RATING RATIONALE
22 Jan 2021
Gram Tarang Employability Training Services Pvt. Ltd.
Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.15.00 Crs. of Gram Tarang Employability Training Services Pvt. Ltd.
Particulars| Facility** | Amount (Rs.Crs) | Tenure | Rating* |
|---|---|---|---|
| Fund Based | |||
|
Over Draft
Sanctioned
Adhoc Facilities FB (CC/TL/OD) Proposed |
07.00
05.00 |
Long Term | BWR BB + (Stable) |
| Sub Total | 12.00 | ||
| Non-Fund Based | |||
| Bank Guarantee Sanctioned | 03.00 | Short Term | BWR A4 + |
| Sub Total | 03.00 | ||
| Grand Total | 15.00 | (Rupees Fifteen Crores Only) | |
**Details of Bank facilities are provided in Annexure-I
Note: Banking since 2015. RATING ACTION / OUTLOOK : Stable
BWR believes that Gram Tarang Employability Training Services Pvt. Ltd. business risk profile will be maintained over the medium term.
The outlook of the company is assigned as stable due to its consistent improvement in scale of operations, PAT, Networth. Minimal utilization of available banking facilities and satisfactory feedback from the bank.
KEY RATING DRIVERS
Credit Strengths:
- Management Experience, geographical reach, and long-standing market presence :
The directors of the company have experience in similar lines of business of the company and hold educational degrees in similar lines of business. The management has an overall experience of more than two decades in the industry and was associated with reputed universities of India. The company has its presence pan India with physical centers in Andhra Pradesh, Odisha, Assam, Jharkhand, and a long market presence of 21 years.
- High Industry demand and support from the Government of India :
Huge demand-supply skill gap, 90% of the jobs in India are "skill-based", entailing the requirement of vocational training. It is estimated that only 5% of the youth in India are vocationally trained, which creates a huge demand for vocational training in India. Government institutions like National Skill Development Corporation of India(NSDC), Ministry of Skill Development and Entrepreneurship(MSDE), Pradhan Mantri Kaushal Vikas Yojna(PMKVY), Ministry of Rural Department(MoRD), Deen Dayal Upadhyaya Grameen Kaushalya Yojana(DDUGKY), and Government of Individual states along with companies under its CSR(Corporate Social Responsibility) support vocational training of the country.
- Gradual improvement in scale of operations :
The company has continuously improved its scale of operations on a yearly basis as shown by, the company’s operating income of Rs. 92.42 Crs in FY 20 against Rs. 69.82 Crs in FY 19 and Rs. 49.45 Crs in FY 18. The expected decline in the top line for FY21 is on account of the impact of COVID.
- Improving financial indicators :
Interest and finance charges have declined over the years from Rs. 1.71 Crs in FY 19 to Rs. 0.99 Crs in FY 20, PAT has improved from Rs. 4.28 Crs in FY 19 to Rs. 4.75 Crs in FY 20, Net-worth has increased from Rs. 19.08 Crs in FY 19 to Rs. 22.90 Crs in FY 20, TOL/TNW has improved from 4.48 times in FY 19 to 3.39 times in FY 20. Even with a decline in the projected sales for FY21, the company expects an improvement in net worth, gearing, profit margin, and debt protection metrics, with only a marginal reduction in ROCE, for FY21.
- Adequate debt-protection metric :
Debt protection coverage ratio and interest service coverage ratio has improved from 1.79 times and 7.60 times respectively in FY 19 to 2.00 times and 13.05 times respectively in FY 20 and are expected to be 2.44 times, 11.19 times respectively In FY 21.
Credit Risks:
- COVID Impact on Education Sector :
With the closure of education and training institutions all over the world because of the COVID-19 pandemic, Vocational Education and Training is likewise feeling the strain. Several initiatives have been launched as a means of ensuring that teaching and learning continue throughout this period and Work-based learning (WBL) is maintained in very few countries and in sectors where companies’ activities are still going on; this seems to be the part of VET programmes that is most affected during this period.
- Presence in a highly competitive industry :
Entities in this segment face intense competition, thus requiring them to bid aggressively to procure contracts, this restricts the operating margin to a moderate level. Also, given the cyclicality inherent in the construction industry, the ability to maintain profitability through operating efficiency becomes critical.
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
Positive: The rating may be upgraded in case of an increase in the scale of operation and improvement in margins and debt protection metrics of the company.
Negative: Any delays in servicing of debt obligations, deterioration in liquidity and debt protection metrics, may lead to negative rating action.
LIQUIDITY POSITION
Liquidity is Adequate. Average utilization of Overdraft limits is about 40.00% in the last eight and a half months (April 2020- December 14, 2020). The ISCR stood at 13.05 times in FY 20 against 7.60 times in FY 19, and the current ratio stood at 2.11 times in FY 20, as against 1.90 times in FY 19. The company has not availed of a moratorium facility under COVID from the bank. Net Cash Accruals of the company stood at Rs. 10.38 Crs. as of 31 March 2020 against Rs. 9.42 Crs in FY 19. The company will be in a position to serve in debt obligations from its cash accruals. However, the Total cash & cash equivalent balance as of 31 March 2020 was Rs. 9.96 Crs. against Rs. 21.46 Crs on 31 March 2019.
PROFILEGram Tarang Employability Training Services Pvt Ltd(GTETSPL or the “Company”) was incorporated on 11 January 1999 with its registered office at KSR, Pleasant Valley, Madhavadhara, Visakhapatnam, Andhra Pradesh. The company is engaged in providing vocational training services for employment and recruitment assistance for technical positions of the companies. The company provides training with the support of Centurion University and National Skill Development Corporation of India(NSDC), Ministry of Skill Development and Entrepreneurship(MSDE), Pradhan Mantri Kaushal Vikas Yojna(PMKVY), Ministry of Rural Department(MoRD), Deen Dayal Upadhyaya Grameen Kaushalya Yojana(DDUGKY) and Government of Assam, Punjab, and Andhra Pradesh. The directors of the company are Mr. Mukti Kanta Mishra, Mr. V. V. L. Narsimha Rao Dechiraju, Mr. Abhinav Madan, Mr. Aditya Saikia, and Mr. Debashish Panda.
KEY FINANCIAL INDICATORS| Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 92.42 | 69.82 |
| EBITDA | Rs.Crs. | 12.80 | 13.01 |
| PAT | Rs.Crs. | 4.75 | 4.28 |
| Tangible Net Worth | Rs.Crs. | 22.90 | 19.08 |
| Total Debt/Tangible Net Worth | Times | 2.39 | 3.09 |
| Current Ratio | Times | 2.11 | 1.90 |
RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)
| S.No | Current Rating (2021) | Rating History | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Facilities | Tenure | Amount (Rs.Crs) | Rating | 2020 | 2019 | 2018 | ||||
| Fund Based | ||||||||||
| 1 | Over Draft - SanctionedAdhoc Facilities FB (CC/TL/OD) - Proposed | Long Term | 07.0005.00 | BWR BB+(Stable) | NA | NA | NA | |||
| Non-Fund Based | ||||||||||
| 2 | Bank Guarantee - Sanctioned | Short Term | 03.00 | BWR A4+ | NA | NA | NA | |||
| Total | 15.00 | (Rupees Fifteen Crores 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.
Hyperlink/Reference to applicable Criteria : For More Information Contact:| Analytical Contacts | |
|---|---|
|
Protusha Bera Ratings Analyst B : +91 80 4040 9940 protusha.b@brickworkratings.com |
Anuradha Gupta Director - Ratings anuradha.g@brickworkratings.com |
| 1-860-425-2742 | media@brickworkratings.com | |
| SL.No. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) |
|---|---|---|---|---|
| 1 | Over DraftSanctioned | 7.00 | _ | 7.00 |
| 2 | Adhoc Facilities FB (CC/TL/OD)Proposed | 5.00 | _ | 5.00 |
| 3 | Bank GuaranteeSanctioned | _ | 3.00 | 3.00 |
| Total | 12.00 | 3.00 | 15.00 | |
| TOTAL (Rupees Fifteen Crores Only) | ||||
Note: Banking since 2015.
| Instrument | Issue Date | Amount (Rs.Crs) | Coupon Rate | Maturity Date | ISIN Particulars |
|---|---|---|---|---|---|
| NA | NA | NA | NA | NA | NA |
| Name of Entity | % Ownership | Extent of consolidation | Rationale for consolidation |
|---|---|---|---|
| NA | NA | NA | NA |
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