MUMBAI: Shemaroo Entertainment (Shemaroo), one of the largest independent content aggregators in Bollywood, today announced that CRISIL has assigned its ‘CRISIL A-/ Stable’ rating to the long term bank facilities of Shemaroo. Post this, the existing credit rating enjoyed by the Company on its long term banking facilities stands upgraded by 3 notches.

Rating Rationale by CRISIL:

The rating reflects the benefits that Shemaroo derives from its established market position as a distributor of film content in the re-issue cycle, supported by a large library of content rights and its strong financial risk profile. The rating also reflects CRISIL’s belief that the company’s capital structure will remain below 0.5 times over the medium term. These rating strengths are partially offset by the company’s long working capital cycle marked by long inventory holding period leading to price volatility risks along with high debtor days and its exposure to intense competition in the new media segment.

CRISIL believes that Shemaroo will maintain its credit risk profile supported by its strong market position and financial risk profile. The outlook may be revised to ‘Positive’ if the company’s enhances its business risk profile, backed by sustainable improvement in its sales to inventory ratio and its receivables management, while maintaining its healthy profitability levels and strong financial risk profile. Conversely, the outlook may be revised to ‘Negative’ if the company’s cash accruals declines significantly or of its working capital cycle lengthens, leading to deterioration in the company’s financial risk profile.