Rating agency Fitch has affirmed a low default risk on Uttam Galva Steels -- one of the leading producers of galvanised and cold rolled products -- and given it a stable outlook on the back of its improved revenue last fiscal.
"Fitch has affirmed India-based Uttam Galva Steels Ltd's (UGSL) national long-term rating at 'A(ind)' with stable outlook," it said in a statement.
An 'A' rating denotes expectations of low default risk relative to other issuers or obligations in the same country.
"The affirmations reflect the improvement in UGSL's profitability in FY'10," Fitch added.
World's largest steel maker ArcelorMittal holds 33.8% stake in Uttam Galva.
In 2010-11, the company had reported a consolidated total operating income of Rs 5,035 crore, up from Rs 4,519 crore in the previous fiscal. It had also reported an EBIDTA (Earnings before Interest, Depreciation, Taxes and Amortisation) margin of 8.9%.
"The affirmations continue to reflect UGSL's market position as one of the leading producers of galvanised and cold rolled products, its demonstrated track record in terms of growth and margins, and the company's diversified customer profile," Fitch said.
It added the ratings has also factored UGSL's strong linkages with ArcelorMittal.
"Fitch expects linkages between the two entities to strengthen further, based on its belief that UGSL's would be a part of ArcelorMittal's longer-term India strategy.
The agency said that UGSL is improving its operating and business synergies with ArcelorMittal, including technical support for the development of new products, which is expected to benefit the company in the medium-term.
Fitch has also affirmed low default risk on some of UGSL's long-term and short-term debt instruments.
