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    Go First crisis impact: Wadia Group stocks slump up to 10%, are investors in exit mode?

    Synopsis

    Speaking to news channels, Go First CEO Kaushik Khona clarified that the company has filed for a voluntary insolvency resolution process with the National Company Law Tribunal, and not for bankruptcy.

    Go First crisis impact: Wadia Group stocks slump up to 10%, are investors on exit mode?TNN
    Shares of the Wadia Group companies were trapped by the bears on Dalal Street today after the shocking move by the group’s subsidiary Go First airlines to file for bankruptcy.

    Speaking to news channels, Go First CEO Kaushik Khona clarified that the company has filed for a voluntary insolvency resolution process with the National Company Law Tribunal, and not for bankruptcy.

    Go First's total debt to financial creditors was Rs 6,521 crore as of April, according to its filing with the National Company Law Tribunal.

    The tribunal is expected to hear the insolvency plea of the cash-strapped airline on Thursday.

    The budget carrier, which had a 6.9% market share as of March, had cancelled all the scheduled flights for May 3 to May 5 due to non-payment of dues to oil companies amid cash crunch.

    The Directorate General of Civil Aviation issued showcause notice to the airline for the cancellation of flights without prior notice.

    The financial crisis at Go First did have a sentimental impact on the group stocks, with Britannia Industries, National Peroxide, Bombay Dyeing and Manufacturing Co, and Bombay Burmah Trading falling more than 1-10% during the day.

    As per the earlier filing of Go First, the company had inter-corporate loans with group firms like Bombay Burmah, Britannia, and National Peroxide.

    The group’s flagship company Britannia Industries is cash rich with a strong balance sheet and the outlook for its business also remains bright.

    That investors remain positive on Britannia Industries reflects in the stock which recouped losses and was trading in the positive territory.

    Other group stocks too, recouped partial losses and were trading sharply off their day’s lows.

    While one cannot immediately ascertain the impact of the financial crisis at Go First on the group firms, the Street will look for clarifications from the group in the coming days.

    (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)



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