Sambhaav Media Ltd.

Brickwork Ratings revises the ratings for the Bank Loan Facilities of Rs. 29.09 Crs. of Sambhaav Media Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (10 Jun 2022)	Present
Fund Based	19.01	19.01	Long Term	BWR BBB- /Stable Reaffirmation	BWR BB + /Stable Downgrade
Non Fund Based	10.08	10.08	Short Term	BWR A3 Reaffirmation	BWR A4 + Downgrade
Grand Total	29.09	29.09	(Rupees Twenty Nine Crores and Nine lakhs Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure

RATING ACTION / OUTLOOK

Rating: BWR BB+/Stable/BWR A4 (downgrade)

The rating downgrade primarily factors the nonachievement of its projected performance in last few quarters. The revision in the ratings of the bank facilities of Sambhaav Media Ltd. takes into account the deterioration in its business risk profile in FY21 and lower-than-expected performance for FY23 as reflected in the decline in its total operating income and lower than envisaged cash accruals and profitability. he ratings continue to draw strength from its operational track record, strong regional market presence, diversified revenue stream, experienced management having healthy relationships with customers, and its comfortable financial risk profile. However, the ratings continue to be constrained by the moderate scale of operations, its significant dependence on advertisement revenue, and exposure to competition in the industry.

The ‘Stable’ outlook indicates BWR’s opinion that the Company will continue to benefit from its long track record of operations and the experience of its management and promoters. BWR expects that SML’s business risk profile will be maintained over the medium term.

The ability of the company to achieve the projected revenue, get the renewal/extension for the GSRTC work order, and increase profit margins will be key rating monitorable.

KEY RATING DRIVERS

Credit Strengths:

Experienced management, operational track record of the company, its strong regional market presence :
The Company is promoted by Mr. Manoj Vadodaria and Mr. Kiran Vadodaria, who have over three decades of experience in this industry. The Company has established strong relationships with reputed corporates and government agencies.
Diversified revenue stream, having healthy relationships with customers :
SML has developed a diversified business model. The Company is into the business of publishing of Newspapers, Journals and Periodicals and Sale of other Advertising Space or Time. Its business operations include VTV News, Abhiyaan Magazine, Sambhaav Metro (a mid-day paper), Wise TV, Vehicle Tracking System, Online Portal, Online Applications, and FM radio stations. However, scale of operations remains moderate.

Credit Risks:

Significant dependence on ad revenue :
Major portion of the revenue comes from advertisements through print media and television ads. Furthermore, the operating margin of media houses remains vulnerable to economic downturns as advertisement revenue is linked to economic conditions. Revival in the macroeconomic environment and its impact on the company's operating performance will remain a key monitorable.
Exposure to competition in the industry :
SML faces competition from other regional/ national news channels, FM stations and print media houses which have a healthy circulation in core regional markets. The ability to withstand competition and drive revenue growth will remain a key
monitorable.
Moderate financial risk profile marked by continued deterioration in operational performance during FY23 albeit comfortable capital structure :
The Company recorded a total operating income of Rs. 44.68 crs in FY22 as against a total operating income of Rs. 41.44 Crs in FY21. Sales growth has been subdued in the last 3 years . Due to a slowdown in the industry, reduction in ad revenue, and increased operational expenses due to the new FM stations initiative, profit margins for FY21 were reduced. The operating profit margin was at 13.31% in FY21 which improved to 13.84% in FY22 with the revival of the industry. Revenue generated from GSRTC has been lost for the entire lockdown period as GSRTC suspended operations for the entire lockdown period. However, the company was able to secure the GSRTC order extension successfully. The company expected to achieve the pre-covid level performance from the start of FY23. However, the company has reported around 29% QoQ decline in the revenue from Rs. 9.8 crs for the June 2022 quarter as against Rs. 13.87 Crs for the previous quarter. Further, the company is reporting PAT level losses from past three quarters due to lower absorption of fixed overheads. Despite the detoriation in the operational performance, the capital structure of the company remains comfortable marked by a healthy net worth of Rs. 68.20 Crs, low gearing of 0.14x, and comfortable coverage indicators with ISCR of 3.00x and DSCR of 2.38x.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has considered the standalone financials of the company as the performance under the subsidiaries is negligible. While assigning the Ratings, BWR has applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Positive :

Upgrade in rating is unlikely in the near term. BWR may upgrade SML’s rating if the company demonstrates a significant improvement in revenue along with sustained profit margins and improvement in the interest coverage ratios.

Negative :

Negative pressure on the ratings could also arise if the execution is lower than expected, or there is an increase in the working capital cycle. Specific credit metrics that could result in downgrade include interest coverage below 1.70 times on a sustained basis. Pressure on the ratings could also materialise if the financial risk profile weakens due to a slowdown in the execution pace, moderation in profitability and elongation of working capital cycle leads to a significant increase in the working capital requirement and impacts the cash flows. BWR will continue to monitor the pace of revival of revenue from both advertisements and circulation and the effect of cost reduction initiatives on overall operating performance of the Company. Significant and sustained deviations from our base case expectation may adversely impact SML's credit risk profile over the medium term and, thus, will remain a key monitorable

LIQUIDITY INDICATORS - Adequate

Cash accrual is expected to be between Rs 6-10 crs for FY23 and FY24 against debt obligation of around Rs. 1.00 Crs for next two years. SML has sufficient gearing headroom to contract additional debt. Average bank Working Capital limit utilization is moderate at around 65% for last 12 months. Unutilized bank limit is more than adequate to meet incremental working capital needs over the medium term.

ABOUT THE ENTITY

Sambhaav Media Ltd (SML) is a Public Limited Company incorporated in 1990, having its registered office in Ahmedabad, Gujarat. On 06Feb1995, SML got listed in NSE & BSE. Mr. Kiran Vadodaria is the Chairman & Managing Director of the Company. He has more than 3 decades of experience in the industry. The Company is in the business of Publishing of Newspapers, Journals and Periodicals, and Sale of Other Advertising Space or Time. Its business operations include VTV News, Abhiyaan Magazine, Sambhaav Metro, Wise TV, Vehicle Tracking system, Online Portal, Online Application, and FM.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21-22 (Audited)	FY 20-21 (Audited)
Operating Revenue	Rs.Crs.	44.68	41.44
EBITDA	Rs.Crs.	6.18	5.52
PAT	Rs.Crs.	-0.17	-1.86
Tangible Net Worth	Rs.Crs.	68.20	67.72
Total Debt/TNW	Times	0.14	0.18
Current Ratio	Times	2.43	1.96

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2022)			2022 (History)		2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	19.01	BWR BB+/Stable (Downgrade)	10Jun2022	BWR BBB- Stable (Reaffirmation)	19Mar2021	BWR BBB- Stable (Reaffirmation)	NA	NA	27Dec2019	BWR BBB- Stable (Reaffirmation)
Non Fund Based	ST	10.08	BWR A4+ (Downgrade)	10Jun2022	BWR A3 (Reaffirmation)	19Mar2021	BWR A3 (Reaffirmation)	NA	NA	27Dec2019	BWR A3 (Reaffirmation)
Grand Total		29.09	(Rupees Twenty Nine Crores and Nine lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

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.

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Priya Depala Senior Rating Analyst priya.d@brickworkratings.com	Dileep Narayan Singh Director dileep.s@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Sambhaav Media Ltd.

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Bank of Baroda	Term Loan - Sanctioned	0.83	_	0.83
2	Bank of Baroda	Cash Credit - Sanctioned	13.25	_	13.25
3	Bank of Baroda	Bank Guarantee - Sanctioned	_	8.50	8.50
4	Bank of Baroda	Letter of Credit - Sanctioned	_	1.50	1.50
5	Bank of Baroda	Forward Contract - Sanctioned	_	0.08	0.08
6	Bank of Baroda	Funded Interest Term Loan - Sanctioned	0.88	_	0.88
7	Bank of Baroda	CECL - Sanctioned	1.30	_	1.30
8	Bank of Baroda	GECL - Sanctioned	2.75	_	2.75
Total			19.01	10.08	29.09
TOTAL (Rupees Twenty Nine Crores and Nine lakhs Only)

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