Rating Rationale
March 29, 2018 | Mumbai
BLS International Services Limited
Rating Reaffirmed
Rating Action
Total Bank Loan Facilities Rated Rs.22.5 Crore
Short Term Rating CRISIL A2 (Reaffirmed)
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale

CRISIL has reaffirmed its 'CRISIL A2' rating on the short-term bank facility of BLS International Services Limited (BIS; a part of the BIS group).

The rating continues to reflect the group's established market position in the visa outsourcing services sector, strong ties with Indian diplomatic missions, and comfortable financial risk profile. These strengths are partially offset by tender-based nature of business, susceptibility to adverse regulations and pricing put forth by the Ministry of External Affairs, and large working capital requirement resulting from the master service agreement with Government of Punjab.

Analytical Approach

For arriving at the rating, CRISIL has combined the business and financial risk profiles of BIS, BLS International FZE (100% subsidiary of BIS), and their step-down subsidiaries. This is because all the companies, collectively referred to as the BIS group, are under a common management and have strong financial linkages in the form of equity share capital, revenue sharing, and loans and advances.

Key Rating Drivers & Detailed Description
* Established market position
Established in 2005, BIS is present in over 20 countries and provides services through 101 offices worldwide. Within a decade, the group has gradually attained a comfortable position in the visa services outsourcing market. Though the group has grown considerably in a short span, sustainability of the market position in the long term will remain a key rating sensitivity factor.

* Strong ties with Indian diplomatic missions
BIS serves 20 Indian diplomatic missions at various geographies which constitute major part of the revenues. Not only has it been able to acquire new tender-based contracts from Indian diplomatic missions at new locations but it has also been able to successfully renew its current arrangements with them.

* Comfortable financial risk profile
The group is estimated to record a comfortable financial risk profile marked by a total outside liabilities to tangible networth ratio of less than one time and comfortable debt protection metrics in fiscal 2018.

* Tender-based nature of business and susceptibility to adverse regulations and pricing put forth by the Ministry of External Affairs
The contracts with diplomatic missions are generally tender based with a tenure of three years. These tender-based contracts have certain pre-requisites such as prior experience in visa outsourcing, robust credit history, IT and operational expertise and strong background check function. This makes the revenue susceptible to the risk of non-renewal of contract at the end of the term or inability to bag new contracts. Also, the diplomatic missions regulate the management, pricing of visa application and commission of the outsourcing company. This limits BIS's bargaining power in the market. Thus, increased regulation or fixing of more stringent pricing by the diplomatic missions could also result in reducing topline. Any change in regulation on the medium/long-term trading would remain a sensitivity factor over the medium term.

* Large working capital requirement due to master service agreement with Government of Punjab
The group is estimated to record working capital intensive operations marked by estimated gross current assets of 110-130 days due to high debtors of 80-100 days. Debtors were sizeable due to delayed payments from the Punjab state government under the master service agreement and stood at Rs.133.26 crores at 62 days as on September 30, 2017.  BIS is engaged with the Government of Punjab regarding the process of closure of the agreement, and the payment of dues of more than six months. Working capital is expected to normalise post the receipt of the payments from the Punjab Government by July 31, 2018. Timely closure of the agreement and receipt of the dues will remain a key rating sensitivity factor.
About the Group

Established in early 2005, BIS is a specialist provider for outsourcing of visa, passport, and attestation services to Indian missions across the world. BIS 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 is promoted by Mr Diwakar Aggarwal. It has been listed on the Bombay Stock Exchange and National Stock Exchange in 2016.

Also, BIS has operations in over 22 countries and is providing services through 101 offices worldwide. BIS has presence in these countries either through joint ventures with a local player or 100% ownership through its wholly owned subsidiaries, i.e., BLS International FZE and others.

Key Financial Indicators
Particulars Unit 2017 2016
Revenue Rs crore 636.94 505.13
Profit After Tax (PAT) Rs crore 49.99 30.91
PAT Margins % 7.8 6.1
Adjusted debt/adjusted networth Times 0.60 0.05
Interest coverage Times 11.75 29.70

Any other information
The scale of operations and operating margin are expected to improve in fiscal 2018. Over the nine months through fiscal 2018, revenue has been Rs 584 crore. Operating income may reach Rs 500-600 post 2017-18, with operating margin at 6.5-7.5% (similar to levels, prior to the Punjab government project) because of termination of master service agreement with the Punjab Government project vide announcement dated January 30, 2018. Working capital is estimated to stretch in fiscal 2018 due to high debtors; however, it is expected to normalise over the medium term, following the closure of the agreement. The group is also in discussion with the government to see the possibility of continuing the contract at a reduced scale. 

Note on complexity levels of the rated instrument:
CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL 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)
ISIN Name of instrument Date of allotment Coupon
rate (%)
Maturity date Issue
(Rs cr)
Rating assigned with outlook
NA Bank Guarantee NA NA NA 22.5 CRISIL A2
Annexure - Rating History for last 3 Years
  Current 2018 (History) 2017  2016  2015  Start of 2015
Instrument Type Quantum Rating Date Rating Date Rating Date Rating Date Rating Rating
Non Fund-based Bank Facilities  LT/ST  22.5  CRISIL A2    No Rating Change    No Rating Change    No Rating Change  27-08-15  CRISIL A2  -- 
Table reflects instances where rating is changed or freshly assigned. 'No Rating Change' implies that there was no rating change under the release.
Annexure - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Crore) Rating Facility Amount (Rs.Crore) Rating
Bank Guarantee 22.5 CRISIL A2 Bank Guarantee 22.5 CRISIL A2
Total 22.5 -- Total 22.5 --
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating criteria for manufaturing and service sector companies
Rating Criteria for Software Industry
CRISILs Criteria for rating short term debt
Criteria for rating entities belonging to homogenous groups

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