Film production and distribution company Eros International Plc reiterated a strong financial position today after its shares nosedived by as much as 20% on Friday.
Earlier, rating company CARE had cut the creditworthiness of the entertainment firm, citing delays or likely default in serving debt availed from banks.
"Eros has a strong liquidity profile and healthy balance sheet with no meaningful near-term debt maturities. As of 31 March, 2019, we had over $135 million of cash and cash equivalents on our balance sheet and our net debt position was $145 million," Prem Parameswaran, group financial officer and president of North America, Eros International, said in a statement on Monday.
Since the company went public in 2013, Eros has invested over $1.2 billion in content and generated over $970 million in operating cash flow from operations, Parameswaran added.
Group Chairman and CEO of Eros International Kishore Lulla said the company’s video streaming platform Eros Now had risen to 18.8 million paid subscribers and 154.7 million registered users as of 31 March, 2019, far exceeding its target for the full financial year 2019 of 16 million subscribers. This represents a 138% increase in paid subscribers over the past 12 months and an 18% increase over the prior quarter.
“Our success in building our subscriber base will further increase the visibility of our earnings and move the company towards a more annuity-based business model which will deliver continuing and profitable growth," Lulla said. “Additionally, I am pleased to inform shareholders that we now have a strong financial and operating position and our management team are making it a priority to work with CARE Ratings to have our credit rating revised upwards in due course."
Older media reports suggest Eros has faced trouble since 2015 when a section of investors in its US-listed unit filed a class action lawsuit accusing the Sunil Lulla-owned company of making misleading statements or concealing information that affected its share price. That resulted in a 45% crash in its New York Stock Exchange-listed holding company in October 2015 and a 20% fall in the Indian unit’s stock. In April 2017, Standard and Poor’s (S&P) had lowered its long-term corporate credit rating on Eros International to “B-" from “B+" and placed it on credit watch with negative implications, justifying the downgrade by citing weak liquidity at Eros, given the impending maturity of a revolving credit facility that had expired.
“I would also note that baseless allegations have been made against the company in the past and subsequent frivolous lawsuits have been dismissed with prejudice by the US courts. Similar baseless allegations continue to be made by known short sellers without justification. We will continue to defend our interests rigorously at all times," Lulla said.
The Eros board of directors believes the equity value of Eros International is seriously undervalued in the public markets and accordingly, the board has approved a share buyback of up to $20 million of outstanding common shares. Share repurchases may be made at the management’s discretion from time to time in the open market or through privately negotiated transactions. The repurchase programme has no time limit and may be suspended for periods or discontinued at any time.