Adesh Welfare Society

Brickwork Ratings reaffirms the ratings with change in Outlook from Stable to Positive for the Bank Loan Facilities of Rs. 123.39 Crs. of Adesh Welfare Society

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (11 Apr 2024)	Present
Fund Based	94.94	98.59	Long Term	BWR BBB+/Stable Reaffirmation	BWR BBB + /Stable to Positive Reaffirmation
Fund Based	(0.00)	(5.00)	Long Term	BWR BBB+/Stable Reaffirmation	BWR BBB + /Stable to Positive Reaffirmation
Non Fund Based	31.05	24.80	Long Term	BWR BBB+/Stable Reaffirmation	BWR BBB + /Stable to Positive Reaffirmation
Grand Total	125.99	123.39	(Rupees One Hundred Twenty Three Crores and Thirty 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+ and revises the outlook from Stable to Positive for the long-term bank loan facilities of Rs.123.39 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 steady operational performance with healthy student strength and AWS’s satisfactory financial risk profile as per FY24 audited and H1 FY25 unaudited financials. 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.

OUTLOOK: STABLE to POSITIVE

The rating outlook has been revised from 'Stable' to 'Positive', reflecting the anticipated increase in receipts and surplus in the coming academic years, driven by the recent fee revision and expansion in the number of seats. Associated expenditures are expected to remain stable, as AWS is investing in the infrastructure and already hired additional staff as per requirements. BWR believes that the business and financial risk profile of AWS is expected to improve, reflecting positive trends in the AWS's financial performance and credit risk profile.

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 95% 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 ~89% plus.
Steady operational performance with healthy student strength :
The topline increased from Rs. 129.02 Crores in FY23 to Rs. 132.68 Crores in FY24, primarily driven by steady student enrollments across the institution. Revenue is expected to grow further with the increase in the number of seats under different programs offered by the institutes. Further, the total student strength has increased to 1482 during the current academic year as compared to 1185 students during the previous academic year.
Satisfactory financial risk profile :
The society has reported a satisfactory financial risk profile. The Tangible Net Worth of the company has improved from Rs.187.81 Crores as on 31 March 2023 to Rs.200.02 Crores as on 31 March 2024 on account of year on year accretion of surplus after tax to reserve & surplus. Further, the Total debt/ TNW & TOL/TNW improved from 0.69x & 0.72x respectively, as on March 31,2023 to 0.63x & 0.68x respectively as on March 31,2024 on account increased tangible net worth, timely repayment of term loan and lower working capital utilisation. The debt coverage ratio as indicated by ISCR and DSCR continues to remain satisfactory at 5.29x & 1.87x respectively in FY24 as compared to 7.14x & 2.99x respectively in FY23.The short term liquidity of the company as indicated by current ratio remains above unity at 1.36x in FY24 (1.53x in FY23).

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 FY24, 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 increase in operating revenue by 20% and profit margins by 10%. Further, there should be 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 by 15% and/or profitability by 5% due to decline in enrolment ratio or any moderation in the liquidity and debt coverage indicators.

LIQUIDITY INDICATORS - Adequate

AWS’s liquidity position remains adequate. In FY24, the society reported net cash accruals of Rs. 42.07 crore, which comfortably covered its current debt maturity of Rs. 19.04 crore, leaving a surplus of Rs. 23.03 crore to address any unforeseen expenses. Looking forward, the society projects net cash accruals of Rs. 47.95 crore in FY25 and Rs. 54.60 crore in FY26, against term loan repayments of approximately Rs. 16.90 crore in FY25 and Rs. 17.64 crore in FY26, ensuring sufficient coverage for debt servicing. As on March 31, 2024, the society’s cash and cash equivalents stood at Rs. 8.82 crore. The current ratio stood comfortable at 1.36x as on March 31, 2024. Debt protection metrics remained comfortable, with an Interest Service Coverage Ratio (ISCR) of 5.29x and a Debt Service Coverage Ratio (DSCR) of 1.87x as on March 31, 2024. The total debt-to-Tangible Net Worth (TNW) stood at 0.63x as on March 31, 2024. Additionally, the fund-based utilization limit moderately remained at 45.38% over the past 12 months.

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 seven 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. The Society has also setup College of Nursing at Mohri, Punjab. Admission for this College of Nursing were taken for batch 2024. The Society have plans to convert Adesh Medical College and Hospital into University in the coming future.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21 - 22 (Audited - Annual)	FY 22 - 23 (Audited - Annual)	FY 23 - 24 (Audited - Annual)
Operating Revenue	Rs.Crs.	108.90	129.02	132.68
EBITDA	Rs.Crs.	64.18	67.90	49.16
PAT	Rs.Crs.	20.42	32.26	12.20
Tangible Net Worth	Rs.Crs.	155.55	187.81	200.02
Total Debt / Tangible Net Worth	Times	0.83	0.69	0.63
Current Ratio	Times	1.90	1.53	1.36

KEY COVENANTS OF THE FACILITY RATED

The terms of the sanction of loans from banks include standard covenants normally stipulated for such facilities by the banks. Apart from this certain specific financial related covenant as mentioned in the sanction lettrer are as follows:

Debt to Equity Ratio not more than 1.00x times.
DSCR more than 1.50x times.
DEBT to EBITDA less than 3 times.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

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

Facilities	Current Rating (2025)			2024		2023		2022
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	98.59	BWR BBB+/Stable to Positive (Reaffirmation)	11Apr2024	BWR BBB+Stable (Reaffirmation)	07Mar2023	BWR BBB+ Stable (Reaffirmation)	06Apr2022	BWR BBB+ Stable (Reaffirmation)
FB SubLimit	LT	(5.00)	BWR BBB+/Stable to Positive (Reaffirmation)	NA	NA	NA	NA	NA	NA
Non Fund Based	LT	24.80	BWR BBB+/Stable to Positive (Reaffirmation)	11Apr2024	BWR BBB+Stable (Reaffirmation)	07Mar2023	BWR BBB+ Stable (Reaffirmation)	06Apr2022	BWR BBB+ Stable (Reaffirmation)
Grand Total		123.39	(Rupees One Hundred Twenty Three Crores and Thirty Nine lakhs Only)

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Rahul Shaw Ratings Analyst rahul.shaw@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.)	Complexity of the Instrument
1	HDFC Bank	Term Loan	93.59	_	93.59	Simple##
2	HDFC Bank	Bank Guarantee	24.80	_	24.80	Simple##
	Sub-Limit (Over Draft)	(5.00)
3	HDFC Bank	Overdraft	5.00	_	5.00	Simple##
Total			123.39	0.00	123.39
TOTAL (Rupees One Hundred Twenty Three Crores and Thirty Nine lakhs Only)

## 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.

ANNEXURE-II

INSTRUMENT DETAILS

Instrument	Issue Date	Amount (Rs.Crs)	Coupon Rate (%)	Maturity Date	ISIN Particulars	Complexity of the Instrument
Nil	Nil	Nil	Nil	Nil	Nil	Nil

ANNEXURE-III

List of entities consolidated

Name of Entity	% Ownership	Extent of consolidation	Rationale for consolidation
Nil	Nil	Nil	Nil

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