Key Rating Drivers & Detailed Description

Strengths:

Established market position & Diversified business profile

Set up in 2005, the group operates in over 62 countries and provides services through 2,325 offices worldwide. Within a decade, it 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. The group now covers over 46 missions, compared to only seven a few years back. In e-governance services, the group has three clients presently, compared to only one client two years ago; in the banking correspondent segment, Bank of Baroda has been added alongside the existing client - State Bank of India.

Robust financial risk profile

The financial risk profile remains robust supported by strong networth of over Rs 500 Cr expected as on 31st Mar, 2022 and absence of debt in the capital structure resulting in expected nil gearing ratio. Debt protection metrics remained robust owing to low reliance on external debt, leading to expected interest coverage at over 60 times in fiscal 2022. In the absence of any debt funded capex plan, the financial risk profile is expected to remain robust over the medium term.

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 as indicated by decline in revenue by around 40% during fiscal 2021 (Rs 493 crore). However, revenue should rise to around Rs 800 crore in fiscal 2022, supported by addition of new orders and customers. Going forward, sustained improvement in scale of operations will remain a key rating sensitivity factor.

Key Financial Indicators

Annexure - Details of Instrument(s)

Annexure – List of entities consolidated

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