New Delhi, June 17 -- When film production and distribution company Eros International Plc's shares dropped by as much as 20% earlier this month after being downgraded by two rating agencies, not too many people in the industry were surprised.

Rating agency CARE on 5 June, cut its ratings from BBB- to D, citing delays or likely default in serving debt availed from banks. Moody's Investor's Service downgraded the corporate family ratings to B2 from B1.

In a statement issued three days later, Eros insisted it has a strong liquidity profile and healthy balance sheet with over $135 million of cash and cash equivalents, and net debt of $145 million.

But industry experts say all is not well with the Sunil Lulla-owned company.

For starters, ...