Eros International Plc, listed on the New York Stock Exchange, denied short-seller allegations about financial misappropriations at the the India-based content aggregation company said it was also working with CARE Ratings to address their concerns.
It also announced a $20 million (Rs 138 cr) share repurchase program.
The company’s stock also took a knock last week after it was downgraded for delays in servicing its loans. The company later clarified the loan payments were ‘being expedited’.
In a fresh statement, the company said there was nothing fictitious about its revenues or business model, and that it was actually doing very well.
Group Chairman Kishore Lulla said Eros has “a strong financial and operating position” and the management is “making it a priority to work with CARE Ratings, the regulatory agency, to have our credit rating revised upwards in due course.”
Last week, a US-based short-seller also put out a research paper alleging financial irregularities.
Lulla called them “baseless allegations” that “have been made against the company in the past”. He said “frivolous lawsuits” based on such reports have been dismissed with prejudice in the past 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.”
CFO Prem Parameswaran said the company has a “strong liquidity profile and healthy balance sheet” with no meaningful near-term debt maturities.
“As of March 31st, 2019, we had over $135 million of cash and cash equivalents on our balance sheet and our net debt position was $145 million (unaudited figures). 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.”
Eros, which used to be a film producer and distributor, gets a larger and larger chunk of its revenue from selling digital rights, and also has its own consumer facing businesss – an app called Eros Now.
“Our Eros Now platform has risen to 18.8 million paid subscribers and 154.7 million registered users as of March 31, 2019, far exceeding our target for the full fiscal 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,” Lulla said.
“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.”
The company CFO said Eros has one of the largest libraries of Indian films in the world, with over 12,000 digital rights.
“The Eros Board of Directors believes the equity value of Eros International PLC is seriously undervalued in the public markets and accordingly, the Board has approved a share buyback program of up to $20 million of outstanding common shares. We look forward to discussing Eros International’s Fiscal Year and 2019 results with the market on July 15, 2019,” Eros International added.
It said the repurchases may be made at management’s discretion from time to time on the open market or through privately negotiated transactions.
“The repurchase program has no time limit and may be suspended for periods or discontinued at any time. Eros’ share repurchase program does not obligate it to repurchase any specific number of shares and may be suspended or discontinued at any time.”