Maha Durga Charitable Trust: Summary of Rated Instruments Instrument Rated Amount (Rs. Crore) Rating Action

August 23, 2017
Maha Durga Charitable Trust

Summary of rated instruments
Instrument* Rated Amount (Rs. crore) Rating Action
Term Loan 49.00 [ICRA]B(Stable); re-affirmed

Total 49.00
*Instrument details are provided in Annexure-1
Rating action
ICRA has reaffirmed the long-term rating of [ICRA] B (pronounced ICRA B) on the Rs. 49.00-crore1
fund-based bank facilities of Maha Durga Charitable Trust (MDCT)2. The outlook on the long-term rating
is Stable.
Rationale
The rating reaffirmation takes into account the delay in execution of the hospital project due to
impediment in civil construction and excavation, which in turn has increased the budgeted project cost.
However, construction of the proposed hospital is complete and installation of the plant and machinery is
in progress. The hospital is expected to commence operations from October 2017.
The rating is further constrained by the high competition from hospitals in the National Capital Region
and hence MDCT’s ability to attract reputed doctors and medical staff would be a key rating sensitivity.
ICRA also takes into account the high reliance on debt funding for the proposed hospital (the debt to
equity ratio is 1.73:1) and its adverse impact on the capital structure and credit protection metrics in the
near term. However, ICRA favourably considers the extensive experience of the trustees in the healthcare
industry and the fact that specialised doctors head most departments. The rating also factors in the
hospital’s good catchment area as it is located in the high population density area of Mukherjee Nagar
(North Delhi), which has a number of colonies and institutions in the vicinity.
Going forward, timely completion of the project and satisfactory scaling up of operations will be critical
to enable timely debt servicing.
Key rating drivers
Credit strengths
 25-year long experience of trustees in healthcare sector – The trustees of the proposed hospital are
doctors with combined professional experience of more than 100 years in the healthcare sector and
expertise in different streams and also in running a hospital.
 Good catchment area of proposed hospital –The proposed hospital has a good catchment area as it
is located in the high population density area of Mukherjee Nagar (North Delhi), which has a number
of colonies and institutions in the vicinity.
 Favourable outlook for healthcare industry: Increased health awareness, rising healthcare
expenditure, government and non-government bodies’ investment in different schemes along with
1
100 lakh = 1 crore = 10 million
2
For complete rating scale and definitions please refer to ICRA’s website www.icra.in or other ICRA Rating
Publications
new opportunities in medical tourism and health insurance are expected to contribute to raising
demand for healthcare.
Credit weaknesses
 Execution risk remains a major concern - The proposed hospital has already been delayed by
around two years. Moreover, the trust’s ability to scale up its operations in a profitable manner in the
medium term is yet to be seen.
 Intense competition from nearby hospitals - The proposed hospital faces stiff competition from
various established hospitals in Delhi. However, considering the absence of multispecialty hospital
within the radius of 10 km, its competition is limited in the medium term
 Aggressive repayment obligations because of high debt-funded capital expenditure-Timely

servicing of debt will be crucial, considering the high debt-funded capital expenditure, which would
have an adverse impact on the capital structure over the medium term.
Analytical approach: For arriving at the ratings, ICRA has applied its rating methodologies as indicated
below.
Links to applicable criteria:
Corporate Credit Rating Methodology
Rating Methodology for Hospitals
About the trust:
Maha Durga Charitable Trust (MDCT) was established in 1995 to set up a 120-bed hospital viz.
Mahadurga Hospital at Mukherjee Nagar area in New Delhi. The proposed hospital would provide
services in various specialities such as neurology, radiology, general surgery, angiography, angioplasty,
ophthalmology, dental services and various others. The major trustees of MDCT are members of the
Makhija family. Dr. Satish Makhija is the secretary and other members of the trust include Dr. Ashok
Makhija, Dr. Kamlesh Makhija, Mr. Suresh Makhija and Mr. Naresh Makhija. Both Dr. Satish and Dr.
Ashok have more than 25 years of medical experience and are also involved in running a 15-bed hospital
by the name of Durga Hospital in Mukherjee Nagar, New Delhi.
Key Financial Indicators (Audited)

FY2015 FY2016
Operating Income (Rs. crore) NA NA
PAT (Rs. crore) NA NA
OPBDIT/ OI (%) NA NA
RoCE (%) NA NA
Total Debt/ TNW (times) NA NA

Total Debt/ OPBDIT (times) NA NA
Interest coverage (times) NA NA
NWC/ OI (%) NA NA
OI: Operating Income; PAT: Profit after Tax; OPBDIT: Operating Profit before Depreciation, Interest,
Taxes and Amortisation; ROCE: PBIT/Avg (Total Debt + Tangible Net-Worth + Deferred Tax Liability -
Capital Work - in Progress);
NWC: Net Working Capital
Status of non-cooperation with previous CRA: Not applicable
Any other information: Not applicable

Table: Rating history for last three years
S. Instrumen Current Rating (FY2018) Chronology of Rating History for
No. t the past 3 years
Type Amou Amount Date & Date & Date & Date &
nt Outstandi Rating Rating in Rating in Rating in
Rated ng (Rs FY2017 FY2016 FY2015
(Rs. Crore)
crore)
August 2017 May 2017 NA February
2015
1 Term loan Long 49.00 [ICRA]B [ICRA]B NA [ICRA]B
Term (Stable) (Stable) (Stable)
Complexity level of the rated instrument:

ICRA has classified various instruments based on their complexity as "Simple", "Complex" and "Highly
Complex". The classification of instruments according to their complexity levels is available on the
website www.icra.in
Annexure-1
Instrument Details
ISIN No Instrument Date of Coupon Maturity Amount Current Rating
Issuance / Rate Date Rated and Outlook
Sanction (Rs. crore)
Term loan December - March 2025 49.00 [ICRA]B (Stable)
2014
Source: Maha Durga Charitable Trust
Contact Details
Analyst Contacts
Sabyasachi Majumdar Vipin Jindal
+0124-4545 304 +0124-4545 355
sabyasachi@icraindia.com vipin.jindal@icraindia.com
Manish Ballabh Gaurav Gupta

+0124-4545 812 +0124- 4545 814
manish.ballabh@icraindia.com gaurav.gupta@icraindia.com
Relationship Contact
Jayanta Chatterjee
+91 80 4332 6401
jayantac@icraindia.com
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financial services companies as an independent and professional investment Information and Credit
Rating Agency.
Today, ICRA and its subsidiaries together form the ICRA Group of Companies (Group ICRA). ICRA is a
Public Limited Company, with its shares listed on the Bombay Stock Exchange and the National Stock
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For more information, visit www.icra.in
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Contents may be used freely with due acknowledgement to ICRA
ICRA ratings should not be treated as recommendation to buy, sell or hold the rated debt instruments. ICRA ratings are subject to
a process of surveillance, which may lead to revision in ratings. An ICRA rating is a symbolic indicator of ICRA’s current
opinion on the relative capability of the issuer concerned to timely service debts and obligations, with reference to the instrument
rated. Please visit our website www.icra.in or contact any ICRA office for the latest information on ICRA ratings outstanding.
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August 23, 2017

Maha Durga Charitable Trust

Term Loan 49.00 [ICRA]B(Stable); re-affirmed

Key rating drivers

 Aggressive repayment obligations because of high debt-funded capital expenditure-Timely

Key Financial Indicators (Audited)

Total Debt/ TNW (times) NA NA

Status of non-cooperation with previous CRA: Not applicable

Any other information: Not applicable

Complexity level of the rated instrument:

Manish Ballabh Gaurav Gupta

About ICRA Limited:

© Copyright, 2017, ICRA Limited. All Rights Reserved

5th Floor, Karumuttu Centre 'The Millenia'

4th Floor, Shobhan, 6-3-927/A&B. Somajiguda, Raj

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