Fitch rates P.S. Krishnamurthy BB+(ind)

Fitch Ratings said it assigned a BB+(ind) national long-term rating to P.S. Krishnamurthy Steels Pvt. Ltd. and BB+(ind)/F4(ind) ratings to its Rs. 1.2 billion fund-based working capital limits and Rs. 1.2 billion non-fund based limits.

The outlook is stable.

The agency said the ratings are underpinned by the track record of P.S. Krishnamurthy's promoters in steel trading, its 4.9 times financial leverage, its consistently profitable operations, its established reputation as one of the largest steel traders in Tamil Nadu and Pondicherry and its strong relationships with suppliers like Steel Authority of India Ltd. and Rashtriya Ispat Nigam Ltd., with whom the company has signed procurement agreements.

Key concerns are the working-capital-intensive nature of the company's operations, an increase in competitive pressures and a deterioration in the steel market that would restrict the company's operating margins and pressurise its interest coverage and leverage, Fitch said.

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