Press Release
ABP Private Limited
November 30, 2017 Ratings Amount Rating Facilities Rating1 (Rs. crore) Action CARE A+; Stable Long-term Bank Facilities 136.78 Reaffirmed (Single A plus; Outlook: Stable) CARE A+; Stable/ CARE A1+ Long/Short-term Bank facilities 230.0 (Single A plus; Outlook: Stable/A Reaffirmed One Plus) CARE A1+ Short-term Bank Facilities 122.0 Reaffirmed (A One Plus) 488.78 Total Facilities (Rupees Four Hundred Eighty eight crore and Seventy Eight lakh only) 100.0 CARE A1+ Commercial Paper (CP) issue* Reaffirmed (Rupees One Hundred crore only) (A One Plus) Proposed Commercial Paper (CP) 50.0 CARE A1+ Reaffirmed issue# (Rupees Fifty crore only) (A One Plus) Details of instruments/facilities in Annexure-1
*carved out of sanctioned working capital limit # change in terms from carved out to standalone limit; the outstanding CP and sanctioned bank borrowing will not exceed the overall sanctioned working capital limit of the company.
Detailed Rationale& Key Rating Drivers The ratings assigned the bank facilities/instruments of ABP Private Limited (ABP) continue to derive strength from the experienced promoters of ABP with established track record, strong & diversified portfolio of newspapers, magazines & news channels, established presence of the group in electronic media platform, satisfactory financial performance coupled with comfortable liquidity position and improvement in capital structure in FY17 (refers to the period April 01 to March 31)& H1FY18. The ratings, however, continue to be constrained by volatility in newsprint prices, forex fluctuation risk, dependence on advertisement revenue and regional dependence. The ability of the company to achieve growth in its advertising revenue, improve the profitability margin while also diversifying its revenue source are the key rating sensitivities.
Detailed description of the key rating drivers Key Rating Strengths Reputed and experienced promoters with established track record ABP has been in the business of publishing newspapers and magazines since 1922. Over nine decades, the company has evolved into a media conglomerate with various premier publications, electronic media ventures, book publishing and mobile based information services. Diversified portfolio of newspapers, magazines and news channels With a legacy of best practices and reaching out to millions of viewers and readers, the ABP group has evolved into a media conglomerate that has 9 premier publications, four 24-hour national TV news channels and leading book publishing house. Strong position in the print and electronic media segment; though print media is concentrated in Eastern India Established market position of the newspapers (The Telegraph and AnandaBazarPatrika) and news channel (ABP News) have led to healthy business returns. The group currently broadcasts four news channels- ABP News (Hindi), ABP Ananda (Bengali), ABP Majha (Marathi) and recently launched ABP Asmita (Gujarati) with strong positions in their respective genres.
1Complete definition of the ratings assigned are available at www.careratings.com and other CARE publications 1 CARE Ratings Limited
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Satisfactory financial performance of the group in FY17 & H1FY18 Though demonetization has impacted the revenue and profitability of ABP owing to lower advertisement revenue, however, group was able to register turnover of around Rs.1340 crore in FY17, with a dip of merely 2% from FY16. The decline in operating margin was on account of higher voluntary retirement compensation and higher advertisement expenditure (mainly during demonetisation period) in FY17 vis-à-vis FY16. Decline in PBIILDT level led to decline in PAT level and margin of the company despite lower interest cost. The operating and PAT margin of the group remained satisfactory in FY17. In H1FY18, ABP (consolidated) earned PAT of Rs.49.9 crore on a total operating income of Rs.653.6 crore. Comfortable capital structure and debt protection metrics post prepayment of term loan The capital structure of the group witnessed an improvement on account of prepayment of significant term loan (Rs.72.5 crore in FY17) through healthy accruals on consolidated level coupled with accretion of profit to reserves. The consolidated debt equity and overall gearing ratios improved to 0.56x & 1.17x respectively as on March 31, 2017 from 1.21x & 2.45x respectively as on March 31, 2016. Average utilization of ABP (standalone) stood at around 39% for 12 months ending October 2017. Term debt to GCA and total debt to GCA of the group also improved on account of decline in total debt level. The interest coverage ratio also improved and stood at 5.24x in FY17.
Key Rating Weakness Volatility in newsprint prices The major raw material for the group is newsprint, constituting approximately 92% of the total raw material cost. ABP procures NP from the domestic (27%) as well as international suppliers (73%). Domestic NP prices are also linked to import price, as majority of domestic NP demand is met through imports. Forex fluctuation risk ABP is subjected to forex fluctuation risk, as it imports around 73% of its NP consumption. However, the forex risk is partially mitigated as the company takes forward cover for majority of its exposure at an opportune time. However, ABP (standalone) incurred a forex loss of Rs.0.37 crore in FY17 vis-à-vis loss of Rs.7.2 crore in FY16. Dependent on the advertisement revenue which in turn is linked to the growth of the economy The growth in the revenue & profitability of ABP group are linked to the economic cycles, as the advertisement revenue (which forms around 81% of operating revenue) is directly linked to the growth of the economy. However, ad spend on a particular channel/newspaper depends on its market reach and popularity it enjoys among the consumers. ABP has strong regional focus which helps it to compete effectively with its much bigger competitors having national content. Strong market position and large client base, from all the sectors, is also expected to contribute to its revenue growth, going forward.
Analytical approach: CARE has taken a consolidated view of ABP and its wholly owned subsidiary, ABP News Network Pvt. Ltd (ANNPL) as it operates in similar industry and has financial linkages.
Applicable Criteria Criteria on assigning Outlook to Credit Ratings CARE’s Policy on Default Recognition Rating Methodology - Service Sector Companies Criteria for Short Term Instruments Rating Methodology: Factoring Linkages in Ratings Financial ratios – Non-Financial Sector
About the Company ABP Pvt. Ltd (ABP), one of the leading print media companies in Eastern India, was formed in 1922 with the launch of its four pages Bengali daily - ‘AnandaBazar Patrika’. Currently, ABP’s publication portfolio includes Ananda Bazar Patrika (Bengali daily), The Telegraph (English daily), E-bela (Bengali tabloid), TTIS and other Bengali periodicals like Desh, Anandamela, Anandalok, and. ABP has state-of-the-art printing infrastructure in Kolkata and Barasat, both in West Bengal (WB). Besides this, it has
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Press Release printing facilities in two other towns in WB – Barjora and Baharampur. ABP also has tie-ups with printers in Ranchi, Patna, Bhubaneswar, Siliguri and Guwahati, who execute printing orders as per ABP’s requirement. Besides print media, ABP has presence in electronic media via its wholly owned subsidiary ABP News Network Pvt. Ltd {ANNPL, formerly Media Content & Communication Services (India) Pvt. Ltd (CARE A; Stable)}, which owns four news channels. Financials of ABP Private Limited (Consolidated) Brief Financials (Rs. crore) FY16 (A) FY17 (A) Total operating income 1367.13 1339.10 PBILDT 221.77 197.66 PAT 90.62 74.57 Overall gearing (times) 2.85 1.35 Interest coverage (times) 3.74 5.24 A: Audited
Status of non-cooperation with previous CRA: Not Applicable
Any other information: Not Applicable
Rating History for last three years: Please refer Annexure-2
Note on complexity levels of the rated instrument: CARE has classified instruments rated by it on the basis of complexity. This classification is available at www.careratings.com. Investors/market intermediaries/regulators or others are welcome to write to [email protected] for any clarifications.
Analyst Contact: Name: Ms. Richa Bagaria Tel: (033) 4018 1653 Mobile: +91 9830770650 Email: [email protected]
**For detailed Rationale Report and subscription information, please contact us at www.careratings.com
About CARE Ratings: CARE Ratings commenced operations in April 1993 and over two decades, it has established itself as one of the leading credit rating agencies in India. CARE is registered with the Securities and Exchange Board of India (SEBI) and also recognized as an External Credit Assessment Institution (ECAI) by the Reserve Bank of India (RBI). CARE Ratings is proud of its rightful place in the Indian capital market built around investor confidence. CARE Ratings provides the entire spectrum of credit rating that helps the corporates to raise capital for their various requirements and assists the investors to form an informed investment decision based on the credit risk and their own risk-return expectations. Our rating and grading service offerings leverage our domain and analytical expertise backed by the methodologies congruent with the international best practices. Disclaimer CARE’s ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE has based its ratings/outlooks on information obtained from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments. In case of partnership/proprietary concerns, the rating /outlook assigned by CARE is based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating/outlook may undergo change in case of withdrawal of capital or the unsecured loans brought in by the partners/proprietor in addition to the financial performance and other relevant factors.
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Annexure-1: Details of Instruments/Facilities Name of the Date of Coupon Maturity Size of the Rating assigned Instrument Issuance Rate Date Issue along with Rating (Rs. crore) Outlook Non-fund-based-Short Term - - - 122.00 CARE A1+
Fund-based - LT/ ST-CC/Packing - - - 230.00 CARE A+; Stable / Credit CARE A1+
Term Loan-Long Term - - Mar-24 136.80 CARE A+; Stable
Commercial Paper-Commercial - - - 100.00 CARE A1+ Paper (Carved out) Commercial Paper-Commercial - - - 50.00 CARE A1+ Paper (Standalone) Annexure-2: Rating History of last three years Sr. Name of the Current Ratings Rating history No. Instrument/Bank Type Amount Rating Date(s) & Date(s) & Date(s) & Date(s) & Facilities Outstanding Rating(s) Rating(s) Rating(s) Rating(s) (Rs. crore) assigned in assigned in assigned in assigned in 2017-2018 2016-2017 2015-2016 2014-2015 1. Short Term Instruments- ST - - - - - 1)Withdrawn CP/STD (05-Dec-14) 2. Non-fund-based-Short ST 122.00 CARE A1+ 1)CARE A1+ 1)CARE A1+ 1)CARE A1 1)CARE A1 Term (18-May-17) (19-Oct-16) (10-Sep-15) (05-Dec-14) 2)CARE A1 (04-Aug-15) 3. Fund-based - LT-Term LT - - - 1)Withdrawn 1)CARE A 1)CARE A- Loan (19-Oct-16) (10-Sep-15) (05-Dec-14) 2)CARE A (04-Aug-15) 4. Fund-based - LT/ ST- LT/ST 230.00 CARE A+; 1)CARE A+; 1)CARE A / 1)CARE A / 1)CARE A- / CC/Packing Credit Stable / Stable / CARE CARE A1+ CARE A1 CARE A1 CARE A1+ A1+ (19-Oct-16) (10-Sep-15) (05-Dec-14) (18-May-17) 2)CARE A / CARE A1 (04-Aug-15) 5. Fund-based - LT-Term LT - - - 1)Withdrawn 1)CARE A 1)CARE A- Loan (19-Oct-16) (10-Sep-15) (05-Dec-14) 2)CARE A (04-Aug-15) 6. Term Loan-Long Term LT 136.80 CARE A+; 1)CARE A+; 1)CARE A 1)CARE A - Stable Stable (19-Oct-16) (10-Sep-15) (18-May-17) 2)CARE A (04-Aug-15) 7. Commercial Paper- ST 100.00 CARE A1+ 1)CARE A1+ - - - Commercial Paper (Carved (18-May-17) out) 2)CARE A1+ (21-Apr-17) 8. Commercial Paper- ST 50.00 CARE A1+ - - - - Commercial Paper (Standalone)
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