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.
