RATING RATIONALE
25Aug2021

Zee Learn Ltd.

Brickwork Ratings revises the ratings for the Bank Loan Facilities of Rs. 58.00 Crs. of Zee Learn Ltd.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(03 Nov 2020)
Present
Fund Based 58.00 58.00 Long Term BWR BB Credit Watch with Negative Implications
Downgrade
BWR D
Downgrade
Grand Total 58.00 58.00 (Rupees Fifty Eight Crores 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

BWR has downgraded the rating to BWR D from BWR BB Credit Watch with Negative Implications for the bank loan facilities.

The downgrade in rating is on account of default in payment of principal installment of the term loan availed from a bank which was due on 31st July 2021. ZEE Learn Limited has informed BWR about the default on 24th Aug 2021.

The rating also factors invocation of the corporate guarantee extended by the company for the trusts by lender, auditor comments on material uncertainty on going concern, the deteriorating financial health of the company, and default in company's subsidiary.

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Consolidated

BWR has essentially relied on Consolidated audited financials up to FY20, FY21 (BSE Published) financials, Q1 June 2021 results, publicly available information, information/ clarification provided by the company’s management and the declaration by the company in the NDS provided by the company which mentions under that the company has defaulted on the principal installments of the term loan availed from a bank.

RATING SENSITIVITIES

Positive: The rating and outlook may be reviewed if the company is able to scale up its revenues and profitability, improve its liquidity, timely repayment of its debt obligation and compliance to the BWR policy for upgrade from a default rating.

LIQUIDITY INDICATORS - Poor

The liquidity profile is poor as reflected in the events such as the company was not able to repay principal debt obligation to a bank which was due on July 31, 2021, and the guaranteed debt of the group companies.

ABOUT THE ENTITY

Zee Learn Limited (ZLL) is a part of Essel Group and was incorporated in 2010. It is a child development and education company that operates K-12 school sunder the brand name of Mount Litera Zee Schools, pre schools under Kidzee and vocational academies ZICA and ZIMA. ZLL also acts as a consultant to local entrepreneurs who wish to set-up K-12 schools and the Kidzee pre-school and provide send-to-end education management and advisory services. ZLL runs programs in the following: early childhood education, school education, activity-based learning centers and vocational training in media and design, all through partnerships/franchising and running its own institutes. The group follows a structure of Company- Owned and Company  Operated (COCO), as well as franchisee models. It has 49 pre school centers under the COCO model (32 Kidzee,11 Mount Litera World Pre schools and 6 Mount Litera Zee schools Junior). The company also has 6K-12 COCO schools (5 Mount Litera Zee School and 1 Mount Litera Schools International), which operate under various trusts or societies. 

The company has recorded decline in revenue in Q1 June 2021 to Rs.74 crs v/s Rs.92 crs n Q1 June 2020.

Particulars Q1 Jun 2020 Q1 Jun 2021
Total Operating Income 92.63 74.2
Total Expenses 87.19 68.39
Depreciation 13.79 10.42
Interest/Finance cost 12.42 11.25
     
EBITDA 31.65 27.48
PAT 3.36 1.38

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 90.31 194.37
EBITDA Rs.Crs. 26.40 100.46
PAT Rs.Crs. 16.58 68.62
Tangible Net Worth Rs.Crs. 494.94 475.86
Total Debt/Tangible Net Worth Times 0.33 0.37
Current Ratio Times 0.81 0.91
KEY FINANCIAL INDICATORS (Consolidated)
Key Parameters Units

Operating Revenue Rs.Crs. 257.12 514.83
EBITDA Rs.Crs. 43.10 168.39
PAT Rs.Crs. -21.15 25.11
Tangible Net Worth Rs.Crs. 184.31 195.47
Total Debt/Tangible Net Worth Times 1.86 1.96
Current Ratio Times 0.54 0.44

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
Facilities Current Rating  (2021) 2021 (History) 2020 2019 2018
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating Date Rating
Fund Based LT 58.00
BWR D
(Downgrade)
NA
NA
02Apr2020
BWR A Credit Watch with Negative Implications
(Change in outlook)
01Feb2019
Issuance of Credit Note
()
22May2018
BWR A Credit Watch with Developing Implications
(Reaffirmed)
NA
NA
NA
NA
14Jul2020
BWR BBB Credit Watch with Negative Implications
(Downgrade)
01Feb2019
BWR A Credit Watch with Developing Implications
(Reaffirmation)
NA
NA
NA
NA
NA
NA
03Nov2020
BWR BB Credit Watch with Negative Implications
(Downgrade)
NA
NA
NA
NA
Grand Total 58.00 (Rupees Fifty Eight Crores 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

Heta Mehta

Senior Manager - Ratings Board : +91 22 2831 1426, +91 22 2831 1439 heta.m@brickworkratings.com

Bal Krishna Piparaiya

Senior Director - Ratings Board : +91 22 2831 1426, +91 22 2831 1439 piparaiya.bk@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Zee Learn Ltd.
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 DCB Bank Over DraftSanctioned 19.00 _ 19.00
2 DCB Bank Term LoanSanctioned 14.00 _ 14.00
3 Yes Bank Over DraftSanctioned 25.00 _ 25.00
Total 58.00 0.00 58.00
TOTAL (Rupees Fifty Eight Crores Only)
ANNEXURE-III
List of entities consolidated

Name of Entity% OwnershipExtent of consolidationRationale for consolidation
Liberium Global Resources Private Limited 100 100% Subsidiary
Digital Ventures Private Limited 100 100% Subsidiary

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