Express Publications (Madurai) Pvt. Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 145.58 Crs. of Express Publications (Madurai) Pvt. Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (16 Jun 2021)	Present
Fund Based	110.58	110.58	Long Term	BWR BB+ /Stable Reaffirmation	BWR BB + /Stable Reaffirmation
Non Fund Based	35.00	35.00	Short Term	BWR A4+ Reaffirmation	BWR A4 + Reaffirmation
Grand Total	145.58	145.58	(Rupees One Hundred Forty Five Crores and Fifty Eight 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

Ratings: Reaffirmed

The ratings reflect the long operational track record of the Company, established brand name, stable readership base of key publications like "The New Indian Express" and ‘Dinamani’ in their respective regions, experience and reputation of the management and strong editorial team. However, the ratings are constrained by the vulnerability of margins to fluctuations in global newsprint prices, the general decline in the circulation level of main publications in the recent past, high dependence on government advertisements for revenue, consecutive losses post FY19 primarily due to increase in newsprint cost and stretched liquidity position with working capital intensive nature of operations. The ratings have been assigned a stable outlook on account of the recovery in newspaper circulation. BWR believes that Express Publications (Madurai) Pvt Ltd business risk profile will be maintained over the medium term.

KEY RATING DRIVERS

Credit Strengths:

Established brand name and market position :
Express Publications (Madurai) Pvt. Ltd. is the flagship company of The New Indian Express Group and is publishing Newspapers and Periodicals in the States of Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, Kerala, Orissa and Union Territories of Delhi, Pondicherry, Andaman and Nicobar Islands, Yanam and Lakshadweep. The Company’s flagship newspapers ‘The New Indian Express’ and ‘Dinamani’ have significant market positions in South India. These publications also get a healthy share of advertisements from both government and private sector. Mr. Manoj Kumar Sonthalia, grandson of Late Mr. Ramnath Goenka, is the Chairman & Managing Director of the Company. He is ably supported by a well qualified and experienced Board of Directors. The editorial team of the Company consists of journalists of repute like Mr. Prabhu Chawla (Editorial Director), Mr. G S Vasu, Mr. K Vaidyanathan and Mr. Saji James
Long operational track record :
The Company was part of the Indian Express Group founded by Late Mr. Ramnath Goenka in 1932 in the erstwhile Madras. After his demise in 1991, the Group split into Indian Express (Mumbai) Limited and Express Publications (Madurai) Limited. The Company was converted into a private limited company, and its name changed to Express Publications (Madurai) Private Limited w.e.f. 29Jan2019. The Company’s publications have a significant presence in South India. It is also increasing its footprint in North India. The Company optimizes its printing resources by taking job work from different clients. Likewise, the Company rents out its commercial property in prime locations of Kochi and Bengaluru. Job work and property rentals have become a stable and reliable source of income for the Company.

Credit Risks:

Geographical concentration of revenue and operations :
Although the Company is gradually increasing its presence in North India, the majority of both circulation and advertising revenue come from the southern states of India. The five southern states of Tamil Nadu, Karnataka,Kerala, Andhra Pradesh and Telangana accounted for the majority of total advertising revenue. This concentration exposes the revenue to volatilities regarding political, economic and administrative changes in the five southern states.
Subdued long term outlook for print media :
Globally, the print media is facing challenges from the expansion and penetration of digital media. Global newsprint producers are decreasing their production capacity due to decline in the demand globally and the majority of global growth in advertising spending during 2018-2021 period is from digital media, and at the cost of newspapers and magazines which may witness negative growth. However, despite the increasing penetration of the internet, both the newspaper circulation and print media advertising expenditure is increasing in India.
Moderate financial performance :
Total Operating Income is on a declining trend from past three years. The company has recorded TOI of Rs. 207.87 Crs in FY22 against Rs. 210.08 Crs in FY21 and Rs. 262.22 Crs in FY20. Due to the higher input cost, the margins have also reduced in FY22. The company has recorded operating profit margin of 3.34% in FY22 against 6.61% in FY21. Further, gearing is stretched with total debt/ TNW standing at 11.13x in FY22 as compared to 4.12x in FY21 on account of the decline in networth due to consecutive losses incurred. The revenue from advertisements had been adversely impacted due during Covid period.The company has been striving to make a recovery after this setback and has implemented many cost optimizing measures to secure projected topline and bottom line. Subsequently, as part of the RBI’s one-time restructuring (OTR) scheme related
to Covid-19, the company got its debt restructured in June 2021. Under the OTR, the company’s loan tenure were extended by 24 months. BWR notes that depending on the pace of ramp-up in financial performance, the promoter entity might have to raise additional
funds to provide continued support and is a sensitivity factor.
Susceptibility to fluctuations in newsprint prices and macroeconomic events :
The newspaper industry remains vulnerable to fluctuations in the price of newsprint due to limited scope to pass it on to readers. The Company has no long-term contract for newsprint purchase or import and it places orders on a quarterly basis.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has considered the standalone performance of Express Publications (Madurai) Pvt Ltd. BWR has applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Positive :

substantial growth in revenue and profitability, leading to higher-than-expected cash accruals on a sustained basis.
Increase in net worth, which improves the capital structure and liquidity profile

Negative:

Any major debt-funded capex or any further stretch in the working capital cycle
Any further reduction/erosion of TNW which could adversely impact capital structure and liquidity profile or cessation of support from the promoter group

LIQUIDITY INDICATORS - Poor

The current ratio stands at 0.74x in FY21 which is further deteriorating to 0.67x in FY22. The Company has cash and cash equivalents amounting to Rs 10.49 Cr in FY22.The cash accruals are negative at Rs -12.84 Crs in FY21 and Rs.-29.22 Cr in FY22 which are expected to improve in current year. As per the OTR scheme, the company’s loan tenure were extended by 24 months and repayment will start from FY24. The working capital facilities are utilised more than 95% in last 6 months ending September 2022 and the Company is heavily reliant on bank borrowings.

ABOUT THE ENTITY

Express Publications (Madurai) Private Limited, formerly Indian Express (Madurai) Limited, was incorporated in 1959 under the Companies Act, 1956 in Chennai. The Company was part of the Indian Express Group founded by Late Mr. Ramnath Goenka in 1932 in the erstwhile Madras. It is the flagship company of The New Indian Express Group. The Company's publications include English dailies viz. The New Indian Express, The New Sunday Express and The Sunday Standard on Sundays from New Delhi and Dinamani in Tamil. In addition, the Company also brings out Samakalika Malayalam Varika, a weekly in Malayalam. In FY19, the Company started publishing Indulge, a weekly from Kolkata and The Morning Standard, a daily from New Delhi. Siddharth Media Holdings Private Limited is the holding company. Mr. Manoj Kumar Sonthalia, grandson of Late Mr. Ramnath Goenka, is the Chairman & Managing Director. The Editorial Director of the Group is Mr. Prabhu Chawla.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21-22 (Audited)	FY 20-21 (Audited)
Operating Revenue	Rs.Crs.	207.87	210.08
EBITDA	Rs.Crs.	6.95	13.89
PAT	Rs.Crs.	-33.52	-20.64
Tangible Net Worth	Rs.Crs.	22.74	56.26
Total Debt/TNW	Times	11.13	4.12
Current Ratio	Times	0.67	0.74

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

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

Facilities	Current Rating (2022)			2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	110.58	BWR BB+/Stable (Reaffirmation)	16Jun2021	BWR BB+ Stable (Reaffirmation)	12Mar2020	BWR BB+ Stable (Assignment)	NA	NA
Non Fund Based	ST	35.00	BWR A4+ (Reaffirmation)	16Jun2021	BWR A4+ (Reaffirmation)	12Mar2020	BWR A4+ (Assignment)	NA	NA
Grand Total		145.58	(Rupees One Hundred Forty Five Crores and Fifty Eight 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	Vidya Shankar Principal Director - Ratings Board : +91 80 4040 9940 vidyashankar@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Express Publications (Madurai) Pvt. 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	HDFC Bank	Term Loan - Sanctioned	30.36	_	30.36
2	Indian Bank	Term Loan - Sanctioned	3.19	_	3.19
3	Indian Bank	Term Loan - Sanctioned	3.22	_	3.22
4	Indian Bank	Term Loan - Sanctioned	0.88	_	0.88
5	Indian Bank	Term Loan - Sanctioned	0.59	_	0.59
6	Indian Bank	Term Loan - Sanctioned	4.98	_	4.98
7	Indian Bank	Term Loan - Sanctioned	17.26	_	17.26
8	Indian Overseas Bank	Letter of Credit - Sanctioned	_	35.00	35.00
9	Indian Overseas Bank	Working Capital (CC) - Sanctioned	35.00	_	35.00
10	Indian Overseas Bank	Term Loan - Sanctioned	4.38	_	4.38
11	Indian Overseas Bank	Term Loan - Sanctioned	7.52	_	7.52
12	Indian Overseas Bank	Term Loan - Sanctioned	3.20	_	3.20
Total			110.58	35.00	145.58
TOTAL (Rupees One Hundred Forty Five Crores and Fifty Eight lakhs Only)

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