| BLS International Services Limited | ||||||
| Long-term rating upgraded to 'CRISIL A-/Stable'; short-term rating reaffirmed | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed rationale CRISIL Ratings has upgraded its long-term rating on the bank facilities of BLS International Services Limited (BLS; part of the BLS International group) to ‘CRISIL A-/Stable’ from ‘CRISIL BBB+/Stable’ and reaffirmed the short-term rating at ‘CRISIL A2+’.
The upgrade in rating is driven by the gradual improvement in the business risk profile on account of diversification into new business segments and addition of clients in these segments. Business of the group, which earlier only consisted of visa processing, is now diversified into consular services, E-Governance services (entered in fiscal 2017) and banking correspondent services (fiscal 2019, resultantly the contribution from visa and consular business has dropped to 85%.
The upgrade in the rating also factors in the revival in visa business from the second quarter of fiscal 2022 post a significant decline in fiscal 2021. Since visa and consular services business contributes 80-85% to total revenue, topline for fiscal 2021 declined 38% to Rs 489 crore from Rs 793 crore in fiscal 2020 due to the severe impact of the Covid-19 induced disruptions globally on the travel and tourism industry. However, the group has shown sufficient track record of revival in business and has reported operating income of Rs 369 crore in the first half of fiscal 2022, improved by 101% from Rs 183 crore in the corresponding period of the previous fiscal. Similarly, an earnings before interest, tax, depreciation and amortization (EBITDA) of Rs 46.4 crore was reported in the first half of fiscal 2022 (growth of 184% compared to Rs 16.3 crore in the corresponding period of the previous fiscal). The group is expected achieve revenue of upwards of Rs 750 crore along with operating margin of 13-14% for fiscal 2022.
Credit profile continues to be supported by healthy financial risk profile reflected by nil gearing and superior debt protection metrics owing to strong networth and zero debt as on March 31, 2021. Since all business segments have negative working capital cycle, cash generated in each of them add to the cash balance of the group. Unencumbered cash and bank balance stood at Rs 310 crore as on September 30, 2021.
The ratings reflect the established market position of the group in the visa outsourcing services sector, diversified business profile, and comfortable financial risk profile. These strengths are partially offset by the tender-based business, susceptibility to changes in regulations by the concerned ministries of various countries. |
Analytical approach CRISIL Ratings has combined the business and financial risk profiles of BLS, BLS International FZE (100% subsidiary of BLS), and their step-down subsidiaries. This is because all these entities collectively referred to as the BLS International group, are under a common management and have strong financial linkages in the form of equity share capital, revenue sharing, and loans and advances.
Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key rating drivers & detailed description Strengths:
Set up in 2005, the BIS group is present in over 62 countries and provides services through 2,325 offices worldwide. Within a decade, it has attained a comfortable position in the visa services outsourcing market. Though it has grown considerably in a short span, sustainability of market position in the long term is a key rating sensitivity factor.
The group offers services in visa processing, E Governance and banking correspondence. Apart from diversification into new business segments, addition of new clients in these segments has further strengthened the market position of the group. BLS group now covers over 46 missions compared to only 7 a few years back. In E Governance services, the group has three clients presently, compared to only one client 2 years ago and in the banking correspondent segment, Bank of Baroda has been added alongside the existing client - State Bank of India.
Financial risk profile is marked by nil gearing and strong networth of Rs 447 crore as on March 31, 2021. Debt protection metrics remained robust owing to low reliance on external debt, which led to interest coverage of 31.8 times in fiscal 2021.
Weakness:
The contracts with diplomatic missions are generally tender-based with a three-year tenure, and have certain pre-requisites such as experience in visa outsourcing, robust credit history, adequate information technology, operational expertise, and strong background check function. This makes revenue susceptible to the risk of non-renewal of contract at the end of the term or inability to bag new contracts. Any changes in regulation or conditions of contract mid-way will thus remain a key rating sensitivity factor. |
Liquidity: Strong Liquidity is strong with healthy unencumbered cash balance of Rs 310 crore as on September 30, 2021. The group is expected to generate moderate cash accrual of Rs 85-90 crore over the medium term against nil debt obligation. Further, fund-based bank limits remain unutilised and the small limits are kept only for backup. Current ratio was also strong at 11.87 times as on March 31, 2021. |
Outlook: Stable CRISIL Ratings believes that strong financial risk profile along with established market position will continue to support the overall credit risk profile of the group. |
Rating sensitivity factors Upward factors
Downward factors
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About the company Established in early 1983, BLS is a specialist provider for outsourcing visa, passport, and attestation services to Indian missions across the world. It serves the diplomatic missions by managing all administrative and non-judgmental tasks related to the entire life cycle of a visa application process.
The company was listed on the Bombay Stock Exchange, National Stock Exchange and Metropolitan Stock Exchange in 2016. BLS has operations in over 62 countries either through joint venture with a local player or through wholly-owned subsidiaries (BLS International FZE and others).
The BLS International group has reported operating income of Rs 369 crore in the first half of fiscal 2022, improved by 101% from 183 crore in the corresponding period of the previous fiscal. For the same comparative period, EBITDA stood at Rs 46.4 crore against Rs 16.3 crore. |
Key financial indicators
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Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
Annexure - Details of instrument(s)
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Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||
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Criteria Details
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