RATING RATIONALE
19May2020
India Radio Ventures Pvt. Ltd.
Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.26.10 Crs. of India Radio Ventures Pvt. Ltd.
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||||
|---|---|---|---|---|---|---|---|
| Fund Based | |||||||
| Cash Credit Sanctioned | 02.50 | Long Term | BWR | ||||
| Term Loan Out-standing | 20.20 | ||||||
| Sub Total | 22.70 | ||||||
| Non-Fund Based | |||||||
| Bank Guarantee Sanctioned | 03.40 | Short Term | BWR | ||||
| Sub Total | 3.40 | ||||||
| Grand Total | 26.10 | (Rupees Twenty Six Crores and Ten lakhs Only) | |||||
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure RATING ACTION / OUTLOOK
BWR believes that India Radio Ventures Pvt. Ltd. business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the revenues and profit show sustained improvement. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than expected figures.
KEY RATING DRIVERSBWR has essentially relied upon the audited financial statements of India Radio Ventures Pvt. Ltd. of FY17,FY18,FY19 and publicly available information and information / clarifications provided by the entity’s management. The rating draws strength from the vast business experience of the director/s, established track of operations and letter of comfort provided by the group company. However, the rating is constrained by the scale of operations, weak financial profile indicated by high gearing level, weak debt protection metrics, weak liquidity position and high competition from other established players in the market.
Going forward, the ability of the entity to increase revenue, margins and manage liquidity would be key rating sensitivities.
Credit Strengths:
- Management Experience :
The directors are well experienced.
- Company’s Existence :
The company is in existence for 21 years and has seen complete business cycles.
- Customer Concentration :
The company has well diversified customers, since top 3 customers contribute only 24 % of sales.
- Group Support :
Letter of Comfort provided by the group company Jupiter Capital Pvt Ltd. which is rated at BWR BBB+/Stable on 16.03.2020.
Credit Risks:
- Liquidity Position :
The FY 19 current ratio of 0.75 indicates inadequate liquidity position.
- Networth :
Low net worth of the company resulting in high gearing.
- Debt Protection Metrics :
DSCR and ISCR of the company stand at 0.23 and -0.05 respectively in FY indicating company’s inadequacy to meet its debt obligations.
For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale). The company also availed moratorium for its running term loan under COVID-19 Pandemic.
RATING SENSITIVITIES
Going forward, the company’s ability to achieve the revenue and profitability as envisaged would be key rating sensitivity.
Positive: Growth in the revenues, improved profitability margins and efficient working capital management will be positive for rating.
Negative: Continued decline in operating profitability, and weakening of market position of channels.
ABOUT THE ENTITYIncorporated business entitiy in 1999 at Koramangala, Bangalore Karnataka.India Radio Ventures Pvt. Ltd. is engaged in Telecommunication broadcasting and information supply services i.e Indigo FM Channel 91.9. Mr. Korodi Sanjay Prabhu and Mr. Abhinav Khare are the directors of the company and they have more than a decade of experience in same line of business.
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 18-19 (Audited) |
FY 17-18 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 17.17 | 18.87 |
| EBITDA | Rs.Crs. | -0.20 | 1.84 |
| PAT | Rs.Crs. | -4.72 | -5.11 |
| Tangible Net Worth | Rs.Crs. | -0.09 | 2.91 |
| Total Debt/Tangible Net Worth | Times | -275.00 | 8.69 |
| Current Ratio | Times | 0.75 | 1.09 |
NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY ANY OTHER INFORMATION RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended) COMPLEXITY LEVELS OF THE INSTRUMENTS -
BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.
| Analytical Contacts | |
|---|---|
|
G Srinivasa Rao Lead Analyst srinivasarao.g@brickworkratings.com |
K Nagaraj Associate Director - Ratings Board : +91 80 4040 9940 nagaraj.ks@brickworkratings.com |
| 1-860-425-2742 | media@brickworkratings.com | |
| SL.No. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) |
|---|---|---|---|---|
| 1 | Bank GuaranteeSanctioned | _ | 3.40 | 3.40 |
| 2 | Cash CreditSanctioned | 2.50 | _ | 2.50 |
| 3 | Term LoanOut-standing | 20.20 | _ | 20.20 |
| Total | 26.10 | |||
| TOTAL (Rupees Twenty Six Crores and Ten lakhs Only) | ||||
| Instrument | Issue Date | Amount (Rs.Crs) | Coupon Rate | Maturity Date | ISIN Particulars |
|---|---|---|---|---|---|
| NA | NA | NA | NA | NA | NA |
| Name of Entity | % Ownership | Extent of consolidation | Rationale for consolidation |
|---|---|---|---|
| NA | NA | NA | NA |
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About Brickwork RatingsDisclaimer
Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented "as is" without any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons.