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CRISIL has assigned its ‘BBB-/Stable’ rating to the bank facilities of KG Information Systems Private Limited (KGISPL), part of KGISPL group. The rating reflects the KGISPL group’s above-average financial risk profile, and the benefits that the group derive from the industry experience of its management team. These rating strengths are partially offset by the group’s large working capital requirements, exposure to risks related to volatility in the value of the Indian rupee, and small scale of operations.
For arriving at its ratings, CRISIL has combined the financial and business risk profiles of KGISPL and KG Financial Software Private Limited (KGFSL), together referred to as KGISPL group. KGFSL is a subsidiary of KGISPL; the two companies are in the same line of business, are under common management, and have considerable level of operational and business linkages with each other.
Outlook: Stable
CRISIL believes that the KGISPL group will maintain its business risk profile, given the group’s established position in the business process outsourcing (BPO), and information technology (IT) and IT-enabled services (ITES) sectors. The outlook may be revised to ‘Positive’ in case of a significant and sustained increase in the group’s accruals and improvement in profitability. Conversely, the outlook may be revised to ‘Negative’ if the group undertakes a large debt-funded capital expenditure programme, adversely affecting its capital structure, or if its revenues or profitability declines, or if the group extends substantial support to its group entities, which negatively affects its financial risk profile.
About the Group
Set up in 1994 by Mr. Ashok Bakthavathsalam, KGISPL offers BPO, software development, and software consulting, services. The BPO and software services are offered in various segments, such as transcription, healthcare, legal, insurance, business, finance, and banking. KGFSL offers software development services to various financial and banking companies.
The KGISPL group reported a profit after tax (PAT) of Rs.28.3 million on net sales of Rs.303 million for 2008-09 (refers to financial year, April 1 to March 31), against a PAT of Rs.14.3 million on net sales of Rs.231 million for 2007-08.
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Disclaimer: A CRISIL rating reflects CRISIL's current opinion on the likelihood of timely payment of the obligations under the rated instrument and does not constitute an audit of the rated entity by CRISIL. CRISIL ratings are based on information provided by the issuer or obtained by CRISIL from sources it considers reliable. CRISIL does not guarantee the completeness or accuracy of the information on which the rating is based. A CRISIL rating is not a recommendation to buy, sell, or hold the rated instrument; it does not comment on the market price or suitability for a particular investor. All CRISIL ratings are under surveillance. Ratings are revised as and when circumstances so warrant. CRISIL is not responsible for any errors and especially states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this product. CRISIL Ratings’ rating criteria are generally available without charge to the public on the CRISIL public web site, www.crisil.com. For the latest rating information on any instrument of any company rated by CRISIL, please contact CRISIL RATING DESK at CRISILratingdesk@crisil.com, or at (+91 22) 3342 3000.
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