| Bennett Coleman and Company Limited | ||||
| Rating reaffirmed at 'CRISIL AAA / Stable'; NCD Withdrawn | ||||
| Rating Action | ||||
| ||||
| ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL AAA/Stable’ rating on the long-term bank facilities of Bennett, Coleman & Company Ltd (BCCL). CRISIL Ratings has also withdrawn its rating on Non convertible debenture programme as company had repaid its debentures. The withdrawal is in line with CRISIL Ratings’ withdrawal policy.
The rating continues to reflect the strong market position of BCCL as India's largest media group with presence across diverse media and entertainment platforms, and its robust financial risk profile. These strengths are partially offset by susceptibility to volatility in global newsprint prices and economic cycles, sizeable exposure to subsidiaries and group companies in the gestation phase, and large investment in the brand capital business (BCB).
Ratings reflect improvement in operating performance of company in fiscal 2022 on quarter to quarter basis after significant impact in fiscal 2021 because of COVID-19 impact on economic activity. In Q3FY22 (full festive season), advertisement volumes have reached pre covid level while circulation stood at around 70% of pre covid levels. In-line with the circulation volumes, the advertisement yields also remained at a discount to the pre-covid levels thereby impacting overall ad revenue. Growth in operating revenue is expected to continue in next fiscal.
Further, driven by cost rationalisation measures such as reduction in pagination, employee cost and other fixed costs undertaken by the company operating margins have seen a sharp rebound, Further, newsprint cost accounts for 20-25% of total cost for BCCL have increased 20-30% which may reduce EBIDTA in FY23. Sustained high newsprint prices and its impact on margins will be a monitorable
BCCL’s credit risk profile is resilient due to its market leadership, strong liquidity of over Rs 2,500 crore and nil debt as on Dec 31, 2021, prudent capital structure, and high financial flexibility. |
Analytical Approach CRISIL Ratings has considered the standalone business and financial risk profiles of BCCL, however, for arriving at debt, CRISIL Ratings has included the debt of BCCL's subsidiaries along with BCCL. |
Key Rating Drivers & Detailed Description Strengths:
While newspaper publishing is the largest business segment for BCCL, it has diversified into various other media and entertainment businesses over the years. It has presence in radio broadcasting through subsidiary Entertainment Network (India) Ltd ('CRISIL AA+/Stable/CRISIL A1+'), and several television channels. Its internet properties are operated through a wholly owned subsidiary, Times Internet Ltd.
Weaknesses:
A substantial proportion of operating income comes from advertisement revenue, which has a strong linkage to economic activity. Recessionary cycles and uncertain market conditions lead to slowdown in spending, constraining the advertisement revenue for newspapers, as seen in the last fiscal.
Besides, as newsprint accounts for 20-25% of the operating cost and the company imports over 75% of its newsprint requirement, its operating margin is susceptible to volatility in newsprint prices and foreign exchange rates. Ebitda may be impacted in fiscal 2023 due to high-cost inventory and a possibly reduced advertisement revenue from various sectors, such as automobiles, education, e-commerce and real estate. Given the recent rise in newsprint prices, profitability could come under further pressure in fiscal 2023 if prices continue to rise.
Sizeable investment of over Rs 3,400 crore (as on March 31, 2021) in BCB exposes BCCL to market risk, as a large portion of BCB comprises investment in equity and debt of listed as well as unlisted companies and in immovable property.
Exposure to subsidiaries (including through equity and loans and advances) was over Rs 4,700 crore as on March 31, 2021. Though these entities are strategically important to the business risk profile in the rapidly evolving media space, they will yield subdued returns over the medium term as some of them are still in the investment phase. However, with some of the subsidiaries turning profitable and no large investment planned, support from BCCL to these subsidiaries is expected to remain at Rs 200-300 crore per annum over the medium term. |
Liquidity: Superior BCCL’s superior liquidity is driven by cash and equivalent of over Rs 2,500 crore as on Dec 31, 2021. Cash accrual is expected at Rs 500-600 crore per fiscal over the medium term. Fund-based limit of Rs 565 crore remains unutilised. |
Outlook Stable CRISIL Ratings believes BCCL will maintain its strong market position and robust financial risk profile over the medium term. |
Rating Sensitivity factors Downward factors
|
About the Company BCCL is the flagship company of the Times group, the largest media conglomerate in India. The company, incorporated in 1913, along with its group companies, has diversified into various media and entertainment businesses: print, television, radio, music, out of home advertising, and the internet. Newspaper publishing is its largest business segment.
The Times group's business strengths emanate from the robust brand image of its key daily publications: ToI and ET in English, Navbharat Times in Hindi, Maharashtra Times in Marathi, Vijay Karnataka in Kannada, and Ei Samay in Bengali. The group also publishes magazines, Filmfare and Femina. It has presence in radio broadcasting under the Radio Mirchi brand through its subsidiary, Entertainment Network (India) Ltd, in which the promoter group holds a 71.15% equity stake.
It has presence in television through Zoom TV (general entertainment channel), Times Now, Mirror Now (English news channels), ET Now (business news channel), Romedy Now, Movies Now, and Movies Now Plus (movie channels). The internet properties of the group are operated through a wholly owned subsidiary, Times Internet Ltd. |
Key Financial Indicators
|
Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
Annexure - Details of Instrument(s)
^Interchangeable with bank guarantee, letter of credit, working capital loan, and buyer’s credit. |
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | |||||||||||||||||||||
|
Criteria Details
|