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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%.

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