Product Quantum (Rs. Cr) Long Term Rating Short Term Rating
Bank Loan Ratings 10.00 ACUITE BB | Stable | Reaffirmed -
Total Outstanding Quantum (Rs. Cr) 10.00 - -
 
Rating Rationale
Acuité has reaffirmed the long-term rating of ‘ACUITE BB’ (read as ACUITE double B) on the Rs.10.00 crore bank facilities of Sanvi Education Society (SES). The outlook is 'Stable'

Rationale for Reaffirmation 
The rating on SES takes into account the expected growth in the operating income and stability in operating margins over the medium term. The rating is supported by the experienced management, long track record of operations. These strengths are, however, partly offset by the moderation in margin, modest scale of operation and competition in the Industry.

 

About the Company
­Shimla based, Sanvi Education Society was formed under Himachal Pradesh Society Registration Act, 2006. Currently, Sanvi Education Society runs a school in Shimla under the name of Ivy International School. The school is located at Kamla Nagar, Shimla . The school has partnered with Cambridge University (U.K.), Pearson Education (U.K.) and iDiscoveri (Xceed Foundation for life).The society consists of eight members, from various professional backgrounds.The School is affiliated to Central Board of Secondary Education.
 
Analytical Approach
­Acuité has taken the standalone view of the business and financial risk profile of Sanvi Education Society for arriving at this rating.
 

Key Rating Drivers

Strengths
­Established track record and experienced management
Sanvi Education Society was formed in the year 2006 and has an operational track record of more than one decade. Currently, Sanvi Education Society runs a school in Shimla under the name of Ivy International School. The institution is managed by the members of the society headed by Mr. Vishal Chauhan who has over 18 years of work experience in organizations of repute. The extensive experience of the governing body members in the education and horticulture industries is expected to continue to support the business risk profile.

Tie ups with international educational institutions, state of the art facilities, physical security and innovative methods of teaching: Ivy International school has partnered with Cambridge University (U.K.), Pearson Education (U.K.) and iDiscoveri (Xceed Foundation for life) The school imparts teaching with new tools and technologies in the field like through digital mediums, activity based models, outbound activities for greater exposure, exchange programmes for quick learning etc. The school has one of the best infrastructures in Himachal Pradesh (HP) with respect to sports and extracurricular activities. The school has the first Robotics Lab in HP. It is the only private day school in HP which provides in-house lunch to the kids and teaches a foreign language i.e. French.Each student has been provided a personal locker to keep their books, note books, sports kit and other personal belongings.
Weaknesses
Financial Risk Profile – Moderate
SES has Moderate financial risk profile marked by low net worth and moderate debt protection metrics. SES’s net worth stood at Rs. 5.36 Cr (Prov.) as on 31st March 2023 as against Rs.4.02 Cr as on 31st March 2022. Company follows moderate leverage policy. Gearing levels (debt-to-equity) improved by 54 bps and stood at 1.64 times as on March 31, 2023 (Prov.) as against 2.18 times in FY 2022. Improvement in Gearing Ratio in FY 23 is on account of profit accretions and infusion of USL as quasi equity. The total debt outstanding of the Society is Rs. 8.78 crore as on 31 March, 2023 (prov.)which consists of long term bank borrowings of Rs.6.49 crore, short term working capital limit of Rs. 1.04 crore and current maturities of long term Debt Rs 1.25 crore.

Further, the interest coverage ratio improved by 13 bps and stood comfortable at 2.67 times for FY2023 (Prov.) as against 2.54 times in FY2022 likewise Debt Service coverage ratio improved by 8 bps and stood moderate at 1.18 times for FY2023 (Prov.) as against 1.10 times in FY2022. Total outside liabilities to total net worth (TOL/TNW) stood at 1.75 times as on FY2023 (Prov.) vis-à-vis 2.29 times as on FY2022. However, Debt-EBITA stood at 3.78 times as on 31st March 2023(Prov.) as against 4.23 times as on 31st March 2022. The Net Cash Accruals to Total debt stood at 0.17 times as on FY2023 (Prov.) and 0.14 times for FY2022. ­

Exposure to intense competition and stringent regulatory framework for the educational sector in India
The society will face intense competition from other private institutions offering similar courses. Given the competition, the ability of the society to attract requisite students in tune with its sanctioned intake would be a challenge. Further, the Indian education industry is highly regulated and consequently subject to the stringent regulatory framework, which is to be followed by group operated institutes. Any major change in regulatory framework by Government of India or change in policy by affiliated boards will have a major impact on the revenue, financial and operating performance of the group. Acuité believes that society’s ability to scale up its operations while maintaining profitability will be a key rating monitorable.
Rating Sensitivities
­Significant Improvement in Operating income and Profitability 
Improvement in liquidity 
 

 
 
Material covenants
­None
 
Liquidity Position
Poor
­Society has poor liquidity marked by net cash accruals to its maturing debt obligations, current ratio and Bank Limit Utilization. SES generated cash accruals of Rs. 1.46 crore for FY2023 (Prov.) as against obligations of Rs. 1.10 crores for the same period. Current Ratio stood at 0.76 times as on 31 March 2023(Prov.) as against 0.51 times in the previous year. Fund working capital limits are utilized at ~ 94 per cent during the last six months ended May 23. Cash and Bank Balances stood at Rs 0.30 crores.
 
Outlook: Stable
­Acuité believes that Sanvi Education Society will maintain a 'Stable' outlook over the medium term on the back of promoters’ extensive experience in the industry, moderate financial risk profile. The outlook may be revised to 'Positive' in case the society registers higher-than expected growth in its revenue and profitability while improving its liquidity position. Conversely, the outlook may be revised to 'Negative' in case the society registers lower than expected growth in revenues and profitability or in case of deterioration in the society’s financial risk profile or deterioration in fresh enrollment and total head count of students.
 
Other Factors affecting Rating
­None
 

Particulars Unit FY 23 (Provisional) FY 22 (Actual)
Operating Income Rs. Cr. 4.40 3.51
PAT Rs. Cr. 0.80 0.56
PAT Margin (%) 18.17 16.05
Total Debt/Tangible Net Worth Times 1.64 2.18
PBDIT/Interest Times 2.67 2.54
Status of non-cooperation with previous CRA (if applicable)
­Brickworks vide its press release dated 20.02.2023, had rated the company to  BWR B-/Stable; Issuer Not Cooperating.
 
Any other information
­None
 
Applicable Criteria
• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm
• Service Sector: https://www.acuite.in/view-rating-criteria-50.htm
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm

Note on complexity levels of the rated instrument
­­In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in
 

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook
28 Mar 2022 Term Loan Long Term 7.89 ACUITE BB (Assigned)
Proposed Bank Facility Long Term 1.06 ACUITE BB (Assigned)
Cash Credit Long Term 1.05 ACUITE BB (Assigned)
­

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating
J&K Bank Not Applicable Cash Credit Not Applicable Not Applicable Not Applicable 1.05 Simple ACUITE BB | Stable | Reaffirmed
Not Applicable Not Applicable Proposed Long Term Bank Facility Not Applicable Not Applicable Not Applicable 1.06 Simple ACUITE BB | Stable | Reaffirmed
J&K Bank Not Applicable Term Loan Not available Not available Not available 7.89 Simple ACUITE BB | Stable | Reaffirmed

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