Icra has introduced corporate governance ratings (CGR) for the Indian market. CGR would indicate the rating agency's opinion on the level to which an organisation accepts and follows the codes and guidelines of corporate governance practices.
"Our product would address the concerns of the foreign institutional investors (FIIs), domestic investors, regulatory bodies and credit suppliers," Icra managing director PK Chaudhary said.
He added that FIIs are concerned about the quality of corporate governance in India in view of increased cross-border inflows of investment. The regulatory authorities would feel more comfortable if there is some assurance from an independent agency about some systemic transparency and quality of disclosure which will take care of minority interests.
"We want to give an unbiased and independent opinion on the company's quality of operations and thus provide a certain comfort level to the concerned stakeholders," Chaudhary said. Though CGR is not an indicator of statutory compliance, a higher CGR rating may also improve the comfort level of the statutory authorities and regulators, he added.
Though Icra has not set any targets for the business it will garner during the year, it estimates to at least get about 10-12 assignments during the next year. Icra has initially identified 25 top companies for rating, which will later be increased to 100.
"At present, fine tuning of the product is going on and we will start assigning ratings to the companies in about a month," Chaudhary said adding that Icra has already received about 6-10 queries.
The focus of the new product will be on corporate's business practices and quality of disclosure standards with respect to the requirements of regulators and interests of financial stakeholders. The product is based on core principles of fairness, transparency, accountability and responsibility.
Icra believes that this service would help corporates develop a credible opinion about their management quality and responsiveness towards the interests of stakeholders. Improved perception of investors may in turn influence valuations and facilitate raising of funds at favourable terms.
