NSoft India Services Pvt. Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 29.98 Crs. of NSoft India Services Pvt. Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (13 Nov 2020)	Present
Fund Based	10.41	11.98	Long Term	BWR BBB- /Stable Reaffirmation	BWR BBB - /Stable Reaffirmation
Non Fund Based	22.40	18.00	Short Term	BWR A3 Reaffirmation	BWR A3 Reaffirmation
Grand Total	32.81	29.98	(Rupees Twenty Nine Crores and Ninety Eight lakhs Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure

RATING ACTION / OUTLOOK

Brickwork Ratings has reaffirmed the long term rating at 'BWR BBB-/Stable' and also reaffirmed the short term rating at 'BWR A3' for the bank loan facilities of NSoft India Services Pvt Ltd.

The Rating has factored, inter alia , the extensive business experience of promoters, increase in operating revenue of the company, comfortable financial risk profile of the company and reputed clientele base . However, the rating is constrained by moderate scale of operations, stretched working capital requirements, tender based nature of business and client concentration risk. Going forward, the ability of the company to increase revenues, improve its profitability margins, strengthen its financial risk profile and manage its working capital efficiently will remain the key rating sensitivities.

The rating outlook has been assigned as "Stable" as BWR believes that NSoft India Services Pvt Ltd business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term,. The rating outlook may be revised to 'Positive' in case the revenue and profitability margins show sustained improvement. The rating outlook may be revised to 'Negative' if the financial risk profile goes down.

KEY RATING DRIVERS

Credit Strengths:

Extensive experience of promoters in industry :
The day-to-day management of the company is taken care of by Dr. Naagaraj Subramanya (Managing Director), who has over two decades of experience in the Software Products and Services Industry.
Increase in operating revenue of the company :
The operating revenue of the company increased from Rs. 61.97 crore in FY19 to Rs.81.63 cr in FY20 driven by successful completion of projects and extension received for existing projects. The operating revenue however marginally declined from Rs. 81.63 cr in FY20 to Rs. 78.02 cr in FY21. The company has achieved operating revenue of Rs. 65 crore as on date. The scale of operations is likely to improve in medium term as the company has order book position of Rs. 209 crore as of December 2021.
Comfortable financial risk profile of the company :
The Tangible networth of the company increased from Rs. 35.05 cr as on 31 March 2020 to Rs. 41.12 cr as on 31 March 2021. The financial risk profile of the company remained comfortable as the gearing ratio stood at 0.44 times as on 31 March 2021 , though moderated from 0.16 times as on 31 March 2020 due to increase in debt levels as on 31 March 2021. The debt protection metrics stood at comfortable levels with ISCR and DSCR at 12.34 times and 3.27 times respectively in FY20. The ISCR moderated to 9.38 times in FY21 on account of increase in finance charges. The DSCR stood at 3.74 times in FY21.
Reputed clientele and low counterparty credit risk :
The company primarily caters to state power distribution companies such as Purvanchal Vidyut Vitran Nigam Ltd, West Bengal State Electricity Development Corporation Ltd, BESCOM, BWSSB, HESCOM and GESCOM among others. As the majority of the company’s clients are government bodies, the counterparty credit risk is negligible.

Credit Risks:

Moderate scale of operations :
The company is operating at a moderate scale of revenue as it has reported net revenue of Rs. 81.63 Crs in FY20 and Rs. 78.02 Crs in FY 21 . Though the revenue increased, it is quite moderate given the vintage of the company.
Stretched working capital requirements :
The working capital requirement of the company is high due to high receivables days of approximately 165 days in FY21.
Tender based nature of business :
As the company majorly depends on tenders, it is exposed to risk in the tendering process.
Client concentration risk :
The company executes orders mainly for various government entities like BESCOM, WBSEDCL, PUVVNL, etc and earns 70-80% of its total operating revenue from above clients which exposes it to concentration risk. However, the clients are government entities and hence risk of default is minimal.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Going forward the company’s ability to improve the scale of operations, improve and maintain profitability, the debt servicing capability & liquidity and manage its working capital efficiently will be the key rating sensitivities.

Positive:

The rating will be upgraded if the company is able to achieve significant growth in revenue and improvement in profit margins to improve its cash accruals and thereby the liquidity , with other metrics such as gearing, debt coverage ratios and working capital cycle.

Negative:

The rating may be downgraded if there is lower than expected revenues affecting the profitability margins or deterioration in its financial risk profile from current level.

LIQUIDITY INDICATORS - Adequate

The liquidity position of the company is adequate as indicated by current ratio of 1.98 times as on 31 March 2021. The average OD utilization is around 85-90% during the last 8 months ended December 2021. The entity reported net cash accruals of Rs. 9.95 crores which was sufficient to cover the current portion of long-term debt of Rs. 3.15 crore in FY21. Going forward the net cash accruals is expected to improve to Rs. 15.62 crore which will be sufficient to cover current portion of long-term debt of Rs. 3.88 crores in FY22. The balance of cash and cash equivalents stood at Rs. 1.54 crore as on 31 March 2021.

ABOUT THE ENTITY

NSoft (India) Services Pvt Ltd. was established in 2006 as a private limited company. It is an application software solution provider located in Bangalore, India. The company has expertise in providing solutions in the area of Revenue management for utility sector, Financial management, Work management, Asset management, Energy management system and Channel management for large corporations. The solutions have been predominantly on Microsoft technologies and Oracle. Its major revenues are generated by providing Total Revenue Management (TRM) service for public utilities like ESCOMS, water supply, gas ,etc. It is currently providing TRM across 100 subdivisions of ESCOM in Karnataka and parts of U.P. It is an ISO 9001-2000 certified company. The Company has obtained CMMI Level 5 certification for Development and Services.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	78.02	81.63
EBITDA	Rs.Crs.	12.53	13.51
PAT	Rs.Crs.	6.09	6.81
Tangible Net Worth	Rs.Crs.	41.12	35.05
Total Debt/Tangible Net Worth	Times	0.44	0.16
Current Ratio	Times	1.98	1.88

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include standard covenants normally stipulated for such facilities.

NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

ANY OTHER INFORMATION

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2022)			2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	11.98	BWR BBB-/Stable (Reaffirmation)	NA	NA	13Nov2020	BWR BBB- Stable (Reaffirmation)	21Oct2019	BWR BBB- Stable (Reaffirmation)
Non Fund Based	ST	18.00	BWR A3 (Reaffirmation)	NA	NA	13Nov2020	BWR A3 (Reaffirmation)	21Oct2019	BWR A3 (Reaffirmation)
Grand Total		29.98	(Rupees Twenty Nine Crores and Ninety Eight lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Roshan Ranjan Ratings Analyst roshan.r@brickworkratings.com	Nagaraj K Associate Director - Ratings Board : +91 80 4040 9940 nagaraj.ks@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

NSoft India Services Pvt. Ltd.

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Canara Bank	Overdraft against Book Debts (ODBD) - Sanctioned	9.00	_	9.00
2	Canara Bank	Bank Guarantee - Sanctioned	_	18.00	18.00
3	Canara Bank	Working Capital Demand Loan - Out-standing	0.28	_	0.28
4	Canara Bank	GECL - Out-standing	0.84	_	0.84
5	Canara Bank	GECL - Out-standing	1.86	_	1.86
Total			11.98	18.00	29.98
TOTAL (Rupees Twenty Nine Crores and Ninety Eight lakhs Only)

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About Brickwork Ratings

Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. BWR has rated over 11,400 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters and strategic partner. BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations.

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