ICRA reaffirms CMC's CP rating

THE INVESTMENT Information and Credit Rating Agency (ICRA) has reaffirmed the A1 plus rating assigned to the Rs. 10 crore commercial paper programme of CMC, indicating highest safety. The reaffirmation takes into account CMC's established position in various segments of the IT industry, strong vertical industry skills, favourable order book position, healthy growth in turnover and profits resulting in comfortable gearing and coverage indicators. Although the disinvestment process for the company has been initiated, the rating agency does not foresee any adverse impact on the short term rating of the company.

CMC is a public sector enterprise under the Ministry of Information Technology (MoIT). The Central Government holds 83.33 per cent of the paid-up capital with General Insurance Company and public holding the balance. CMC's focus, at the time of inception in 1976, was on computer maintenance but later it successfully diversified into other areas of IT services including systems integration, networking, systems design and consultancy, education and training and software exports. The company derives more than 70 per cent of its revenues from the government and public sector units (PSUs).

In 1994, CMC created five strategic business units namely Customer Services (CS), Systems Integration (SI), International, Education and Training (E&T) and Indonet - each catering to specific area of the IT industry.

Its focus since inception has been on the domestic IT sector with software exports accounting for less than 20 per cent of the income in 2000-01. The recent slowdown in IT spending in the international markets is expected to have marginal impact on its operations. During 2000-01 the operating income and PAT grew by 17 per cent and 93 per cent to Rs. 540 crores and Rs. 24.40 crores respectively. It had a net worth of Rs. 76.20 crores and gearing of 0.45 times as on March 31, 2001.

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