CRISIL has assigned its bank loan ratings of ‘BBB-/Stable’ to the various bank facilities of SKM Steels Ltd (SKM). The ratings reflect SKM’s stable business risk profile, backed by the company’s authorised dealership of select Tata Steel products. The ratings are also underpinned by SKM’s healthy growth prospects on account of Tata Steel’s growing presence in the global steel market. These rating strengths are partly offset by SKM’s weak credit protection measures.

Outlook: Stable
SKM is likely to maintain a healthy business risk profile, backed by the fact that it is the sole authorised dealer in Madhya Pradesh, and one of two distributors in Maharashtra, for Tata Steel products. The outlook may be revised to ‘Positive’ if SKM’s debt protection measures improve considerably from current levels. Conversely, the outlook may be revised to ‘Negative’ if SKM’s debt protection measures weaken, or if the management continues to trade in equity through SKM.

About SKM
SKM was started as a partnership firm in 1972 by the Shah family – the partners were Mr. Kirtilal Shah, Mr. Ramniklal Shah, Mr. Dahyalal Shah, and Mr. Bhogilal Shah. The firm was converted into a limited company in 1994. It is an ISO 9001:2000 certified company, and is an authorised distributor of cold rolled close annealed, hot rolled and Tiscon products of Tata Steel in Maharashtra and Madhya Pradesh.

For 2007-08, SKM reported a profit after tax (PAT) of Rs.0.07 billion on net sales of Rs.9.17 billion, as against a PAT of Rs.0.04 billion on net sales of Rs.6.75 billion for 2006-07.