Credit Rating and Information Services of India (Crisil) in association with the Confederation of Indian Industry (CII) has developed a methodology for grading film and television software producers in order to help lenders evaluate their funding for these entertainment projects.
The comprehensive and objective analytical framework would assist banks, institutions and other lenders in evaluating film and television software producers.
According to sources, lenders could use the framework to systematically classify and objectively assess various risk issues before determining their exposure levels and interest rates for the entertainment industry.
As for borrowers, so far, they have sourced funds at exorbitant interest rates from the informal market. Now, the grading framework would act as a key facilitator in accessing institutional funds.
According to Crisil, while the overall analytical approach includes an assessment of business risk, financial risk and management capabilities, the methodology derives its robustness from the level of detail in incorporating specific entertainment industry-specific parameters and benchmarks.
In case of film producers, it would assign a grade for a specific movie indicating the rating agency’s opinion on the producer’s ability to complete a particular project and recover costs incurred. It is, therefore, possible that different movies of the same producer could get different grades.
For television software producers, which are generally constituted as corporate entities, the grade would indicate Crisil’s opinion on credit worthiness of the entity.