CRISIL has upgraded its ratings on the bank facilities of Jassar Dental Medical Education Health Foundation (JDMH) to ‘B/Stable/P4’ from ‘D/P5’.

The rating upgrade reflects the timely payment of debt instalments by JDMH since October 2009. The upgrade also factors in JDMH’s initiatives, including advance monthly part-payment of the half-yearly instalments, to avoid any lumpsum payment that might adversely affect its debt repayment ability. Moreover, repayment on the society’s Rs.50 million term loan contracted for capital expenditure (capex) towards starting its post-graduate diploma in management (PGDM) course will commence only after the current term loan is fully repaid; this has partly alleviated the company’s liquidity problem.

The ratings reflect JDMH’s exposure to risks related to mismatch in cash flows, limited financial flexibility, limited track record of placements, weak brand appeal limiting its ability to attract students, and highly regulated operations. These rating weaknesses are partially offset by the diversity in courses offered by JDMH and its moderate financial risk profile.

Outlook: Stable
CRISIL believes that JDMH’s revenues will continue to improve over the medium term because of the introduction of new courses. However, the financial flexibility of the society is likely to remain subdued because of its constrained profitability as a result of higher operating costs in the initial years of implementing the recently introduced courses. The outlook may be revised to ‘Positive’ if JDMH enhances its brand appeal by giving better job placements to its students, thereby increasing its enrolment for the recently introduced courses. Conversely, the outlook can be revised to ‘Negative’ if JDMH’s financial risk profile weakens, most likely because of larger-than-expected debt-funded capex, subdued cash accruals leading to decline in profitability, or slackened cash management practices leading to weakening in debt repayment ability.

About the Society
JDMH, a registered Sikh minority society set up in 1997, provides courses in dental studies, engineering, pharmacy and business administration. The society’s dental college, set up in 1999, is recognised by the Dental Council of India, New Delhi. JDMH’s engineering college has approval from the All India Council for Technical Education, while its post-graduate degree course in business administration is affiliated to Uttar Pradesh Technical University. The society has also started an autonomous business school in the academic year 2009-10.

JDMH, on a provisional basis, reported an excess of income over expenditure of Rs.21.9 million on revenues of Rs.201.7 million for 2009-10 (refers to financial year, April 1 to March 31), against an excess of income over expenditure of Rs.21.6 million on revenues of Rs.159.5 million for 2008-09.