RATING RATIONALE 16 June 2021 Express Publications (Madurai) Pvt Limited

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs.145.58 Crores of Express Publications (Madurai) Pvt Limited (EPMPL or the ‘Company’).

Particulars: Amount (₹ Cr) Rating* Facility** Tenure Previous Present Previous Present (March 2020)

BWR BB+ BWR BB+ Fund based 104.01 110.58 Long Term Stable [Stable] Reaffirmed

BWR A4+ Non Fund Based 35.00 35.00 Short Term BWR A4+ Reaffirmed

Rupees One Hundred and Forty Five Crores and Fifty Total 139.01 145.58 Eight Lakhs Only

*Please refer to BWR website www.brickworkratings.com/ for definition of the ratings ** Details of Bank facilities is provided in Annexure-I

Rating: Long term & short term rating reaffirmed

RATING ACTION / OUTLOOK The ratings reflect the long operational track record of the Company, established brand equity, recall and stable readership base of key publications like ‘The New Indian Express’ and ‘Dinamani’ in their respective regions, experience and reputation of the management and strong editorial team. The ratings also take into account the steady revenue from the newspapers and publications, significant and relatively consistent advertisement revenue, stable income from job work and commercial property rent and ability to increase the cover price of the publications. However, the ratings are constrained by vulnerability of margins to fluctuations in global newsprint prices, general decline in the circulation level of main publications in FY19, FY20 and FY21 provisionals, high dependence on government advertisements for revenue, consecutive losses in FY19 and FY20 primarily due to increase in newsprint cost and stretched liquidity position with working capital intensive nature of operations.

The ratings have been assigned a stable outlook on account of recovery in the newspaper circulation in the upcoming months post the second wave of COVID-19. BWR believes that Express Publications (Madurai) Pvt Ltd business risk profile will be maintained over the medium term. www.brickworkratings.com Page 1 of 7 KEY RATING DRIVERS

Credit Strengths: Established brand name and market position: Express Publications (Madurai) Pvt. Ltd. is the flagship company of The New Indian Express Group and is publishing Newspapers and Periodicals in the States of Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, Kerala, Orissa and Union Territories of Delhi, Pondicherry, Andaman and Nicobar Islands, Yanam and Lakshadweep. The Company’s flagship newspapers ‘The New Indian Express’ and ‘Dinamani’ have significant market positions in South India. These publications also get a healthy share of advertisements from both government and private sector. New Indian Express has achieved a circulation of around 10% of the Market Leader - The Times of India (English Daily) and Dinamani has achieved a circulation of around 10% of the Market Leader – Daily Thanthi. Mr. Manoj Kumar Sonthalia, grandson of Late Mr. Ramnath Goenka, is the Chairman & Managing Director of the Company. He is ably supported by a well qualified and experienced Board of Directors. The editorial team of the Company consists of journalists of repute like Mr. Prabhu Chawla (Editorial Director), Mr. G S Vasu, Mr. K Vaidyanathan and Mr. Saji James.

Long operational track record: The Company was part of the Indian Express Group founded by Late Mr. Ramnath Goenka in 1932 in the erstwhile Madras. After his demise in 1991, the Group split into Indian Express (Mumbai) Limited and Express Publications (Madurai) Limited. The Company was converted into a private limited company, and its name changed to Express Publications (Madurai) Private Limited w.e.f. 29Jan2019. The Company’s publications have a significant presence in South India. It is also increasing its footprint in North India. The Company optimises its printing resources by taking job works from different clients. Likewise, the Company rents out its commercial property in prime locations of Kochi and Bengaluru. Job work and the property rentals have become a stable and reliable source of income for the Company. The revenue from advertisements had declined for the last two years on account of Lok Sabha Elections and Legislative Assembly Elections in 8 states. However, the quarters- Q3 & Q4 of the financial year 2020 – 2021 saw promising business from the corporate retail segment with advertisers such as HLL, Amazon, Colgate, SBI, Auto Majors spending and this is expected to grow year after year.

Socio-cultural initiatives to augment the brand equity and advertising revenue: Revenues from the annual features like calendars, Maruthuva Malar, Diwali Malar, Maanavar Malar, Election Malar, Thozhil Malar, Ramzan Malar, IsaiVizha Malar has been increasing with new clients. The company has brought several coffee table books focusing on leading politicians, spiritual leaders, religious places and traditions, fairs and festivals, generating substantial revenue and the company would like to capitalize this segment further by bringing out more coffee table books .

Credit Risks: Geographical concentration of revenue and operations: Although the Company is gradually increasing its presence in North India, the majority of both circulation and advertising revenue come from the southern states of India. The five southern states of Tamil Nadu, Karnataka, www.brickworkratings.com Page 2 of 7 Kerala, Andhra Pradesh and Telangana accounted for the majority of total advertising revenue in FY20. The same five southern states contributed over 90% of total circulation revenue in FY20. This concentration exposes the revenue to volatilities regarding political, economic and administrative changes in the five southern states.

Subdued long term outlook for print media: Globally, the print media is facing challenges from the expansion and penetration of digital media. Global newsprint producers are decreasing their production capacity due to decline in the demand globally and the majority of global growth in advertising spending during 2018-2021 period is from digital media, and at the cost of newspapers and magazines which may witness negative growth. However, despite the increasing penetration of the internet, both the newspaper circulation and print media advertising expenditure is increasing in India.

Susceptibility to fluctuations in newsprint prices and macroeconomic events: The newspaper industry remains vulnerable to fluctuations in the price of newsprint due to limited scope to pass it on to readers. The Company has no long term contract for newsprint purchase or import and it places orders on a quarterly basis.

Declining financial performance: The gearing is stretched with total debt/ TNW standing at 4.05x in FY21 provisionals as compared to 2.98x in FY20 on account of the decline in networth due to consecutive losses incurred. Weak debt protection metrics with the ISCR and DSCR standing at -0.21x and 0.15x respectively in FY20 and the same is improving slightly to 0.39x and 0.33x respectively in FY21 provisionals. Decline in profit margins with the NPM and OPM standing -12.87% and -2.51% respectively in FY20 which continues to remain weak in FY21 provisionals.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA For arriving at its ratings, BWR has considered the standalone performance of Express Publications (Madurai) Pvt Ltd. BWR has applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES Going forward the company’s ability to improve the scale of operations, improve and maintain profitability, the debt servicing capability & liquidity will be the key rating sensitivities.

Positive: The rating will be upgraded if the Company is able to achieve significant growth in revenue and profitability backed by a favourable industry scenario and optimum utilisation of capacities, and sustained improvement working capital management and enhanced recovery rates. Company’s effort at enhancing digitization will also be a key rating sensitive factor. Negative: The rating may be downgraded if there is lower than expected revenues affecting the profitability margins, coverage ratios, liquidity and gearing ratios adversely.

LIQUIDITY POSITION: Stretched The current ratio stands at 0.74x in FY20 which is further deteriorating to 0.67x in FY21 www.brickworkratings.com Page 3 of 7 provisionals. The Company has cash and cash equivalents amounting to Rs 10.71 Cr in FY20.The cash accruals are negative at Rs -25.59 Cr in FY20 and Rs -12.04 in FY21 provisionals which are not sufficient to meet the long term debt repayment obligations. The working capital facilities are fully utilised and the Company is heavily reliant on bank borrowings.

COMPANY PROFILE Express Publications (Madurai) Private Limited, formerly Indian Express (Madurai) Limited, was incorporated in 1959 under the Companies Act, 1956 in Chennai. The Company was part of the Indian Express Group founded by Late Mr. Ramnath Goenka in 1932 in the erstwhile Madras. It is the flagship company of The New Indian Express Group. The Company's publications include English dailies viz. The New Indian Express, The New Sunday Express and The Sunday Standard on Sundays from New Delhi and Dinamani in Tamil. In addition, the Company also brings out Samakalika Malayalam Varika, a weekly in Malayalam. In FY19, the Company started publishing Indulge, a weekly from Kolkata and The Morning Standard, a daily from New Delhi. Siddharth Media Holdings Private Limited is the holding company. Mr. Manoj Kumar Sonthalia, grandson of Late Mr. Ramnath Goenka, is the Chairman & Managing Director. The Editorial Director of the Group is Mr. Prabhu Chawla.

KEY FINANCIAL INDICATORS

FY19 FY20 Key Financial Indicators Unit Audited Audited Total Operating Income (in ₹ Cr) 303.69 262.22 EBITDA (in ₹ Cr) 13.61 -6.57 PAT (in ₹ Cr) -15.02 -33.75 Tangible Net Worth (in ₹ Cr) 110.64 76.89 Total debt/ TNW Times 1.96 2.98 Current ratio Times 0.94 0.74

KEY COVENANTS OF THE FACILITY RATED: NA

NON-COOPERATION WITH PREVIOUS RATING AGENCY IF ANY: NA

www.brickworkratings.com Page 4 of 7 RATING HISTORY FOR THE PREVIOUS 3 YEARS [including withdrawal/suspended]

Facili Chronology of Rating History for previous three years (Rating Assigned & date, rating Current Rating ties withdrawn/ suspended if applicable)

June 2021 12 March, 2020 2019 2018

Amt Amt Tenure Amt Rating Tenure Amt Rating Tenure (Rs Rating Tenure (Rs Rating (₹ Cr) (₹ Cr) Crs) Crs)

BWR BB+ BWR BB+ Fund Long Long 110.58 [Stable] 17.60 Stable NA NA NA NA NA NA Based Term Term Reaffirmed Assigned

Non Short BWR A4+ Fund Short 35.00 BWR A4+ 27.00 NA NA NA NA NA NA term Assigned Based term Reaffirmed

TOTAL 145.58 Rupees One hundred and Forty Five Crores Fifty Eight Lakhs Only

COMPLEXITY LEVELS OF THE INSTRUMENTS For more information, visit www.brickworkratings.com/download/ComplexityLevels.pdf

Hyperlink/Reference to applicable Criteria ● General Criteria ● Manufacturing Companies ● Short term debt

Analytical Contacts

Saloni Singh Vidya Shankar Ratings Analyst Principal Director - Ratings D : +91 22 6745 6647 B :+91 22 2831 1426, +91 22 2831 B :+91 80 4040 9940 1439 [email protected] [email protected]

1-860-425-2742 [email protected]

www.brickworkratings.com Page 5 of 7 ANNEXURE I Details of Bank Facilities rated by BWR

Sl. Type of Facilities Long Term Short Term Total No. (₹ Cr) (₹ Cr) (₹ Cr)

1. CC 35.00 - 35.00

2. Term Loan 15.06 - 15.06

3. Letter of credit - 35.00 35.00

4. Term loan 30.12 - 30.12

5. Term Loan 30.36 - 30.36

TOTAL 145.54

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