| BLS International Services Limited | ||||||
| Ratings upgraded to 'CRISIL A/Stable/CRISIL A1' | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has upgraded its rating on the bank facilities of BLS International Services Limited (BLS; a part of the BLS International group) to ‘CRISIL A/Stable/CRISIL A1’ from 'CRISIL A-/Stable/CRISIL A2+'.
The upgrade factors in company’s established market position in the visa services business leading to healthy traction in revenue amidst revival in tourism industry post covid-19 outbreak. After witnessing decline in revenue during fy21, due to travel restriction amid covid, revenue witnessed an on-year growth of 75% during fy22 and is further expected to improve by another 50-60% during fy23. Further, with acquisition of Zero Mass during Q1-fy23, share of digital business is expected to improve to 17% in fy23 (11% during Fy22), hence further aiding the revenue profile. Revenue is estimated at around Rs 1080 crore during April-Dec in fy23, as against around Rs 860 crore during fy22. The business risk profile has been further aided by healthy operating efficiencies backed by steady increase in operating profitability to an estimated 14-14.5% during fy23, improved from pre-pandemic levels and around 12.7% during fy22, prudent working capital management and hence healthy return on capital employed ~ around 28-30% estimated during fy23. CRISIL Ratings believe that the business risk profile of the group will further improve over the medium term, backed by steady growth in tourism and improved penetration in digital business through on-boarding of new customers.
The ratings also factor in the company’s robust financial risk profile, aided by its efficient working capital management and nil reliance on external debt. Absence of sizeable debt funded capex and expected accretion to reserve shall continue to aid the financial risk profile over the medium term as well. Liquidity stood comfortable too, backed by healthy net cash accruals vis a vis maturing debt, cushion in bank lines and sizeable unencumbered cash reserves.
The ratings continue to reflect the established market position of the BLS International group in the visa outsourcing services sector, and group’s robust financial risk profile. These strengths are partially offset by group’s moderate scale of operations and its 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: Established market position: Post commencing the Visa services business in 2005 in select territories, the group has over the years expanded into various countries for its visa vertical. As of fy23, the group has presence in over 66 countries and has around 45-50 government clients, aside over 30000 application centers worldwide. Resultantly, group is one of the largest players globally in Visa, Passport, Consular and citizen services. The market position of the group had further strengthened with acquisition of Zero mass during Q1-fy23, which has provided further diversification in the digital business, including business correspondent services etc. Resultantly, revenue profile stood stable over the years and with expected industry revival post easing of covid-19 travel restriction, it witnessed an on-year growth of 75% during fy22 and is further expected to improve by another 50-60% during fy23. CRISIL Ratings believe that the business risk profile of the group will continue to remain benefitted from group’s established market position and shall further improve over the medium term, backed by steady growth in tourism and improved penetration in digital business through on-boarding of new customers.
Robust financial risk profile: The financial risk profile has remained robust over the years and shall continue to strengthen over the medium term as well backed by expected accretion to reserve, group’s strong networth providing financial flexibility and nil dependence on external debt amid prudent working capital management; networth is estimated at around 660-670* crore as of Mar 31, 2023 (Rs 542* crore as Mar 31, 2022). Further, the debt protection indicators remain strong too backed by steady increase in operating profitability and nil reliance on external debt. Going forward, with no debt funded capital expenditure or acquisition plan, along with no stretch envisaged in the working capital cycle, CRIISL believes the group’s financial flexibility will further improve.
*as per CRISIL adjusted numbers
Weaknesses: Moderate scale of operations and susceptible to changes in regulations by the concerned ministries of various countries: The contracts with diplomatic missions are generally tender based 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 leading to impact on revenue profile. Though group’s established market position and subsequent growth in business reported over the years partly mitigates the afore stated risk, sustained growth in revenue over the medium term will continue to remain a key monitorable. Additionally, any weakening in the business performance due to reduced demand for existing business and/or any unfavorable business acquisition might impact the overall business risk profile of the group and hence will remain a key monitorable. |
Liquidity: StrongBank limit utilisation has remained nil over the past few years to till date due to prudent working capital management. Cash accruals are expected to be over Rs. 130-150 crores per annum over the medium term, which will aid the incremental working capital and capex/business acquisition requirement of the group, as there are no term debt repayments. Further, sizeable cash reserves (of Rs. 470crore as of Dec-22) and strong networth provides additional flexibility to the group to face the downturn in the business performance, if warranted. Current ratio is estimated to remain healthy too at around 89 times as of March 31, 2023. |
Outlook: Stable The BLS International group will continue to benefit from its established market position and diversified business segment. |
Rating Sensitivity factors Upward factors • Sustained increase in revenue, driven by onboarding of new customers and timely contract renewal from existing customers, with steady operating profitability at 15-16% leading to more than expected net cash accruals • Efficient working capital management leading to low to nil reliance on external debt and hence sustenance of robust financial risk profile and liquidity
Downward factors • Large, debt-funded capex or acquisition adversely impacting the financial risk profile and liquidity • Cash accrual declining below Rs. 80-90 crore on account of decline in operating income and/or operating profitability or any unfavorable/unrelated business acquisition. |
About the Group 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).
BLS International group has reported operating income of Rs 1067.5 crore in the 9M-fy23, with earnings before interest, tax, depreciation and amortization (EBITDA) of Rs crore 154.6 (14.5%). |
Key Financial Indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
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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This Annexure has been updated on 24-Apr-2023 in line with the lender-wise facility details as on 05-Apr-2022 received from the rated entity.
Criteria Details
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