Press Release Ananda Offset Private Limited (Revised) January 02, 2018 Ratings Amount Facilities Rating1 Rating Action (Rs. crore) Revised from CARE A-; Stable 10.00 CARE A; Stable Long term Bank Facilities (Single A Minus; Outlook: (reduced from 10.75) (Single A; Outlook: Stable) Stable) 10.00 Total Facilities (Rupees Ten crore only) Details of instruments/facilities in Annexure-1 Detailed Rationale & Key Rating Drivers The revision in the rating assigned to the bank facilities of Ananda Offset Private Limited (AOPL) takes into consideration improvement in the financial risk profile of ABP Private Limited (ABP; CARE A+; Stable/CARE A1+), a group entity, being a single largest customer of AOPL. The aforesaid rating continues to derive strength from the considerable experience of the promoters with established track record, strong operational linkage with ABP, conservative capital structure and satisfactory financial performance in FY17 & H1FY18. The rating, however, continues to be constrained by relatively small size of the company and intense competition in the private radio FM industry. The ability of the company to increase the scale of operation by increasing advertising revenue from the radio business and diversifying customer-base in printing segment while maintaining capital structure will remain the key rating sensitivities. Detailed description of the key rating drivers Key Rating Strengths Experienced promoters with strong group ABP group has been in the business of publishing newspapers and magazines since 1922. The ABP group has evolved into a media conglomerate that has four 24-hour national TV news channels, 9 premier publications, leading book publishing house and mobile-based information services. Strong operational linkage with ABP, from whom AOPL derives majority of its revenue in the form of printing income The company receives printing and processing charges from ABP for printing popular Bengali magazines like ‘Desh’, ‘Sananda’, ‘Anandolok’, ‘Anandamela’ and daily newspapers for ABP. AOPL has started printing on job work basis, for customers other than ABP, to diversify its customer-base, though it continued to be minimal. Improved performance of radio division in intensely competitive radio segment Income from radio business of AOPL has gradually increased since inception due to higher ad revenues and growing popularity of its radio station. Ad revenue from radio grew from Rs.10.60 crore in FY16 to Rs.10.80 crore in FY17. Radio division earned operating profit of Rs.1.30 crore in FY17 (vis-à-vis Rs.1.1 crore in FY16). Satisfactory financial performance in FY17 & H1FY18 with conservative capital structure Net sales of the company grew by approximately 15% in FY17 over FY16. The increase in revenue was on account of increase in printing charges from ABP for newspaper and magazines despite decline in the print volume. Higher printing charges and improved operating profit from radio division led to improved PBILDT margin in FY17. The PAT margin of the company also improved. The company earned cash accrual of Rs.5.85 crore vis-à-vis debt repayment of Rs.0.75 crore in FY17. Interest coverage ratio of the company also improved in FY17 on account of increase in the operating profit level coupled with decline in the interest cost of the company. The capital structure of the company continued to remain comfortable with debt equity and overall gearing ratios of 0.02x & 0.22x respectively as on March 31, 2017. The company has also repaid its entire term debt obligation and has a healthy debt protection metrics. In H1FY18, AOPL earned a PAT of Rs.0.51 crore on total operating income of Rs.21.3 crore. 1Complete definition of the ratings assigned are available at www.careratings.com and other CARE publications 1 CARE Ratings Limited Press Release Key Rating Weaknesses Relatively small sized company AOPL is a relatively small sized company with a total operating income of Rs.45.08 crore and total capital employed of Rs.56.89 crore in FY17. Intense competition from national level players in FM radio segment Bengali radio stream continued to be highly competitive with pressure from national level players. In order to counter such competitive presence, AOPL has tied up with Music Broadcast Pvt. Ltd. (the company which runs ‘Radio City 91.1 FM’ across major cities in India) which enables it garner ads for airing various national level ads in Kolkata through its radio station. Group Exposure AOPL’s aggregate exposure to subsidiaries/group companies was Rs.36.3 crore which forms 79% of its tangible net-worth as on March 31, 2017 (vis-à-vis Rs.33.1 crore forming 76% of its tangible net-worth as on March 31, 2016). Out of this, Rs.13.7 crore is funded out of loans from ABP. Prospects The ability of the company to increase the scale of operation by increasing advertising revenue from the radio business and diversifying customer-base in printing segment while maintaining capital structure will remain the key rating sensitivities. Analytical approach: Standalone with notching based on linkages with other group companies Applicable Criteria CARE’s Policy on Default Recognition Criteria on assigning Outlook to Credit Ratings CARE’s Policy on Default Recognition Rating Methodology: Factoring Linkages in Ratings Financial ratios – Non-Financial Sector About the Company AOPL, incorporated in 1970, belongs to the ABP group - an established media conglomerate of the country. The company was promoted by Late Mr Ashok Kumar Sarkar, son of Late Mr Prafulla Sarkar, the promoter of the group’s flagship company, ABP. AOPL is engaged in the business of printing various magazines/publications and newspapers of ABP on job work basis. The company is also into media and entertainment business through radio station ‘Friends 91.9 FM’ in Kolkata. AOPL is currently looked after by Mr Apurba Kumar Sengupta, Executive Director, under the overall guidance of Mr Aveek Sarkar and Mr Arup Sarkar, the current promoters of ABP. Financials of Ananda Offset Private Limited Brief Financials (Rs. crore) FY16 (A) FY17 (A) Total operating income 39.18 45.08 PBILDT 2.43 7.45 PAT -2.58 2.69 Overall gearing (times) 0.25 0.22 Interest coverage (times) 1.39 5.50 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. 2 CARE Ratings Limited Press Release Analyst Contact: Name: Ms Richa Bagaria Tel: (033) 4018 1653 Mobile: +91 99034 70650 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. Annexure-1: Details of Instruments/Facilities Name of the Date of Coupon Maturity Size of the Issue Rating assigned along Instrument Issuance Rate Date (Rs. crore) with Rating Outlook Fund-based - LT-Term Loan - - - 0.00 Withdrawn Fund-based - LT-Cash Credit - - - 10.00 CARE A; Stable 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. Fund-based - LT-Term LT - - - 1)CARE A-; 1)CARE A- 1)CARE A- Loan Stable (15-Oct-15) (14-Jan-15) (27-Feb-17) 2. Fund-based - LT-Cash LT 10.00 CARE A; - 1)CARE A-; 1)CARE A- 1)CARE A- Credit Stable Stable (15-Oct-15) (14-Jan-15) (27-Feb-17) 3 CARE Ratings Limited Press Release CONTACT Head Office Mumbai Ms.