Dish TV clarifies on debt repayment following rating downgrade by CARE
The rating agency had downgraded the short-term bank facilities rating to ‘CARE D’ from ‘CARE A4+’. The agency in its rationale has taken into consideration the default by Dish TV India Limited in payment of its short-term loan amounting to Rs. 250 crore.
In a statement, Dish TV India said it has been drawing on its internal cash accruals to fund its capital expenditure for more than 6 quarters now. In addition, the company has also serviced its debt and interest obligations, on a consolidated level, to the tune of Rs. 850 crore in the current fiscal.
Debt and interest payment obligations falling due after the particular incident of non-service have also been fulfilled on time, it added.
The company said that deferral to service the loan amount is due to bunching of repayment obligations and utilisation of funds for other business requirements including, both capital expenditure and payment of operating liabilities to broadcasters and suppliers. “The default in debt repayment was thus a result of a temporary cash shortfall due to peak payment commitments to suppliers,” the company clarified.
Dish TV said it remains optimistic about improvement in its liquidity situation going forward. “The Company is in touch with its banking partners and hopes to get alternate credit facilities to finance its regular capex so as to normalize the utilization of its cash flow towards debt repayment.”
On 6th December, CARE had said that it has received written confirmation from the company on 5th December stating that the short term loan amounting to Rs. 250 crore has not been paid and remains unsettled as on date.
It had also stated that the liquidity is marked by tightly matched accruals to repayment obligations, highly utilised bank limits and low cash balance.
On a consolidated level, the company generated cash accruals of Rs. 863.58 crore as on September 30, 2019 & Rs. 1654.71 crore as on March 31, 2019. For H2FY20, the company has to service a debt of Rs.650 crore and is likely to spend around Rs. 250-300 crore towards the purchase of Consumer Premise Equipments.
Further, it had stated that Dish TV’s working capital limit utilisation stood around 73% for the past seven months ending September 2019 and cash & bank balance on consolidated level stood around Rs.136.77 crore as on September 30, 2019, as against Rs.170.68 crore as on March 31, 2019.
In addition, there is high potential liability of unpaid license fees of Rs. 3256.48 crore as on March 31, 2019, for which the matter is pending in Supreme Court. Any adverse ruling for the same could further weaken the credit profile of the company.
CARE has considered the consolidated financials of DTIL for analytical purposes owing to financial and operational linkages between the company and its subsidiaries. The consolidated financials include the financials of Dish TV (post-its merger with Vd2h), its subsidiaries i.e. Dish TV Lanka Private Limited (70% stake) and Dish Infra Services (post-merger of Vd2h’s infra support business; 100% stake) and joint venture – C&S Medianet Private Limited (51% stake).