Short term and long term bank facilities worth Rs.67.48 Crore of Professional Educators Private Limited receive ratings from Care Nepal

CARE Ratings Nepal Limited (CRNL) has assigned rating of ‘CARE-NP BBB-’ to the long term bank facilities worth NPR 658.86 Million and ‘CARE-NP A3’ to the short term bank facilities worth NPR 16 Million of Professional Educators Limited (PEL).

The ratings assigned to the bank facilities of PEL derives strength from established track record and experienced directors in the related field, comfortable financial risk profile during FY18 (refers to 12 months period ended mid-July 2018), increasing number of students enrolled, growing female education concerns and increasing literacy rate in Nepal positive for the education industry, various courses offered by PEL and subsidiary companies.

The ratings are, however, constrained by moderately leveraged capital structure and debt service coverage indicators, debt funded capex and investments in different institutions within the education sector, exposure to volatile interest rates, stiff competition in the industry and exposure to regulatory risk related to industry.

Ability of the company to profitably scale-up its operations shall be key rating sensitivity.

Professional Educators Limited (PEL) is a public company incorporated under the Companies Act, 2006. PEL was established with the objective of operating educational institutions delivering education from the primary level to higher degree level. Immediately after incorporation, PEL acquired the ownership of Global College of Management (GCM) and Valley View English School (VES). GCM was operating Bachelor in Business Studies (BBS) course with affiliation from Tribhuvan University (TU) since academic year 1998-99 and XII class in management faculty with affiliation from National Examinations Board (NEB; former Higher Secondary Education Board) since academic year 2001-02. Later on PEL added Masters in Business Studies (MBS) course with affiliation from TU from the academic year 2005-06. Following the direction from University Grants Commission and TU, to operate university level education program, PEL established separate subsidiary company in the name Global College of Management Limited (GCML) to operate programs affiliated from TU since academic year 2016-17. Currently PEL operates only those program affiliated from NEB. PEL has Rs.230.29 Mn paid up capital as on July 16, 2018. PEL issued 10% bonus share and after that issued right share in the proportion of 2:1 for the existing shareholders during FY19.

Source: Care Ratings Nepal