the management, the case is currently subjudice and the impact and outcome of the event is uncertain. The rating action reflects the heightened management risk and adverse ruling or imposition of any material penalties shall remain key monitorable.

The rating reflects MCL's moderate financial profile and significant scale up in operations. These strengths are partially offset by a modest operating margin and vulnerability to fluctuations in raw material prices, it said.

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