| Entertainment Network (India) Limited | ||||||
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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 AA+/Stable/CRISIL A1+’ ratings on the bank facilities and Rs 350 crore debt programmes of Entertainment Network (India) Limited (ENIL).
The ratings continue to reflect the sequential improvement in revenue in the second and third quarters of fiscal 2022 as radio advertisement (ad) volumes grew. The Ebitda (earnings before interest, taxes, depreciation and amortisation) improved to Rs 35.6 crore in the third quarter (against loss of Rs 18.7 crore incurred in the second quarter) on account of tight cost-control measures and improvement in ad volumes. However, the company is launching Mirchi Digital Platform in the international and domestic markets, which will weaken Ebitda margin in fiscal 2023.
The ratings also continue to reflect the market leadership of ENIL in the FM radio broadcasting industry, comfortable financial risk profile backed by strong liquidity, and support of the parent, Bennett Coleman and Company Ltd (BCCL; 'CRISIL AAA/Stable'). These strengths are partially offset by significant dependence on ad revenue and exposure to intense competition. |
Analytical Approach For arriving at its ratings, CRISIL Ratings has combined the business and financial risk profiles of ENIL and its subsidiaries, Alternate Brand Solutions (India) Ltd, Entertainment Network, Inc (EN, INC), Global Entertainment Network Limited WLL and Mirchi Bahrain WLL, which have business and financial linkages with ENIL. The operations of ENIL in the USA are housed under EN, INC.
CRISIL Ratings has also applied its parent notch-up criteria to factor in the extent of support expected from BCCL.
Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths Healthy business risk profile backed by market leadership ENIL is the market leader, in terms of revenue, in the Indian FM radio broadcasting industry. Business risk profile is also supported by a wide bouquet of channels and strong presence in most states. The flagship channel, Radio Mirchi, has strong brand equity, which is reflected in the premium charged on ad rates over other FM radio players.
Performance has significantly improved every quarter after the lows of the first quarter of fiscal 2022 due to the second wave of the pandemic. Revenue grew 17% on the back of 23% growth in the core FM radio revenue for the quarter ended December 31, 2021. Furthermore, cost-control measures led to a 70% year-on-year growth in Ebitda.
The solutions business is a strategic part of the overall operations of ENIL and has witnessed significant growth (both in revenue and profitability) in the last several fiscals. Increased focus on solutions and digital products has helped to gain a larger market share and diversify business risk profile. Strong presence in the solutions business helps ENIL cater to non-radio consuming advertisers, thereby transforming itself into a solutions company.Business risk profile is likely to remain healthy over the medium term, driven by a diverse customer base, established market position and improving operating margin.
Strong financial risk profile Financial risk profile is supported by a large networth, comfortable capital structure and strong liquidity. The company became debt-free in fiscal 2021 and remains so in fiscal 2022. Debt protections metrics continue to be robust in the absence of any external borrowing, and cash and equivalents were healthy at Rs 202 crore as on December 31, 2021. ENIL has sufficient gearing headroom to contract moderate debt, if required.
Strategic importance to strong parent The company is strategically important to BCCL, giving the parent presence across all media platforms and offering of a bouquet of media advertising options. ENIL derives significant operational synergies through the dominant market position of the parent. BCCL will continue to provide timely and need-based support to the subsidiary.
Around 65%-70% of the income comes from radio ads. The impact of Covid-19 and weak economic environment thereafter resulted in a sharp dip in ad volume. However, in the third quarter of 2022, radio ad volumes grew by 20% and revenue by 23%. With the receding impact of the pandemic, ad revenue is likely to grow further in fiscal 2023.
Also, ENIL has to compete with Radio City, Fever and Red FM, leading to considerable pricing pressure. However, with a strong market position and parentage of BCCL, the company does have high flexibility to price its offerings and maintain healthy operating profitability. Furthermore, the solutions and digital businesses provide diversification benefits and partially reduce dependence on radio revenue. |
Liquidity: Strong Cash and equivalents stood at Rs 202 crore as on December 31, 2021. The company remains debt-free. Moderate capital expenditure (capex) should be funded through accrual and cash and equivalents. Furthermore, the company is also launching a new digital platform that will be funded through internal accrual. Dividend will remain low, in line with previous fiscals. |
Outlook: Stable The company will continue to benefit over the medium term from its market leadership, solutions business, and healthy operating efficiency. Financial risk profile should remain comfortable, backed by a prudent capital structure and improving cash accrual. |
Rating Sensitivity Factors Upward Factors
Downward Factors
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About ENIL ENIL, incorporated in June 1999, has acquired FM radio licences across 63 cities. It is a 71% subsidiary of BCCL and listed on the National Stock Exchange and the Bombay Stock Exchange.
The company has 73 frequencies located in 63 cities in India.
After 19 years, the Radio Mirchi brand has been changed to just Mirchi.
After a successful entry in the US market, the company has further diversified operations to Qatar through an agreement wherein it will operate and manage Marhaba FM through subsidiary, Global Entertainment Network Ltd, and also by commencing radio broadcasting and related business through wholly owned subsidiary, Mirchi Bahrain WLL, in Bahrain.
ENIL also re-entered the UAE on March 28, 2021, through a brand licensing agreement with Dolphin Recording Studio LLC.
ENIL launched Mirchi Digital App in the international markets and will soon launch it in India. |
About BCCL BCCL, incorporated in 1913, is the flagship company of the largest media conglomerate in India, the Times group, which is a family-owned business operated by the sons of the late Ms Indu Jain, Mr Samir Jain and Mr Vineet Jain, and their families. BCCL, along with its group companies, has diversified into various media and entertainment businesses (print, television, radio, music, OOH advertising, and the Internet). Newspaper publishing is its largest business segment. |
Key Financial Indicators for ENIL
Note: These are CRISIL Ratings-adjusted figures *Includes only interest on lease liabilities as per Ind AS-116 |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
*Yet to be issued |
Annexure - List of Entities Consolidated
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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 | ||||||||||||||||||||
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This Annexure has been updated on 28-Feb-2022 in line with the lender-wise facility details as on 28-Feb-2022 received from the rated entity
Criteria Details
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