CRISIL has assigned its ‘BB+/Stable’ rating to the bank facilities of Mother’s Pet Kindergarten (MPKG), which is part of the Mother’s Pet group. The rating reflects MPKG’s relatively small scale of operations and risks associated with the company’s ongoing capacity expansion project. These rating weaknesses are partially offset by the healthy financial risk profile, marked by low gearing and strong debt protection metrics, and established market position in the pre-nursery education sector in Nagpur (Maharashtra).

For arriving at its ratings, CRISIL has combined the business and financial risk profiles of MPKG and Nagpur Estate Private Limited (NEPL), together referred to as the Mother’s Pet group. This is because the entities are under a common management and have fungible cash flows. Moreover, NEPL, which is the in-house construction company of the Mother’s Pet group, constructs and modifies buildings used by MPKG and Centre Point Schools (CPS).

Outlook: Stable
CRISIL believes that MPKG will maintain its business risk profile over the medium term, supported by its established brand in the pre-nursery education segment in Nagpur. The company is also likely to maintain its healthy financial risk profile, supported by comfortable debt protection metrics. The outlook may be revised to ‘Positive’ if the company increases its revenues and improves its profitability by way of increasing its student strength or fees significantly. Conversely, the outlook may be revised to ‘Negative’ if the company’s, cash flows, and consequently debt protection metrics, decline, most likely because of time and cost overruns in its ongoing capacity expansion project resulting in less-than-expected student intake.

About the Group
MPKG is a proprietorship concern founded by Mrs. Aruna Upadhyay in 1979. MPKG offers pre-school education to children between two and five years of age, in four classes - pre-nursery, nursery, lower kindergarten (KG-I) and upper kindergarten (KG-II). It has four branches in Nagpur with combined student strength of around 2500. Mrs. Aruna Upadhyay has also started three schools under CPS brand. The schools are run by Mother’s Pet Education Society (MPES); Mrs. Aruna Upadhyay is the chairperson of the society. The students of MPKG get direct admission to CPS after KG-II.

NEPL is a construction company; it constructs buildings for MPKG and CPS.

MPKG reported a provisional profit after tax (PAT) of Rs.21 million on provisional net sales of Rs.75 million for 2009-10 (refers to financial year, April 1 to March 31), against a PAT of Rs.17 million on net sales of Rs.42 million for 2008-09.