CRISIL has assigned its ‘BBB/Stable/P3+’ ratings to the bank facilities of Prima Telecom Ltd (PTL). The ratings reflect PTL’s moderate financial risk profile, marked by a healthy capital structure, and the benefits the company derives from its good relationships with its key customers and suppliers. These rating strengths are partially offset by PTL’s exposure to risks relating to high customer and supplier concentration in revenue profile, small scale of operations in a highly competitive industry, and foreign exchange rate fluctuations, and moderately working-capital-intensive operations.

Outlook: Stable
CRISIL believes that PTL will continue to benefit over the medium term from its good relationships with key suppliers and customers. The outlook may be revised to ‘Positive’ in case PTL achieves more-than-expected topline growth and profitability, or improves its capital structure. Conversely, the outlook may be revised to ‘Negative’ if the company’s sales from new technological collaborations are lower than expected, leading to pressure on its cash accruals.

About the Company
Incorporated in 1995, PTL is a Lalit Suri group company that assembles and markets telecommunication access products manufactured by multinational companies. The primary products that the company imports, assembles, and sells are routers, multiplexers, converters, and modems. PTL tied up with Loop Telecommunication International, Inc. in 2000 and was a value-added reseller (VAR) during the period from 2000 to 2005; after which, the company signed a technology and development agreement with Loop Telecom and established a small assembling unit in 2005. It has been engaged in limited assembly operations along with marketing and maintenance support for Loop Telecom products to various Indian fixed line, as well as mobile telecommunication operators. PTL’s largest customers include Tata Teleservices Ltd (TTSL) and Tata Teleservices Maharashtra Ltd (TTML). PTL also markets specific products of companies such as Easy Broadband Technology Ltd (EBB) and T&W. PTL has also tied up with other equipment manufacturers such as Veraz Networks Incorporated, Celtro Ltd and Ripcode Incorporated over the past two years to supply telecommunication equipment for upcoming new generation networks. The company has recently entered the passive telecommunication infrastructure domain by tying up with Omnishelter Srl, which designs and manufactures shelters. PTL is part of the Suri group of companies, that is engaged in various businesses including hospitality (Bharat Hotels), auto components (Subros Ltd), telecommunication equipment (Fibcom India Ltd), automobile retailing (Rohan Motors and Godawri Motors), and education.

PTL reported a profit after tax (PAT) of Rs.3 million on net sales of Rs.484 million for 2008-09 (refers to financial year, April 1 to March 31), against a PAT of Rs.13 million on net sales of Rs.352 million for 2007-08.