BECIL slips into the red with net loss of Rs 4.28 cr in FY18
MUMBAI: Broadcast Engineering Consultants India Limited (BECIL) has slipped into the red in FY18 with a net loss of Rs 4.28 crore compared to a net profit of Rs 2.04 crore in FY17.
The central public sector undertaking (PSU) saw a moderate income growth at Rs 241.79 crore compared to Rs 232 crore in the previous fiscal. The company’s profit before interest lease depreciation and tax (PBILDT) was down to Rs 0.09 crore from Rs 5.9 crore.
Recently, rating agency Care Ratings revised BECIL’s long-term bank facilities worth Rs 275 crore to CARE BB Negative from CARE BB+, Positive.
The rating agency noted that the revision in the outlook from ‘Positive’ to ‘Negative’ is on account of significant deterioration as against anticipated improvement in the financial risk profile in FY18 which continued during 9M FY19 and its inability to recoup losses for the entire year.
Also, BECIL’s revenue contribution from its core segments remains volatile and its ability to undertake new contracts with relatively higher margins remain uncertain.
The outlook may be revised back to ‘Stable’ if the company is able to achieve profitable growth for the current year through increased off-take from newly introduced product segments and growth in all the other revenue segments without any adverse impact on the capital structure of the company.
Care noted the financial profile of the BECIL is characterised by cash losses and high gearing despite y-o-y growth in total operating income by 31% in FY18. The PBILDT margin deteriorated to 0.04% in FY18 as compared to 3.21% for FY17 on account of 36% increase in cost of sales and undertaking low yielding projects to combat competition in new business segments, namely manpower placement services and trading of security and surveillance equipment for various government departments.
Moreover, the trading sales have a higher contribution (69% of total operating income during FY18) in in the overall income which has further suppressed the operating profitability. Also, the operating cycle of BECIL has remained high owing to elongated credit periods extended to the government clientele.
The company had to resort to short term working capital borrowings during the year to finance the servicing of the specialised manpower, which led to substantial increase in the interest expense to Rs. 4.08 crore in FY18 as compared to Rs. 0.65 crore in FY17 resulting in net loss in FY18.
BECIL derives revenue from the sales of equipment either through tender or direct marketing efforts. Hence, ability of the company to sustain their business depends on successful bidding for the tenders.
It also faces competition from small players in some of their segments such as transmitter, cable, antenna etc. in the broadcasting segment. However, over the years, BECIL has established itself as an integrated player in the industry.
BECIL has moderate liquidity profile with unencumbered cash and cash equivalents stood at Rs. 16.65 cr as on March 31, 2018. On account of majority of its clients being government entities, the pending dues are released by end of March every year, due to which the working capital remains fully utilized during the year.
The average working capital utilisation for the last twelve months period ended Jan 2019 stood at approximately 88%. Also, the operating cycle was 102 days during FY18 and remains high due to extended credit periods enjoyed by the governmental clientele.
BECIL is a government company with The President of India holding 100% equity in the company. BECIL, a central public sector undertaking since 1995, has been accorded Mini Ratna status and comes under the ambit of Ministry of Information and Broadcasting (MIB). The company enjoys financial autonomy in their investment decision owing to the Mini Ratna status.
BECIL is primarily engaged in providing project consultancy services and turnkey solutions in the field of television and radio broadcasting. However, recently, company has diversified into the new verticals such as social security domain, electronic surveillance, CCTV, infrastructure management system, human resource management system, and communication systems/analytics and very recently into the provision of LED and smart business lighting for various government organisation and private organization.
BECIL is further moving into manufacturing of broadcast equipment such as set top boxes (STBs) for Doordarshan. Company has a diversified clientele including prominent government bodies, namely Ministry of Defense, Indian Railways, MIB, and Airport Authority of India (AAI).
BECIL’s unexecuted order book stood at Rs. 294.60 crore as on 28th February, 2019 which translates into 1.21 times of revenues for FY18 ensures a revenue visibility in the medium term. Out of the total contracts to be executed, top five contracts account for 62.79% of the total order book which consist of control and surveillance projects from government organization.