CREDIT rating agency Icra has accorded a A1+ rating to the Rs 5-billion (Rs 500 crore) commercial paper (CP) programme of ITC Limited. Earlier, Icra had assigned the same rating to the same financial product from ITC for an amount of Rs 500 million (Rs 50 crore). It accorded the same rating on the enhanced amount of Rs 500 crore as well. Incidentally, A1 is the highest credit quality rating Icra assigns to short term debt instruments. Instruments rated in this category carry the lowest credit risk in the short term.
In a media statement issued on Monday, Icra said the reaffirmation of the rating takes into account the dominant position of ITC in the domestic cigarettes market, strong cash flows from the business and a very favourable financial profile characterised by strong ROCE, conservative gearing and large liquid investments.
ITC is also the domestic leader in paperboards and in the specialty packaging segment and has a large presence in hotels and in the trading of agricultural products.
The rating also takes into account the high gestation costs and investments in brand building that ITC’s “other FMCG” businesses involve and the current slowdown in the hotels business. The company expects to meet its future capital expenditure of Rs 60 billion spread over three years between 2008-09 and 2010-11 entirely by internal accruals.