Harrow Educational Society

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.6.34 Crs. of Harrow Educational Society

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Term Loan - Sanctioned Over Draft - Sanctioned	00.89 05.45	Long Term	BWR D
Sub Total	06.34
Grand Total	06.34	(Rupees Six Crores and Thirty Four lakhs Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK :

NA

KEY RATING DRIVERS

Credit Strengths:

• Experience and Qualified members of the society :

  Er. Navin Prasad Mathur is the current president of the society and has more than three decades of experience in running education institution through his association with HES. Mrs. Veena Mathur (Secretary) is LLB by education and has an experience of more than three decades in association with this society.

Credit Risks:

• Delay in debt servicing due to stress in liquidity position :

  There have been delays in relation to the debt servicing of principal installment and interest of term loan on account of liquidity stress.

• Highly regulated sector in India :

  In addition to AICTE, the educational institutes are regulated by respective State Governments with respect to the number of management seats, amount of the tuition fees charged for the Government quota and management quota. The factors have a significant impact on the revenue and surplus of the society.

• Highly competitive industry :

  There are various educational institutions in and around Bareilly, Uttar Pradesh. The intense competition in the region adds to the pressure of attracting students as well as hiring and retaining quality faculty.

• Small and declining scale of operations :

  The scale of operations of the society marked by total operating income stood small at Rs.11.27 Cr for FY 17 and Rs 10.20 Cr for FY 18. The small scale limits the society’s financial flexibility at the times of financial crunch and deprives it from any scale benefits.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

For ariving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Going forward, the ability of the society to repay the debt obligation in a timely manner, increase the enrollment ratio & profitability and manage liquidity would be key rating sensitivities. 

Positive: The outlook may be revised to positive if the society is able to increase the enrollment ratio and improve surplus margin significantly and also have adequate liquidity.

LIQUIDITY POSITION

Liquidity position has been marked as poor as there are delays in servicing the debt obligations. Also, the overdraft limit is fully utilized. Current ratio of the society stood at 0.20 times in FY 18 which is below the industry average. The society has cash and bank balance amounting to Rs. 1.28 Cr in FY 18.

PROFILE

Harrow Educational Society was established in 1981 with an objective to provide education services. The Educational society is based in Bareilly, Uttar Pradesh. The Society is managed by Er. Navin Prasad Mathur ( President), Mrs. Veena Mathur ( Executive Chairman) and Mrs. Sandhya Gupta ( Treasurer). HES provides undergraduate and post-graduate courses in various fields of Engineering, Computers Science, Management and Pharma. The colleges are affiliated to Gautam Buddha Technical University and are approved by the All India Council for Technical Education (AICTE). The society also operates a school in the name of Harrow School providing primary and secondary education from Nursery to class XIIth. The school is affiliated to Central Board of Secondary Education (CBSE).

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 17-18	FY 16-17
Total Receipts	Rs.Crs.	10.20	11.29
OSBITDA	Rs.Crs.	2.08	3.47
Net Surplus	Rs.Crs.	-0.99	0.44
Corpus Fund	Rs.Crs.	14.62	15.58
Total Debt/Corpus Fund	Times	0.72	0.84
Current Ratio	Times	0.20	0.31

KEY COVENANTS OF THE INSTRUMENT/FACILITY RATED

NA

NON-COOPERATION WITH PREVIOUS RATING AGENCY ,IF ANY

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2019)				Rating History
	Facilities	Tenure	Amount (Rs.Crs)	Rating	2018	2017	2016
Fund Based
1	Term Loan - Sanctioned Over Draft - Sanctioned	Long Term	0.89 5.45	BWR D (Pronounced as BWR D )	NA	NA	NA
Total			06.34	(Rupees Six Crores and Thirty Four lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS

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.

For More Information Contact:

Analytical Contacts	Investor Contacts
Sanskriti Jain Lead Analyst sanskriti.j@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
Satvinder Kumar Gakhar Associate Director - Ratings B : +91 11 2341 2232 satvinder.g@brickworkratings.com
1-860-425-2742

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Term Loan - Sanctioned	0.89	_	0.89
2	Over Draft - Sanctioned	5.45	_	5.45
Total				6.34
TOTAL (Rupees Six Crores and Thirty Four lakhs Only)