Crisil has assigned ‘CRISIL B+/Stable’ rating to the long-term bank facilities of Kamal Haasan (KH), a proprietary firm of actor Kamal Haasan.
The rating is for the long-term banking loan facility to the tune of ₹25 crore.
The rating reflects a high degree of geographic concentration in revenue profile and exposure to risks inherent to the film industry. These weaknesses are partially mitigated by established presence and proprietor's extensive industry experience, said Crisil in a note.
Weaknesses
The operations are mainly confined to Tamil Nadu limiting its revenue; consequently, any dispute between the exhibitors and distributors, or strike in the film industry, or agitations by political parties will have a negative impact on revenue, Crisil said.
Another factor is, according to Crisil, exposure to risks inherent in the film industry. Volatility in profitability and revenue, inherent in the film industry, will continue to impact the firm, since the income is based on the ongoing films and other programmes.
Strengths
However, extensive industry experience of the proprietor is the key strength, it added.
The proprietor (Kamal Haasan) has an experience spanning over four decades in film industry.
Liquidity Stretched
Cash accrual is expected at Rs 7- 8 crore in the medium term, against maturing debt obligation of Rs.4.20 crore for fiscal 2020. The cash inflow is from the on-going film and media projects, while the operating expenditure and repayments are monthly and fixed in nature, it said.
In the absence of working capital limits, any cash flow mismatches may severely impact the liquidity of the firm, it further warned.
CRISIL believes KH will continue to benefit from the extensive industry experience of its proprietor.
KH is proprietorship firm with interests in directing, acting, and producing mainly involved in Tamil film industry.