Rating Rationale
June 23, 2023 | Mumbai
Living Media India Limited
Ratings Reaffirmed
 
Rating Action
Total Bank Loan Facilities RatedRs.124 Crore
Long Term RatingCRISIL A-/Positive (Reaffirmed)
Short Term RatingCRISIL A2+ (Reaffirmed)
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 A-/Positive/CRISIL A2+’ ratings on the bank facilities of Living Media India Limited (LMIL).

 

The ratings reflect the improvement in business risk profile derived from growth in core operations revenue growth. The ratings also factor in the healthy financial risk profile, driven by a debt-free balance sheet and strong financial flexibility, backed by LMIL’s holding in TV Today Network Ltd (TVTN; rated ‘CRISIL AA/Stable/CRISIL A1+’). These strengths are partially offset by susceptibility of revenue to economic downturns and market risk.

 

Revenue has grown by nearly 40% and 23%, respectively, in fiscals 2022 and 2023, respectively. Operating margin too has improved significantly over the last two fiscals, driven by few cost rationalisation measures undertaken during the Covid-19 pandemic, as against operating loss incurred in the past. LMIL reported operating margin (excluding dividend income) of 16.7% and 10.6% in fiscals 2022 and 2023, respectively. The margin declined during fiscal 2023 due to the higher production and inventory cost, given the sharp rise in input cost and marketing and publicity expenses. Operating performance should improve moderately over the medium term, and its sustenance will remain a key monitorable.

 

The financial risk profile will continue to be aided by the debt-free status of LMIL as on March 31, 2023. The company received a dividend income of around Rs 10 crore in fiscal 2023. It also received a special dividend of around Rs 227 crore from TVTN during the same year, which was entirely distributed to shareholders of LMIL in April 2023. Regular dividend income from TVTN should continue to support liquidity of LMIL.

 

The company holds 56.91% stake in TVTN which had a market value of around Rs 680 crore as on June 20, 2023. With a debt cap of Rs 50 crore the market value to debt coverage ratio continues to remain healthy.

Analytical Approach

CRISIL Ratings has followed the operating-cum-holding company approach and has considered the standalone credit risk profile of LMIL. Dividend income from TVTN has been included under the financial risk profile as this is largely a part of financial flexibility available with the company.

Key Rating Drivers & Detailed Description

Strengths:

  • Improvement in business risk profile supported by core operations revenue growth and cost rationalizations: Business risk profile for the company improved due to growth in core operations revenue seen over last two fiscals after a decline during the pandemic. Revenue grew by around 40% in fiscal 2022 and nearly 23% in fiscal 2023, despite low ad volumes across the media and entertainment industry. Revenue from the core operations stood at Rs 20 crore and Rs 15 crore in fiscals 2022 and 2023 (excluding dividend income), respectively, while the margin was healthy around 16.7% and 10.6%, respectively. The margin declined in fiscal 2023, led by a sharp rise in input cost as well as marketing and publicity expenses.

 

  • Strong financial flexibility marked by adequate liquidity, steady dividend income and a debt-free balance sheet: LMIL is the flagship company of the India Today group, which has strong presence across media segments: TVTN in Hindi and English news channels, and Thomson Press in printing. LMIL received dividend income of around Rs 10 crores in fiscal 2023. It also received a special dividend of nearly Rs 227 crore from TVTN during fiscal 2023, and distributed the entire amount to its shareholders in April 2023. LMIL is likely to remain debt-free over the medium term and maintain adequate liquidity (around Rs 40 crore currently). The company will continue to enjoy strong financial flexibility, given its strategic importance to the India Today group and its shareholding in TVTN. LMIL holds 56.91% stake in TVTN, which carried a market value of around Rs 680 crore as on June 20, 2023. LMIL is expected to continue to receive stable dividend income of Rs 8-10 crore from TVTN.

 

Weaknesses:

  • Susceptibility to economic cycles: Revenue and profitability remain susceptible to economic downturns as advertising contributes to a significant portion of income and it typically takes a hit during an economic slump. For instance, in fiscal 2021, the Covid-19 pandemic had a severe impact on circulation as well as advertising revenue. Dependence on advertising revenue, and hence, linkages with the economic scenario, will remain high.

 

  • Susceptibility to market risk: The market value of the shareholding in TVTN will remain susceptible to the share price of TVTN and the underlying market sentiment. Any increase in systemic risk, leading to a sharp decline in the share price, is a key rating sensitivity factor. Given the modest accrual from the publishing business, LMIL is also dependent on dividend income. Hence, regular dividend distribution by TVTN is crucial to manage cash flow and ensure adequate liquidity for LMIL.

Liquidity: Strong

LMIL has a debt-free balance sheet and a healthy cash balance of Rs 40 crore as on date. The company received total dividend of Rs 238 crore from TVTN in fiscal 2023; this included  a special dividend of around Rs 227 crore, which was distributed among LMIL’s shareholders in April 2023. Liquidity is also supported by an unutilised bank limit of Rs 63.5 crore and high financial flexibility, stemming from the 56.91% stake in TVTN, valued around Rs 680 crore as on June 20, 2023. The company is unlikely to undertake significant capital expenditure, and any incremental investment or working capital expenses will be met through internal accrual and the available liquidity.

Outlook: Positive

LMIL’s business risk profile may improve further with expected growth in the operating performance supported by the healthy market position of the India today and Business today magazines. It continues to benefit from healthy financial flexibility as the holding company of TVTN. However, the nature of the business limits its growth as per the macroeconomic conditions.

Rating Sensitivity factors

Upward factors

  • Improvement in business risk profile as a result of significant increase and diversity in revenue
  • Sustenance of healthy operating profitability
  • Upward revision in the ratings on TVTN by 1 or more notches

 

Downward factors

  • Material decline in the market value to debt coverage ratio
  • Significant decline in revenue impacting operating profitability
  • Downward revision in the ratings on TVTN by 1 or more notches

About the Company

LMIL was founded in 1975 as a part of the India Today group. The company derives revenue from its own publications (India Today, Business Today, etc.), publications under licence (Reader’s Digest, Cosmopolitan, etc.), marketing and distribution of international publications (TIME), and distribution rights for music titles. LMIL owns India's largest magazine distribution network.

 

The India Today group, also founded in 1975, has diverse business interests, including magazines, TV channels (Aaj Tak, India Today Television and GNT), a digital newspaper (Mail Today), a classical music label (Music Today), and other media operations. The Aditya Birla group acquired stake in LMIL in July 2012 and currently owns 41.5% through IGH Holdings Pvt Ltd.

Key Financial Indicators

As on / for the period ended March 31

 

2023

2022

Revenue

Rs crore

145

118

EBITDA*

Rs crore

15

20

EBITDA margin

%

10.6

16.7

Adjusted debt/adjusted networth

Times

-

-

Interest coverage

Times

15.5

1

    These are numbers adjusted by CRISIL Ratings and do not match the numbers reported by the company

    *: EBITDA numbers excluding dividend income

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

CRISIL Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the CRISIL Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN

Name of instrument

Date of

allotment

Coupon

rate (%)

Maturity

date

Issue size

(Rs crore)

Complexity

level

Rating assigned with outlook

NA

Cash Credit*

NA

NA

NA

20.00

NA

CRISIL A-/Positive

NA

Cash Credit**

NA

NA

NA

23.50

NA

CRISIL A-/Positive

NA

Overdraft Facility%

NA

NA

NA

20.00

NA

CRISIL A2+

NA

Proposed Term Loan

NA

NA

NA

60.50

NA

CRISIL A-/Positive

*Fully interchangeable with working capital demand loan and interchangeable with bank guarantee (sub-limit to CC) upto Rs. 4 crore and letter of credit (inland/import) upto Rs. 4 crore

** Fully interchangeable with working capital demand loan and interchangeable with bank guarantee (sub-limit to CC) upto Rs. 10 crore and letter of credit (inland/import) upto Rs. 10 crore

% Fully interchangeable with short term loan

Annexure - Rating History for last 3 Years
  Current 2023 (History) 2022  2021  2020  Start of 2020
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT/ST 124.0 CRISIL A2+ / CRISIL A-/Positive   -- 11-07-22 CRISIL A2+ / CRISIL A-/Positive 26-03-21 CRISIL A2+ / CRISIL A-/Stable 06-01-20 CRISIL A2+ / CRISIL A-/Stable CRISIL A-/Stable
      --   -- 01-06-22 CRISIL A2+ / CRISIL A-/Positive   --   -- --
Non-Fund Based Facilities ST   --   --   --   --   -- CRISIL A2+
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Cash Credit* 20 The Federal Bank Limited CRISIL A-/Positive
Cash Credit** 23.5 HDFC Bank Limited CRISIL A-/Positive
Overdraft Facility% 10 ICICI Bank Limited CRISIL A2+
Overdraft Facility% 10 RBL Bank Limited CRISIL A2+
Proposed Term Loan 60.5 Not Applicable CRISIL A-/Positive

*Fully interchangeable with working capital demand loan and interchangeable with bank guarantee (sub-limit to CC) upto Rs. 4 crore and letter of credit (inland/import) upto Rs. 4 crore

** Fully interchangeable with working capital demand loan and interchangeable with bank guarantee (sub-limit to CC) upto Rs. 10 crore and letter of credit (inland/import) upto Rs. 10 crore

% Fully interchangeable with short term loan

Criteria Details
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating criteria for manufaturing and service sector companies
Criteria for rating holding companies (including debt backed by pledge of shares)

Media Relations
Analytical Contacts
Customer Service Helpdesk

Aveek Datta
Media Relations
CRISIL Limited
M: +91 99204 93912
B: +91 22 3342 3000
AVEEK.DATTA@crisil.com

Prakruti Jani
Media Relations
CRISIL Limited
M: +91 98678 68976
B: +91 22 3342 3000
PRAKRUTI.JANI@crisil.com

Rutuja Gaikwad 
Media Relations
CRISIL Limited
B: +91 22 3342 3000
Rutuja.Gaikwad@ext-crisil.com


Manish Kumar Gupta
Senior Director
CRISIL Ratings Limited
B:+91 124 672 2000
manish.gupta@crisil.com

Naveen Vaidyanathan
Director
CRISIL Ratings Limited
B:+91 124 672 2000
naveen.vaidyanathan@crisil.com

Sumant Mulkalwar
Rating Analyst
CRISIL Ratings Limited
B:+91 124 672 2000
Sumant.Mulkalwar@crisil.com		Timings: 10.00 am to 7.00 pm
Toll free Number:1800 267 1301

For a copy of Rationales / Rating Reports:
CRISILratingdesk@crisil.com
 
For Analytical queries:
ratingsinvestordesk@crisil.com

 

Note for Media:
This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper/magazine/agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to CRISIL Ratings. However, CRISIL Ratings alone has the sole right of distribution (whether directly or indirectly) of its rationales for consideration or otherwise through any media including websites and portals.


About CRISIL Ratings Limited (A subsidiary of CRISIL Limited, an S&P Global Company)

CRISIL Ratings pioneered the concept of credit rating in India in 1987. With a tradition of independence, analytical rigour and innovation, we set the standards in the credit rating business. We rate the entire range of debt instruments, such as bank loans, certificates of deposit, commercial paper, non-convertible/convertible/partially convertible bonds and debentures, perpetual bonds, bank hybrid capital instruments, asset-backed and mortgage-backed securities, partial guarantees and other structured debt instruments. We have rated over 33,000 large and mid-scale corporates and financial institutions. We have also instituted several innovations in India in the rating business, including ratings for municipal bonds, partially guaranteed instruments and infrastructure investment trusts (InvITs).
 
CRISIL Ratings Limited ('CRISIL Ratings') is a wholly-owned subsidiary of CRISIL Limited ('CRISIL'). CRISIL Ratings Limited is registered in India as a credit rating agency with the Securities and Exchange Board of India ("SEBI").
 
For more information, visit www.crisilratings.com 
 



About CRISIL Limited

CRISIL is a leading, agile and innovative global analytics company driven by its mission of making markets function better. 

It is India’s foremost provider of ratings, data, research, analytics and solutions with a strong track record of growth, culture of innovation, and global footprint.

It has delivered independent opinions, actionable insights, and efficient solutions to over 100,000 customers through businesses that operate from India, the US, the UK, Argentina, Poland, China, Hong Kong and Singapore.

It is majority owned by S&P Global Inc, a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.

For more information, visit www.crisil.com

Connect with us: TWITTER | LINKEDIN | YOUTUBE | FACEBOOK

CRISIL PRIVACY NOTICE
 
CRISIL respects your privacy. We may use your contact information, such as your name, address and email id to fulfil your request and service your account and to provide you with additional information from CRISIL. For further information on CRISIL's privacy policy please visit www.crisil.com.



DISCLAIMER

This disclaimer is part of and applies to each credit rating report and/or credit rating rationale ('report') that is provided by CRISIL Ratings Limited ('CRISIL Ratings'). To avoid doubt, the term 'report' includes the information, ratings and other content forming part of the report. The report is intended for the jurisdiction of India only. This report does not constitute an offer of services. Without limiting the generality of the foregoing, nothing in the report is to be construed as CRISIL Ratings providing or intending to provide any services in jurisdictions where CRISIL Ratings does not have the necessary licenses and/or registration to carry out its business activities referred to above. Access or use of this report does not create a client relationship between CRISIL Ratings and the user.

We are not aware that any user intends to rely on the report or of the manner in which a user intends to use the report. In preparing our report we have not taken into consideration the objectives or particular needs of any particular user. It is made abundantly clear that the report is not intended to and does not constitute an investment advice. The report is not an offer to sell or an offer to purchase or subscribe for any investment in any securities, instruments, facilities or solicitation of any kind to enter into any deal or transaction with the entity to which the report pertains. The report should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in the US).

Ratings from CRISIL Ratings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold or sell any securities/instruments or to make any investment decisions. Any opinions expressed here are in good faith, are subject to change without notice, and are only current as of the stated date of their issue. CRISIL Ratings assumes no obligation to update its opinions following publication in any form or format although CRISIL Ratings may disseminate its opinions and analysis. The rating contained in the report is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment or other business decisions. The recipients of the report should rely on their own judgment and take their own professional advice before acting on the report in any way. CRISIL Ratings or its associates may have other commercial transactions with the entity to which the report pertains.

Neither CRISIL Ratings nor its affiliates, third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively, 'CRISIL Ratings Parties') guarantee the accuracy, completeness or adequacy of the report, and no CRISIL Ratings Party shall have any liability for any errors, omissions or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the report. EACH CRISIL RATINGS PARTY DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall any CRISIL Ratings Party be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the report even if advised of the possibility of such damages.

CRISIL Ratings may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of the instruments, facilities, securities or from obligors. Public ratings and analysis by CRISIL Ratings, as are required to be disclosed under the regulations of the Securities and Exchange Board of India (and other applicable regulations, if any), are made available on its website, www.crisilratings.com (free of charge). Reports with more detail and additional information may be available for subscription at a fee - more details about ratings by CRISIL Ratings are available here: www.crisilratings.com.

CRISIL Ratings and its affiliates do not act as a fiduciary. While CRISIL Ratings has obtained information from sources it believes to be reliable, CRISIL Ratings does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives and/or relies on in its reports. CRISIL Ratings has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. CRISIL Ratings has in place a ratings code of conduct and policies for managing conflict of interest. For details please refer to: https://www.crisil.com/en/home/our-businesses/ratings/regulatory-disclosures/highlighted-policies.html.

Rating criteria by CRISIL Ratings are generally available without charge to the public on the CRISIL Ratings public website, www.crisilratings.com. For latest rating information on any instrument of any company rated by CRISIL Ratings, you may contact the CRISIL Ratings desk at crisilratingdesk@crisil.com, or at (0091) 1800 267 1301.

This report should not be reproduced or redistributed to any other person or in any form without prior written consent from CRISIL Ratings.

All rights reserved @ CRISIL Ratings Limited. CRISIL Ratings is a wholly owned subsidiary of CRISIL Limited.
 

 

CRISIL Ratings uses the prefix 'PP-MLD' for the ratings of principal-protected market-linked debentures (PPMLD) with effect from November 1, 2011, to comply with the SEBI circular, "Guidelines for Issue and Listing of Structured Products/Market Linked Debentures". The revision in rating symbols for PPMLDs should not be construed as a change in the rating of the subject instrument. For details on CRISIL Ratings' use of 'PP-MLD' please refer to the notes to Rating scale for Debt Instruments and Structured Finance Instruments at the following link: https://www.crisil.com/en/home/our-businesses/ratings/credit-ratings-scale.html