Rating Rationale

Brickwork Ratings has assigned a long-term rating of BWR BBB/Stable to the bank loan facilities of Yagachi Education and Research Trust, with the total sanctioned exposure aggregating to Rs. 97.56 crore. (Rupees Ninety-Seven Crores and Fifty-Six Lakhs Only).

The rating is supported by Yagachi Education and Research Trust’s experienced management and established presence in the education sector, along with its association with the broader Gokula MS Ramaiah ecosystem. The group has an established presence in the education sector, with M.S. Ramaiah University of Applied Sciences carrying an ICRA rating of A+ with a stable outlook, which provides comfort regarding the group’s institutional profile. The Trust benefits from its established Navkis College of Engineering, supported by approvals and affiliations with the relevant regulatory and academic bodies. Further strength is derived from its plans to transition into Navkis University, which is expected to broaden the academic portfolio beyond engineering to include management, commerce, pure sciences, design and liberal arts. The Trust’s growth is supported by increasing student enrolment, improving capacity utilisation and phased development of academic and hostel infrastructure. The proposed university is expected to further diversify the Trust’s academic offerings and strengthen its long-term operating profile.

The rating outlook is assigned as “Stable,” reflecting BWR’s expectation that Yagachi Education and Research Trust’s business risk profile will remain steady over the medium term. A stable outlook indicates a low probability of a rating change during this period. The outlook may be revised to “Positive” if the company achieves sustained improvement in revenue and profitability margins, while it may be revised to “Negative” in the event of a deterioration in its financial risk profile.

The terms of sanction include standard covenants normally stipulated for such facilities. 

• Strong Institutional Track Record and Management Experience :

  Yagachi Education and Research Trust (YERT) is a public charitable trust established on 24 December 2007, with an established track record in the education sector. The Trust is currently managed by the Navkis Group, an initiative of the M. S. Ramaiah Group, providing an established institutional and management framework. The Trust is led by Mr. M.R. Anandaram, Managing Trustee, who has been associated with the institution since its establishment in 2009 and oversees its strategic and administrative functions. The other trustees, Mrs. Kamala Anandaram, Mr. M.A. Navakoti Ram and Ms. Yerubandi Sai Geethica, contribute to the governance and oversight of the Trust, with Mr. Navakoti Ram bringing relevant industry experience. Overall, the Trust benefits from an experienced management team and established institutional backing, supporting the continuity and growth of its educational operations.

• Healthy Surplus Generation :

  The Trust has healthy surplus generation, with its Operating Surplus Margin improving significantly from 26.59% in FY25 to 29.81% in FY26 (Provisional). The improvement was supported by growth in operating income from ?23.24 crore in FY25 to ?28.05 crore in FY26, while OSBDIT increased from Rs 6.18 crore to Rs 8.36 crore during the same period. Further, the Net Surplus Margin remained healthy at 20.43% in FY25 and 23.04% in FY26, indicating strong internal accrual generation and a comfortable financial position. This healthy surplus generation provides the Trust with financial flexibility to support its ongoing operations and future expansion. 

• Moderate capital structure :

  The Trust’s capital structure remained moderate, marked by an overall gearing of 0.74x as on March 31, 2026, compared with 0.41x as on March 31, 2025. Debt coverage indicators remained moderate, with the interest coverage ratio at 8.75x in FY26 (FY25: 11.13x) and total debt to GCA at 2.91x (FY25: 1.72x). The Trust’s corpus stood at Rs. 31.55 crore as on March 31, 2026, and is expected to improve to Rs. 39.23 crore in FY27, providing some support to its overall financial profile.

• Significant Capex :

  The Trust has proposed setting up Navkis University in Hassan, subject to UGC approval, along with expansion of its existing Hassan campus. The proposed development includes academic blocks, an administration/library block, student centre, food court and hostel facilities, aggregating around 6.2 lakh sq. ft. of academic infrastructure and 1.67 lakh sq. ft. of hostel area. The total project cost is estimated at Rs. 97 crore, to be funded through promoter contribution of Rs. 24.25 crore and debt of Rs. 72.75 crore. 

• Exposure to Intense Competition :

  Yagachi Education and Research Trust operates in the highly competitive education sector, with several established institutions offering similar academic programmes in the region. This may exert pressure on student enrolment, fee levels and capacity utilisation. However, the Trust’s established presence, diversified academic offerings and proposed campus expansion are expected to support its competitive position.

• Risk from Stringent Regulatory Framework :

  The Trust is exposed to regulatory risks arising from compliance requirements of UGC, AICTE and other statutory authorities. Changes in regulations, accreditation norms, fee structures or approval requirements may impact the Trust’s operations, student intake and expansion plans. However, its established presence and compliance framework provide some mitigation.

In the future, the trust’s ability to improve its revenue profile and strengthen its financial risk profile will remain the key rating sensitivities.

Positive:

• Improvement in revenue by around 30%, supported by better operating profitability and improvement in profit margins.
• Strengthening of the Trust’s corpus, which is expected to support an improvement in the gearing ratio.
• Maintaining adequate debt protection metrics, with ISCR remaining above 2.0x and DSCR at around 1.10x.

Negative: 

• A decline in revenue by around 20% from the current level, resulting in a reduction in the operating surplus margin to below 10%.
• A significant weakening in the Trust’s capital structure, with TOL/TNW increasing above 2.0x.
• Deterioration in debt protection metrics, with ISCR declining below 2.0x and DSCR falling below 1.0x.

The Trust maintains an adequate liquidity profile, supported by healthy cash generation and comfortable short-term liquidity. Cash and cash equivalents stood at Rs. 2.05 crore in FY26 (Prov.), while the current ratio improved significantly to 5.09x from 1.93x in FY25. Net cash accruals stood at Rs. 7.97 crore in FY26 (Prov.) and are expected to improve to around Rs. 9.43 crore in FY27, against scheduled debt repayment of around Rs. 1.71 crore in FY27, providing adequate headroom for debt servicing. Working capital utilisation remained moderate at around 65.59% over the past ten months.

The Trust’s financial risk profile remains comfortable, supported by a strengthening corpus and moderate leverage. The corpus increased from Rs. 25.17 crore in FY25 to Rs. 31.55 crore in FY26 (Prov.), while Total Debt/Corpus stood at 0.74x. Debt protection metrics remained comfortable, with ISCR at 8.75x and DSCR at 2.50x in FY26 (Prov.), supported by healthy cash accruals and moderate leverage.

The Yagachi Education and Research Trust’s ESG risk profile is assessed as Adequate, supported by the inherently low environmental footprint of its education-focused operations, meaningful social contribution through provision of higher education, and established governance framework. The Trust operates educational institutions across Karnataka, with its activities primarily focused on imparting undergraduate and postgraduate education.

Environmental Profile: The Trust’s direct environmental impact remains relatively low, given the non-industrial nature of its educational operations. Environmental risks are primarily associated with electricity consumption, water usage, waste generation and campus infrastructure. These risks are considered manageable through routine campus-level measures such as energy-efficient lighting, natural ventilation, waste management and responsible water usage. The Trust’s operations are not exposed to significant pollution, hazardous-material handling or other material environmental risks typically associated with industrial activities.

Social Profile: Social factors constitute a key strength, given the Trust’s role in providing higher education and enhancing access to professional and technical education. The institutions offer programmes across disciplines such as engineering, computer science, artificial intelligence, electronics and civil engineering, thereby contributing to the development of skilled human capital. The Trust caters to students from diverse backgrounds and supports employability through academic programmes and placement-related initiatives. Student welfare, campus safety, anti-ragging measures and compliance with applicable academic and regulatory requirements remain important aspects of its social framework.

Governance Profile: Governance practices are supported by the Trust’s established institutional framework and oversight by its trustees and management. The segregation of academic and administrative responsibilities, adherence to applicable regulatory requirements and periodic audit of financial statements provide a framework for responsible governance. The Trust’s financial statements are subject to independent audit, while banking conduct has remained satisfactory. The absence of adverse remarks from the auditor in the FY25 audited financial statements further supports the assessment. Overall, the governance framework is considered adequate, although continued succession planning, institutionalisation of management processes and maintenance of regulatory compliance remain important from a credit perspective.

Yagachi Education and Research Trust (YERT) is a public charitable trust established on 24 December 2007 and registered with the Sub-Registrar, Hassan. The Trust is currently managed by the Navkis Group, which took over its management through a Reconstitution Deed dated 16 October 2019.

Navkis Educational Centre (NEC), founded by Chairman Shri M. R. Anandaram, traces its origins to the Gokula Campus established in January 2000. The group has since expanded its presence across various educational disciplines.

YERT currently manages Navkis College of Engineering, Hassan, formerly known as NDRK Institute of Technology. The institute was renamed Navkis College of Engineering following VTU approval dated 30 September 2020.

The College offers seven undergraduate B.E. programmes across engineering disciplines and one postgraduate programme in MCA, with admissions governed by AICTE, VTU and Government of Karnataka norms. The College has a total student strength of around 1,910 students across the four years of undergraduate programmes.

The Complexity Indicator refers to the ease with which the returns associated with the rated instrument could be estimated. It does not indicate the risk related to the timely payments on the instrument, which is rather indicated by the instrument's credit rating. It also does not indicate the complexity associated with analysing an entity's financial, business, industry risks or complexity related to the structural,transactional or legal aspects. Details on the complexity levels of the instruments are available on BWR's website Complexity Levels.

Not Applicable

BWR Board of Directors have no influence over rating decisions, nor do they sit on the rating committee or review, discuss or evaluate any credit rating during the Board meetings.

Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI]. BWR is the 5th agency to get a credit rating registration in India in 2009 and its corporate office in Bengaluru. It has a country-wide presence with representatives in 150+ locations. Canara bank is an institutional investor in Brickwork.

Brickwork offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitisation Products, Municipal Bonds, etc. BWR has also rated NGOs, Educational Institutions, Hospitals, Urban Local Bodies and Municipal Corporations.

Nature of Ratings & Information: BWR ratings are opinions on the relative ability of an entity/instrument to meet its financial obligations and are based on information obtained from issuers and other sources believed to be reliable. BWR does not conduct audits, due diligence, or independent verification of such information and does not guarantee its accuracy, adequacy, or completeness.Ratings are current only as of the date of publication and may be revised based on new or unavailable information.

No Advice or Recommendation: Ratings, reports, and related communications are not investment advice and do not constitute recommendations to buy, sell, or hold securities, or to sanction, renew, or disburse credit facilities. They do not represent offers or solicitations for any transaction. Users must rely on their own independent judgment and professional advice. Access to or use of these materials does not create any client relationship with BWR.

Liability, Usage & Regulatory Framework: This content is published for the purpose of dissemination of information as required under applicable laws and regulations. BWR holds exclusive copyright over the content. It may be used with appropriate credit to BWR, provided that the content is not altered or modified in any way that could change its meaning or intent. BWR retains the exclusive right to distribute or share its rating rationales, directly or indirectly, through any print, digital, or electronic media. All reports are provided on an "as is" basis without warranties of any kind, express or implied, including but not limited to merchantability, fitness for a particular purpose, or non-infringement. BWR and its affiliates shall not be liable for any direct, indirect, incidental, or consequential losses or damages arising from the use of these reports. Ratings are subject to continuous surveillance and may be revised, suspended, or withdrawn at any time without notice. These reports are intended for use within India only. BWR operates under SEBI Regulations and Code of Conduct.

For more information on policies and ratings, please visit our www.brickworkratings.com