ICRA reaffirms ‘A1’ rating for TCI’s 150.0 crore CP/STD programme

Transport Corporation Of India Ltd. | Logistics | Transportation & Logistics | BSE: 532349 | NSE: TCI

09 Dec 2011 Evaluate

ICRA has reaffirmed ‘A1+’ rating assigned to Transport Corporation of India’s (TCI) Rs 150.0 crore CP/STD programme. A1 is the highest-credit-quality rating assigned by ICRA to short term debt instruments. Instruments rated in this category carry the lowest credit risk in the short term. Within this category, certain instruments are assigned the rating of A1+ to reflect their relatively stronger credit quality.

The ratings reaffirmation takes into account TCI’s strong position in the organized segments of the logistics industry, asset light model, diversified customer base and revenues and increasing contribution from the high margin businesses. The company's business, however, remains vulnerable to the slowing growth in industrial production that directly impacts the revenues of freight division, though the decline is mitigated by growth in XPS and SCS segments

The ratings remain sensitive to company’s low operating margin and high working capital intensity, an industry-wide phenomenon. The company’s ability to grow its revenues from higher margin XPS and SCS business would be critical to maintain its financial risk profile given the working capital intensive nature of business and significant capex planned over the medium term.