CARE Downgrades Eros International’s Credit Rating To Default

CARE Ratings downgraded Eros International Media Ltd.’s long-term and short-term bank facilities to ‘D’, or default rating, citing delays and default in its debt-servicing ability.

A slowdown in debt collection, spurring cash flow issues, led to the situation, the rating agency said in a note. The entertainment company delayed debt servicing by over 30 days, the note said, adding that it failed to disclose the same to exchanges until June 5.

The action affects the following instruments of the company:

• Long-term bank facilities worth Rs 300 crore downgraded from ‘BBB-’ to ‘D’.
• Long-term bank facilities (cash credit) worth Rs 263 crore revised downward to ‘D’ from ‘BBB-’.
• Short-term bank facilities worth Rs 187 crore downgraded to ‘D’ from ‘A3’.

The company, which is the Indian subsidiary of U.S.-listed Eros International Plc., has availed nearly Rs 750 crore through a combination of long-term and short-term bank loans.

Eros International didn’t respond to telephone calls or emailed queries from BloombergQuint. This report will be updated when the company replies.

CARE interacted with Eros International's bankers and obtained "default if any" statements from the company that contained details about its delays and defaults in servicing both the principal and interest on its term loans.

The company’s receivables rose 13.5 percent to Rs 793.5 crore in the year ended March 2019, as per its financial statements.

Shares of the producer and distributor of Indian movies have plunged from their lifetime high of Rs 644 in July 2015 to Rs 66.40 as of Tuesday. They have returned losses of nearly 39 percent so far this year.