Credit Rating Commitee

EXTERNAL RATING COMMITTEE

1. External Rating Committee

In view of growing business and increase in number of applications for Rating, Infomerics Valuation and Rating Pvt Ltd (also referred to as Infomerics) have now reconstituted the External Rating Committee to form two separate committee’s instead of one committee which is at present operational.

• Composition of Committee/s

There are two separate independent External Rating Committee (also referred to as RC) of Infomerics Valuation and Ratings Pvt Ltd each consisting of four members. The members of External Rating Committee will neither be the employees nor the members of the Board of the company. The External Rating Committee (RC) is an independent body.

Any change in the composition of RC shall be approved by the Board of Directors through a resolution in the meeting of the Board.

The details of newly constituted committees are given below: -

Committee A

1. Sh. Ramesh C Grover 
2. Sh. Bhupinder Nayyar 
3. Sh. Sudhir Mittal 
4. Sh. Anil Girotra

Committee B

1. Sh. Gauri Shankar 
2. Sh.SC Sinha 
3. Sh. Yudhisthir Lal Madan 
4. Sh. Charan Singh 

• Chairman of the Committee/s

The Chairman of the committee will be decided by the members of the committee present before the commencement of each meeting.

• Quorum for the meeting

The meeting of the External Rating Committee shall be considered appropriately held if three members of the existing four members are present. Sufficient notice would be given to the members of the committee informing the date and time of the meeting. If one or more member/s express his / their inability to attend the meeting on receipt of the meeting notice, notice inviting the member/s from alternate committee would be issued in seriatim.  If after the start of the meeting, the quorum is not complete, the meeting will be postponed for a duration of thirty minutes. If the quorum is not complete even after postponement of the meeting, the same shall be considered as cancelled and adjourned to a future date at the mutual consent and convenience of members and Infomerics.

• Frequency of Meeting

RC meetings for committee 1 and committee 2 will be as and when required depending on the number of applications for Rating.

• Duties & Responsibilities of RC Members

The authority to assign Credit Rating RC shall be the solely vested with RC and shall be finalized in a duly convened meeting. The minutes of the meeting for each meeting of RC shall be articulated in writing and signed by the chairman of the said meeting. The decision of the meeting will be conveyed to the client only after the minutes of the meeting are signed by the chairman of the meeting. Same procedure shall be adopted for surveillance of rating. 

RC members shall while considering / deliberating of each case shall form their opinion based on documented Rating Note which shall detail all information & analysis of the rating in consideration and information/s available on public domain and / or in their individual possession. The Rating Note shall be provided sufficiently in advance to each member of the RC by Infomerics.

The meeting of the RC shall be considered appropriately convened if each member of the RC will be given Agenda Papers & Meeting Notice two days prior to the meeting. The Notice & Agenda papers will be sent to the members by email as per address as available in the records of Infomerics. Emergent meetings of the RC can be convened by waiving of the notice period and merely circulating the Agenda Papers if the RC members accord consent to such meetings.

Every effort to be made by the members of RC to arrive at a consensus while allotting the rating. However, if there is a disagreement amongst members, the rating would be decided by voting of members present in the meeting. In case of tie, the rating process can be reconducted in the subsequent meeting of RC.

Every member of RC can record his / her dissent note on the Rating allotted. The Company Secretary / Dy. Company Secretary shall be the contact person for recording such dissent. Further, Company Secretary / Dy. Company Secretary will be the contact point for all the members of RC.

The RC members should be abreast with Rules & Regulations guiding the Rating process and also notifications / corrigendum/s / addendums issued by the Regulatory authorities on the said Rules and Regulations. They will ensure strict compliance of these regulations & guidelines and under no circumstances would deviate from the said Rules and Regulations.

The RC members will adopt and adhere to the standard operating procedure (SOP) as specified by Infomerics for conducting the meeting of RC.

• Role of Company Secretary

The following will be role of Company Secretary / Dy. Company Secretary for the smooth conduct of RC.

1. To issue Notice to issue Notice for RC meeting. 
2. To take note of the final Rating assigned in the Rating Register. 
3. To ensure that the minutes of each case discussed at the committee shall be recorded/maintained and signed (digitally or manually by the Chairperson). 
4. To Capture the deliberations in the minutes. 
5. To Capture dissent of members (if any) in minutes. 
6. If required, to get approved the summary of final Rating (s) assigned by the RC and approved by the Chairman of RC and to circulate the same to the Rating Head, Group Head, and CRO, over email.

• Evaluation of the performance of the rating committee members

The performance of RC members will be evaluated by the Board of Infomerics / Rating Subcommittee once in every six months. Infomerics further reserves the right to make suggestions or issue guidelines with a view to improving the quality of rating notes and rating process.

                              Updated November – 2021 (after Board Meeting dated 26.11.2021)

INTERNAL RATING COMMITTEE

• Composition & Eligibility

Infomerics have two Internal Rating Committees (IRC) with the following composition:-

• Minimum quorum required for IRC

The quorum for both the committees will be 3 members and in case of lack of quorum in any committee, members from other committee may be inducted on rotation into the concerned committee. The Chairman of the committees will be Chief Rating Officer for Committee A and Vice President for Committee B respectively. 

Employees from the Rating Division in the rank of Senior Managers and above whose notes are not listed as agenda may be appointed as an IRC Members with the approval of the Chief Rating Officer for broad basing the committee.

• Attendance at IRC Meetings

The Internal Rating Committee meetings can be conducted in person or through Video Conferencing (VC) or through Con-call depending upon the availability of the members.

• Cases to be placed before the IRC
  • Where the Rating Team recommends Below Investment Grade rating (i.e., long term ratings of BB+ and below and short-term ratings of A4+ and below). However, if IRC feels that an investment grade rating can be assigned, such case shall be referred to ERC with the observations of IRC. IRC can also refer any case to the ERC seeking its guidance.
  • Final rating proposals in cases where the provisional ratings have already been assigned by the RC subject to fulfilment of certain conditions. IRC may assign such final ratings after ensuring complete fulfilment of those conditions provided there has been no major changes in the entity with respect to financials, management, shareholding structure, business environment or in any other major element. Such ratings shall be reported along with the comments of the IRC to ERC.
  • Assigning same rating to the entity whose debt programme being rated is guaranteed by another entity which has also been rated by Infomerics, provided the guarantee is irrevocable and unconditional. This is applicable when the guarantee in already factored in the extant rating note of the guarantor. In case the guarantee is not factored in and the same impacts the debt protection matrix of the guarantor materially, the case shall be referred to the ERC.
  • Assigning lower/same rating to the entity whose debt programme being rated is backed by another entity which has also been rated by Infomerics, through shortfall undertaking or any other form of Credit Enhancement with the approval of the Chief Rating Officer.
  • If any entity is assigned a long-term or short-term rating for any debt facility (including Issuer Rating), assigning the corresponding long-term and short-term ratings to other debt facility/ies (including Issuer Rating) of the same entity within three months of the initial rating, provided there is no significant change in the risk profile of such entity.
  • Revalidation of long-term and/or short-term rating(s) upto the next annual surveillance, provided there is no significant change in the risk profile of such entity.
  • Review of ratings based on audited annual results where the RC has assigned rating based on provisional annual results and if such audited results are similar
  • with the provisional results and there is no major development in the business outlook of such entity.
  • Withdrawal of ratings in cases where the rated debt instrument and/or debt facility is redeemed or the client does not want to place the debt instrument which has been rated by Infomerics or does not want to avail the debt facility which has been rated by Infomerics and the Issuer Ratings.
  • Assigning ratings to Security Receipts.

• Matrix of Approval

1. Any issuer with total debt size of more than Rs.500 crores will be deliberated in the ERC irrespective of the proposed rating.
2. Committee A of the IRC will deliberate on sub investment grade proposals with total debt size of more than Rs.100 crore.
3. Committee B of the IRC will deliberate on sub investment grade proposals with total debt size of less than Rs.100 crore.

• System of voting and recording of dissent notes

The duties & responsibilities of IRC members shall be same as for RC members. Each IRC member shall have one vote and in case of tie, the vote of Chairman of the committee will be deciding the proposal. The dissent if any, shall be recorded with reasons.

• Recording of Rating Decision (Minutes of Meeting)

The rating sheet recording the decisions of the Committee will be sent via email to all the IRC members and their approval shall be obtained within 24 hours of the meeting. Further, all the rating decisions taken place at IRC shall be recorded in Minutes. Minutes of IRC Meeting shall be prepared and be put up at the next IRC Meeting for confirmation. The Minutes of IRC Meeting shall be signed by all the members of the Internal Rating Committee and placed before the Rating committee for information. The original signed minutes shall remain in the custody of Compliance Officer in Mumbai office.

• Duties & Responsibilities of IRC Members

The duties & responsibilities of IRC members shall be same as for RC members.

Minutes of IRC Meeting shall be prepared and be put up at the next RC Meeting for information.

The IRC meeting shall be considered to have been held properly if all members attend the meeting in person or through video or through con-call. Each IRC member shall have one vote and the committee shall strive to decide unanimously. In case of absence of consensus, the proposal shall be put to vote with each member having one vote and in case of a tie the vote of Chairman of the meeting will be deciding vote. The dissent among members shall be duly recorded in the minutes.

                              Updated December– 2021 (after Board Meeting dated 26.11.2021)

RATING REVIEW COMMITTEE

In line with SEBI’s guidelines, Infomerics currently has a Rating Review Committee to consider all cases of requests by Issuers for review of the Investment Grade rating(s) assigned to their instrument(s) / bank facilities. In line with SEBI’s requirement that the Review Committee of a CRA shall consist of majority of members that are different from those in the Rating Committee of the CRA that assigned the earlier rating and at least one-third of members should be independent (members not having any pecuniary relationship with the CRA or any of its employees).

COMPOSITION

The Rating Review Committee (RRC) of Infomerics, consists of Four Members who are different from those in the External Rating Committee (RC) of the CRA that assigned the earlier rating. Majority of the Member of the Rating Review Committee of Infomerics are Independent member (members not having any pecuniary relationship with the CRA or any of its employees)

ELIGIBILITY

The Eligibility to become a Member of Rating Review committee is same as of RC.

QUORUM FOR THE MEETING

The RRC meeting shall be considered to have appropriately held if quorum is present. Quorum for this purpose shall constitute at least Two members. In the event of shortfall in quorum for the meeting, any of the independent members of the Board of Directors of Infomerics or any independent member of the Rating Committee who did not present at the time of initial rating may form a part of the Review Committee. All Investment Grade cases for review are considered by Review Committee subject to such requests meeting the review criteria as stated in subsequent paragraphs. The Review Committee shall invite the CRO/CEO and the Rating Team for their input and/or presentation.

In case of Below Investment Grade cases, the External Rating Committee (RC) is the Review Committee and all the requirements relating to quorum, etc., is applicable accordingly.

DUTIES & RESPONSIBILITIES OF RRC MEMBERS

The Duties and responsibility of the RRC members is same as of the RC Members. The RRC Members should appropriately consider the Representation received form the Client and accordingly make the decision. 

REVIEW CRITERIA

The Duties and responsibility of the RRC members is same as of the RC Members. The RRC Members should appropriately consider the Representation received form the Client and accordingly make the decision. 

(i).    If there is any additional information which was not available at the time of initial rating/surveillance; and/or,
(ii).    (ii)If there is any new development post initial rating/surveillance (like any equity infusion through QIP, from Private Equity players, private placement, long-term preference capital issue, exodus/entry of any key person from/into the Board and/or Senior Management team, any sudden change in the regulatory framework and so on) which appears to be significant.

It is proposed that the senior level Rating Analyst(s)/Group Head, who is/are not involved in the initial rating/surveillance exercise, shall go through the papers to evaluate whether the request for review meets the aforesaid criteria. If it is so felt, then the case shall be processed for Review Committee subject to approval of CEO.

SYSTEM OF VOTING AND RECORDING OF DISSENT NOTES

The voting system at RRC is same as of RC Meeting.

POLICY ON MANAGING CONFLICT OF INTEREST

Any RC member or RRC Member who is also a Director or an employee of any other entity is an “interested party” so far as the rating of such entity is concerned. If the RC Member or RRC Member is a wholetime director or employee of such other entity, such entity shall not be rated by Infomerics Ratings. However,

1)if the RC/Board Committee Member is only an independent director in such other entity, Infomerics Ratings may undertake ratings of that entity; however, in such a case, the same shall be disclosed clearly on the first page of the Rating/Grading Report;
2)if the RC/Board Committee Member is appointed or associated with regulated appointed committee and, in turn, deals with companies and/or entities and/or banks, the same shall be disclosed on the Rating and/or Grading Report;

The rating agenda papers are not to be sent to such a member who is an “interested party”. Further, he/she is required to abstain from the committee deliberations/rating process. All rating letters/rationales/ press releases concerning such cases shall make disclosures regarding the non-participation of such RC/RRC members in the rating process.  

Updated November – 2021 (after Board Meeting dated 26.11.2021)