| Dish Infra Services Private Limited | ||||||
| Long-term rating reaffirmed; Short term rating withdrawn | ||||||
| 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 B+/Stable' rating on the bank facilities of Dish Infra Services Private Limited (DISPL), a wholly-owned subsidiary of Dish TV India Ltd (DTIL). The rating on bank facilities worth Rs. 471.4 crore has been withdrawn basis client request and receipt of the 'no dues certificates' from the respective bankers. The withdrawal is in line with the policy of CRISIL Ratings’ on withdrawal of ratings.
The ratings are driven by the group’s healthy market position in the direct-to-home (DTH) industry and improving, yet moderate, financial risk profile. These strengths are partially offset by the large disputed regulatory dues and exposure to risks inherent in the DTH industry.
DTIL has potential liability towards disputed license fees (including interest) of Rs 4,164 crore as per the demand raised by the Ministry of Information and Broadcasting in December 2020, which may constrain the financial flexibility of the company. The matter is currently sub judice. CRISIL Ratings will continue to monitor any developments in this regard.
CRISIL Ratings also takes note of the decline in the promoters’ share in the company to 4.04% as on September 30, 2022, from 54.56% as on March 31, 2020, post invocation of the pledged shareholding. Of the remaining promoter shareholding, 11.7% remains pledged. Mr Jawahar Goel, erstwhile chairman, has also resigned from the board of directors recently. Any further invocation of pledge by the lenders and change in the management will remain a monitorable. |
Analytical Approach CRISIL Ratings has applied its parent notch-up framework to factor in the strong operational, financial and managerial linkages between DISPL and DTIL. For arriving at the rating for DTIL, CRISIL Ratings has combined the business and financial risk profiles of DISPL and DTIL. The two companies, collectively referred to as the DTIL group, are in the same line of business and have high operational and financial interdependence and a common management. |
Key Rating Drivers & Detailed Description Strengths:
Dish TV is among the leading players in the DTH industry following its merger with Videocon D2h. The company has been able to leverage its strong brand to maintain a healthy market share in the DTH industry. As on March 31, 2022, the company had subscriber market share of ~22%. The company’s subscriber market share has fallen over the past few years because of constrained funds, leading to lower capital expenditure (capex) for acquiring new subscribers. Moreover, competition from DD Free Dish, particularly in rural areas, and the impact of the pandemic has resulted in lower disposable income for rural subscribers, leading to a decline in net active subscribers. However, in terms of revenue market share, Dish TV is still one of the top three operators in the industry.
The DTIL group’s financial risk profile has improved significantly in the recent past because of a sharp reduction in debt and healthy cushion between cash accrual and debt obligation. The group’s debt has reduced to Rs 202 crore as on September 31, 2022, from Rs 725 crore as on June 30, 2021. This led to net cash accrual to total debt improving to ~4 times in fiscal 2022 compared to 1.3 times in fiscal 2021. Over the medium term, net cash accrual is expected to remain healthy and debt to reduce further. Thus, debt protection metrics should remain healthy going forward.
However, the DTIL group's financial flexibility is constrained by potential liabilities pertaining to license fees and pledge of promoter shareholding. Promoters’ shareholding in the company has reduced to 4.04% as on September 30, 2022, from 54.56% as on March 31, 2020, post invocation of the pledged shareholding. Of the remaining promoter shareholding, 11.7% continues to be pledged. Moreover, Mr. Jawahar Goel, erstwhile chairman, has also resigned from the board of directors recently. Any further invocation of pledge by the lenders and change in the management will remain a monitorable.
Weaknesses:
DTIL has potential liability towards disputed license fees of Rs 4,164 crore as per the demand raised by the Ministry of Information and Broadcasting in December 2020. The matter is sub judice. Company has made a provision of Rs 3,945 crore as of fiscal 2022 for these regulatory dues and interest thereon. In the interim, the ministry has issued provisional license to all DTH players for 20 years with effect from April 1, 2021, amidst pending final order on this matter by the judiciary. Any large payout towards this liability, could significantly weaken the company's financial risk profile. CRISIL Ratings will continue to monitor any developments in this regard.
The DTH business requires sizeable capex on an ongoing basis. DTH operators need to deploy set-top boxes (STBs), which form a major part of the capex. Besides STBs, DTH operators also need to undertake significant establishment costs (installation service and software, operational and customer support) and operating expenses (advertising and cost of acquiring subscribers) to continue ramping-up operations.
Furthermore, DTH operators face risks arising from technological advancements and changing consumer behaviour. For instance, growing popularity of over-the-top (OTT) platform could be a threat in the long run. With limited product differentiation, the DTH industry is exposed to intense competition from the four large operators and from cable TV operators. |
Liquidity: Adequate The DTIL group had cash and equivalent of Rs 182 crore as on March 31, 2022. Therefore, CRISIL Ratings expects net cash accrual to remain healthy at ~1100-1200 crore for fiscals 2023 and 2024 as against debt obligation of ~Rs 111 crore remaining in fiscal 2023. Hence, the company has cushion to meet its capex requirement from internal accruals. However, any adverse ruling on the unpaid license fees may have a significant impact on the liquidity profile and will remain a key monitorable. |
Outlook: Stable CRISIL Ratings believes established market position and healthy cash accrual should continue to benefit the credit risk profile of the DTIL group. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company Dish TV is one of India's leading DTH service providers by number of subscribers. It is part of the Essel group, which has presence in the media industry through Zee Entertainment Enterprises, Zee Media Corp Ltd and Siti Cable Network.
Dish TV has its own platform with more than 700 channels and services, including 31 audio channels and 71 high-definition channels and services. The company has a vast distribution network of over 3,700 distributors and around 400,000 dealers spanning 9,400 towns in India.
DISPL is a 100% subsidiary of DTIL and provides DTH-related infrastructure and services. DTIL retains the DTH license and focusses on branding and subscriber acquisition. Effectively, the consumer premise equipment is owned and leased to the customer by DISPL, while DTIL manages the content and subscriber revenue. The entire debt for DISPL is guaranteed by DTIL. |
Key Financial Indicators
These are CRISIL Ratings’ adjusted numbers for DTIL (consolidated) and may not match directly with the company’s reported numbers. |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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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 | |||
| Facility | Amount (Rs.Crore) | Name of Lender | Rating |
| Buyer Credit Limit | 11.6 | RBL Bank Limited | Withdrawn |
| Letter of Credit | 35.2 | Standard Chartered Bank Limited | Withdrawn |
| Overdraft Facility | 40 | Axis Bank Limited | CRISIL B+/Stable |
| Overdraft Facility | 50.2 | RBL Bank Limited | Withdrawn |
| Overdraft Facility | 37.8 | RBL Bank Limited | CRISIL B+/Stable |
| Term Loan | 97.1 | Axis Bank Limited | CRISIL B+/Stable |
| Term Loan | 307.9 | Axis Bank Limited | Withdrawn |
| Term Loan | 66.5 | RBL Bank Limited | Withdrawn |
| Term Loan | 22 | RBL Bank Limited | CRISIL B+/Stable |
This Annexure has been updated on 30-Mar-2023 in line with the lender-wise facility details as on 29-Mar-2023 received from the rated entity.
Criteria Details
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