| Established market position, long track record of operations and healthy brand recognition with stable readers.
EPMPL has more than six decades experience in print media business, the company is professionally managed by Board of Directors headed by Shri. Manoj Kumar Sonthalia as chairmen and managing director and three directors Viz., Mr. S.S Poddar, Mr. T J S George, Ms. Lakshmi Menon as CEO and director and one nominee director Mr. Sreekumar Karunakaran. The extensive experience of promotors helped company in establishing strong relationship with its suppliers. Express Publications (Madurai) Private limited 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, Delhi and Union Territories of Pondicherry. EPMPL brings out its publication of newspapers and periodicals from 31 printing and publication centres. Company has marketing centres across South India, Kolkata, Mumbai and Delhi. EPMPL publications includes The New Indian Express, The New Sunday Express, The Morning Standard from New Delhi & NCR, The Sunday Standard, in addition EPMPL also brings out Samakalika Malayalam Vaarika, a weekly in Malayalam and, The Morning Standard, weekly tabloid magazine at Kolkata. EPMPL’s flagship newspapers ‘The New Indian Express’, ‘The New Sunday Express’ and ‘Dinamani’ has an established market position in South India and enjoys patronage from a niche reader base. Company also receives healthy share of advertisements from government and private sector. Other publications of the company The Sunday Standard, The Morning Standard and Samakalika Malayalam Vaarika also enjoys stable reader base. The revenue of the company has remained stable through last three years supported by healthy brand recognition and stable readership base. The revenue of the company slightly improved and stood at Rs.247.33 Cr in FY2023(Provisional) as against Rs.208.07 Cr in FY2022 and Rs.210.70 Cr in FY2021.
Acuite believes that company will continue to benefit from its long operational track record, brand recognition and stable readership base over the medium term.
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| Average financial risk profile
The financial risk profile of the company is average marked by moderate net worth, high leverage ratios and moderate debt protection metrics. The company's net worth stood at Rs.34.26 Cr as on March 31st 2023(Prov) as against Rs.22.74 Cr as on March 31st 2022 and Rs 56.26 Cr as on March 31 st 2021. The increase in net worth in FY 2023 (Prov) is majorly due to accretion of profits to the reserves. However, the net worth has eroded in FY 2022 due to losses reported by the company. The total debt of Rs. 213.76 Cr as on March 31st 2023(Prov) consists of Rs.69.22 Cr of term loans, Rs.102.92 Cr of unsecured loan, Rs.42.73 Cr of short term debt and Rs. 16.88 Cr of current maturity of long term debt. The company follows an aggressive financial policy reflected through its peak gearing of 10.23 times as on March 31 st 2022. The gearing (debt/equity) of the company remain high at 6.77 times as on March 31st 2023(Prov) as against 10.23 times as on March 31st 2022. Furthermore, the debt to EBITDA of the company also remains high at 4.42 times as on March 31st 2023(Prov) as against 16.86 times as on March 31st 2022. Debt protection metrics of interest coverage ratio stood at 1.43 times as on 31st March 2023(Prov) as against 0.32 as on 31st March 2022 and debt service coverage ratio(DSCR) stood at 1.43 times as on 31st March 2023(Prov) as against 0.29 times as on 31st March 2022. The total outside liabilities to tangible net worth stood at 9.39 times as on March 31st 2023(Prov) as against 14.47 times as on March 31st 2022.
Acuite believes that the improvement in financial risk profile of the company going ahead will remain a key rating sensitivity.
Working capital intensive operations
The company's operations are working capital intensive as reflected by its Gross current asset (GCA) days of 194 days for FY2023(Prov) as against 216 days for FY2022. The inventory days ranged between 13 to 16 days and debtors days ranged between 110 to 112 days during last three years ending FY2023(Prov). To support the working capital company stretches its creditors to 306 to 357 days during the last three years ended FY2023. Further, company has been fully utilising its working capital limits during the past 12 months ended March 2023.
Acuite believes that working capital management of the company will remain a key rating sensitivity over the medium term.
Profitability remains vulnerable to newsprint prices, increasing competition from digital media and significant dependence on advertisement revenue
The main cost element for a newspaper company is the newsprint cost. Newsprint prices have been volatile, and it may not always be possible to pass on the increase to the customers through an increase in cover price or higher advertisement tariff. The newspaper publications are witnessing gradual slowdown in circulation and readership due to the increasing penetration of the digital medium, market saturation and changing media consumption habits. As digital penetration increases, the circulation volumes of newspapers may undergo significant changes. Major portion of the revenue comes from advertisement through print media. Furthermore, the operating margin of media houses remains vulnerable to economic downturns as advertisement revenue is linked to economic conditions.
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