CRISIL has reaffirmed its rating on the proposed long-term bank facility and NCDs of Dish Infra Services Pvt Ltd (DISPL) at 'CRISIL A-/Stable'. CRISIL had assigned its 'CRISIL A-/Stable' rating to DISPL's bank loan facility on April 1, 2015 and its proposed NCDs on March 26, 2015. For arriving at its rating, CRISIL has combined the financial and business risk profiles of DISPL and its parent Dish TV (India) Ltd (DTIL; rated CRISIL A-/Stable). This is because the two companies, together referred to as Dish (or the combine), are in the same line of business, have high operational and financial interdependence, and a common management. CRISIL's rating continues to reflect Dish's leadership position in the direct-to-home (DTH) industry, healthy operating efficiency marked by low content cost and strong cash accruals, and comfortable liquidity. The rating also factors in the strong support that Dish receives from the Essel group because of the combine's strategic importance in the media business. These rating strengths are partially offset by the combine's average financial risk profile, marked by high, though reducing, debt, and a negative net worth. Dish is also exposed to risks inherent in the industry such as intense competition, capital intensity, and high regulatory compliance. Dish continues to be a leader in the domestic DTH industry, with a net subscriber base of around 12.5 million as on December 31, 2014. Moreover, it maintains a high operating efficiency as reflected in its low content cost and healthy operating profitability, leading to strong cash accruals. Furthermore, the combine's liquidity is likely to remain strong, underpinned by cash balance and cash equivalents it is expected to maintain over the medium term. This provides it with financial flexibility to survive the impact of intense competition and any unfavourable regulatory changes. Dish continues to be an integral part of the Essel group's value chain, as the distribution arm of the group's media and entertainment business. Hence, CRISIL believes that the group will continue to support the combine as and when required and maintain a stake of more than 51 per cent in DTIL. Dish has an average financial risk profile, marked by a negative net worth, primarily on account of high depreciation. Furthermore, its business is highly capital intensive; the capital requirement has been partially funded through debt, leading to substantial borrowings. Dish also has large debt maturing over the medium term; capital expenditure (capex) over this period is expected to be funded largely through internal accruals, leading to a decrease in debt. The DTH industry is highly regulated with high tax incidence. Furthermore, the players have to pay licence fees. The Ministry of Information and Broadcasting's demand of Rs.6.25 billion for unpaid licence fees from DTIL is being disputed by the company and the matter is sub-judice. Significant capex or any adverse impact of regulatory changes, leading to sizeable debt will continue to be a key rating sensitivity factor. Furthermore, the DTH industry is intensely competitive with players pursuing subscribers aggressively, leading to high capital intensity and pressure on average revenue per user. |
| Outlook: Stable |
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CRISIL believes that Dish will maintain its established market position, while its financial risk profile will continue to improve, over the medium term, aided by stable cash accruals. The outlook may be revised to 'Positive' if the combine's financial risk profile improves substantially. Conversely, the outlook may be revised to 'Negative' if the combine undertakes a large capex programme, or reports considerably low profitability. |
| About the Group |
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Dish is one of India's largest DTH service providers by number of subscribers. The combine is part of the Essel group, which is promoted by Mr. Subhash Chandra. The group is present in the media industry through Zee Entertainment Enterprises Ltd (ZEEL), Zee Media Corp Ltd, and Siti Cable Network. DTIL's managing director and head of business, Mr. Jawahar Goel, is also the promoter of the Essel group and the ex-president of Indian Broadcasting Foundation. Mr. Subhash Chandra, promoter of ZEEL, is the chairman of DTIL. Dish has a presence in over 870 towns and cities through a network of over 170,000 registered dealers and 1900 registered distributors. DISPL is a 100 per cent subsidiary of DTIL. |
| Annexure 1 - Details of various bank facilities | ||||||||||||||||||||||||
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