| Entertainment Network (India) Limited | ||||||
| Ratings Reaffirmed | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL AA+/Stable/CRISIL A1+’ ratings on the bank facilities and debt programmes of Entertainment Network (India) Limited (ENIL).
The ratings continue to reflect the market leadership of ENIL in the FM radio broadcasting industry, comfortable financial risk profile backed by strong liquidity, and strong parentage of Bennett Coleman and Company Ltd (BCCL; 'CRISIL AAA/Stable'). These strengths are partially offset by significant dependence on ad revenue and exposure to intense competition.
Advertisement (ad), the major source of revenue for the company, is strongly correlated with the level of economic activity in the country. This was significantly impacted in fiscal 2021 and the first-half of fiscal 2022 due to the pandemic. However, with economic activity picking up gradually, operating performance witnessed healthy recovery with ad volumes crossing pre-pandemic levels. This is reflected in revenue of Rs 124 crore and earnings before interest, taxes, depreciation, and amortisation (Ebitda) margin reaching 22.2% for the quarter ended December 31, 2022, against the pre-pandemic levels of Rs 148 crore and 27.8%, respectively, in the corresponding period of fiscal 2020. Ad yields remain subdued and are not expected to recover significantly in the near term. Continued recovery in operating performance going forward will remain a monitorable. |
Analytical Approach For arriving at its ratings, CRISIL Ratings has combined the business and financial risk profiles of ENIL and its subsidiaries, Alternate Brand Solutions (India) Ltd, Entertainment Network, Inc (EN, INC), Global Entertainment Network Limited WLL and Mirchi Bahrain WLL, which have business and financial linkages with ENIL. The operations of ENIL in the USA are housed under EN, INC.
CRISIL Ratings has also applied its parent notch-up criteria to factor in the extent of support expected from BCCL.
Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Healthy business risk profile backed by market leadership ENIL is the market leader, in terms of revenue, in the Indian FM radio broadcasting industry. Business risk profile is also supported by a wide bouquet of channels and strong presence in most states. The flagship channel, Radio Mirchi, has strong brand equity, which is reflected in the highest revenue share in the industry.
Increased focus on solutions and digital products has helped to gain a larger market share and diversify business risk profile. Strong presence in the solutions business helps ENIL cater to non-radio consuming advertisers, thereby transforming itself into a solutions company. Business risk profile is likely to remain healthy over the medium term, driven by a diverse customer base, established market position and expected recovery in operating margin.
Strong financial risk profile Financial risk profile is supported by a healthy networth, nil debt and strong liquidity. Debt protections metrics continue to be robust in the absence of any external borrowing, and cash and equivalents were healthy at Rs 227 crore as on December 31, 2022. Financial risk profile is expected to continue to be strong over the medium term in the absence of any significant capital expenditure (capex) and healthy accrual.
Strategic importance to strong parent The company is strategically important to BCCL given the presence of the latter across all media platforms. ENIL derives high operational synergies through the dominant market position of the parent. BCCL will continue to provide timely and need-based support to the subsidiary.
Operating performance of radio operators remains vulnerable to economic downturns as ad revenue is linked to the overall macroeconomic scenario. Therefore, operations were significantly impacted during the two years of the pandemic, after reporting a weak performance in fiscal 2020 due to a subdued macroeconomic environment. Recovery in ad revenue will be a key monitorable over the medium term.
Also, ENIL competes with Radio City, Fever and Red FM, leading to pricing pressure. However, the company does have high flexibility to price its offerings and maintain healthy operating profitability. Furthermore, the solutions and digital businesses provide diversification benefits and partially reduce dependence on radio revenue. |
Liquidity: Strong Cash and equivalents stood at Rs 227 crore as on December 31, 2022. The company remains debt-free. Moderate capex should be funded through accrual and cash and equivalents. The company has launched a new digital platform that was funded through internal accrual. |
Outlook: Stable The company will continue to benefit over the medium term from its market leadership and healthy operating efficiency. Financial risk profile should remain comfortable, backed by a prudent capital structure and improving cash accrual. |
Rating Sensitivity Factors Upward Factors
Downward Factors
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About ENIL ENIL, incorporated in June 1999, has acquired FM radio licences across 63 cities. It is a 71% subsidiary of BCCL and listed on the National Stock Exchange and the Bombay Stock Exchange. The company has 73 frequencies located in 63 cities in India. After 19 years, the Radio Mirchi brand has been changed to just Mirchi.
The company is also present in international markets like the USA, Qatar, Bahrain and UAE. ENIL launched Mirchi Digital App in the international markets and India.
For the 9 months through December 2022, revenue was Rs 331 crore with net loss of Rs 7.8 crore; against Rs 217 crore and Rs 30.5 crore, respectively, for the corresponding period previous fiscal.
About BCCL BCCL, incorporated in 1913, is the flagship company of the largest media conglomerate in India, the Times group, which is a family-owned business operated by the sons of the late Ms Indu Jain, Mr Samir Jain and Mr Vineet Jain, and their families. BCCL, along with its group companies, has diversified into various media and entertainment businesses (print, television, radio, music, OOH advertising, and the Internet). Newspaper publishing is its largest business segment. |
Key Financial Indicators for ENIL
Note: These are CRISIL Ratings-adjusted figures NM- Not meaningful |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
*Yet to be issued |
Annexure - List of Entities Consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||
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This Annexure has been updated on 28-Feb-2023 in line with the lender-wise facility details as on 28-Feb-2022 received from the rated entity
Criteria Details
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