Sri Guru Granth Sahib World University

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.21.94 Crs. of Sri Guru Granth Sahib World University

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Term Loan - Out-standing	21.94	Long Term	BWR B (Stable)
Sub Total	21.94
Grand Total	21.94	(Rupees Twenty One Crores and Ninety 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
Note: Amount outstanding as on 30.09.2019 RATING ACTION / OUTLOOK : Stable

BWR has assigned long term rating of BWR B with 'Stable' outlook for the bank loan facilities of Sri Guru Granth Sahib World University (SGGSWU- The University). The rating draws strength from the vast business experience of the management and the board. However, the ratings are constrained by the extensive reliance of the university on Shiromani Gurudwara Prabandhak Committee(SGPC) and Sri Guru Granth Sahib Fourth Centenery Memorial Trust (SGGST) for running of operations, declining student strength, negative net profit margins and vulnerability to regulatory risks.

BWR believes that Sri Guru Granth Sahib World University business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the revenues and profit show sustained improvement. The rating outlook may be revisd to 'Negative' if the revenues go down and profit margins show lower than expected figures.

KEY RATING DRIVERS

Credit Strengths:

• Experienced Management and Board :

  SGGSWU has a well educated and experience management team including Dr. Pritpal Singh (Vice Chancellor), Dr. RK Sharma, Dr. Swaraj Raj, Dr Sukhwinder Singh Jolly, Mr. Tarlochan Singh Virk, Mr. Amarjeet Singh Sidhu and others. The university is being managed by the Trust which includes some prominent well recognized names such as Sardar Gobind Singh Longowal (Head of SGPC), Sardar Parkash Singh Badal (Ex- CM of Punjab), Sardar Sukhbir Singh Badal (Ex-Deputy CM of Punjab), Sardar Nirmal Singh (Retired Justice Punjab & Haryana High Court), Dr. Ajaib Singh Brar (Former Vice-Chancellor GNDU, Amritsar).

Credit Risks:

• Extensive Reliance of SGPC and SGGST for running of operations :

  SGGSWU has to extensively rely on grants received from SGPC and SGGST for its day to day operations. As per agreement, SGPC will strive to provide Rs. 10.00 Cr every year for the objectives of University. During FY19, the university received grants of Rs. 13.30 Cr from SGPC and SGGST. Combined these grants represent around 50% of the total Income booked. In FY20, till date the university has received Rs.10.00 grant from SGPC. Any delay in receipt of the grants in future can have significant impact on the operations of the university in medium term.

• Declining student strength and intense competition from other well established universities :

  The university had 3190 students enrolled with it for Academic year 2017-18 which declined to 3096 students in 2018-19 and further to 2980 students in current year 2019-20. The reason for such decline is on account of emergence of substitutes such as online certifications and programmes from reputed colleges/universities and migration of young blood to foreign countries such as Canada, New Zealand, Australia etc for higher studies.

• Vulnerability to Regulatory risk associated with the Education Sector :

  The educational institutions are regulated by various bodies, namely, University Grants Commission (UGC), All India Council for Technical Education (AICTE) etc.and are vulnerable to regulatory changes.

• Negative Net Profit Margins :

  Despite improvement, the University had negative Net profit margins of (1.60%) in FY19 as against (17.58%) in FY18.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

For arriving 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 university's ability to improve its enrollment ratio and coverage ratio's along with significant increase in revenue will be a key rating sensitivity.

Positive: The ratings may be upgraded if the university is able to significantly reduce its dependence on grants being received and increase its enrollment ratio and revenue.

Negative: The ratings may be downgraded if the university is not able to improve its profitability and coverage ratios going forward.

LIQUIDITY POSITION

1. The university had Bank Balance of Rs. 2.18 Cr as on 31.03.2019. It also had Fixed deposits of Rs. 2.64 Cr as on 31.03.2019.

2. Long term borrowings from Banks represents Term Loan with outstanding balance of Rs. 20.43 Cr as on 31.03.2019. Current Portion of Long term debt was Rs. 3.00 Cr as on 31.03.2019.

3. Current Ratio of the university was low at 0.62 times as on 31.03.2019.

4. The university did not have any working capital facilities availed  from Banks or Financial Institutions as on 31.03.2019.

5. Coverage ratios remain moderate with ISCR at 2.61 times and DSCR at 1.27 times for FY19.

6. The university did not had any associate/subsidiary concerns.

PROFILE

Sri Guru Granth Sahib World University(SGGSWU) is a Deemed Private University approved under section 2(f) of the UGC (University Grants Commission) Act, 1956. The university is being managed by Sri Guru Granth Sahib Fourth Centenary Memorial Trust (SGGST), being established by Shiromani Gurudwara Prabandhak Committee (SGPC). The university has its campus at District Fatehgarh Sahib, Punjab spread across more than 136 acres with year 2011-12 being the first academic session. The land has been provided on lease by SGPC to the trust for the establishment of the University and no rent is payable on the leased land by the university / trust. Dr. Pritpal Singh is the Chairperson of the University and is the head of the management team looking after day to day operations of the university. The university offers various graduate, post-graduate and doctoral programmees in sciences, arts, languages, economics etc. such as M.Com,MCA, M.Tech, BBA, B.com, MA , MBA , M.Sc., etc. Shiromani Gurudwara Prabandhak Committee (SGPC): SGPC is apex body for Sikhs. It was formed under Sikh Gurudwara Act,1925 and has its office at Amritsar. SGPC runs many gurudwaras, hospitals and charitable institutions, particularly for the welfare of the society at large. Its receives funds by way of donations from general public. Currently Sardar Gobind Singh Longowal is the President of SGPC. For FY2019-20, SGPC passed budget of Rs. 1205 Cr of which Rs. 238 Cr is being allocated for the 53 Schools and 37 Colleges its runs. Sri Guru Granth Sahib Fourth Centenery Memorial Trust(SGGST): SGGST is a educational charitable trust registered under Indian Trust Act,1882 formed by SGPC for the purpose of Establishment of Sri Guru Granth Sahib World University. SGGST has its registered office at Amritsar and Head office at District Fatehgarh Sahib, Punjab.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19 (Audited)	FY 17-18 (Audited)
Operating Revenue	Rs.Crs.	26.01	22.87
EBITDA	Rs.Crs.	7.77	4.94
PAT	Rs.Crs.	-0.42	-4.02
Tangible Net Worth	Rs.Crs.	53.73	54.15
Total Debt/Tangible Net Worth	Times	0.44	0.48
Current Ratio	Times	0.62	0.24

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 - Out-standing	Long Term	21.94	BWR B (Stable)	NA	NA	NA
Total			21.94	(Rupees Twenty One Crores and Ninety 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.

Hyperlink/Reference to applicable Criteria :

• General Criteria
• Approach to Financial Ratios

For More Information Contact:

Analytical Contacts	Investor Contacts
Gunsahib Singh Ratings Analyst B : +91 172 5032 295 / 6 Ext : 104 gunsahib.s@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
V.K.Kukreja Associate Director - Ratings B : +91 11 2341 2232 kukreja.vk@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 - Out-standing	21.94	_	21.94
Total				21.94
TOTAL (Rupees Twenty One Crores and Ninety Four lakhs Only)

Note: Amount outstanding as on 30.09.2019