Fitch Ratings has today assigned a National Issuer Rating of 'A-(ind)' to India-based Genus Power Infrastructures Ltd. (Genus). Genus's INR1370m short-term bank loan has been assigned an 'F1(ind)' rating and INR1500m long-term bank loan has been assigned an 'A-(A minus)(ind)' rating.. The INR880m CP program, which is part of overall fund-based working capital limits of the company, has been assigned a rating of 'F1(ind)'. The Outlook for ratings is Stable.

Genus's ratings reflect its strong business position in the electronic energy meter (EEM) business, a track record of healthy EBITDA and PAT margins and steady growth in revenues over the past five years. The ratings are also based on Genus's capabilities in developing new value added products to meet the growing demand of utilities for tamper proof and efficient metering devices that can help reduce power theft and aid in accurate and efficient capturing of energy consumption data. Going forward, increased demand from power utilities for advanced electronic metres to reduce distribution losses and plug revenue leakages is expected to sustain growth of EEM business. The ratings are supported by the improvement in credit metrics subsequent to the INR840m infusion of capital from private equity investors during the current fiscal year and the ability of the company to raise equity at regular intervals during the past two years. The INR 880m CP program would remain carved out of the sanctioned fund-based working capital limits of Genus.

Fitch expects Genus's strong order book and pipeline (INR6.04bn) in power distribution projects business to support growth in earnings. This business, started in 2005, contributed 44% of the total revenues in FY07. The ratings also factor in the company's diversification into invertors and UPS systems and the establishment of its brand equity in the retail market, which has so far been populated by a large number of unbranded 'lower-end-of-the-value-chain' players.

The company's ratings are constrained by working capital intensive nature of the operations resulting in negative cash flow from operations and a continuous increase in overall debt levels. This has resulted in higher leverage as at FYE07. Although the financial profile of its major customers - the state government-owned power utilities - is weak, the counter-party risk is mitigated by the central government support to these power utilities for upgrading the distribution network and metering systems. Larger than stated capex or a larger than anticipated increase in working capital could pose a risk to the debt metrics and, consequently, to the ratings of the company. The company remains open to acquisition in power infrastructure space, which remains an event driven risk.