RATING RATIONALE 03 June 2021 Patanjali Yogpeeth (Trust) Brickwork Ratings removes the rating from Issuer Not Cooperating^ category and reaffirms the long-term rating for the Bank Loan Facilities amounting to Rs. 231.53 Cr of Patanjali Yogpeeth (Trust). Particulars: Amount (₹ Crs) Rating* Facility Tenure Previous Present Previous (Dec 2020) Present Fund based BWR BBB/Stable BWR BBB/Stable Long Term Loan I 189.00 171.07 Term Issuer Not Cooperating^ (Reaffirmed) Term Loan II 75.50 60.46 Rupees Two Hundred & Thirty One Crores and Fifty Three Total 264.50 231.53 Lakhs Only *Please refer to the BWR website www.brickworkratings.com/ for the definition of the ratings. ^Issuer did not Cooperate, based on best available information. Details of bank loan facilities are given in Annexure I. RATING ACTION / OUTLOOK The rating has been removed from Issuer Not Cooperating category upon receipt of full financial information from Patanjali Yogpeeth (Trust) (PYT or the Trust) and reaffirmed, after factoring in its established activities with sustained income from donations, received from the public at large as also from corporate entities, which support a vast array of activities like educational institutes and schools, healthcare treatment centres besides many other projects at Haridwar, Uttarakhand. Term loans were availed by the Trust for the construction of dedicated premises and infrastructure for the University of Patanjali (UOP) and Acharyakulam High School (AHS) at Haridwar and the Trust, as well as the lenders, have confirmed that these projects are now complete and DCCO has been achieved. Thus, income contributions from UOP and AHS are likely to increase significantly in FY22, owing to increased capacity for student intake and more course offerings. PYT’s financial risk profile remains comfortable with sizable corpus funds against negligible debt obligations. BWR notes that the Patanjali Ayurved Limited (PAL) (rated BWR AA-/Stable/A1+) and Divya Yog Mandir Trust (DYMT) have provided commitment letters and corporate guarantees, in favor of the PYT’s lenders. The ratings are, however, constrained by the current small scale of operations of the UOP and AHS, coupled with the large debt size and fixed assets in their respective balance sheets. These projects are not yet self-sustainable and need support from PYT’s other activities for meeting its upcoming debt obligations. BWR believes that PYT’s business risk profile will be maintained over the medium term. The Stable outlook indicates a low likelihood of a rating change over the medium term. The rating www.brickworkratings.com Page 1 of 6 outlook may be revised to Positive in case if the trust is able to generate donation income with adequate cash accruals, ability of UOP and AHS to service its debt obligation from its own accruals and ability to attract good faculty and increase in student strength as projected over the medium term. The rating outlook may be revised to Negative if there is significant decline in PYT’s total income and cash accruals. DESCRIPTION OF KEY RATING DRIVERS Credit Strengths: Established reputation of the Trust: Patanjali is an established brand name and image, and is well known both domestically and internationally.The educational institutes run by the Trust gain from this image, specifically in the areas of yoga, vedic and Sanskrit education. DCCO achieved for both the projects: For AHS, DCCO was achieved in FY20 and thus it had started admitting more students since the last academic session. Presently, the capacity of this school has been increased to 960 students. For the UOP project, DCCO was achieved in March 2021. Its total capacity has been enhanced to 3120 students, and thus its student enrollment is expected to increase substantially FY22 onwards from the previous years. Comfortable financial risk profile: The Trust reported a comfortable financial risk profile driven by a large donation income base and sizable corpus funds along with lower debt levels over the past three years. The trustees also remain resourceful in terms of bringing in more funds as and when required by the trust for its operations. Corporate guarantees: The explicit support provided by PAL) and DYMT in the form of corporate guarantees for the Trust's rated bank loan limits, in order to ensure timely servicing of the said facilities. Both PAL and DYMT have requisite assets or capacity to provide financial support to the trust, as and when required. Credit Risks: Current small size of operations in UOP and AHS: UOP and AHS reported a low income of Rs. 4.87 Crs and Rs. 11.27 Crs respectively with an average sizable debt of Rs. 171.96 Crs and Rs. 60.54 Crs, respectively during FY20. BWR believes that these projects will take time to become self-sustaining and thus will remain dependent on donations and other divisions of the trust for meeting its interest and debt obligations over the next three financial years at least. Management Risks: Patanjali brand name is strongly associated with Swami Ramdev and Acharya Balkrishna, any reputational damage may impact PYT’s operations adversely and thus, will remain crucial for its rating. ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA To arrive at its ratings, BWR has considered the PYT’s financial performance. Though its group entities i.e. Patanjali Ayurved Limited and Divya Yog Mandir Trust had provided the corporate guarantees for the Trust’s rated bank loan limits, BWR had not considered its support and thus, assigned a rating based on its standalone performance. www.brickworkratings.com Page 2 of 6 RATING SENSITIVITIES Owing to a small revenue base of UOP and AHS projects, coupled with large debt obligations, these business entities need to be dependent on PYT for servicing its debt obligations. Since majority of the income of PYT is generated from donations, a sustained income with high income visibility remains the key monitorable. Positive: PYT’s ability to generate cash accruals of at least Rs. 50 Cr each year, UOP and AHS projects becoming self-sustaining to service its upcoming debt obligations and continued financial support from PAL and DYMT, as and when required, will be positive for the rating. Negative: A significant decline in PYT’s total income and net cash accruals and subsequent deterioration in its liquidity position, will be negative for the rating. LIQUIDITY: Adequate: PYT’s liquidity position remains adequate, driven by sizable corpus funds against its total outside liabilities. PYT consistently gets financial support from its other group entities in the form of donations in order to meet its immediate liquidity requirements if any. PYT had availed two term loans amounting to Rs. 231.53 Cr to expand the existing infrastructure of UOP and AHS. Both the projects have been completed as on date and thus, expected to generate incremental revenue receipts from the current financial year itself. Though the scale of UOP is small, it may require support from PYT in the form of donations for servicing its debt obligations in a timely manner. The term loan repayments are expected to start by Dec 2021 for which there is an adequate cash balance available which may also be utilized in case of any shortfall in servicing its upcoming debt obligations. TRUST PROFILE: PYT is a charitable trust, established in Feb 2005 by Swami Ramdev at Haridwar. The other major trustees are Acharya Balkrishna and Swami Muktanand. PYT was set up for the purpose of propagating yoga at pan-India level, study & research of Vedic traditions of yoga and conduct different activities & projects related to it. Presently, major activities run by PYT are yoga science camps, yoga training through TV programs, yoga, naturopathy and panchkarma treatment centres, UOP and AHS. FINANCIAL PERFORMANCE: Key Parameters Units 2019 (A) 2020 (A) Operating Revenue Rs. crs 164.30 182.62 Operating Surplus Rs. crs 63.24 14.95 Net Surplus Rs. crs 52.32 5.18 Total Corpus Funds Rs. crs 490.71 493.82 Total Debt/Total Corpus Funds Times 0.10 0.00 ISCR Times 126.70 1320.49 www.brickworkratings.com Page 3 of 6 Status of non-cooperation with previous CRA- Not Applicable Any other information: Nil Rating History for the last three years (including withdrawn and suspended) Chronology of Rating History for the past 3 years (Rating Assigned and Press Release date) along with outlook/ Watch, if S Current Rating (2021) applicable . N o Bank Loan Facilities 23 Sept 2020 14 Aug 2019 11 June 2018^ Facilitie Type Amt. Ratin Facilities Type Amt. Rating Facilities Type Amt. Rating Facilities Type Amt. Rating 1 s (Rs. g (Rs. (Rs. (Rs. Crs) Crs) Crs) Crs) Fund Long 231.53 BWR Fund Long 264.50 Rating Fund Based Long 264.50 BWR Fund BWR Based Term BBB/ Based Term Not Term Loans Term BBB/StableBased Long 264.50 BBB/St Term Stable Term Reviewed Term Term able Loans (Reaff Loans Advisory Loans irmed ) 03 Dec 2020 Faciliti Type Amt. Ratin es (Rs. g Crs) Fund Long 264.50 BWR Based Term BBB/ Term Issuer Loans not Coop eratin g* *Issuer did not Cooperate, based on best available information ^BWR had assigned an initial bank loan rating of BWR BBB/Stable to its proposed bank loan facilities of Rs. 264.50 Cr on 03.05.2017 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 www.brickworkratings.com Page 4 of 6 Analytical Contacts [Peeush Middha] [Ashwini Mital] Assistant Manager - Ratings [Director – Ratings] [Board: +91 172 5032295/96] [Board: +91 172 5032295/96] [[email protected]] [[email protected]] [email protected] 1-860-425-2742 Patanjali Yogpeeth Trust ANNEXURE I Details of Bank Facilities rated by BWR S.