Press Release Ananda Offset Private Limited March 17, 2021 Ratings Amount Facilities/Instruments Ratings Rating Action (Rs. crore) CARE A; Stable Long Term Bank Facilities 1.60 Assigned (Single A; Outlook: Stable ) CARE A; Stable Long Term Bank Facilities 10.00 Reaffirmed (Single A; Outlook: Stable ) 11.60 Total Bank Facilities (Rs. Eleven Crore and Sixty Lakhs Only) Details of instruments/facilities in Annexure-1 Detailed Rationale & Key Rating Drivers The rating assigned to the bank facilities of Ananda Offset Private Limited (AOPL) continues to derive strength from the experienced promoters with long track record, strong operational & financial linkage with ABP Pvt Ltd (ABP), improvement in financial performance in FY20 albeit deterioration in 9MFY21 and satisfactory capital structure. The rating, however, continues to be constrained by relatively small size of the company, continuation of losses in radio division in FY20 albeit reduction in losses from FY19 and high exposure to group companies. Rating Sensitivities Positive Factors - Factors that could lead to positive rating action/upgrade: Increase in scale of operations by diversifying customer base in printing segment Positive turnaround in the radio business with increase in scale & profitability (PBT beyond 15%) Improvement in operating margin beyond 20% in projected periods Reduction of operating cycle below 75 days Negative Factors- Factors that could lead to negative rating action/downgrade: Deterioration in overall gearing and TD/GCA beyond 0.3x and 3x Increase in exposure to group companies beyond current levels Increase in losses in the radio segment Key Rating Strength Experienced promoters with strong group ABP group has been in the business of publishing newspapers and magazines since 1922. In 2003 it forayed into electronic media space through ABP News Network Pvt Ltd. The ABP group has evolved into a media conglomerate that has one national TV news channels and various regional channels along with websites, 10 premier publications, leading book publishing house, web based and mobile-based information service. The group has supported the company in the form of fund infusion in the past years. Strong operational and financial linkages with ABP AOPL prints popular Bengali magazines like ‘Desh’, ‘Sananda’, ‘Anandolok’, and ‘Anandamela’ and daily newspapers for ABP. Besides, it also prints various books and other publications released by ABP. ABP contributed to 69% of AOPL’s total operating income in FY20 (68% in FY19). Improvement in financial performance in FY20 albeit deterioration in 9MFY21 Total operating income of AOPL improved by ~19% in FY20 from FY19 and stood at Rs.50.25 crore mainly due to mainly due to increase in newspaper printing charges per sheet for Ananda Bazaar Patrika & The Telegraph. PBILDT margin improved from 1.72% in FY19 to 15.70% in FY20 due to higher printing charges. Interest coverage ratio improved from 0.77x in FY19 to 8.68x in FY20 due to improved operating profits. The company reported GCA of Rs.8.11 crore vis-à-vis nil debt repayment obligations. In 9MFY21, the company reported a PAT of Rs.0.22 crore on Total Operating Income of Rs.27.01 crore due to disruptions caused on account of COVID-19. 1 CARE Ratings Limited Press Release Satisfactory capital structure The capital structure was stable at 0.39x as on Mar 31, 2020 (0.46x as on Mar 31, 2019) and TD/GCA stood at 2.27x as on March 31, 2020. In 9MFY21, the overall gearing stood at 0.42x and TD/GCA stood at 7.69x as on Dec 31, 2020. Key rating weaknesses Relatively small sized company AOPL is a relatively small sized company whose total operating income stood at Rs.50.25 crore in FY20 (Rs.42.24 crore in FY19) and total capital employed of Rs.70.99 crore as on Mar 31, 2020 (Rs.138.06 crore as on Mar 31, 2019). Continuation of losses in radio division albeit reduction in losses from FY19 Income from radio business of AOPL stood at Rs.8.77 crore in FY20 as compared to Rs.7.90 crore in FY19. The radio segment continued to be in loss of Rs.0.98 crore in FY20 as against loss of Rs.1.65 crore in FY19 as the company could not pass on the fixed cost incurred for this division. In 9MFY21, the radio segment has incurred a loss of Rs.0.80 crore on total operating income of Rs.4.75 crore. High exposure in various group entities AOPL’s net exposure to group companies stood at Rs.106.04 crore as on Mar 31, 2020 vis-à-vis Rs.109.81 crore as on Mar 31, 2019 and formed 222% of its net-worth as on Mar 31, 2020 as compared to 269% as on Mar 31, 2019. Industry outlook: Print: The effect of pandemic, increasing prices of newsprint and as readers shift from newspaper to webpage, the long term outlook of the print media industry is subdued. Radio: There has been an increase in digital strategies to better suit the changing landscape and many FM Channels have made headway by developing and curating their own web radio platforms. Digitization of channels will help the radio industry to grow. Liquidity: Adequate Adequate liquidity characterized by accruals of Rs.8.11 crore in FY20 vis-à-vis nil debt repayment obligations. Apart from this, the free cash balance was moderate and stood at Rs.0.32 crore as on Mar 31, 2020. Its capex requirements are nil. Its average utilization of fund based limits stood at 90% in the last 12 months ended Feb-21. They have not availed any deferment of interest on CC. AOPL has taken GECL of Rs.1.60 crore in Aug’20 at an interest rate of 7.35% repayable in 36 equal instalments with moratorium of twelve months. Analytical approach: Standalone factoring linkage with group entity i.e., ABP Pvt. Ltd. Applicable Criteria Financial ratios – Non-Financial Sector Liquidity Analysis of Non-Financial Sector Entities Rating Methodology: Factoring Linkages in Ratings (Parent Sub JV Group) Criteria on assigning Outlook and Credit Watch to Credit Ratings CARE’s Policy on Default Recognition Rating Methodology - Manufacturing Companies About the Company AOPL, incorporated in 1970, belongs to the ABP group - an established media conglomerate. 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. Financials Brief Financials (Rs. crore) FY19 (A) FY20 (A) Total operating income 42.24 50.25 PBILDT 0.72 7.89 PAT -1.98 6.11 Overall gearing (times) 0.46 0.39 Interest coverage (times) 0.77 8.68 A: Audited 2 CARE Ratings Limited Press Release Status of non-cooperation with previous CRA: Not applicable Any other information: Not applicable Rating History for last three years: Annexure 2 Covenants of rated instrument / facility: Not Applicable Complexity level of various instruments rated for this company: Annexure 3 Annexure-1: Details of Instruments/Facilities Size of the Rating assigned Name of the Date of Coupon Maturity Issue along with Rating Instrument Issuance Rate Date (Rs. crore) Outlook Fund-based - LT-Cash CARE A; Stable - - - 10.00 Credit Fund-based - LT-Term CARE A; Stable - - Aug’2024 1.60 Loan Annexure-2: Rating History of last three years Current Ratings Rating history Date(s) & Date(s) & Date(s) & Name of the Type Rating Date(s) & Sr. Amount Rating(s) Rating(s) Rating(s) Instrument/Bank Rating(s) No. Outstanding assigned assigned assigned Facilities assigned in (Rs. crore) in 2020- in 2019- in 2018- 2017-2018 2021 2020 2019 1)Withdrawn Fund-based - LT- 1. LT - - - - - (02-Jan-18) Term Loan 1)CARE A; 1)CARE A; 1)CARE A; CARE A; Stable Stable Fund-based - LT-Cash Stable 2. LT 10.00 Stable - (04-Mar- (11-Feb- Credit (02-Jan-18) 20) 19) CARE A; Fund-based - LT- 3. LT 1.60 Stable - - - - Term Loan Annexure 3: Complexity level of various instruments rated for this Company Sr. Name of the Instrument Complexity Level No. 1. Fund-based - LT-Cash Credit Simple 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. 3 CARE Ratings Limited Press Release Contact us Media Contact Mradul Mishra Contact no. – +91-22-6837 4424 Email ID – [email protected] Analyst Contact Name: Punit Singhania Tel: 033-4018 1620 Email: [email protected] Relationship Contact Name: Lalit Sikaria Contact no.: 033-4018 1607 Email: [email protected] 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. 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