Fitch rates KCT Trading loans BBB(ind)

Fitch Ratings said it assigned KCT Trading Pvt Ltd. a national long-term rating of BBB(ind) and a BBB(ind) rating to its term loans aggregating Rs.26.5 million, along with a national short-term rating of F2(ind) rating on its fund-based limits of Rs.400 million.

The ratings reflect the small scale of operation, low margins and competitive nature of the company's trading business, as reflected in its low EBITDA margins, relatively low interest coverage and high leverage, Fitch said.

KCT also is exposed to pricing and inventory carrying risk as it does not have back-to-back transaction-based contracts, the agency said. These risks are partly mitigated by maintaining low inventory levels, Fitch said. KCT benefits from its long track record in paper trading as the former division of Karam Chand Thapar & Bros. Ltd., the agency added.

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