Icra plans to expand in Asia

After establishing a presence in Indonesia and Sri Lanka, Icra, the rating agency and associate of Moody's in India, plans to expand further in Asia to get a slice of business from the growing bond markets.

The focus will be on domestic rating activity, while Moody's looks at cross-border business. It is in the process of deciding on countries to set up base. "The bond market in Asia is growing. Icra will use the expertise developed in India for business growth. The agency will consult Moody's, its largest shareholder, on entering new markets," said its Vice-Chairman and Group Chief Executive, P K Chaudhury.

At present, Icra has subsidiaries in Sri Lanka and Indonesia. The Lankan unit, incorporated in December 2010, received a licence from the Securities and Exchange Commission of Sri Lanka in May 2011.

The Indonesian subsidiary, PT Icra Indonesia, got its operating licence from the Capital Markets and Financial Institution Supervisory Board of that country in September 2010.

Chaudhury said Icra intended to bring in local partners like banks and insurance companies to hold a small equity stake in these two subsidiaries. So far, there have been only initial discussions about getting local partners on board.

Icra would prefer to have many shareholders with a small equity stake, he added.

Chaudhury also said Icra had decided it would no longer enter into ties to provide technical assistance in setting up rating agencies. At present, it has such a tie-up in Bangladesh and Kuwait.

On broadbasing the revenue streams, he said the rating business would remain a mainstay. Icra would also like to expand activities in software development, management consulting and knowledge process outsourcing. The growth opportunities in these lines of business were immense and this would reduce the dependence on revenue from ratings. At present, rating contributes 65 per cent of revenue and the other three segments account for the balance share.

Consolidated net profit for April-December 2011 declined 18 per cent to Rs 29.6 crore (Rs 296 million) from Rs 36.3 crore (Rs 363 million) in April-December 2010. The total income for nine months of 2011-12 is Rs 156.7 crore (Rs 1.56 billion) as against Rs 147 crore (Rs 1.47 billion) in the same period a year earlier.