RATING RATIONALE 30 June 2021 Graphic Era Educational Society

Brickwork Ratings reaffirms the long-term and short-term rating for the Bank Loan Facilities amounting to Rs. 325.00 Cr of Graphic Era Educational Society.

Particulars: Amount (₹ Crs) Rating* Facility Tenure Previous Present Previous (Mar 2020)^ Present

Fund based O.D. Limits 47.90 56.70 Long BWR BBB+/Stable BWR BBB+/Stable Existing Term Loans 208.97 104.61 Term (Reaffirmed) Proposed Term Loans 63.13 158.69

Non Fund Based Short BWR A3+ BWR A3+ Bank Guarantee 5.00 5.00 Term (Reaffirmed)

Total 325.00 325.00 Rupees Three Hundred and Twenty Five Crores Only *Please refer to the BWR website www.brickworkratings.com/ for the definition of the ratings. ^BWR issued Rating Not Reviewed advisory on 14.04.2021 for the previous ratings. Details of bank loan facilities are given in Annexure I. RATING ACTION / OUTLOOK The reaffirmation in the ratings of Graphic Era Educational Society (GEES or the Society) factors in its long track record along with extensive experience of the promoters in the education sector, consistent improvement in the revenue receipts despite COVID-19 pandemic during FY20 owing to increase in student strength from its new campus located at Haldwani, Uttarakhand, coupled with upward fees revision every year, healthy operating surplus along with comfortable coverage indicators, healthy financial risk profile driven by strong capital structure, coverage indicators and liquidity position. Majority of the revenues of the Society’s are generated from long-duration courses (mainly 3 to 4 year courses) which provides strong revenue visibility over the short to medium term. The ratings are, however, constrained by the intense competition from other reputed institutes in north India and regulatory risk faced in the education sector. There is also a high implementation risk for its proposed hospital project, though the management had submitted that it had already prepaid its entire loans availed for this project and is now commencing operations for a COVID-19 hospital facility with a requisite staff and medical equipment. This will add up to its revenue profile during the current financial year.

Brickwork Ratings notes that the management has requested for a fresh term loan of ~ Rs. 320 Cr from its existing/new lenders with a revised proposal of 515-bedded hospital project. TEV www.brickworkratings.com Page 1 of 8 study is expected to be completed (as informed by the management) shortly and thus, the impact of the said capex on its credit metrics are yet to be ascertained. BWR believes that the Society'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 Society is able to ramp up the operations of its COVID-19 related facilities, ability to achieve the financial tie up for the remaining hospital project and efficient proposed project execution without cost and time overrun and maintain growth in student strengths across all courses offered despite the COVID-19 pandemic. The rating outlook may be revised to ‘Negative’ if the society is unable to generate sufficient accruals for its increased fixed debt obligations or if there is any delay in hospital project implementation as per its revised schedule given. DESCRIPTION OF KEY RATING DRIVERS Credit Strengths-: Established reputation of the institutes with long operational track record: The Society is running Graphic Era (Deemed to be University) at Dehradun, which is present in the higher education sector for over two decades and has an established presence in the region. This deemed to be University is also accredited by National Assessment and Accreditation Council (NAAC) with grade ‘A’. The society also runs a state private university i.e. Graphic Era Hill University (GEHU) having two campuses viz. Dehradun Campus (main campus) and Bhimtal Campus. Both universities have a student strength of 7817 for the 2020-batch. Comfortable financial risk profile: The Society reported a comfortable financial risk profile driven by increase in cash accruals, robust coverage indicators and strong liquidity position. Despite regular capex towards infrastructure development, the Society generates surplus cash accruals, which facilitated prepayment of loan instalments over the years. It also repaid the entire term loan facilities availed for its proposed hospital project, which resulted in further improvement in its gearing profile as on 31st March 2021. Consistent increase in its revenue receipts: Despite COVID-19 pandemic, the Society’s revenue increased by 13.58% to Rs. 323.90 Cr in FY21 from Rs. 285.18 Cr in FY20 on account of increased student strength of GEHU, as it added a new campus in Haldwani, Uttarakhand, with a total approved intake of 365 students, coupled with upward fee revision every year. The Society’s majority of the revenues are generated from long-duration courses (3 to 4 years courses) which provides strong revenue visibility over the short to medium term. Further, the management expects revenue receipts to increase considering Dehradun being an education-hub which attracts new students from other states as well. The Society also received an approval to start with a distance learning course and also starting up with a COVID-19 hospital facility, which will together add up to its revenue profile in the current financial year. Diversified revenue stream and healthy student enrolments in Universities – The revenue stream of the universities running under this Society is diversified across schools, colleges and various courses ranging from engineering, management, law to commerce. The Society witnessed marginal growth in student strength, increasing to 7,817 in AY 2019-20 from 7,629 in www.brickworkratings.com Page 2 of 8 AY2018-19 and further expects to cross over 8,000 in AY 2020-21 on the back of adding a new campus at Haldwani, Uttarakhand and introduction of new courses. Credit Risks-: Intense Competition from other reputed institutes in North India: The Society faces competition from an increased number of educational institutes that have been set up in various in north India over the past few years. The competition, in turn, affects its ability to maintain large student strength and attract qualified faculty. However, the Society demonstrated ability to maintain a relatively stable revenu profile, supported by its diversified course offerings, strategic location of the Universities and available infrastructure, provides comfort. Exposure to Regulatory Risk: The education sector in India is highly exposed to regulatory risk. As various institutes and universities need to abide by the rules framed by various regulatory bodies such as University Grants Commission (UGC), Medical Council of India (MCI), Dental Council of India (DCI) etc. High implementation risk of its hospital project: This project was earlier started in FY19 which was subsequently delayed due to various external reasons. Though the Society had prepaid the entire term loans available for this project. The ability of the Society to tie-up for a fresh term loan and subsequently achieve its COD as per its schedule revised plan remains a key rating monitorable. ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA To arrive at its ratings, BWR has considered the Society’s standalone financial performance. However, the Society’s balance sheet consolidated the financials of both campuses i.e. Graphic Era University and Graphic Era Hill University. BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale). RATING SENSITIVITIES Positive: The Society’s ability to substantial increase in enrollment across courses and ramp-up the operations of its new COVID-19 hospital facilities, implement its proposed-hospital project without cost and time overrun and maintain its adequate liquidity position and surplus levels despite expecting significant amount of cash outflow in setting up its proposed hospital project. Negative: Inability to maintain healthy enrollment ratios across all courses, affecting the overall student strength or any unfavourable regulatory development or adverse impact on its liquidity position and other credit metrics on account sizeable capex proposed by the Society. LIQUIDITY: Adequate: GEES’s liquidity profile is adequate, supported by cash and liquid investments of Rs 32.73 Cr as on 31st March 2021 and healthy cash accruals vis-a-vis debt servicing obligation. The average utilization of its O.D. limits remains moderate at ~ 65% over the past six months ended May 2021 (though it became overdrawn because it availed Moratorium I & II as per regulatory framework on COVID-19 related stress, which subsequently became within the limits after the moratorium period ended). However, the Society has planned for a major debt funded capex

www.brickworkratings.com Page 3 of 8 towards setting up a proposed hospital project. The impact of the major cash outflow towards its debt repayment on the liquidity position, would however, remain a key monitorable. SOCIETY PROFILE: Graphic Era Education Society (GEES) is a Society which was established in 1996. GEES’s registered office is located at Dehradun, Uttrakhand (UK). Presently, the Society runs Graphic Era (Deemed to be University) and a state private university, Graphic Era Hill University. Graphic Era (Deemed to be University) (GEU) was established in the year 1998. It has one campus, located at Dehradun, Uttarakhand. It offers around 44 courses and has also added a few more courses related to commerce, PHd courses, technology etc. during FY18. GEU (deemed to be University) is accredited by National Assessment and Accreditation Council (NAAC) whereby it has been accredited with grade ‘A’. Graphic Era Hill University is a state private university, established in 2011. It has two campuses – Dehradun campus (main campus) & Bhimtal campus (near Nainital, UK). It also offers courses similar to the GEU campus. Recently, it also started with a new campus at Haldwani, Uttarakhand during FY21. FINANCIAL PERFORMANCE: Key Parameters Units 2020 (A) 2020 (Prov.) Operating Revenue Rs. crs 285.18 323.90 Operating Surplus Rs. crs 98.27 120.26 Net Surplus Rs. crs 59.75 81.26 Total Corpus Funds Rs. crs 397.32 431.92 Total Debt/Total Corpus Funds Times 0.62 0.48 ISCR Times 5.92 7.01

Status of non-cooperation with previous CRA- Not Applicable Any other information: Nil

www.brickworkratings.com Page 4 of 8 Rating History for the last three years (including withdrawn and suspended)

S Chronology of Rating History for the past 3 years (Rating Assigned and Press Release date) along with . Current Rating (2021)** outlook/ Watch, if applicable N o

Bank Loan Facilities

31 Mar 2020 15 Feb 2019 2018^

Facilities Type Amt. Rating Facilities Type Amt. Rating Facilities Type Amt. Rating N.A. 1 (Rs. Cr) (Rs. (Rs. Cr) Cr) Fund Long 320.00 BWR Based Term BBB+/ Fund Long 320.00 BWR Fund Based Long 320.00 BWR Stable Based Term BBB+/Stabl Term BBB+/Sta (Reaffir e ble med) Non Fund Short 5.00 BWR A3+ Non Fund Short 5.00 BWR A3+ Non Shor 5.00 BWR Based Term Based Term Fund t A3+ Based Term

Total 325.00

*Issuer did not Cooperate, based on best available information **BWR issued Rating Not Reviewed advisory on 14.04.2021 for the previous ratings. Advisory issued due to non-receipt of complete information required for the review. ^BWR had assigned an initial bank loan rating of BWR BBB+/Stable/A3+ to its existing bank loan facilities of Rs. 327.26 Cr on 17.11.2017

COMPLEXITY LEVELS OF THE INSTRUMENTS: Simple For more information, visit www.brickworkratings.com/download/ComplexityLevels.pdf

Hyperlink/Reference to applicable Criteria ● General Criteria ● Approach to Financial Ratios ● Services Sector

Analytical Contacts

[Peeush Middha] [Ashwini Mital] Manager - Ratings [Director – Ratings] [Board: +91 172 5032295/96] [Board: +91 172 5032295/96] [[email protected]] [[email protected]] 1-860-425-2742 [email protected]

www.brickworkratings.com Page 5 of 8 Graphic Era Educational Society ANNEXURE I Details of Bank Facilities rated by BWR

S. No. Name of the Type of Facilities Long term Short Term Total Lender (Rs. Crs) (Rs. Crs) (Rs. Cr)

Fund Based 1. Axis Bank O.D./Dropline O.D. 36.70 Term Loans 44.11 - 82.77 FITL 1.96

2 HDFC Bank Fund Based O.D. Limits 20.00 - Term Loans 35.00 56.69 FITL 1.69

Fund Based 3 Nainital Bank Term Loan 2.20 - 7.20 Non Fund Based - 5.00 BG

4 Indian Overseas Fund Based - Bank Term Loan 9.83 9.83

5 Tata Capital Term Loan 9.82 - 9.82

6 Proposed Limits Proposed Term Loans 158.69 - 158.69

Total (Rs. Crs) 320.00 5.00 325.00

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