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ICRA

The document discusses corporate governance ratings by ICRA and CRISIL in India. ICRA's Corporate Governance Rating evaluates a company's practices and disclosure standards in terms of fairness and transparency for financial stakeholders. CRISIL's Corporate Governance and Value Creation Rating provides an independent assessment of an entity's current governance, value creation, and expected future performance based on balanced quantitative and qualitative criteria. Both agencies conduct in-depth research and management interviews to assign ratings.

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Bhavdeepsinh Jadeja
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44 views14 pages

ICRA

The document discusses corporate governance ratings by ICRA and CRISIL in India. ICRA's Corporate Governance Rating evaluates a company's practices and disclosure standards in terms of fairness and transparency for financial stakeholders. CRISIL's Corporate Governance and Value Creation Rating provides an independent assessment of an entity's current governance, value creation, and expected future performance based on balanced quantitative and qualitative criteria. Both agencies conduct in-depth research and management interviews to assign ratings.

Uploaded by

Bhavdeepsinh Jadeja
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Corporate Governance Rating

Corporate Governance Rating


• The CGR is meant to indicate the extent to which a company adopts and follows such
practices and conventions that would provide its stakeholders an assurance on the
quality of Corporate Governance Practice.

• The CGR would indicate ICRA’s current opinion on the relative level to which an
organization accepts and follows the codes and guidelines of Corporate Governance
Practices.
Features
• It is mandate driven, not unsolicited
• It is public rating – disclosed only on acceptance
• Confidential rating – company may accept and disclose only to select entitles
• It is accepted ratings subject to regular surveillance
• It has exist option with a notice of 1 year.
Parameters of Corporate Governance
Ratings
• CGR is based on the core principles of Corporate Governance Practices those are
Fairness, Transparency, Accountability and Responsibility.

• The codes and standards which are applicable have been defined in detail in the various
committees constituted by the SEBI and RBI

• The rating agency would consider these requirements and various parameters including
among others are the ownership structure, management structure including board level
issues, quality of financial reporting and other disclosures and fulfillment of interests of
the financial stakeholders.
ICRA
• ICRA’s Corporate Governance Rating (CGR) seeks to evaluate a company’s business conduct and practices
and the quality of its disclosure standards in terms of fairness and transparency from the perspective of its
financial stakeholder.

• ICRA’s Corporate Governance Rating (CGR) seeks to evaluate a company’s business conduct and practices
and the quality of its disclosure standards in terms of fairness and transparency from the perspective of its
financial stakeholder
• CGR1 – Highest level of CG
• CGR2 – Highest level of CG, but not as high as in CGR1
• CGR3 – Adequate level of CG
• CGR4 – Moderate level of CG
• CGR5 – Inadequate level of CG
• CGR^ - Poor level of CG
ICRA Methodology
• Shareholding Structure
• Decision making process
• Quality of information
• Broad structure and process
• Stakeholder relations
• Transparency and disclosures
• Financial discipline
Process
• Meetings and discussion with –: 1. MIS reports
1. Board members 2. Audit reports
2. Key top management personnel 3. Prospectus
3. Key stakeholders 4. Filling with statutory authorities
4. Auditors 5. Records/minutes of AGM/EGM
5. Other financial Stakeholders 6. Agenda Papers
6. Lenders and bankers 7. Record of Penalties
• Analyze information such as –
1. Annual reports
2. Intra-year financial reports
CRISIL
• To evaluate the effectiveness of corporate governance has been a key concern facing
stakeholders.

• The CRISIL Corporate Governance and Value Creation Rating (CRISIL GVC Rating) fully
addresses this issue by providing an independent assessment of an entity’s performance
and future expectation on ‘balanced value creation through sound corporate governance
practices’.

• The CRISIL GVC Rating is a globally unique model, which appropriately balances
quantitative value creation measures with qualitative evaluation, provides a view on the
entity’s expected performance in future and addresses all stakeholders more equitably.
CRISIL
• CRISIL GVC Ratings provide an independent assessment of an entity’s current corporate governance and
value creation practices and an expectation on its future performance.
• CRISIL GVC Ratings are based on criteria from which the present condition and future progress can be
accurately measured and analyzed.
• Rating
1. GVC Level 1 – Highest
2. GVC Level 2 – Very High
3. GVC Level 3 – High
4. GVC Level 4 – Above Average
5. GVC Level 5 – Below Average
6. GVC Level 6 – Average
7. GVC Level 7 – Low
8. GVC Level 8 - Lowest
CRISIL
• Criteria:
• Value Creation and distribution
1. Shareholders
2. Debt Holders
3. Customers
4. Employees
5. Suppliers
6. Society
CRISIL
• Corporate Governance and Wealth Management:
1. Assessment of management capabilities
2. Financial transparency and disclosure
3. Influence of majority or large stakeholders
4. Board composition and effectiveness
CRISIL
• Evaluation Process:
1. The evaluation is carried out only upon receipt of the mandate from the company
2. Analyzing both information that is confidential and that which is in the public domain
as well as having intensive interactions with the management personnel, board
members, especially external directors, and representative of key stakeholders.
3. The findings from this process are captured into a detailed report, which is presented
to the rating committee, which then assigns the rating
4. The assignment is typically completed within three to four weeks from receiving the
mandate.
5. The ratings are confidential till accepted by the company.
6. A CRISIL GVC Rating is valid for a period of one year from the date of assignment of the
first rating. Thereafter, the ratings shall be reviewed annually or more frequently if the
circumstances so warrant.
CRISIL
• Benefits: Investors
1. Helps in identifying the company following effective corporate governance
2. Helps to evaluate the reports presented to mass
3. It gives more balanced viewpoint then traditional analysis
4. It also provides sustainability about the organization
5. It helps in creating differentiation between well governed company and others
CRISIL
• Benefits: Companies
1. It helps to attract investors
2. It also enables a company to assess the existing status and capabilities
3. CRISIL GVC Ratings help create visibility across all stakeholders
4. These ratings also serve as an independent opinion of the company’s governance
practices and their sustainability

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