CRISIL has assigned its ‘C/D/P4’ ratings to the bank facilities of SRV Telecom Pvt Ltd (SRV Tele). The ratings reflect delays in debt servicing by SRV Tele; the delays have been caused by weak liquidity. The ratings also factor in SRV Tele’s average scale of operations, limited pricing flexibility, customer concentration in revenue profile, sub-par financial risk profile, and large working capital requirements. These weaknesses are partially offset by the company’s established relationship with Bharat Sanchar Nigam Ltd (BSNL), low fixed-costs, and promoters’ experience in the telecommunication equipment and electronic products business.

About the Company
The Bengaluru-based SRV Tele, incorporated in 1995, is a manufacturer of telecommunication equipment and electronic products - phones with caller identification (ID), electronic push button telephones (EPBT), fixed wireless telephones (FWT), patch cords and pigtails, and coin box telephones. The company also manufactures digital distribution frames, Asymmetric Digital Subscriber Line (ADSL) modems, and ticketing and token machines. The company derived 46 per cent of its revenues from caller ID telephones, used in fixed wire line network, in 2008-09 (refers to financial year, April 1 to March 31). FWT accounted for 13 per cent of the revenues, while patch cords and pigtails accounted for 17 per cent. The company also manufacturers new products, such as multipurpose universal remotes, and other products, such as modems and routers for third generation (3G) devices.

For 2008-09, SRV Tele reported a net profit before tax of Rs.2.80 million (net loss of Rs.9.23 million for 2007-08) on net sales of Rs.425 million (Rs.328 million). For the nine months ended December 31, 2009, the company reported a net profit of Rs.24.36 million on net sales of Rs.475 million.