BLS International Services Ltd Management Discussions.

INDUSTRY OVERVIEW

Global Tech Enabled Government to Citizen (G2C) Services Landscape

Every industry and government is facing digital disruption across the globe. The goal of G2C is to provide one-stop, online access to information & services to Citizens so that they are be able to find and access what they need with ease. The public expects the agility and efficiency found in the private sector, for the governments to get more private players with the skills, to participate, and meet these requirements to grow economies.

Presently, services offered by the government are still semi-automated with a low penetration of cutting-edge technologies, leading to slow and inefficient delivery. Todays citizens are seeking the same conveniences theyve become used to in their experience as consumers, for example improved efficiency and optimized interactions across mobile, social and web. This has led to an increased demand for outsourcing to a specialized partner that reduces delivery time, increases efficiency and leads to customer delight which in turn enhances government image and national brand.

The Government to Citizen (G2C) Services market is increasingly developing as an imperative in the business largely owing to the increasing use of data, increased business collaborations, compliance mandates, and government regulations.

This assistance offered by specialist service providers including integration, support, and training, has availed the industries for the best practices, which has ensured a burgeoning market. The extensive need for enterprise-wide management systems is encouraging transparency among the systems, which is augmenting the overall demand across the globe. Moreover, with the increasing demand coupled with cost efficiency and better security features.

Indian G2C Services Landscape

In the last few years there has been a massive explosion in information technology the world over. The confluence of electronics and telecommunications has opened new vistas of transmission, storage and retrieval of information as never before. These are being increasingly used for decision-making, not only in the corporate world but even in public administration. The increasing population and the massive burden on civic amenities and the socio-economic infrastructure is unimaginable. With this transformation, e-Governance becomes not only a necessity but an integral part of every nation. In India, e-Governance initiatives have traditionally been confronted with the dual challenges of automating government departments and taking online services to the common man.

e-Governance has moved beyond government departments. It has now become about transforming the way governments work and reinvent peoples participation in the democratic process. e-Governance provides a platform to integrate solutions and services between Government-to-Citizens (G2C), Government-to-Business (G2B) and Government-to-Government (G2G), empowering both the government and the citizen like never before.

According to a research conducted by McKinsey, an average Indian user currently consumes more than 8 GB of mobile data per month, which exceeds the average in more digitally advanced countries such as China and South Korea. It is projected that India will witness an increase in the number of internet users to 800 million 3 by 2023 driven by the increasing availability and decreasing cost of high-speed connectivity and smartphones. The Digital India initiative undertaken by the government is bringing broadband internet access to 250,000- gram panchayats, or self-governing

village councils, to make it easier for millions to connect online. With a strong foundation of digital infrastructure and expanded digital access through Digital India Programme of the Government, India is now poised for the next phase of growth creation of tremendous economic value and empowerment for citizens as new digital applications permeate sector after sector. The country can create up to $1 trillion of economic value from the digital economy from $200 billion currently by 2025. Improving the trust between governments and citizens is fundamental to good governance and Information and Communications Technology (ICT) is progressively becoming an essential tool for promoting accountability, convenience and transparent governance. Governments around the nation are pushing hard to leveraging solutions and services from specialist service providers to realize the vision of Digital India. From utilizing ICT for elections, census, computerizing all the government offices, to digital lockers e-Transportation, e-Health, e-Education and e-Taxation, the new India has paved its way in the realm of e-Governance.

The government is working with stakeholders, to build India on this digital dynamism to deepen, widen, and scale up its digital economy in the coming years, creating huge economic value and empowering millions of people across all walks of life. The impressive number of more than 1.25 billion Indians4 already enrolled for the governments biometric digital identity programme. Aadhaar, is one of the examples of the digital amplification bringing massive number of users onto a common digital platform.

Driven by technology, e-Governance is transforming citizen services by providing access to information, integrating various systems and services between government and citizens, thereby empowering and enhancing citizens social, environmental and economic values. With private players collaborating with the government in fostering a digitally empowered India, it is likely to see efficient and safer modes of functioning at different levels.

Land record registration service

In India, land ownership is primarily established through a registered sale deed (a record of the property transaction between the buyer and seller). Other documents used to establish ownership include the record of rights (document with details of the property), property tax receipts, and survey documents. Governments outsource these procedures to various third part expertise such as BLS International in order to improve the quality of land records and making them more accessible. The government seeks to achieve complete computerisation of the property registration process and digitisation of all land records. Third party expertise such as BLS International, with its latest technology, helps in achieving this goal and ensures smooth functioning of services.

Global Tourism Industry Overview

Travel and tourism directly contributed approximately US$ 8.9 trillion1 to the global GDP in 2019, comprising 10.3% of the global GDP Approximately 1.5 billion international tourist arrivals were recorded in 2019, globally, indicating a 4% growth of the industry2. Tourism plays a crucial role in a countrys economic growth and around 10% of all jobs in the world are supported by the tourism industry, in some way or the other. The industry created 330 million jobs in 2019.

In 2019, international arrivals increased. The Middle East emerged as the fastest growing region for international arrivals, recording a growth of 8%, followed by Asia and the Pacific region at 5%, showing above-average growth. International arrivals in Europe and Africa increased in line with the world average, at 4%, America saw a growth of 2%. However, uncertainty surrounding Brexit, geopolitical and social tensions and the global economic slowdown contributed to slower growth in 2019, compared to the exceptional rates of 2017 and 2018. Demand growth also weakened, mainly in advanced economies and particularly in Europe.

COVID-19 has significantly impacted the global tourism industry in 2020 and, presumably, the impact will be seen in the years to come. As countries are

implementing severe travel restrictions to curb the spread of the pandemic, national and international tourism has come to a drastic halt. 96% of all worldwide destinations have introduced travel restrictions, as of 6th April, 2020. It is estimated that the global revenue for the travel and tourism industry will drop by 34.7% in 2020, with Asia forecast to see the gravest overall decrease in revenue as well as the highest employment loss in the entire industry.

With over 90% of the world living in countries with travel restrictions, the Covid-19 pandemic has brought travel to a standstill. While it is fairly known that the pandemic has bruised many- a-industries, it has etched a scathing impact on global tourism, which in fact accounts for ~10% of the global GDP. Given the wide-spread restrictions on travel globally, World Tourism Organization (UNs specialized agency for tourism (UNWTO), has predicted a 20-30% decline in international tourist arrivals in comparison to previous year. Going forward, the tourism sector as a whole, including travel companies and airlines, face an unprecedented challenge in the face of Covid-19 and is likely to experience slowdown in the short to medium term.

COMPANY OVERVIEW

BLS International Services Limited is a giobaiiy renowned leader in Visa and Tech enabled government to citizen services. BLS International has an impeccable reputation of setting exceptional standards of service. The company manages visa, passport, consular, attestation and tech enabled citizen services for government and diplomatic missions in Asia, Africa, Europe, South America, North America and the Middle East.

The use of innovative technology, a team of proficient personnel and its emphasis on delivering brilliant service differentiates it from the rest. Additionally, its proprietary technology platform enhances efficiency and continues to evolve year-after-year.

Services offered by the company -

• Visa processing services

• Client and front-end services

• Consular services

• E-visas

• Biometrics and identity management services

• Verification and attestation services

• Value-added services

• Passport services

• B2C services

COMPETITIVE STRENGTHS

• Strategic deployment of Technology, People & Process: The Companys agile, secure and highly scalable systems and processes drive its business success. It ensures data security through its personal as well as cloud-based platforms. BLS International is a ISO 9001, ISMS 27001, ISO 23026 certified Company and its agile proprietary processes, complex data handling capability and integrated scheduling and

processing systems ensure quick turnaround times. The Company employs about 5,000 people from 60+ nationalities and maintains a retention rate of more than 90%.

• Strong global presence: The Company has branches in 62 countries and has a total of 2325 centers globally. It enables BLS to maintain its dominant position in the industry and facilitates it to capitalize on growing business opportunities.

• Asset light, high FCF business model with net cash positive: All the global branch offices of BLS International are on lease, making it an asset-light business with minimum liabilities. The company has an efficient capital utilization mechanism to use funds only for contract execution. Besides, its Citizen Service offices are operated by BLS and developed by the government, thereby ensuring cost optimization.

FOCUS AREAS

• Strong Focus on tech enabled citizen services - By leveraging domain expertise, the Company will continue to focus on offering tech enabled citizen services for governments and diplomatic missions worldwide. BLS International aims to tap into the international market for outsourced citizen and front-end services. Further, it aspires to take up government projects in India to drive future growth. The Company will focus on increasing wallet share by extending beyond initial visa contract to other citizen services to lessen the impact of current situation.

• Continued leadership through organic growth in visa and value- added services: The Company focused on deepening its presence by offering more services and increasing its wallet share. It

also intends to makes its foray in new geographies to capitalize on emerging opportunities.

• Leveraging strong technology platform, trained staff and years of domain expertise: To keep pace with rapid digitization, the Company plans to leverage advanced technology, experienced staff and expertise built

to develop robust, agile and cutting- edge processes that enable last mile penetration and enhanced service experience. It also aims to build best-in-class centers for delivering superior service with ease and efficiency.

• Strong focus on balance sheet and cash generation: The Company will focus on projects entailing direct collection from customers, thereby eliminating dependence on government revenues and receivable cycles. It will also continue to focus on the asset light business model with minimal capex for new projects.

Financial Review

Operational Revenue stood at H78,613.54 Lakhs compared to H80,382.79 Lakhs in FY20, compared to H84,638.78 Lakhs in FY19. EBIDTA* for the year stood at H9,639.67 Lakhs compared to H1 5,097.61 Lakhs in FY19. Profit After Tax (PAT)

for the year ended, 2020 is H5,237.94 Lakhs compared to H10,516.68 Lakhs in the same period of last financial year. Revenue was impacted by the Covid-19 pandemic as the government across countries enforced travel restrictions and lockdowns. Visa and consular services operations in some of the countries (China,

Russia) were impacted from early part of Q4FY20, whereas, most of the countries shut down during the last 15 days of FY20

Total borrowings (short + secured + current maturities) is H88.32 Lakhs as on 31st March ‘20.

Key Ratios

Ratios FY20
ROCE 35.12% 19.54%
ROE 28.27% 12.23%
D/E 0.08 0
EBITDA* Margin 17.84% 12.06%
PAT Margin 12.43% 6.55%
Debtor Days 88.21 days 67.08 days

"Excluding exceptional item

Operational Highlights

• The Company was awarded Digital Technology Award in Visa Outsourcing Service Sector at the Business Leader Awards in Feb 2020

• The Company commenced accepting visa applications from October 2019 to provide efficient visa application services to people traveling to Brazil from Lebanon for business, work or leisure

• The Company entered into an exclusive partnership with the Embassy of Libya to provide visa

services Center which went live from November 2019

• The Company was Awarded ‘Brand Excellence Award in the Visa Outsourcing Service Sector by ABP News in Nov 2019 for excellence in visa process outsourcing and allied services

• The Company inaugurated new Spain Visa Application Centres in Belarus and Miami

• The Company relocated Spain Visa Application Centres to larger sites in Ankara & Tashkent to service

more applicants and provide more enhanced services

• The Company was awarded ‘Quality Excellence Award for the Best Operational Process in Visa Outsourcing at the World Quality Congress & Awards

• The Company received ‘Indias Most Trusted Visa Outsourcing Services Company for its excellence in visa process outsourcing and allied services at Indias Most Trusted Companies Award 2019

RISK AND CONCERNS

Risks Mitigation
Economic risk - A soft or modest economic growth might have cascading effect on several industries or sectors could impact business sustainability. Indias sustained economic growth continues unabated, despite several macro and micro-economic challenges. The regulatory reforms and proposed investment plans will aid for recovery in economic growth post the pandemic Covid-19 that caused a temporary halt to operations and economy across the country.
Unforeseen risk - An unexpected and unforeseen pandemic like Covid-19, which has caused business disruptions and caused loss of lives across the world, might disrupt business in the near short to medium term Incidents like Covid-19 are completely unexpected and highly impossible risks to mitigate. The Company is readying its centers with appropriate sanitation and protection measures to ensure the safety of their employees and customers as travel restrictions are expected to pick up in phased manner. Moreover, the Company has realigned the costs by rationalizing rent and operational expenses in order to reduce the impact on financials.
Competition risk - Competition risk describes the risk associated with growing competitive pressures and it might prevent the Company from achieving its predicted margins and market share. As one of the leading players in the visa and tech enabled citizen services space, the Company strives to meet challenges and satisfies customer demands by offering superior service and has over the years garnered significant brand equity.
Security risk - The Company has access to sensitive and confidential data as it is a part of consular services industry. Lack of adequate and integrated Information management system could expose and disrupt the operations, thereby causing fall in margins and profitability. The Company has an established robust system from reputed vendors and has in-house operations & maintenance team, certified with global standards to ensures high data integrity.
Human Resources Risk - The inability to retain or acquire competent and experienced employees may hamper the Companys ability to pursue growth strategies effectively. The Company undertakes training and development programmes regularly to enhance the skills of its employee. Further, the company conducts also focuses on employee retention. The Company enjoyed a low attrition in FY 2019-20, way below the industry average.

HUMAN RESOURCES

BLS International takes pride in the commitment, competence and dedication shown by its employees in all areas of its business. The Company considers people as its biggest assets and hence, has put in concerted efforts in talent management and succession planning practices, strong performance management and learning and training initiatives to ensure that it consistently develops inspiring, strong and credible leadership. The Company infuses a lot of rigor and intensity in its People Development Processes and strives to hone skill sets that helps to realize the vision and focus on areas that are critical for succeeding strategically. Apart from continued investment in skill and leadership development of its people, the Company also focuses on employee engagement initiatives and drives aimed at increasing the culture of innovation & collaboration across all strata of the workforce.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The business that the Company is engaged in requires a robust framework of control systems that ensure operational consistency and informational security. The Company has implemented a series of checks and controls to ensure the assets and interests under its care are protected and all financial data reported by it are accurate and reliable. The highly- sensitive nature of the business places emphasis on security and the Company has invested in robust data security tools and a state-of-the-art monitoring system. BLS Internationals global operations are certified with the ISO 9001:2008 for quality management and ISO 27001:2005 for information security. The framework is periodically reviewed to ensure that the audit systems, policies, procedures and financial controls are adequate and efficient. A committee reviews audit finding on a regular basis to ensure effective compliance, control and risk mitigation.

DISCLAIMER

Certain statements in the MDA section concerning future prospects may be forward-looking statements which involve a number of underlying identified / non identified risks and uncertainties that could cause actual results to differ materially. In addition to the foregoing changes in the macro-environment, global pandemic like COVID-19 may pose an unforeseen, unprecedented, unascertainable and constantly evolving

risk(s), inter-alia, to the Company and the environment in which it operates.

The results of these assumptions made, relying on available internal and external information, are the basis for determining certain facts and figures stated in the report. Since the factors underlying these assumptions are subject to change over time, the estimates on which they are based, are also subject to change accordingly. These forward-looking statements represent only the Companys current intentions, beliefs or expectations, and any forward-looking statement speaks only as of the date on which it was made. The Company assumes no obligation to revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise.