OUR BANKING BUREAU
Mumbai, June 25
In a first of its kind in the country,
Icra has assigned its first corporate governance rating to ITC Ltd at CGR2. This is on a
rating scale of CGR1 to CGR6 where CGR1 denotes the highest rating.
"The CGR2 rating implies that in
Icra’s current opinion, the rated company has adopted and follows such practices,
conventions and codes as would provide its financial stakeholders a high level of
assurance on the quality of corporate governance", Icra said. However, this is not a
certificate of statutory compliance or a comment on the rated company’s future
financial performance, credit rating or stock price.
Icra’s corporate governance rating
(CGR) is meant to indicate the relative level to which an organisation accepts and follows
the codes and guidelines of corporate governance practices. Corporate governance practices
prevalent in a company reflect the distribution of rights and responsibilities among
different participants in the organisation such as the board, management, shareholders and
other financial stakeholders and the policies and systems laid down and followed for
making business decisions.
The emphasis of Icra’s rating is on a
corporate’s business practices and quality of disclosure standards that address the
requirements of the regulators and is fair and transparent to its financial stakeholders.
The variables, which have been analysed for arriving at the rating, are the shareholding
structure, governance structure and management processes, board structure and processes,
stakeholder relationship, transparency/disclosures and financial discipline including
transactions with subsidiaries and associates.
"The high level of corporate
governance rating reflects ITC’s transparent shareholding structure, well-structured
management decision making processes with adequate delegation of powers and sound board
structure and process. Further, in Icra’s opinion, the composition of the board as
well as the board committees, frequency of meetings, quality of agenda papers and the
board’s involvement in the decision making process satisfy the requirements of good
corporate governance", Icra noted.
ITC’s corporate strategy aims at
creating multiple drivers of growth anchored on its core competencies. It is currently
focussed on four business groups : FMCG, hotels, paperboards, paper and packaging and
agri-business.
