Brickwork Ratings has upgraded the ratings for the enhanced aggregate Bank Loan Facilities of Rs. 45.86 Crs of Ramanarayana Education Trust and removed the ratings from the Issuer Not Cooperating category.
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (10 Jan 2022) |
Present | ||
Fund Based | 21.00 | 45.86 | Long Term |
BWR BB /Stable
Downgrade/ISSUER NOT COOPERATING* |
BWR BBB -
/Stable Upgrade and Removed from the INC category |
Grand Total | 21.00 | 45.86 | (Rupees Forty Five Crores and Eighty Six lakhs Only) |
This rating pertains to an existing assignment received prior to 6 October 2022.
Brickwork Ratings has relied upon the Audited financials of the Trust for FY 19, FY 20 and FY 21, provisional financials of FY 22 and Projected financials of FY 23 and FY 24, information available in public domain as well as feedback from the Trust and its bankers, for arriving at the present rating.
Based on an annual review, Brickwork Ratings has upgraded the rating of the long term bank loan facilities from BWR BB/Stable to BWR BBB-/Stable for the enhanced aggregate bank loan facilities of Rs.45.86 Crs (enhanced from Rs.21.00 Crs) of Ramanarayana Education Trust and has removed the rating from the Issuer Not Cooperating category. The rating upgrade factors in the experienced management and brand name, a comfortable financial risk profile, well established operations of the Trust and adequate liquidity, as well as the growing demand for quality educational institutions. The rating is, however, constrained by moderate scale of operations, Regulatory Risk as the Trust operated in the education sector which is highly regulated by the government and Competition in the Industry .
BWR believes that the business risk profile of Ramanarayana Education Trust will be maintained over the medium term, and the 'Stable' outlook assigned 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 revised to 'Negative' if the revenues go down and profit margins show lower than expected figures on a continuous basis.
Credit Strengths:
The Trustees of the RET, Mr. Subrahmanayam Ponguru and Ms.Krishna Priya Ponguru are having more than a decade of experience in operating educational institutions.
RET’s financial risk profile is marked by comfortable net worth, healthy profitability & debt coverage indicators. The Corpus Fund of the Trust stood at Rs.34.55 crore as on 31st March, 2021 as against Rs.25.63 crores as on 31st March, 2020, the same has improved to Rs.51.78 Crs in FY22 provisional. The gearing of the Trust is moderate at 1.07 times as on 31st March,2021, it has improved in FY 22 provisional stood below unity at 0.52 times. The Trust has reported net surplus margin of 14.53% and operating surplus margin of 29.49 % in FY21 and the same stood at 16.86% and 25.18% respectively in FY 22 provisional. The interest coverage ratio (ISCR) and debt service coverage ratio (DSCR) of the Trust stood at 8.99 times and 2.40 times respectively in FY22 provisional.
The trust has established 16 campuses in various cities of West Bengal and has earned a good name for its schools . It operates a chain of schools by the name and logo of “Narayana School” affiliated to CBSE board.
The demand for good schools has been increasing as it imparting quality education.
The scale of operations of the Trust remained modest as the total operating receipts stood at Rs.102.22 Crs in FY22 provisional despite it being in operations for about 7 years.
The education sector is highly regulated by the government. Any changes in existing regulatory framework/ environment may adversely affect the finances of the Trust.
The Trust faces intense competition from other reputed schools in the vicinity.
Standalone
RATING SENSITIVITIES
Positive
Negative
LIQUIDITY INDICATORS - Adequate
The liquidity of the Trust stands adequate as reflected by the moderate cash credit utilization ~at 71% for the last six months ended September, 2022. Liquidity is further supported by comfortable ISCR & DSCR of 8.99 times and 2.40 times respectively in FY 2022 provisional. The net cash accruals of the Trust stood moderate at Rs. 22.87 as per FY 22 provisionals. In FY 23 projection the Trust has projected the NCA to be Rs. 23.33 Crs against the debt obligation of Rs.5.10 Crs. However, the liquidity is partially offset with the poor current ratio of 0.55 times in FY 22 provisional compared to 0.68 times in FY 21.
ABOUT THE ENTITYRamanarayana Education Trust (RET) is an Educational Trust registered at Ranga Reddy district of Andhra Pradesh by Mr. Subrahmanayam Ponguru, Ms. Krishna Priya Ponguru and Ms. Lakkakula Sindhura in November 2014 . RET was established to set up technical & non technical Schools and provide educational services. Operations of Trust started in November, 2015. Presently, the Trust operates 16 schools in West Bengal by using the brand name and logo of Narayana Schools as permitted by Narayana Educational Trust (NET). The permission of NET has been taken by RET, and a copy of the approval has been pasted in annexure
All schools are affiliated to the CBSE board. The Schools are provided with modern amenities like Swimming Pool, Library with internet facilities, Playground, Science and Computer laboratory, Activity Room, Smart Classrooms, Transportation facilities, Parent mobile app, Live vehicle training app and 24 hours CCTV surveillance.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 61.35 | 101.01 |
EBITDA | Rs.Crs. | 18.09 | 15.61 |
PAT | Rs.Crs. | 8.91 | 5.72 |
Corpus | Rs.Crs. | 34.55 | 25.63 |
Total Debt/Corpus | Times | 1.07 | 1.31 |
Current Ratio | Times | 0.68 | 0.46 |
Usal Covenant as per Bank Loan Rating
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 | 45.86 |
BWR BBB-/Stable
(Upgrade and Removed from the INC category) |
10Jan2022 |
BWR BB Stable
(Downgrade/ISSUER NOT COOPERATING*) |
NA |
NA
|
23Sep2020 |
BWR BBB- Stable
(Reaffirmation/ISSUER NOT COOPERATING*) |
20May2019 |
BWR BBB- Stable
(Assignment) |
0.00 |
NA
|
NA |
NA
|
NA |
NA
|
03Dec2020 |
BWR BBB- Stable
(Reaffirmation and Removed from the INC category) |
NA |
NA
|
||
Grand Total | 45.86 | (Rupees Forty Five Crores and Eighty Six lakhs 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 CriteriaAnalytical Contacts | |
---|---|
Saroj Kumar Das Ratings Analyst sarojkumar.d@brickworkratings.com |
Anuradha Gupta Director - Ratings anuradha.g@brickworkratings.com |
1-860-425-2742 | media@brickworkratings.com |
SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | |
---|---|---|---|---|---|---|
1 | Axis Bank Ltd. | GECLSanctioned | 0.51 | _ | 0.51 | |
2 | Axis Bank Ltd. | Dropdown ODSanctioned | 0.80 | _ | 0.80 | |
3 | Axis Finance Limited | Loans against PropertySanctioned | 15.50 | _ | 15.50 | |
4 | Canara Bank | GECLSanctioned | 2.55 | _ | 2.55 | |
5 | Canara Bank | Term LoanSanctioned | 2.43 | _ | 2.43 | |
6 | Canara Bank | Over DraftSanctioned | 5.00 | _ | 5.00 | |
7 | ICICI Bank | Loans against PropertySanctioned | 9.74 | _ | 9.74 | |
8 | Kotak Mahindra Bank | Over DraftSanctioned | 8.00 | _ | 8.00 | |
9 | Kotak Mahindra Bank | GECLSanctioned | 1.33 | _ | 1.33 | |
Total | 45.86 | 0.00 | 45.86 | |||
TOTAL (Rupees Forty Five Crores and Eighty Six lakhs Only) |
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