Credit Analysis And Research Limited: Professional Risk Opinion


Credit Analysis And Research (CARE Ratings) was established in 1993 by public financial institutions viz. IDBI Limited, Canara Bank, UTI and others. CARE made an OFS IPO in 2012 and was listed. Subsequently, there have been changes in share holding pattern and the current large shareholders include LIC and Canara Bank among others.

CARE Ratings is the second largest credit rating company in terms of rating income which offers ratings of products across a wide range of sectors and entities. These include- Corporates: Debt Ratings, bank ratings, issuer ratings, corporate governance ratings and recovery ratings, Financial sector ratings: Banks, Credit Quality Rating, Capital Protection Oriented Scheme Ratings,  Insurance, NBFCs, Securitization and Housing Finance, Public Finance Ratings: state government entities and urban local bodies, Project FinanceInfrastructure Sector Ratings: roads, power, ports.

There are also special grading products for real estate, education, tourism facilities, environment related products, REITs, MFIs etc. CARE Ratings through its subsidiary companies also offers Advisory services, Research, Training services and Risk solutions.

Eminent Leader

Rajesh Mokashi, Managing Director and CEO of CARE Ratings. He holds a Bachelor’s degree in Mechanical Engineering from VJTI, Mumbai and a Master of Management Studies degree from the University of Bombay. He is a qualified Chartered Financial Analyst and has also cleared Level III of the CFA Program conducted by the CFA Institute, USA. He has obtained a Diploma in Import and Export Management from Indian Institute of Materials Management. He has more than 30 years of experience in finance, commerce and credit risk sectors. Rajesh is on the Board of Directors with CARE Kalypto Risk Technologies and Advisory Services Pvt. Ltd. and also a Member-Empanellment Committee of NISM.

How Endeavouring turned into Success

For a rating agency two things are very important. The first is that the business levels should expand to generate volumes. Second  the quality of ratings should be impeccable so that investors and borrowers repose faith with a rating company.

CARE was able to obtain a breakthrough in business volumes when a new segment of rating- bank loan rating opened up in 2007 when the RBI went in for the standardized approach within the Basel II framework. This opened the window for tapping a large segment of bank loans which hitherto did not require a rating. This was when CARE was able to structurally shift business development strategy from wholesale to retail to reach a vast set of clients geographically spread out which now require a rating. The company today has the highest share in the large and medium segment of companies as denoted by the ET-Top 500 where they have a leading share of 52%. In case of Business Standard-Top1000, CARE have a share of 44%.

Second is the issue of credibility where the investor trusts the rating. This has been achieved through having in place a very rigorous process of rating which goes through multiple layers including an external rating committee which has 4 out 5 independent members. They include Mr Y.H. Malegam (former Managing partner Billimoria and Co), Mr V.Leeladhar (former RBI Deputy Governor), Mr V.K. Chopra (former Whole time Member, SEBI), and Mr H. Khan (former RBI Deputy Governor). Mr Rajesh Mokashi is the only member from the company. This ensures transparency and unbiasedness in the rating process.

Faces of Finance

Indian industry is in an exciting stage where a takeoff is imminent. With a large population and rising consuming class, industry will witness a sea change in demand that will spur investment. Further, the lacuna in infrastructure will necessitate more investment in this sector. Hence, we can see investment picking up sharply in the next few years which will help to spur the economy.

Digitization will be useful for the BFSI space as it will enhance efficiency and lower costs of delivering banking services. It is the future of the industry which has witnessed in all developed countries and is catching on well in India. The recent thrust given by demonetization will further accelerate the process.

Success Resonates with Satisfied Customer

Client acquisition and retention is crucial for success in the Rating Business. The core foundation of success rests on value creation for clients. Here, the important factors are: turnaround time, accuracy, expertise, acceptability of the rating by investors, prompt service and maintenance of good customer relations. To achieve excellence in analytics and business development is the main motto.

Demand of Initiators

Start-ups foster innovation and enterprise adds employment. Those who are going in for such enterprises must keep the following in mind: have a firm idea that can be implemented, get a financer to make this dream a reality and have the operations process in place for executing the same. For this, there is requirement of enthusiastic team which focuses on making it happen and who are willing to wait for rewards at a later date.

Financial Marketing Insights

Marketing strategy is continuous and is based on bringing in new products all the time which address the requirements of various segments of industry. Client acquisition and retention are the two corollaries. The concerns are two: growth can occasionally be uneven, while the path will be positive in the long run, CARE is prepared for slowdown periodically. This is why, to diversify CARE is investing in new ventures such as training, research and advisory and going global through a subsidiary in Mauritius, MoU with Japan Credit Rating in Japan and being a part of global rating agency called ARC Ratings (with CRAs from Brazil, Portugal, South Africa and Malaysia bring the other partners).

Source :- The 10 Fastest Growing BFSI Companies