| BLS International Services Limited | ||||||
| Ratings placed on 'Watch Developing' | ||||||
| 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 placed its ratings on the bank facilities of BLS International Services Limited (BLS) on ‘Rating Watch with Developing Implications’.
The ratings are placed on watch following the corporate announcement made by BLS on Januray 15, 2024. As per the announcement, BLS through its wholly owned subsidiary BLS International FZE, UA has entered into an into a definitive Share Purchase Agreement to acquire 100% stake in iData Danismanlik Ve Hizmet Dis Ticaret Anonim Sirketi (“iDATA”) and its wholly owned subsidiaries for a Enterprise value of Euro 50 Million (~ Rs. 450 Crores) and additional milestones based payments.
The acquisition would be funded mainly through our internal accruals. Further, the transaction is anticipated to be completed in the current financial year, subject to Government & Regulatory approvals.
iDATA is a Turkey based company provides comprehensive visa applications and consular services to various governments. iDATA has been the exclusive provider of Visa & Consular Services to the Italy Diplomatic mission since 2006 and the German Government since 2012 in certain geographies. As per the audited consolidated financials for the calendar year 2022, iDATA achieved revenues of EURO 19.9 million (~Rs. 180 Crores) and EBITDA of EURO 10.4 million (~Rs. 94 Crores).
The acquisition is expected to have strong operational and financial synergies to the group over the medium term. CRISIL Rating will resolve the watch once detailed information and management discussion regarding the business and financial risk profile of the post-acquisition-consolidated entity is available.
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: 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 to further improve with increase in contribution from value added services provided by the group through its visa services. 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 940-950* crore as of Mar 31, 2024 (Rs 702* 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 Ratings adjusted numbers
Weaknesses: Moderate scale of operations and susceptible to changes in regulations by the concerned ministries of various countriesThe 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. 250-260 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. 687crore as of Sept-23) 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 5.62 times as of March 31, 2023. |
Rating Sensitivity factors Upward Factors
Downward Factors
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About the Company Established in early 2005, BLS International Services Ltd. (BIS) is a specialist provider for Outsourcing of Visa, Passport and Attestation Services to Indian missions across the world. |
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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Criteria Details
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