Rating Rationale Bhaskar Industries Private Limited 9 February 2017 Brickwork Ratings assigns Rating for the Non-Convertible Debenture Issue of Rs167.5 Cr of Bhaskar Industries Private Limited (BIPL) Particulars Amount (Rs. Crs) Tenor Rating Assigned* NCD Rs167.50Cr (Rs. One Hundred Sixty Seven Crore Fifty Lakhs Only) Long Term *Please refer to BWR website www.brickworkratings.com/ for definition of the ratings (Outlook: ) Outstanding Reaffirmed as follows Information about other outstanding ratings of the issuer with BWR is as follows Instrument NCD Issue Date January 2016 Amount Coupon Maturity Date Rs195Cr 10.34% 30 th April 2019 ISIN Particulars INE622O0802 * Please refer to BWR website www.brickworkratings.com/ for definition of the ratings Rating* Reaffirmed (Outlook ) Rationale/Description of Key Rating Drivers/Rating sensitivities: The rating takes into account, inter alia, the Company s strong promoters (Dainik Bhaskar or DB Group), the strength of underlying securities (collateralized shares of DB Corp Ltd.) which are listed, fundamentals of DBL, Structure of the proposed NCD issue and availability of sufficient free shares of DB Corp Limited post this transaction. The rating is however constrained by unavailability of assured cash flows of the issuer at redemption, dependency on the group 1 9 th Feb 2017
support or alternatively liquidation of the securities to meet the obligations arising from the proposed NCD issue and low liquidity of the DB Corp Ltd s equity share. NCD Structure BIPL proposes to raise Rs167.5Crores by issue of NCDs with a tenor up to three years. The NCD would be having bullet repayment at the time of maturity and interest is being served on a quarterly basis. The NCDs would be secured by way of pledge of equity shares of DB Corp Ltd (Listed entity) owned by the Promoter of DB Corp Ltd and Promoter Group in proportion of cover of 1.50x. Additionally proposed NCDs are having a cover of 0.35x of mortgage of the property held by promoter group. The Proceeds from the proposed issue will be utilized for repayment of existing outstanding NCD and General Corporate Purpose. Issuer to fund the interest amount three days (T-3) prior to the interest payment date and maturity amount thirty days (T-30) prior to maturity date in the designated account charged to debenture trustee. In the event of shortfall promoters shall ensure to fund shortfall in the designated account, interest amount three days (T-3) prior to the due date and maturity amount twenty five days (T-25) prior to due date. There is Put/call option at the end of six month and every three months thereafter. Rating Outlook: BWR believes the Bhaskar Industries Private Limited business risk profile will be maintained over the medium term. The outlook indicates a low likelihood of rating change over the medium term. The given rating essentially captures performance of DBL, since BIPL currently does not have strong operational cash flows and the NCD structure involves pledge of DBL equity shares provided as security. Security cover of 1.50 times provides cushion to investors. T- 30 days and T-3 days clause requiring the Company to deposit principal and interest amount respectively payable under the facility in the Designated Bank Account charged addresses the liquidity aspects to an extent should there is a need to invoke the security. Performance of DBL and other promoter companies, adherence to the structure are the key sensitivities to the Rating. The rating outlook may be revised to 'Negative' if the if the credit quality of DBL declines. Bhaskar Industries Private Limited (BIPL) Incorporated in 1985, Bhaskar Industries Ltd is today a major player in Denim Fabric manufacturing, being the third largest producer in India with an annual manufacturing capacity of 45 million meters. BIPL s production of denim range from 4.5 oz to 15 oz in the widest possible widths in Asia. Denim manufacturing facilities with added services of having in-house open end and ring spinning, dyeing, weaving, and finishing under one facility Company Financial Performance For FY16, Income from Operations stood at Rs951.18Cr and PAT of Rs5.42Cr in FY16 against Income from operation of Rs957.71Cr in FY15 and PAT at Rs1.03Cr. Net Worth stood at Rs297.37Cr for FY16. 2 9 th Feb 2017
DB Corp Limited (DBL) DBCL, one of the largest print media companies in India, started operations in 1958. The company commenced operations, with the launch of its first edition of Hindi daily newspaper in Bhopal, Madhya Pradesh. As on March 31, 2016 the company publishes seven daily newspapers with 62 editions and 208 sub-editions in four languages i.e. Hindi, Gujarati, English and Marathi across 14 states in India. DBCL s daily newspaper portfolio includes Dainik Bhaskar (DB), Divya Bhaskar, Saurashtra Samachar, DB Star, D, DB Post and Divya Marathi. Other than newspapers DBCL also publishes certain magazines & tabloids. DB also has radio licenses for 17 cities across 7 states, under brand name My FM. In addition, MY FM also acquired 13 new radio station licenses thereby expanding its footprint in 30 cities across markets The company has 52 printing units in the states of Rajasthan, Gujarat, Chandigarh, Punjab, Haryana, Himachal Pradesh, Madhya Pradesh, Chhattisgarh, Jharkhand, Maharashtra and Bihar. The closing price of DBL shares as on 6 th February, 2017 was at Rs375.90. The 52 week high of DBL share price was at Rs447.85 and 52 week low of DBL share price was at Rs286.55. Total Operating Income (TOI) stood at Rs2051.86Cr with PAT of Rs296.64Cr in FY16 against TOI of Rs2009.57Cr with PAT of Rs316.34Cr. For 9MFY17, the company earned a PAT of Rs.310.57Cr on total income of Rs.1740.9Cr Rating History for the last three years (including withdrawn/suspended ratings) Sl No Instrument Current Rating ( 2017) Rating History Type (Long Term/Short Term) Amount (Rs Crs) Rating 2016 2015 2014 1 NCD Long Term 167.50 2 NCD Long Term 195.00 Reaffirmed BWR AA 3 9 th Feb 2017
3 NCD Long Term 195.00 Withdrawn Reaffirmed 2016 Hyperlink/Reference to applicable Criteria General Criteria Structured Obligation Analysts Dinesh Mahabal GM Ratings analyst@brickworkratings.com Media media@brickworkratings.com Relationship Contact bd@brickworkratings.com Phone: 1-860-425-2742 For print and digital media The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a meaning different from what was intended by BWR. BWR alone has the sole right of sharing (both direct and indirect) its rationales for consideration or otherwise through any print or electronic or digital media. Note on complexity levels of the rated instrument: BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com/download/complexitylevels.pdf Investors queries can be sent to info@brickworkratings.com. About Brickwork Ratings Brickwork Ratings (BWR), a SEBI registered Credit Rating Agency, has also been accredited by RBI and empaneled by NSIC, offers Bank Loan, NCD, Commercial Paper, MSME ratings and grading services. BARD has empaneled Brickwork for MFI and NGO grading. BWR is accredited by IREDA & the Ministry of New and Renewable Energy (MNRE), Government of India. Brickwork Ratings has Canara Bank, a Nationalized Bank, as its promoter and strategic partner. 4 9 th Feb 2017
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