You are here: Home » Companies » News
Business Standard

Icra to focus on inorganic growth, scouts for takeovers

Majority of its revenue comes from the rating division

Press Trust of India  |  Mumbai 

Domestic credit rating agency Icra is planning to drive its growth in the next one-two years through inorganic route, a top company official has said.

"We plan to drive our business inorganically in the next one to two years, and we are looking at acquisitions," Icra Vice-Chairman Pranab Choudhury told PTI.

Though scouting for good opportunities across the world, Icra has not zeroed in on anything as of now, he said.

On if they appointed an i-banker for this, Choudhury said: "We don't normally hire i-bankers in advance. We have sent out word that we are on the lookout for suitable target for takeovers. Once anybody comes up, we will go ahead."

Icra provides services in rating, grading, consultancy, knowledge process outsourcing (KPO) and IT, with majority of its revenue coming from the rating division.

In May, the company had picked up 51% stake in a Californian IT firm for a total staggered payout of USD 16 million. Over the next three years, its stake will touch 100% in two instalments of 25 and 24%, he said.

On how the company will fund such buyouts or what could be deal size, he did not put a number but said they have about Rs 250 crore reserves/ investments.

The company doesn't need any support from its shareholders now or raise debt to fuel such takeovers, as it has a cash equivalent of around Rs 250 crore in balance sheet.

"We can take care of our acquisition plans without any fund infusion from promoters," Choudhury said.

On revenue break-up, he said: "While 65% of our revenue comes from rating services, others contribute rest as of now. Going ahead, it is likely to change to some extent."

Besides rating, Icra is also witnessing sound growth for its IT and KPO services, the Kolkata-based vice-chairman of the country's second largest rating agency said.

The company is planning to increase its footprint in Asian region in the near future. "We have already started our operations in Indonesia and Sri Lanka. We plan to increase our footprint in the rest of Asia," he said.

While Indonesian (99% owned by Icra) operation will take three years to break even, the Lankan arm, which is a fully-owned subsidiary, is likely to take 3-5 years to break even, he said.

"We have not introduced all our services in these two countries. However, we will do it as the operations mature in those markets," Choudhury added.

On new services in ratings and grading, he said: "We recently introduced grading for B-schools. We may look at engineering colleges also." However, he added that there is no immediate plan in this regard.

While global rating agency Moody's has a 28.5% of stake in the company, State Bank of India owns 9.9%.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Sun, July 08 2012. 15:13 IST