Bharat Electronics

BEL Optronic Devices Limited

Instruments

Long Term - Fund Based

Short Term - Non Fund Based

Amounts

(in Rs crore)

40.00

6.00

Rating Action

December 2015

[ICRA]AA+ (stable); Upgraded from

[ICRA]AA (stable)

[ICRA]A1+ Reaffirmed

ICRA has upgraded the long term rating assigned to the Rs. 40.00 crore* fund based facilities of BEL

Optronic Devices Limited (BELOP)† to [ICRA]AA+ (pronounced ICRA double A plus) from [ICRA]AA

(pronounced ICRA double A). The outlook on the long term rating is stable. ICRA has also assigned a

short term rating of [ICRA]A1+ (pronounced ICRA A one plus) to the Rs. 6.00 crore non-fund based

facilities of BELOP.

The ratings upgrade takes into account the favourable change in ownership with the increase in share

holding of Bharat Electronics Limited (BEL, rated at [ICRA]AAA and [ICRA]A1+) in BELOP from

92.79% to 100%. BELOP is the sole supplier of IITs used in the manufacturing of Night Vision Devices

(NVDs) to BEL. The assigned ratings draw comfort from the increased financial flexibility of the

company on account of being a wholly owned subsidiary of BEL. BEL has extended financial support

to BELOP in the form of equity commitment and loans for funding large share of XR5 project cost for

transfer of technology from M/s Photonis, France to manufacture higher specification IITs. The ratings

also take into account the continued emphasis on indigenization of sensitive defence technologies and

the defence offset policy of the government that are likely to sustain BEL’s (and hence BELOP’s)

competitive position. Despite the entry of private players in India, BELOP continues to remain the

dominant supplier of Image Intensifier Tubes (IITs) in the country.

The ratings, however, are constrained by the large dependence on a single product and technology

and on the defense sector for orders. Changes in the procurement policy of the defence sector with

respect to night vision devices, including opting for alternate...