CBM Hospital & Research Center
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Rating Rationale CBM Hospital & Research Center 5 Jun 2018 Brickwork Ratings assigns BWR B for the Bank Loan Facilities of Rs. 11.60 Crs of CBM Hospital & Research Center.(‘CBM’ or ‘The Firm’) ______________________________________________________________ Particulars Facility* Present Limit Proposed Tenure Rating^ (Rs. Crs) Limit (Rs. Crs) Fund Based BWR B Term Loan 6.60 11.10 Long (Pronounced as BWR Single ) Cash Credit 0.20 0.50 Term Outlook: Stable Assigned Total 6.80 11.60 (INR Eleven Crores Sixty Lakhs Only ) ^ Please refer to BWR website www.brickworkratings.com/ for definition of the ratings *Annexure-I provides details of bank wise facilities Rationale/Description of Key Rating Drivers/Rating sensitivities: BWR has essentially relied upon the audited financial results of FY17, provisional financial details for FY18, publicly available information and information/clarifications provided by the management. The ratings draw strength from experience of the partner, who herself is an experienced doctor with extensive experience of nearly a decade in the healthcare sector. The ratings, however, are constrained by the limited track record, relatively weak debt protection metrics and competitive & highly regulated nature of the sector. Going forward the ability of the firm to increase its scale of operation, generate projected revenue to serve it’s debt obligations and improve its overall credit risk profile would remain the key rating sensitivities. Analytical approach 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). 5 Jun 2018 Key Rating drivers Credit strengths ● Experienced Partners CBM’s partner Dr. Bindu Tetarwal has an extensive experience of over a decade in the healthcare sector. Credit Weaknesses ● Limited track record of performance CBM has started commercial operations in January 2018. Hence, the track record available of financial and operational performance is very limited. ● Below average credit risk profile Credit risk profile is also constrained by low net worth of around Rs. 1.38 Crs and moderate gearing of around 1.98 times as on 31st March, 2017. ● Intense Competition & highly regulated sector Healthcare sector is one of the most highly regulated sector. Also, there is intense competition with other hospitals in vicinity. Rating Outlook: Stable BWR believes CBM’s business risk profile 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 margins show sustained improvement. The rating outlook may be revised to 'Negative' if the revenues go down and margins show lower than expected figures. Background: CBM Hospital & Research Center is a partnership firm which owns and manages a 100 bedded hospital at Makrana district at Nagaur District , Rajasthan. The Hospital provides services in orthopedics, Paediatrics, , general medicine, general Surgery, ENT and homeopathy services.CBM Hospital has started its operations in January 2018 with the staff of 9 permanent doctors and 5 visiting doctors. The Hospital is managed by Dr. Narendra Chaudhary (MD Physician) and Dr. Bindu Tetarwal (W/O Dr. Narendra Chaudhary). Major sources of revenue for the Hospital is from OPD services, IPD services includes Surgery ICU services, laboratory, blood bank and medical store pharmacy. Hospital plans to open Cardiac Care Unit (CCU), kidney transplant unit, knee and hip joints replacement unit and nursing institute. CBM Hospital and Research Center had an exposure of Rs. 7.20 Crs with Bank of India which they plan to increase to Rs. 11.60 crores Financial Performance During FY17, CBM reported PAT of Rs. (0.20) Crs. On a provisional basis, the Firm has reported sales of around Rs. 0.89 Crs for FY18 and PAT of Rs. 0.11 Crs. Current ratio was 2.52 times as on March 31 2017. 5 Jun 2018 Overall gearing was moderate at 1.98 times as on March 31 2017. Key financial indicators are furnished in Annexure II. Rating History for the last three years: Sl. Current Rating Facility Rating History No. (May 2018) Type Present Proposed Rating 2017 2016 2015 Limit Limit (Rs. Crs) (Rs. Crs) BWR B 1 Term L0an Long 6.60 11.10 (Outlook:Stable) Term N/A N/A N/A 0.20 0.50 Assigned Cash Credit Total INR Eleven Crore Sixty Lakhs Only 6.80 11.60 Status of Non cooperation with other CRA : None Any other information : Not applicable. Hyperlink/Reference to applicable Criteria ● General Criteria ● Services Sector ● Approach to Financial Ratios Analytical Contacts Media [email protected] Nagaraj KS Chief Manager- Ratings Relationship Contact [email protected] [email protected] 5 Jun 2018 Phone: 1-860-425-2742 CBM Hospital & Research Center Annexure I Details of Rated Bank Facilities Proposed Amount Bank Facilities (Rs Crs) 11.10 Bank Of India Term Loan Jawahar Nagar Cash Credit 0.50 Total 11.60 Annexure II Key Financial Indicators Particulars 31st Mar 2017 Net Sales (Rs. Cr) * EBITDA (Rs. Cr) (0.07) PAT (Rs. Cr) (0.20) Partners’ Capital (Rs. Cr) 1.38 Total Debt:Partner’s Capital 1.98 (Times) Current Ratio (Times) 2.52 *Commercial operations started in January 2018 For print and digital media The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a meaning different from what was intended by BWR. BWR alone has the sole right of sharing (both direct and indirect) its rationales for consideration or otherwise through any print or electronic or digital media. Note on complexity levels of the rated instrument: 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 [email protected]. About Brickwork Ratings Brickwork Ratings (BWR), a SEBI registered Credit Rating Agency, has also been accredited by RBI and empaneled by NSIC, offers Bank Loan, NCD, Commercial Paper, MSME ratings and grading services. NABARD has empaneled Brickwork for MFI and NGO grading. BWR is accredited by IREDA & the Ministry of New and Renewable Energy 5 Jun 2018 (MNRE), Government of India. Brickwork Ratings has Canara Bank, a Nationalized Bank, as its promoter and strategic partner. BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations. BWR has rated debt instruments/bonds/bank loans, securitized paper of over ₹ 9,30,000 Cr. In addition, BWR has rated about 5000 MSMEs. Also, Fixed Deposits and Commercial Papers etc. worth over ₹19,700 Cr have been rated. Brickwork has a major presence in rating of nearly 100 cities. DISCLAIMER Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented “as is” without any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons. 5 Jun 2018 .