ICRA downgrades rating of Eros Intl Media's Rs 750 cr NDC

Rating agency ICRA has downgraded the rating on the proposed Rs 750-crore non-convertible debenture programme of Eros International Media Ltd citing concerns of parent company's reduced financial flexibility and also revised outlook to negative from positive.
ICRA said it has revised the the rating on Eros' NCD programme to A+ from AA-. The outlook on the rating has been revised to 'negative' from 'stable', the rating agency said in a statement.
In a BSE filing, Eros said it has not issued any Non- Convertible Debentures (NCD) till date.
A ratings are considered to have adequate degree of safety regarding timely servicing of financial obligations and carry low credit risk. Within this category, modifier "+ " reflects comparative standing within the category, the company added.

As per the rating agency, instruments with AA Instruments are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.
ICRA said the rating revision takes into account the reduction in the financial flexibility of its parent company, Eros International Plc (Eros Plc), due to high receivables and related market concerns.

"Eros Plc has strong operational and financial linkages with Eros India (the entity rated by ICRA) through lending of content advances and purchase of overseas rights. The free cash flows at Eros Plc are constrained by continued high receivables," ICRA said.

The outlook on the rating has been revised to 'negative' and further rating action would depend on the company's ability to contain the ongoing concerns on cash flows and financial flexibility, it added.
In October, San Francisco-based Wells Fargo had downgraded the company's stocks after which the the company's stocks took a hammering in the market.
ICRA said improvement in free cash flow position of Eros International's parent through reduction in receivable days and quantum of advances from the parent company to support Eros India's investment requirements shall remain key rating drivers.
ICRA, however, said it continues to favourably factor in the studio model followed by the company, which allows diversification of content, thereby facilitating mitigation of the risk of losses due to poor box-office performance of some of the movies.