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CARE Ratings Ltd.

BSE: 534804 Sector: Others
NSE: CARERATING ISIN Code: INE752H01013
BSE 00:00 | 30 Sep 505.05 0.55
(0.11%)
OPEN

506.75

HIGH

514.95

LOW

493.60

NSE 00:00 | 30 Sep 505.80 1.55
(0.31%)
OPEN

501.00

HIGH

515.35

LOW

501.00

OPEN 506.75
PREVIOUS CLOSE 504.50
VOLUME 37638
52-Week high 734.00
52-Week low 402.75
P/E 16.34
Mkt Cap.(Rs cr) 1,497
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 506.75
CLOSE 504.50
VOLUME 37638
52-Week high 734.00
52-Week low 402.75
P/E 16.34
Mkt Cap.(Rs cr) 1,497
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

CARE Ratings Ltd. (CARERATING) - Chairman Speech

Company chairman speech

- Mr. Najib Shah

I take pleasure in presenting to you our 28th Annual Report. Your company has gonethrough significant structural changes even as it confronted the effects of the pandemicwhich included a nation-wide lockdown and several initiatives taken by the government andregulators to mitigate the same. 2020-21 was indeed a watershed year for your company bothfrom the internal perspective as well as external environment.

This was the first time that there was a fall in GDP which means that the economy wasaffected quite perceptibly by the lockdown which had not fully opened even by the yearend. A fall in growth meant that there was less demand for funds with investment beingpushed back once again. Interestingly the investment rate has been declining over theyears even before the pandemic struck. The ratings business is driven by both investmentand economic growth; and our initial business was challenged through the year. While therewas traction in the corporate bond market with the combination of government measures andRBI actions in enhancing funding it was concentrated in the financial sector. Growth inbank credit was lacklustre with growth to services and large industry being negative. Thehigher positive growth in small and medium industry was more due to the guarantee extendedby the government as part of the Atmanirbhar Bharat programme.

There was regulatory forbearance too during the course of the year with a moratoriumand one-time restructuring scheme being in place. This was in addition to the flexibilityshown in terms of recognition of NPAs as part of the forbearance provided by the RBI.Hence it was a unique situation where there was surplus liquidity in the system whichranged from Rs 4-5 lakh crore on a daily basis and averaged Rs 4.12 lakh crore inovernight reverse repo operations in the face of low demand for credit. Hence most of theborrowing that took place tended to be more inclined for maintenance rather than growthgiven that capacity utilization rates in Indian industry was low at 66.6% in December2020.

The Board of Directors however took this opportunity to also bring about structuralchanges in your company. Here I would like to talk of four significant decisions which wehave taken and put in place. First we have addressed the issues relating to topmanagement . As you are aware the company has a new MD & CEO who has now been inoffice for the entire year. We also got a new Chief Ratings Officer which aligns with theprocess- reorganization that we have completed. Your company also has a new CFO andCompany Secretary. Thus all the senior management positions have been filled and theorganization is working with a fresh fervour.

Second we have reviewed our entire ratings processes and systems and put in placegreater checks and balances and ensured all regulatory requirements are met. We haveleveraged technology in a big way to ensure that the entire process is seamless. TheCommittees which oversee the ratings processes have been revamped to ensure that there iseven greater transparency and rigour in the system.

Third we have reviewed the business of ratings and juxtaposed the same with the futurepotential of the same. The last few years have taught us important lessons with theeconomy slipping to a low growth path which in turn has affected the investment cycle andfinally the ratings business.

Clearly we cannot take anything for granted and it is essential to look at alternativelines of business. We have taken a conscious decision to focus also on the businesses inour subsidiary companies CART and CARE Risk Solutions which can be run more rigorously inparallel with new mandates. To this end we have bought in a new CEO for CART keeping inmind that the advisory and research businesses which look at both domestic and globalfrontiers require a different mindset and leadership to bring about this higher growth.

Last we have also taken up the task of rebuilding our brand to reflect thesewidespread changes that we have brought about in the CARE Group of companies. Thisunderstandably is an ongoing process which we will be monitoring at the Board level.

Fiscal 2021-22 has also begun on a false note with the second wave of the infectionpervading the country leading to a new set of lockdowns at the regional level. Industryhas been better prepared to face the lockdown this time but the initial signs for thefirst quarter on the credit and debt markets have not been satisfactory. Most economicparameters will look better this year due to the base effect. But it would be challengingonce again for the ratings business as long as investment does not kickstart in a big way.

We would like to thank you for your patience and understanding as always under therather difficult circumstances that pervaded last year. For the year we have proposed atotal dividend of Rs 17 per share which is 170%. The dividend payout ratio for the yearhas been 58%. We would be examining if a part of our reserves can be used for bringingabout much needed inorganic growth in the company.

I would like to assure you on behalf of the company that we would remain dedicated tobuilding the CARE franchise and growing the business in the coming year.

Let me conclude by wishing you and families the very best. Take care and stay safe.

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