Adesh Welfare Society

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 125.99 Crs. of Adesh Welfare Society

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (07 Mar 2023)	Present
Fund Based	102.25	94.94	Long Term	BWR BBB+ /Stable Reaffirmation	BWR BBB + /Stable Reaffirmation
Non Fund Based	29.70	31.05	Long Term	BWR BBB+ /Stable Reaffirmation	BWR BBB + /Stable Reaffirmation
Grand Total	131.95	125.99	(Rupees One Hundred Twenty Five Crores and Ninety Nine lakhs Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure

RATING ACTION / OUTLOOK

Brickwork Ratings has reaffirmed the rating at BWR BBB+/Stable for the long-term bank loan facilities of Rs.125.99 Crores of Adesh Welfare Society (AWS or the society).

The ratings reaffirmed for the bank facilities of AWS continue to drive strength from experienced management with a long track record of operations in the education sector for running various institutes with diversified courses under Adesh Group and sustained popularity of its hospital leading to assured cash flows for the society. The rating also factors in improvement in its operational performance and AWS’s satisfactory financial risk profile as per FY23 Audit and 9M FY24 unaudited financials marked by improvement in total operating income, comfortable gearing and moderate debt coverage metrics and steady operating and net surplus generated by its operations. However, these rating strengths are partially offset due to its presence in a highly competitive sector with exposure to high regulatory risks associated with the stringent compliance requirements of relevant regulatory authorities.

KEY RATING DRIVERS

Credit Strengths:

Experienced management with long track record of Adesh group of institutions :
Adesh Welfare Society was established in 1993 by Dr Harinder Singh Gill (Founder member and Chairman) who holds a PG degree in Medicine. The other members of the society are independent/ technical members involved in strategic planning and decision making. All the members are professionally qualified with most of them having experience in medical and other related fields.The management has over 25 years of experience in running different institutes. AWS is a part of Adesh group, Bhatinda under Adesh Foundation, Muktsar. Adesh group on the whole runs various different institutes in Punjab & Haryana state and offers a variety of courses. AWS benefits from the financial flexibility of Adesh group and its brand recognition among students. The society has established Adesh Medical College & Hospital at Mohri, Haryana in 2016 which contributes more than 85% of the society’s overall revenues with its satisfactory infrastructure backed by experienced faculties leading to satisfactory enrolment rates in its educational institute. The General Hospital attached to Adesh Medical College has a capacity of 720 beds with an occupancy rate of 80% plus.
Improvement in operational performance :
AWS total operating income increased by ~18% to Rs.128.02 crore in FY23 from Rs.108.90 crore in FY22 on account of increase in student strength as well as average fees. The total student strength increased to 1185 students during the current academic session as compared to 1179 students during the previous academic session.
Satisfactory financial risk profile :
The society has reported a satisfactory financial risk profile as depicted by improvement in gearing to 0.69 times as on March 31, 2023 (PY: 0.83x) on account of repayment of loans, accretions of surplus and contribution of donations to corpus fund resulting in increase in net worth. However operating and surplus margins remained steady at 52.63% and 25.01% respectively in FY23, as compared to 58.93% and 18.75% respectively in FY22. The interest coverage and Debt service ratio are at 7.14 times and 2.57 times for FY23. AWS’s debt protection measures are expected to remain at similar levels over the medium term.

Credit Risks:

High competition :
AWS faces competition from other educational institutes located in and around Haryana. It derives demand for its professional courses from students in nearby villages and areas. Several educational institutes setting up their campuses in the vicinity, along with a process of central counseling conducted by the Haryana government have led to increase in competition for AWS.
Regulatory Risks :
Despite the increasing trend of privatization of the education sector in India, regulatory challenges continue to pose a significant threat to the educational institutes. The educational institutes & hospitals have to comply with a number of guidelines/rules such as fee structure, complying with infrastructural standards, minimum number of resident doctors and faculty members and minimum bed occupancy at the hospital. As a result, the colleges under the society run with a risk of not getting permissions for student admissions, imposition of financial & other penalties, risk of downgrade by accrediting agencies etc. Statutory bodies and other professional councils such as National Medical Commission (NMC), Indian Nursing Council (INC), All India Council for Technical Education (AICTE) are responsible for the regulation, coordination and development of higher education in India. The seats for professional courses and fees for various courses are fixed by the regulatory authorities and AWS has to follow the same fee structure, which puts limitations on the revenue growth.

ANALYTICAL APPROACH - Standalone

For arriving at rating, BWR has considered the standalone approach for Adesh Welfare Society (AWS) and its colleges viz, Adesh Medical College & Hospital, Adesh Institute of Technology, Adesh Institute of Information Technology & Management, College of Nursing and College of Physiotherapy. BWR has essentially relied on the audited standalone financials up to FY23, projected financials up to FY25, publicly available information, as well as information/clarifications provided by the company's management and bankers.

RATING SENSITIVITIES

Going forward, the ability of the society to report healthy enrolment ratios and steady growth in student strength, improvement in overall credit risk profile and efficient management of working capital requirements would be the key rating sensitivities.

Positive: The ratings may be upgraded if there is consistency in maintaining the healthy financial risk profile marked by comfortable capital structure and substantial improvement in debt protection metrics, besides other factors favoring an upgrade.

Negative: The ratings may be downgraded if there is a decline in operating income and/or profitability due to decline in enrolment ratio or any moderation in debt coverage indicators.

LIQUIDITY INDICATORS - Adequate

The liquidity in the company remains adequate as indicated by moderate cash accruals vis-a-vis debt repayments, comfortable debt coverage indicators, besides financial flexibility of the society in raising funds in times of need. The society has generated cash accruals of Rs.60.29Crs in FY23 and is expecting to generate cash accruals of Rs.64.15 Crs in FY24 and Rs.68.75 Crs in FY25 respectively. The society had cash and cash equivalents of Rs.11.55 Crs as on 31 March 2023 and ~Rs.13.33 Crs as on 31 December 2023. The Current Ratio of the society stood comfortable at 3.42x in FY23. Debt protection metrics stood moderate, with ISCR at 7.14x and DSCR stood at 2.57x in FY23. The total debt / TNW stood at 0.66x as on 31 March 2023 and 0.58x in as on 31 December 2023. As per the FY23, AWS EBITDA stood at Rs. 67.9 Crs against which they have a commitment of Rs. 17.04 Crs paid towards Term-Loan EMIs. The Net Surplus after serving the commitment stood at Rs.50.86 Crs indicating adequate liquidity for AWS.

ABOUT THE ENTITY

Macro Economic Indicator	Sector	Industry	Basic Industry
Consumer Discretionary	Consumer Services	Other Consumer Services	Education

Adesh Welfare Society (Regd.), Muktsar (AWS), is a society registered on 22.02.1993 with Registrar of Firms & Societies, Punjab, under Societies Registration Act, 1860 having its registered office at Kotkapura Road, Muktsar, Punjab. The Society has a primary membership of five Members. The main promoters of the AWS are Dr. Harinder Singh Gill, Chairman and Mrs. Gurpreet Singh Gill, Vice Chairman with Kamaldeep Kaur Gill, General Secretary. The Society also has colleges in the field of Nursing, Physiotherapy, Para-Medical Sciences, Institute of Technology, Hospital and Medical college. However, the primary focus of the society is on Adesh Medical College & Hospital which started its operations in 2016, as this contributes to maximum income. They are planning to start College of Nursing, Mohri and have a plan to convert Adesh Medical College and Hospital into University in the coming future.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21 - 22 (Audited)	FY 22 - 23 (Audited)	FY 23 - 24 (Unaudited - Midterm-Q3)
Operating Revenue	Rs.Crs.	108.90	129.02	111.90
EBITDA	Rs.Crs.	64.18	67.90	60.52
PAT	Rs.Crs.	20.12	32.26	25.30
Tangible Net Worth	Rs.Crs.	155.55	187.81	213.11
Total Debt / Tangible Net Worth	Times	0.83	0.69	0.61
Current Ratio	Times	3.65	3.42	5.49

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include standard covenants normally stipulated for such facilities.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

There is no instance of non-Cooperations from any other Credit Rating Agencies.

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2024)			2023		2022		2021
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	94.94	BWR BBB+/Stable (Reaffirmation)	07Mar2023	BWR BBB+ Stable (Reaffirmation)	06Apr2022	BWR BBB+ Stable (Reaffirmation)	29Jan2021	BWR BBB+ Stable (Reaffirmation)
Non Fund Based	LT	31.05	BWR BBB+/Stable (Reaffirmation)	07Mar2023	BWR BBB+ Stable (Reaffirmation)	06Apr2022	BWR BBB+ (Reaffirmation)	29Jan2021	BWR BBB+ (Reaffirmation)
Grand Total		125.99	(Rupees One Hundred Twenty Five Crores and Ninety Nine lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Vidit Goel Ratings Analyst vidit.g@brickworkratings.com	Suryanarayan N Associate Director - Ratings suryanarayan.n@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Adesh Welfare Society

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	HDFC Bank	Term Loan	89.94	_	89.94
2	HDFC Bank	Bank Guarantee	31.05	_	31.05
3	HDFC Bank	Overdraft	5.00	_	5.00
Total			125.99	0.00	125.99
TOTAL (Rupees One Hundred Twenty Five Crores and Ninety Nine lakhs Only)

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