Jeeva Educational Trust

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 108.83 Crs.of Jeeva Educational Trust

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (10 May 2022)	Present
Fund Based	95.64	98.12	Long Term	BWR BB+/Stable Upgrade	BWR BB + /Stable Reaffirmation
Non Fund Based	10.21	10.71	Short Term	BWR A4+ reaffirmation	BWR A4 + Reaffirmation
Grand Total	105.85	108.83	(Rupees One Hundred Eight Crores and Eighty Three 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 reaffirms the ratings for the enhanced bank facilities of Jeeva Educational Trust at BWR BB+/A4+(stable).

KEY RATING DRIVERS

Credit Strengths:

Completion of Phase 1 :
JET has built AMCH consisting of 330 beds, 60 ICU beds and a medical college of 150 seats in phase 1 within the budgeted cost and time. The hospital specializes in various disciplines like General Medicine, Pediatrics, Pulmonary Medicine, Dermatology, Psychiatry, General surgery, Orthopedics, ENT, Dentistry, Ophthalmology, and OBG etc. The enrollment for the first batch of MBBS students has been 100% and 90% of the course fees has been received by 31st March 2022.
Diversified source of revenue :
- The Trust has diversified sources of revenues from the hospital and various educational institutes.
  - AMCH: Revenues from MBBS course and hospital services. The Hospital has been granted covid care hospital status since the second wave of pandemic. The fees per student for the MBBS course is Rs 12 lakhs per student for FY22 and the current enrollment status is 100%.
  - Arunai College of Pharmacy: The enrollment ratio for the course is 99% and the fees for B PHARM course is 1 lakh/student and for D PHARM course is 80000/student for FY22. Current year enrollment in both these faculties has been 100%. The course is for four years and started in 2019.
  - Arunai Institute of Nursing Education and Research: The enrollment ratio for the course is 95%. While the initial enrollment sanction for BSC Nursing was 40 seats, sanctioned intake has now increased to 100 students (Total seats 240 of which 210 filled). The fees for this four-year course which was started in 2011 is 1,00,000/student for FY22.
Strong Trustee background :

The founder and Chairman, Mr. E. V. Velu has experience of around three decades in the education sector. Hence, experience of the promoters and their understanding of the dynamics of the industry are expected to support the business risk profile.

Credit Risks:

Moderate scale of operations :

The scale of operations is modest as marked by total operating revenues of Rs. 5.16 crs and negative PAT of Rs. -1.06 crs, in FY 21. However, post phase one of the pandemic the trust has done well with revenues from hospital and education institutes contributing to Rs. 39.15 Crs of Total Operating income and PAT of Rs. 6.43 Crs during FY22E (Management Certified financials). The total debt (TD) as at March 2022 was Rs. 123 Crs. and Tangible Networth (TNW) was at 35.36 Crs. translating to TD/TNW of 3.5x. The TD/TNW, though expected to moderate from FY22E levels, is likely to remain ~2x in FY23 as the trust would be initiating phase 2 expansion plan.
Project execution, time and cost overrun risk :

The Trust is in process of enhancing the Hospital bed capacity by 650 beds with an estimated project cost of Rs. 130 Crs. The project would be funded in the ratio of 70-75% debt and 25-30% equity which will impact the gearing and debt coverage metrics. Moreover there is a risk of time and cost overrun keeping in view the current pandemic situation. The risk is mitigated to a certain extent by successful completion of phase 1 of the expansion by the trust post the lockdown restrictions were lifted. The trust is planning to start a Postgraduate course for MBBS students once the expansion is completed which is likely to be December 2023.
Exposure to regulatory and reputation risk :

The healthcare and educational sector is highly regulated by the government and exposed to unfavorable changes in government policies from time to time. Any restrictions on pricing levied by central and/or state government organizations could constrain the profitability margins going forward. Reputation risk is an inherent risk in the Healthcare Industry, and any act of negligence by the Hospital staff may tarnish the image of the Hospital.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has considered JET’s audited financial for the year FY21, Management certified financials for the year FY22, Projections and the other information as shared by the trust and available in public domain and applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Positive Sensitivities

Sustained growth in scale along with improvement in profit margins, prudent working capital management, strengthening of liquidity and financial risk profile.

Negative Sensitivities

Delay in project execution with significant time and / or cost overruns.
Unanticipated delay in receipts leading to cash flow mismatches, decline in enrollment ratio or lower occupancy, weakening the operating performance and profitability.

LIQUIDITY INDICATORS - Adequate

In order to meet its working capital requirements, the organization has availed OD facility from Indian Bank and the average utilization of cash credit limits is about 13.41% in the last six months ending August 2022. ISCR and DSCR as per management certified FY22 numbers are 2.97x(since there is a moratorium on long-term debt till FY23) Cash and Cash Equivalent stood at Rs. 7.2 Crs at 31st March 2022. The Trust is likely to generate NCA of Rs. 14.17 Crs. and 31.65 Crs. which should be sufficient to meet debt repayment obligation of Rs. 2.25 Crs. and Rs. 8 Crs in FY23 & FY24 respectively.

ABOUT THE ENTITY

JET is a registered charitable trust established dated 3Nov1998. The registered office of the trust is at Chennai, Tamil Nadu. JET is a part of Arunai Group of Institutions. Mr. E. V. Velu, Mr. E. V. Kumaran and Mrs. Vijitha Kumaran are the trustees of the JET. Arunai Group of Institutions has Educational Institutions which are managed by SAET & JET, Tamil Nadu . These trusts are dedicated to education, healthcare and community service. It is based out of Tiruvannamalai. Arunai Group of Institutions was established in 1991 with the purpose of augmenting rural education, healthcare and community service which was started by Mr. E. V. Velu of Arunai Group of Institution and his family members Mrs. Sankari Velu , Mr. E. V. Kumaran & Mrs. Vijitha Kumaran. Having achieved the successful establishment of the 10 Institutions, the management planned to establish a Medical College & Hospital under the name “Arunai Medical College & Hospital” at Tiruvannamalai proposed to be executed in two phases.

Total project cost for phase-I is Rs 135 Crs out of which Rs 90.00 Crs was funded by way of a term loan and the rest from promoter’s contribution of Rs. 45 Crs . The total cost of phase 2 is 130 Crs. to be funded in the ratio of 70-75% debt (yet to be tied up) and 25-30% equity. Phase 2 is likely to be operational by December 2023. Phase 2 consists of adding 650 additional beds to the current capacity of 330 beds and also starting PG courses for MBBS students.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	5.16	4.72
EBITDA	Rs.Crs.	-0.39	1.32
PAT	Rs.Crs.	-1.06	0.54
Corpus	Rs.Crs.	28.93	13.91
Total Debt/Corpus	Times	1.42	0.07
Current Ratio	Times	0.86	0.93

NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

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

Facilities	Current Rating (2022)			2022 (History)		2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	98.12	BWR BB+/Stable (Reaffirmation)	10May2022	BWR BB+Stable (Upgrade)	04Feb2022	BWR BB Stable (Assignment)	NA	NA	NA	NA
Non Fund Based	ST	10.71	BWR A4+ (Reaffirmation)	10May2022	BWR A4+ (reaffirmation)	04Feb2022	BWR A4+ (Assignment)	NA	NA	NA	NA
Grand Total		108.83	(Rupees One Hundred Eight Crores and Eighty Three 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
Prashant Sahadev Mondkar Ratings Analyst Board : +91 22 2831 1426, +91 22 2831 1439 prashant.sm@brickworkratings.com	Chintan Dilip Lakhani Director- Ratings chintan.l@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Jeeva Educational Trust

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	Indian Bank	Term Loan - Sanctioned	59.89	_	59.89
2	Indian Bank	Term Loan - Sanctioned	26.75	_	26.75
3	Indian Bank	Term Loan	2.48	_	2.48
4	Indian Bank	Over Draft - Sanctioned	9.00	_	9.00
5	Indian Bank	Bank Guarantee - Sanctioned	_	10.71	10.71
Total			98.12	10.71	108.83
TOTAL (Rupees One Hundred Eight Crores and Eighty Three lakhs Only)

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