CRISIL Ratings has downgraded its ratings on the bank facilities of
INOX Leisure Limited (ILL) to ‘CRISIL A+/Negative/CRISIL A1’ from ‘CRISIL AA-/Negative/CRISIL A1+’.
“The rating action reflects CRISIL Ratings’ expectation of weakening of ILL’s business risk profile over the medium term. It was earlier expected that with the resumption of operations in October 2020, the occupancy will improve gradually with return of content to the multiplexes. However, with the recent spike in Covid-19 cases, recovery in operating performance of multiplexes will be delayed. Many states have already announced localised lockdowns, night curfews and restrictions over occupancy levels in cinemas. These restrictions will also result in deferment of the release of strong content, which was earlier scheduled to be released in the first quarter of fiscal 2022, thereby impacting operations,” company shared CRISIL’s rationale of rating in a regulatory filing on Sunday.
It further said that Multiplexes were witnessing gradual build-up in occupancy during January-March 2021 quarter, against 4-6% occupancy in October-December 2020 quarter. Release of regional content was largely driving this improvement. However, recent restrictions and increased fear of enclosed spaces might keep the moviegoers away for a while.
ILL had undertaken steps to reduce cost and augment liquidity over the past one year. It has negotiated with majority of mall developers for waiving off rentals for the entire period of closure of operations with revenue sharing arrangements from resumption of operations until March 31, 2021. The company has also conserved cash by reducing its workforce and deferring maintenance outlay and capital expenditure (capex).
During early trade on Monday, Inox Leisure Ltd was trading at Rs249.10 per piece down by Rs12.8 or 4.89% from its previous closing of Rs261.90 per piece on the BSE.