Rating Rationale

Strengths
* Extensive experience of promoters in GIS industry
GICL provides GIS involving digitization of maps, that is, creation of facilities for conversion of paper-based drawings into digital platform.

Over the years, its promoters, Mr. Sajid Malik, has developed insight into the GIS industry, which has helped GICL achieve revenue of over Rs.47.8 crore during fiscal 2016. As a result of their long-standing presence in the industry, the promoters have established strong relationships with several customers, enabling GICL to obtain repeat orders. The company's clientele includes reputed players in the information and telecommunications industry such as Apple Inc, Reliance Communications, Microsoft ' Virtual Earth, AN Virtual World Tech Ltd, Digital Globe, Stewart Geo Technologies, Smart Data Strategies Inc, and Surdex Corporation. Furthermore, in 2009, Mr. Sajid Malik won the 'Businessman of the Year' award at the Indian Geospatial Awards organised by Geospatial Today, recognising GICL for its outstanding contribution to the geospatial industry.

CRISIL believes that the extensive experience of GICL's promoters and their established relationships with customers will help the company maintain its business risk profile over the medium term.

* Above-average financial risk profile
GICL's net worth was around Rs.233 crore as on Mar 31, 2017, up from Rs.210 crore as on March 31, 2016, driven by healthy accretion to reserves. The company's operating profitability improved substantially in fiscal 2017 to 35.7% as compared to 23.5-24.6% over three fiscals ended Mar 2016, due to high margin contracts undertaken and reduction in bad debts. CRISIL, however, notes that a substantial portion of the company's net worth is towards investments and advances in group entities including AN Virtual World Tech Ltd and other third parties. Any large incremental investments will likely impact the company's financial risk profile. Furthermore, timing and quantum of receipt of dividend income and interest income will continue to remain key monitorables over the medium term.

GICL's gearing was low, at 0.06 times, as on March 31, 2017. The company has a conservative gearing philosophy and was debt-free till 2009-10. On account of healthy accruals, its reliance on external debt for funding working capital requirements has been low. The healthy increase in accruals along with low levels of external borrowings resulted in robust debt protection metrics with interest cover and NCATD of 14.9 times and 1.93 times respectively in fiscal 2017.

Weaknesses
* Susceptibility of cash flows to flow of orders and timely realizations from customers
GICL is a niche player in the IT-enabled services (ITES) industry, with presence in domain specific GIS and engineering services. Its portfolio includes digital imaging solutions such as photogrammetry, remote sensing, cartography, data conversion, and related services.

The company has a dedicated marketing team to approach clients and generate regular orders. Since GIS, as a technology, is in an evolving phase in terms of its applications, GICL is constantly looking to tap new industries and sectors. The company's revenue profile depends on receipt of regular orders from its existing and new customers. Also, execution of projects in a timely manner is critical for the company to maintain its growth trajectory. Any challenges in building a strong order pipeline could impact GICL's business and financial risk profiles.

As billings to clients are on a milestone basis while operational expenses are at fixed intervals, timely realization of receivables is a key rating sensitivity factor for GICL. The company also reported bad debt in the past. While the company's healthy cash accruals have helped support its increasing working capital requirements, timely realizations from customers will be a key determinant of its credit risk profile.

CRISIL believes that the GICL's cash flows will remain susceptible to flow of orders and timely realizations from customers over the medium term.

* Vulnerability of revenue growth to emergence of new technologies and changes in competitive landscape
The IT and ITES segments are highly competitive, with companies seeking to create a niche for themselves in the global market. All companies are looking to enhance their capabilities through a combination of greenfield initiatives, partnerships, and overseas acquisitions. Being a knowledge-based sector with low capital requirements, the industry frequently witnesses entry of new players, resulting in increased competition. In the highly competitive industry, consistent product and service innovation and adapting to new technological changes become a crucial factor for growth. Customers also consider scale of operations as an important parameter while awarding contracts, which exerts pressure on modest-sized players and constrains their business risk profile.

The company's ability to constantly adapt to technological advancements and emergence of new players will remain a key rating sensitivity factor.

CRISIL believes GICL's credit risk profile will remain vulnerable to the emergence of new technologies or new players in the market over the medium term. GICL's ability to maintain its revenue growth and margins will remain a key determinant of its credit risk profile.