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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 1450.00 | ACUITE BB | Stable | Upgraded | - |
| Bank Loan Ratings | 0.84 | Not Applicable | Withdrawn | - |
| Bank Loan Ratings | 572.00 | - | ACUITE A4+ | Assigned |
| Bank Loan Ratings | 2829.69 | - | ACUITE A4+ | Upgraded |
| Total Outstanding | 4851.69 | - | - |
| Total Withdrawn | 0.84 | - | - |
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Rating Rationale |
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Acuite has upgraded its long term rating to 'ACUITE BB' (read as ACUITE double B) from 'ACUITE BB-' (read as ACUITE double B minus) and short term rating to 'ACUITE A4+' (read as ACUITE A four plus) from ‘ACUITE A4’ (read as ACUITE A four) on Rs. 4279.69 Cr. bank loan facilities of ITI Limited (ITIL). The outlook is ‘Stable’.
Acuite has assigned its short term rating to 'ACUITE A4+' (read as ACUITE A four plus) of Rs. 572.00 Cr. bank loan facilities of ITI Limited (ITIL). Acuite has withdrawn the proposed long-term facility of Rs. 0.84 Cr. without assigning any rating as this was a proposed facility of ITI Limited (ITIL). The rating withdrawal is in accordance with Acuite’s policy on withdrawal of ratings as applicable to the respective instruments/facility. The rating is being withdrawn on the account of request received from the company. Rationale for rating The rating upgrade factors in benefits accrued to the company being wholly owned by Government of India, despite the discontinuation of the letter of comfort from Department of Telecom (DoT), and ITI’s long-standing operational track record. The improvement in scale of operations and reduction in losses, supported by a healthy order book are expected to drive further recovery in the coming quarters. While liquidity remains stretched due to high working capital intensity and customer concentration risk, it is expected to improve with better execution of orders and expected proceeds from land monetisation earmarked for debt repayment potentially reducing the interest burden. However, the rating remains constrained by weak operating profitability, non-compliance with statutory and listing obligations, adverse auditor comments, and corporate governance concerns. |
| About the Company |
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ITI Limited (ITIL) is a public sector undertaking in the telecommunications technology segment established as a departmental factory in 1948. The company has facilities for manufacturing telecom equipment’s in Bengaluru, Naini, Rae Bareli, Mankapur and Palakkad along with an R&D centre in Bengaluru and 11 Marketing, Services & Projects (MSP) centers in India, which are located at Bengaluru, Chennai, Hyderabad, Mumbai, Ahmedabad, Kolkata, Guwahati, Bhopal, Delhi, Lucknow and Chandigarh. Mr. Rajesh Rai is the current managing director of the company.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuite has considered the standalone business and financial risk profile of ITIL while arriving at the rating. |
| Key Rating Drivers |
| Strengths |
| Established track record of operations and benefits derived from being Government of India (GOI) entity
ITIL has been engaged in the manufacturing of telecom equipment since 1948. The company is a preferred contractor for Bharat Sanchar Nigam Limited (BSNL), Mahanagar Telephone Nigam Limited (MTNL), and Indian Defence Services. As of March 31, 2025, the Government of India (GoI) held ~90 percent stake in the company. The company derives benefit from the grants received from the Government under the financial revival package approved by the Cabinet Committee on Economic Affairs (CCEA) in 2014. As per the approved revival plan, the total capital grant and revenue grant sanctioned by the Government is Rs. 2,264 crore and Rs. 1,892.8 crore, respectively. The capex grant is used to buy capital equipment for the projects, while the revenue grant is for managing operating costs and statutory obligations etc. Revenue grant has been fully received and utilised in the past and capex portion has been received to the extent of Rs. 1191 crore upto FY2024-25 and balance portion to be received is Rs. 1073 Cr. Further, capex support of Rs. 105.50 crore have been sanctioned in Union Budget FY2026 and capex support of Rs. 200 crore is projected for FY2027. Acuite believes that despite the expiry of letter of comfort, GOI is expected to continue to support ITIL over medium to long term. Monetisation of land bank The company is currently undertaking four major land monetization activities that are in advanced stages of execution. The proceeds from these initiatives are planned to be utilized for the repayment of borrowings and fund-based exposures with the Consortium Banks, while any surplus will be directed towards the working capital requirements. Specifically, the monetization of the K.R. Puram Land in Bangalore is projected to yield ~Rs.1,640 crore in FY2026 and ~Rs.1,609 crore in FY2027. Additionally, the Electronic City Land in Bangalore is expected to contribute ~Rs.1,090.17 crore in FY2027. However, the quantum and timelines of land monetisation remain key monitorable. |
| Weaknesses |
| Improving operating performance supported by healthy order book position albeit recurring losses
The company had reported revenue of Rs 3645.14 Cr. in the FY2025 as against Rs 1278.34 Cr. in the FY2024 due to significant project wins and execution, along with the ongoing demand for its telecom and defence products and services. The company incurred net loss of Rs 233.16 Cr. in the FY2025 as against net loss of Rs 569.06 Cr. in the FY2024. Further, the company has reported operating loss of Rs. 7.33 Cr. on revenue of Rs. 498.01 Cr. in Q1FY26 as against operating loss of Rs. 12.62 Cr. on revenue of Rs. 519.98 Cr. in Q1FY2025. Nonetheless, earnings remain volatile due to the lumpy nature of order inflows and inconsistent execution of bulk contracts. The company has a strong unexecuted order book of Rs. 19,033.48 Cr. including recently received BharatNetBharat Net Ph-III [Himachal Pradesh, West Bengal and A&N and NER II] orders of Rs. 7,005.55 Cr., Indian Army ASCON Ph-IV and NFS Project of Rs. 6,919.54 Cr. and BSNL 4G additional order of Rs. 2277.41 Cr, which demonstrates the Company’s growing capabilities and ensures a comfortable revenue visibility in near to medium term. Acuite believes that operations of the ITIL are expected to be improved in medium term on account of healthy order book position, continued assistance from the Government of India and the long track record of management expected to support the business of the company. Adverse auditor’s qualifications and corporate governance concerns The statutory audit of ITI Limited’s for FY 2024–25 standalone financials resulted in a Disclaimer of Opinion due to widespread issues and lack of sufficient audit evidence. Key concerns included inadequate internal controls, premature revenue recognition, improper asset management, and non-compliance with several Ind AS standards. The company also has some unresolved legal disputes, and going concern doubts due to significant losses and weak liquidity. Additionally, CAG observations highlighted poor IT controls and compliance monitoring. Working capital-intensive operations The company’s working capital cycle remained elongated marked by gross current asset (GCA) of 740 days in FY2025 as against 1743 days in FY24. This is primarily driven by high receivable outstanding and high other current assets. The debtor days stood high at 414 days in FY2025 as compared to 743 days in FY2024. The creditor days stood at 502 days in FY2025 compared to 1374 days in FY2024. The inventory holding period had been improved and stood at 23 days in FY2025, 51 days in FY2024. Acuité believes that operations of ITIL are expected to remain working capital intensive over the medium term, and its ability to restrict further elongation of working capital will remain a key rating sensitivity. Below – Average Financial risk profile ITIL continues to exhibit a weak financial profile, characterised by sustained losses, low operational cash flows, and elevated working capital requirements. As on 31st March 2025, the company’s outstanding debt stood at Rs. 1480.81 Cr., compared to Rs. 1801.29 Cr. as on 31st March 2024. A significant portion of this comprises short-term debt of Rs. 1420.61 Cr., with the remainder being Government of India (GOI) loans. Repayment of the GOI loan is not applicable, in line with the terms outlined in the sanction letter. Gradual improvement in operating cash flows and anticipated inflows from ongoing land monetisation initiatives are expected to support liquidity and ease pressure on the financial risk profile. Elevated debt levels and subdued profitability have led to weak debt coverage metrics, with interest coverage estimated to remain below 1x for FY25. Exposure to customer concentration risk ITIL's customer base is heavily dominated by the Ministry of Defence, major PSUs, and government agencies like BSNL, MTNL, etc. Its current order book constitutes 59% of the order value from the Ministry of Defence alone. The company has a limited order base from private players. However, the risk is mitigated to some extent by the fact that ITIL holds a priority quota in the tenders floated by the GOI for any of the telecommunication projects. Acuité believes that the ability of the company to expand its customer base to further mitigate the risk will be critical. |
| ESG Factors Relevant for Rating |
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Environment
Carbon emissions, biodiversity and energy efficiency are material issues to the telecommunication industry. The installation & maintenance of fiber-optic cables, mobile base stations, radio and satellite dishes can contribute to greenhouse gas emissions and negatively impact biodiversity. The company has undertaken initiatives to reduce overall energy consumption. Social Social issues are a key risk for the telecommunication industry with occupational health & safety being a prominent issue due to the worker's proximity to electromagnetic fields, exposure to electricity & extreme heights. Consistent service delivery and the desired customer experience are key to achieving product quality. Diversity & inclusion practices, data privacy & security are other vital matters. The social performance score of ITI Limited has experienced an increase since the last report, primarily due to community support & development, employee safety and product responsibility. The company has adopted a policy on data privacy and human rights. Additionally, it offers training and career development programs to its employees. Governance The telecommunication industry is highly exposed to risks associated with regulatory compliance and ethical business practices during bids. Furthermore, board administration, committee functioning, and financial audit are material issues for this industry. The company has undertaken programs to prevent corruption and improve business ethics. Further, the company complies with the Companies Act 2013 for external auditor rotation & audit committee and SEBI listing regulations for related party transactions & prohibition of insider trading. |
| Rating Sensitivities |
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Consistent improvement in operating performance and profitability.
Deterioration in the working capital cycle leading to cash flow mismatches or further stretch in liquidity. Timely monetisation of land assets and strategic utilisation of the proceeds for debt reduction.
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| Liquidity Position |
| Stretched |
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The company has faced delays in debt servicing in the past, however, since January 2024, the company has been servicing its debt obligations in a timely manner. Despite this improvement, liquidity remains stretched, driven by elevated working capital intensity and consistently high utilisation of fund-based working capital limits averaging ~90 per cent for the six months ended July 2025. Execution delays and an extended receivable cycle continue to exert pressure on liquidity. Capital expenditure has been funded through government capex grants over the years. As on 31st March 2025, ITIL reported a cash and bank balance of Rs. 268.67 Cr. and current ratio of 0.88 times. While the management is actively pursuing land monetisation to strengthen liquidity and intends to repay the entire debt in the near-to-medium term, any significant delay in this process could further strain the company’s liquidity position and remains a key monitorable.
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| Outlook: Stable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 25 (Actual) | FY 24 (Actual) |
| Operating Income | Rs. Cr. | 3645.14 | 1278.34 |
| PAT | Rs. Cr. | (233.16) | (569.06) |
| PAT Margin | (%) | (6.40) | (44.52) |
| Total Debt/Tangible Net Worth | Times | 0.94 | 1.03 |
| PBDIT/Interest | Times | 0.27 | (1.14) |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any other information |
| None |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Service Sector: https://www.acuite.in/view-rating-criteria-50.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm |
| Note on complexity levels of the rated instrument |
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