Fitch rates Khanna BB(ind)

Fitch Ratings said it assigned Khanna & Co. Steel Ltd. a national long-term rating of BB(ind), along with an F4(ind) rating on its Rs. 300 million non-fund based limits.

The ratings reflect Khanna's thin operating margins, high price volatility and intense competition in the mild steel products trading market, the agency said.

The company's operating EBITDA margin has been volatile at about 0.67% to 1.64% from 2007 to 2010, Fitch said.

The ratings also factor in concentration risks as Khanna's top three customers account for 94% of its total revenues. But, the company's long-standing relationship with these customers helps mitigate the risk to a certain extent, the agency said.

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