| Film Farm India Private Limited | ||||
| Rating reaffirmed at 'CRISIL B+ / Stable' | ||||
| Rating Action | ||||
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| 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 long-term bank facilities of Film Farm India Private Limited (FFIPL).
The rating continues to reflect susceptibility of the business to risks inherent in television (TV) content production and new subscription law, and large working capital requirement. These weaknesses are partially offset by the extensive experience of the promoters in the media and entertainment industry, and benefits derived from producing content for over-the-top (OTT) platform services provider through its new web series. |
Analytical approach Unsecured loans (Rs 1.71 crore as on March 31, 2020) extended by the promoters have been treated as debt due to absence of track record. |
Key rating drivers & detailed description Weaknesses
The biggest risk in the media and entertainment industry, particularly for content producers, is rapidly changing consumer preferences. The ability to identify emerging themes is key to success in content production. Content producers are always at the risk of being unable to adapt to evolving viewership patterns and generating innovative content. FFIPL is exposed to the risk of time or cost overruns in production, which may adversely impact its margin. Also, the new channel subscription rules from February 2019 might propel broadcasters to enrich their content to combat competition from other TV channels as subscribers have a free hand in choosing their channels.
The working capital cycle may remain stretched over the medium term and will be closely monitored. Gross current assets were sizeable at 428 days as on March 31, 2020, driven by moderate receivables and high inventory of 13 days and 443 days, respectively.
Strengths
The promoters, Mr Kalyan Guha and Ms Rupali Guha, have been working in the media and entertainment business for more than two decades. They began their career as a producer and director, respectively, at UTV and have also produced India's first game show at the launch of the Zee Network. Ms Rupali Guha comes from a family of producers, being the daughter of producer-director -- Mr Basu Chatterjee. FFIPL started producing TV commercials and, over the years, has grown from a commercial advertisement production company to a successful TV serial production house. Over the past few years, FFIPL has established healthy relationships with channel broadcasters, such as Colors, Zee TV, SAB TV, NDTV Imagine, Star Pravah and Zee Marathi.
With the evolution of OTT web broadcasting services such as Zee5 and ALT Balaji, the company will have a chance to produce content for these service providers. It is already producing a web series called Home for ALT Balaji. This will help in expanding its customer base and mitigate the risks involved in an otherwise competitive and conventional TV broadcasting market, where content is constrained by the television rating points of the broadcaster and limited air time. Also, with higher internet and mobile penetration rates in India, the online appetite of customers is going to grow. The company expects at least 15% margin for producing the web series. |
Liquidity: Stretched Cash accrual remains low, however, in the absence of any yearly debt obligation, the entire cash accrual – Rs 0.10-0.20 crore -- will aid financial flexibility. Bank limit utilisation was moderate and averaged around 87% during the 12 months through January 2021. Current ratio was healthy at 1.65 times as on March 31, 2020. The promoters are also expected to continue extending timely, need-based funds to support financial flexibility. The company has opted for moratorium for interest payment of working capital facility till August 2020. |
Outlook: Stable FFIPL will continue to benefit from the extensive experience of its promoters.
Rating sensitivity factorsUpward factors
Downward factors
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About the company FFIPL, incorporated in 1999 by Mr Kalyan Guha, produces TV serials and commercial advertisements. The company is based in Mumbai and entered film production in 2013; it has produced popular Hindi serials such as Uttaran, Kashi, and Tumhari Disha. FFIPL has also released a Marathi film, Narbachi Wadi, in September 2013. |
Key financials
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Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
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 various bank facilities | ||||||||||||||||||||||||||||||||||||
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