| BLS International Services Limited | ||||||
| Short-term rating upgraded to 'CRISIL A2+'; Rated amount enhanced | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to annexure for Details of Instruments & Bank Facilities |
| Detailed Rationale |
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CRISIL has assigned its 'CRISIL BBB+/Stable' rating to the long term bank facilities of BLS International Services Ltd (BIS; part of the BIS group) and upgraded its short-term rating on the bank facilities to 'CRISIL A2+' from 'CRISIL A2'. |
| Analytical Approach |
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For arriving at its ratings, 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 these entities, 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 |
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Strengths * Established market position 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 recorded an operating income of Rs 792.9 crore in fiscal 2020 but because of the severe impact on travel and tourism industry arising out of Covid-19 outbreak globally, the revenue for Q1 FY21 was down by 77% on Y-o-Y basis at Rs 52.1 crore. * Strong ties with Indian diplomatic missions The group serves around 20 Indian diplomatic missions in various geographies, which contribute a major part to the revenue. Not only has it been able to acquire new tender-based contracts from various International governments at new locations, but has also successfully renewed arrangements with them. * Comfortable financial risk profile Gearing was nil as on March 31, 2020 as there was only a single loan of Rs 0.88 crore outstanding which will be repaid by the end of fiscal 2021. Debt protection metrics remained robust, with interest coverage and net cash accrual to total debt ratios of 25.7 times and 55.6 times, respectively, in fiscal 2020. Weaknesses * Tender-based business and susceptibility to changes in regulations by the concerned ministries of various countries 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 continue to remain a key rating sensitivity factor. |
| Liquidity Strong |
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Liquidity is strong with healthy unencumbered cash balance of Rs 221 crore as on March 31, 2020. Group is expected to generate healthy cash accruals, expected to be lower than previous year (Rs 49.1 crore), against debt obligations of Rs 0.9 crore in fiscal 2021. Current ratio was comfortable at 10.18 times as on March 31, 2020. |
| Outlook: Stable |
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CRISIL believes that strong financial risk profile, esp. liquidity will continue to support the overall credit risk profile of the group. |
| Rating Sensitivity factors |
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Upward Factors * Significant improvement in business risk profile with revenue remaining sustainably over Rs 800 crore * Sustainable improved operating margins of upwards of 15% driven by organic/ inorganic initiatives Downward Factors * Large debt-funded capex or acquisition impacting the liquidity profile with unencumbered cash dropping below Rs 50 crore at any point of time. * Significantly lower than anticipated generation of net cash accruals |
| About the Group |
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Established in early 1983, BIS 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. |
| Key Financial Indicators | ||||||||||||||||||||||||
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Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL complexity levels are assigned to various types of financial instruments and are included (where applicable) in the Annexure -- Details of Instrument in this Rating Rationale. For more details on the CRISIL complexity levels, please visit www.crisil.com/complexity-levels. |
| 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 various bank facilities | ||||||||||||||||||||||||||||||||||||
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