Gurukul Foundation

Brickwork Ratings upgrades the rating for the reduced Bank Loan Facilities of Rs. 12.00 Crs. of Gurukul Foundation, and removes it from the Issuer Not Cooperating category

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (22 Sep 2020)	Present
Fund Based	13.00	12.00	Long Term	BWR B/Stable Downgrade/ISSUER NOT COOPERATING*	BWR BB - /Stable Upgrade
Grand Total	13.00	12.00	(Rupees Twelve 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

Brickwork Ratings has relied on the audited financials of Gurukul Foundation for FY20, provisional figures for FY21, projections for FY22 and FY23 , information furnished by the client and its bankers, as well as information available in the public domain, to arrive at the present ratings.

Brickwork Ratings has upgraded the rating of the reduced long term bank loan facilities of Rs. 12.00 Crs of Gurukul Foundation (GF or “the Trust”) from BWR B, Stable to BWR BB- with a Stable Outlook, and has removed the rating from the “Issuer Not Cooperating” category. The rating factors in the franchise of the established and reputed G D Birla Group, the assurance of receiving constant guidance and support from them whenever needed, construction of the school on its own land, and adequate liquidity. However, the ratings are constrained by the nascent stage of operations of the school, Intense competition and lack of experience of the promoters in the education industry.

BWR believes that the business risk profile of Gurukul Foundation 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, with improvement in debt protection metrics. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than expected figures.

KEY RATING DRIVERS

Credit Strengths:

Franchisee of established brand :
The Trust has strong backing in the form of a franchisee of the GD Goenka Group which established the GD Goenka Public School in the year 1994 and currently runs classes from Nursery to Class 12, all of which are affiliated to the Central Board of Secondary Education (CBSE). Over the last 23 years, the group has over 60 wholly owned and franchised schools across India and abroad. It is a well known name in the northern and the eastern parts of India. This will support the Trust in attracting students for the institution.
Guidance and support from the Group :
The faculties, management and administrative staff are expected to get expert guidance in all teaching and administrative matters from the G D Goenka Group, as and when needed.
Construction on own land :
The school has been constructed on the land owned by the promoters. This underscores the sincerity of the promoters as well as their commitment to the project, and has also helped in cutting the project cost substantially
Improvement in financial profile :
The Trust has shown all round improvement in its financial profile during FY21. There has been improvement in profitability at both the operating and net levels, improvement in debt protection metrics, as well as improvement in the Current Ratio and Net Cash accruals. Also, the Trust has been able to reduce its gearing level during the year.

Credit Risks:

Nascent stage of operations :
The school started its operations in April 2018 and it has been in the business for 3 years. It is yet to reach its full potential.
Intense competition :
The school faces intense competition from other well established players in the industry.
Lack of experience :
The promoters lack experience in the education industry as they are from different lines of business - however, their deficiency in experience is made up by the support from the Group from which it has obtained a franchise.

ANALYTICAL APPROACH - Standalone

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 Triggers: The rating may be upgraded in case of sustained increase in scale of operations and enrolment of students, as well as improvement in margins and debt protection metrics of the trust.
Negative Triggers: Any delays in servicing of debt obligations, deterioration in liquidity and debt protection metrics, and decline in revenue may lead to negative rating action.

LIQUIDITY INDICATORS - Adequate

The EBITDA of the company was Rs. 4.38 Crs. in FY20 and Rs. 4.84 Crs. in FY21(Prov.) and the Net Cash Accruals was Rs. 2.88 Crs. in FY20 and Rs. 3.29 Crs. in FY21(Prov). Cash and Cash Equivalents stood at Rs. 1.27 Crs. in FY20 and Rs. 0.94 Crs. in FY21. The Current Ratio of the company stood at 0.47 times in FY20 and 1.5 times in FY21. All these figures look sufficient against Interest and Finance charges of Rs. 1.6 Crs. in FY20 and of Rs. 1.55 Crs. in FY21.

ABOUT THE ENTITY

Gurukul Foundation (or ‘The Trust’) has entered into an Education Services Agreement with M/s G.D.Goenka Pvt. Ltd. (or ‘GDG’) on 17th of February 2017.
The Trust has its Registered Office at G.D. Poddar Campus, Behind Tiwari Cold Storage, Gulabbagh-854326, Purnea, Bihar.
It is represented by Mr.Piyush Agarwal - Chairman of the Trust.
The Trust runs a school under the name of G.D. Goenka Public School at Purnea, Bihar, which has started functioning in April 2018.
The Board of Trustees comprises Piyush Agarwal, Niraj Kumar Khemka, Ashok Kumar Saraf and Shailendra Kumar Gupta.
It also provides Hostel facilities (At present, there is a provision for 196 students). The Principal, teachers and administrative staff have been appointed. Most of the teachers have been recruited locally but some of them are from Kerala and Dubai.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 19-20 (Audited)	FY 18-19 (Audited)
Operating Revenue	Rs.Crs.	11.21	5.69
EBITDA	Rs.Crs.	4.38	1.83
PAT	Rs.Crs.	0.78	-2.00
Tangible Net Worth	Rs.Crs.	3.29	1.82
Total Debt/Tangible Net Worth	Times	4.44	8.85
Current Ratio	Times	0.47	0.59

KEY COVENANTS OF THE FACILITY RATED

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2022)			2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	12.00	BWR BB-/Stable (Upgrade)	NA	NA	22Sep2020	BWR BStable (Downgrade/ISSUER NOT COOPERATING*)	01Mar2019	BWR BB-Stable (Upgrade)
Grand Total		12.00	(Rupees Twelve Crores Only)

Rating Advisory, as on 02Mar2020
Rating moved to Not Reviewed Advisory

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
Pranaydeep Jana Ratings Analyst pranaydeep.j@brickworkratings.com	Anuradha Gupta Director - Ratings anuradha.g@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Gurukul Foundation

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	Bank of Baroda	Term Loan - Out-standing	12.00	_	12.00
Total			12.00	0.00	12.00
TOTAL (Rupees Twelve Crores Only)

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