Broadcast Engineering Consultants India Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 193.05 Crs. of Broadcast Engineering Consultants India Ltd.

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	83.05	Long Term	BWR BBB - /Stable Assignment
Non Fund Based	110.00	Short Term	BWR A3 Assignment
Grand Total	193.05	(Rupees One Hundred Ninety Three Crores and Five 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
Note: This rating pertains to an existing assignment received prior to October 6, 2022. RATING ACTION / OUTLOOK

While assigning ratings to the bank loan facilities of Broadcast Engineering Consultants India Ltd. (BECIL or the company), BWR has factored in growth in revenues, a healthy work order book, and improvement in the company’s overall financial risk profile. The revenues of the company have improved from Rs.347 crs in FY20 to Rs.744 crs during FY22 and are expected to improve to Rs.874 crs in FY23 and Rs.1049 crs in FY24. On a provisional basis, the company has achieved revenues of Rs.415 crs during 6MFY23 (i.e up to September 2022). At present, the company has work orders worth Rs.2200 crs to be executed during the next three financial years with approx. Rs.1000 crs to be executed during the current year, Rs.700 crs to be executed during FY24, and the remaining to be executed during FY25. The robust order book position of the company gives strong and clear revenue visibility for the company during FY23 and FY24 and supports BWR's expectations for revenues during the years. The overall financial risk profile of the company has improved during FY22 as indicated by the working capital intensity and capital structure. Debtors' holding period has improved from 284 days in FY20 to 162 days in FY21 and further to 113 days in FY22 and is expected to improve to 100 days in FY23 and 83 days in FY24. On the strength of the improvement in the net worth of the company from Rs.7.46 crs in FY20 to Rs.21.09 crs in FY22, the gearing ratio (Total Debt/TNW) has improved significantly from 10.18x in FY20 to 4.45x in FY22 and is expected to further improve to 3.93x in FY23 and 1.95x in FY24. The company is engaged in providing project consultancy services and turnkey solutions for various state and central government projects.

RATING OUTLOOK
BWR believes Broadcast Engineering Consultants India Ltd.'s business risk profile will be maintained over the medium term. The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term.

KEY RATING DRIVERS

Credit Strengths:

Established Market Position :
Since its inception, BECIL has provided technical inputs on policies formulated by MIB. It also prepares feasibility studies and manages the bid process for these policies. BECIL played a key role in setting up the Common Transmission Infrastructure (CTI) for the first two phases of FM radio in India and has been appointed as the service provider for the implementation of Phase 3. The company has also diversified into fields of strategic projects such as Information Communication Technology, Electronic Surveillance, Manpower placement services etc. This has led to a CAGR of 26% in revenue over the past three years ended fiscal 2022; Rs 744.34 crore in fiscal 2022
Improvement in the financial risk profile :
Overall financial risk profile of the company has improved during FY22 as indicated by working capital intensity and capital structure. Debtors' holding period has improved from 284 days in FY20 to 162 days in FY21 and further to 113 days in FY22 and is expected to improve to 100 days in FY23 and 83 days in FY24. On the strength of improvement in networth of the company from Rs.7.46 crs in FY20 to Rs.21.09 crs in FY22, gearing ratio (Total Debt/TNW) has improved significantly from 10.18x in FY20 to 4.45x in FY22 and is expected to further improve to 3.93x in FY23 and 1.95x in FY24. The Debt coverage ratio is moderate with interest service coverage at 1.91 times and debt service coverage at 1.53 times.
Government Ownership :
BECIL is owned wholly by Govt of India and has an exclusive customer base in the form of different govt organisations such as Prasar Bharati, Doordarshan etc
Growth in revenues during the past three years :
Revenues of the company have improved from Rs. 347.07 crores in FY20 to Rs. 552.82 crores in FY21 and Rs. 744.34 crores during FY22. On a provisional basis, the company has achieved revenues of Rs.415 crs during 6MFY23 (i.e up to September 2022) and is expected to improve to Rs.874 crs in FY23 and Rs.1049 crs in FY24.

Credit Risks:

Presence in a competitive and fragmented industry :
The company has a presence in a heavily competitive segment and is in competition with organizations like Bharat Electronics Limited (BEL), Telecommunication Consultants India Limited (TCIL), Central Electronics Limited (CEL), Indian Telephone Industries Limited (TI) L&T, RAILTEL and Mahindra Defense.
High Gearing :
During FY22, the Total Debt/Tangible Net Worth is high at 4.45x times. However, the gearing is expected to improve to 3.5x-4x in FY23.
Thin profit margins :
Due to the competitive nature of work orders being handled by the company, the profit margins of the company are generally low. During FY22, the operating margins and net margins are 2.63% (P.Y 1.67%) and 1.49% (P.Y 0.46%) respectively.

ANALYTICAL APPROACH - Standalone

BWR has factored in the standalone business parameters and financial risk profile of the company to arrive at the rating. Reference may be made to the detailed Rating Criteria hyperlinked below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Positive: BWR may revise the ratings upward in the case there is substantial improvement in revenue, profitability and overall financial risk profile as indicated by capital structure, debt coverage ratios and liquidity profile of the company.

Negative: BWR may revise the rating downward in the case there is decline in the financial risk profile of the company as indicated by profit margins, capital structure and liquidity profile of the company.

LIQUIDITY INDICATORS - Adequate

Liquidity in the company is adequate as indicated by cash accruals, cash and bank balances, and WC utilization. During FY22, the company generated cash accruals of around Rs. 19.19 crores against the annual fixed debt obligation of around Rs. 3.05 crores and has unencumbered cash and cash equivalents of Rs.51 crores approx. as on 31 March 2022. The fund-based working capital utilization is approx. 84% during February - September 2022.

ABOUT THE ENTITY

Broadcast Engineering Consultants India Limited (BECIL), a Mini Ratna Central Public Sector Enterprise (CPSE) was incorporated on 24th March 1995 under the Companies Act, 2013 (erstwhile the Companies Act, 1956) by the Government of India with 100% equity share capital of BECIL held by President of India through Secretary and Joint Secretary of Ministry of Information and Broadcasting.

The Company was initially set up for providing project consultancy services and turnkey solutions encompassing the entire gamut of radio and television broadcast engineering, establishment of transmission facilities i.e content production facilities, terrestrial, like satellite and cable broadcasting in India and abroad.

The company has now diversified into the fields of Strategic Projects such as Information Communication Technology, Electronic Surveillance (namely CCTV, Access Control, Intrusion, Fire Safety, Hydrants, etc.), Electronic Media content including films, Sentinel Analytics, Counter Drones/UAVs etc. The activities include but are not limited to Supply, Installation, Testing and Commissioning, Consultancy Services, Technical Audit, Media Analysis, R&D, projects pertaining to Digital India, City Surveillance, Safe City, Smart City, Make in India, Made in India, Manufacturing, Audio Video and Data Analysis, Cyber Security, Engineering, Procurement & Construction, Project Management Services, Operation and Maintenance, Manpower Placement, AMC and providing the total turnkey project for the critical information infrastructure.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21-22 (Audited)	FY 20-21 (Audited)
Operating Revenue	Rs.Crs.	744.34	552.82
EBITDA	Rs.Crs.	19.60	9.21
PAT	Rs.Crs.	11.09	2.55
Tangible Net Worth	Rs.Crs.	21.09	10.07
Total Debt/TNW	Times	4.45	6.87
Current Ratio	Times	1.34	0.99

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

RATING HISTORY FOR LAST 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	83.05	BWR BBB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	110.00	BWR A3 (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		193.05	(Rupees One Hundred Ninety Three Crores and Five 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
Pallav Kumar Goel Ratings Analyst pallavkumar.g@brickworkratings.com	Saurabh Agarwal Manager - Ratings saurabh.a@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Broadcast Engineering Consultants India 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	Union Bank of India	Over Draft - Sanctioned	70.00	_	70.00
2	Union Bank of India	Bank Guarantee - Sanctioned	_	100.00	100.00
3	Union Bank of India	Letter of Credit - Sanctioned	_	10.00	10.00
4	Union Bank of India	GECL - Sanctioned	13.05	_	13.05
Total			83.05	110.00	193.05
TOTAL (Rupees One Hundred Ninety Three Crores and Five lakhs Only)

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