| Ambalika Welfare Foundation | ||||
| Rating Reaffirmed | ||||
| Rating Action | ||||
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| 1 crore = 10 million | ||||
| Refer to annexure for Details of Instruments & Bank Facilities |
| Detailed Rationale |
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CRISIL has reaffirmed its rating on the long-term bank facilities of Ambalika Welfare Foundation (AWF) at 'CRISIL BBB/Stable'. |
| Key Rating Drivers & Detailed Description |
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Strengths: * Above average financial risk profile The trust has above average financial risk profile, which is expected to improve over the medium term in the absence of any large, debt-funded capital expenditure (capex) and repayment of existing loans. The gearing is 0.36 time as on March 31, 2019, on account of repayment of existing term loans. The corpus have improved to over Rs 37.56 crore as on March 31, 2019, from Rs 10.30 crore as on March 31, 2013, due to a healthy operating margin and accretion to reserves. Debt protection metrics are strong as reflected in a net cash accrual to total debt ratio of over 0.44 time and an interest coverage ratio of over 4.74 times, for fiscal 2019, due to debt repayment and a healthy operating margin. The metrics are expected to remain strong backed by a stable operating margin. * High occupancy and steady cash accrual Occupancy has remained high at above 80% while course offerings and capacity in existing courses have been increasing for past two fiscals. The institute has been organising job fairs for placement of its engineering and management students. Though the operating margin has declined from earlier 35%, remains at healthy level of 31% and is expected to continue at the similar level over the medium term, driven by high occupancy and improvement in fee receipts. Weaknesses: * Modest scale of operations Revenue was modest at about Rs 24.28 crore in fiscal 2019. Though the trust has been taking steps to further improve its market position; the scale of operations is likely to remain modest over the medium term. * Susceptibility to regulatory changes and to intense competition The trust operates only one institute Amablika institute of Management and Technology (AIMT) in Mohanlalganj on the outskirts of Lucknow; it faces competition from other large institutes such as Shri Ramswaroop Memorial Institute of Management & Computer Application and Babu Banarsi Das Education Trust operating in that area and other institutes in Uttar Pradesh that also offer diversified courses. Due to competition, retention of the best faculty is a challenge. The trust plans to diversify its course portfolio to minimise the impact of competition. The trust has to secure approvals from All India Institute of Technical Education (AICTE) and affiliated university, Gautam Buddha Technical University, for offering new courses and increasing the number of seats under each course. It has to comply with the regulations specified by these bodies from time to time in relation to infrastructure and faculty members. The fee to be charged and any increase in the fee structure are decided by the fee committee functioning under the approving bodies. Enhancements in the number of seats/courses offered in any discipline, and setting up of a new institute also require approvals from the regulatory bodies. This is a lengthy process and involves complying with all specified norms and standards. Lack of autonomy (in selection of courses offered, increasing the number of seats, and fixing the fee structure) will limit revenue streams over the medium term. * Working Capital Intensive Operations Gross current assets (GCA) days are high in the range of 222-285 days in past three years due to high debtor days of 202 days in fiscal 2019 as the government receivables are received in delayed manner. The working capital management will remain a key rating monitorable going ahead. |
| Liquidity Adequate |
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Adequate liquidity as the society is expected to generate healthy cash accruals of around 5 to 5.5 crore over the medium term against fixed debt repayment of Rs 2.65 crore in fiscal 2020 and Rs 2.98 crore in fiscal 2021 respectively. Liquidity is further supported by cushion in bank lines which has remained low utilized. |
| Outlook: Stable |
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CRISIL believes AWF will continue to benefit over the medium term from high occupancy and a healthy financial risk profile. |
| Rating Sensitivity factors |
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Upward factors * If it is able to significantly and substantially increase its fees collection at CAGR of 15% over the medium term leading to strengthen revenue visibility. * Improvement in financial risk profile Downward factors * Lower than expected fees collection or operating margins leading to decline in cash accruals by 20% over the medium term. * Undertakes any unanticipated capex leading to weakening of financial risk profile of the trust. |
| About the Trust |
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Set up in 2007 as a trust, AWF operates AIMT, which started in academic year 2008-09. The institute offers engineering and management courses. The graduate engineering courses offer specialisations in mechanical, computer science, information technology, civil engineering, and electronics and communication. The trust is managed by the Mishra family with Mr B C Mishra as chairman, Ms. Rama Mishra as vice chairperson, and Mr Ambika Mishra as secretary. |
| Key Financial Indicators | ||||||||||||||||||||||||
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| Note on complexity levels of the rated instrument: CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
| Annexure - Details of Instrument(s) | |||||||||||||||||||||
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
| Annexure - Details of various bank facilities | ||||||||||||||||||||||||||||||||||||
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| For further information contact: | ||||||
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