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CARE Ratings Ltd.

BSE: 534804 Sector: Others
BSE 00:00 | 07 Oct 519.75 7.15






NSE 00:00 | 07 Oct 520.35 8.15






OPEN 513.00
VOLUME 10370
52-Week high 734.00
52-Week low 402.75
P/E 16.81
Mkt Cap.(Rs cr) 1,541
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 513.00
CLOSE 512.60
VOLUME 10370
52-Week high 734.00
52-Week low 402.75
P/E 16.81
Mkt Cap.(Rs cr) 1,541
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

CARE Ratings Ltd. (CARERATING) - Director Report

Company director report

Your Directors are pleased to present the Twenty Eighth (28th)Annual Report of your Company along with the audited Financial Statements for the yearended March 31 2021.

From headwinds to soaring high

The financial year 2020-21 was challenging in more ways than one. Thebreakout of the COVID-19 pandemic meant that your Company had to transition to new ways ofworking due to extended lockdowns and their attendant restrictions. This meant that we hadto explore new ways of optimising work by leveraging technology blending the newwork-from-home paradigm with a severely limited physical presence in offices.

Your Company is happy to inform you that this transition was madewithout compromising either on the efficiency that we are known for or safety of itsemployees. Every employee was equipped with all the resources they need to help themfunction smoothly and seamlessly across verticals. All client deliverables were fulfilledand all regulatory and government compliances were met on time despite all the hurdles inour way.

Economic Backdrop 2020-21

To say that COVID-19 has adversely impacted the Indian economy is anunderstatement. Coming as it did on the heels of two successive years of subdued economicgrowth the Country's economy experienced the sharpest contraction on record in 2020-21.From a growth of 4.2% in 2019-20 the second advance estimate by the Central StatisticsOffice had projected an 7.3% contraction in India's GDP in 2020-21.

The impact of the lockdown restrictions was felt across both theindustrial and service sectors with each of these contracting on a yearly basis in2020-21. The sharp drop in consumption lower output and consequently the capacityutilization alongside uncertainty regarding the economic and business prospects in thebackdrop of the pandemic kept private investments at bay. The manufacturing sectorcapacity utilization dropped to 47.3% in Q1 2020-21 and despite improvement to 66.6% in Q3continued to be low deterring fresh investments.

The lower levels of economic activity in 2020-21 have had severefinancial ramifications for businesses; many of them faced insufficient cash flows whichimpacted their operations sustainability and viability. While the fund requirements ofbusinesses increased it has been mainly for sustaining their operations. The policy makersi.e. the government and the RBI announced various measures to help businesses faced withfund constraints. These measures mainly included making available adequate funds/liquidity in the system for Banks to lend lowering the rate of interest moratorium onthe repayment of loan debt restructuring and credit guarantees.

In terms of fund raising by businesses in 2020-21 borrowings fromBanks were tempered and that from the overseas markets have been significantly lower.There was also a sharp drop in the short -term borrowings from the debt capital marketswhile fund raising through the long-term issue of corporate bonds were higher.

As of the end of March'21 the outstanding aggregate bank creditamounted to Rs. 109.5 lakh crore Rs. 5.8 lakh crore higher than end-March 2020. Bankcredit growth in 2020-21 was 5.6% v/s the 6.1% growth of 2019-20. In terms of sectorsincremental lending during the financial year has been marginally higher in the case ofthe services sector (growth of 2.5%) while declined in the case of the industry (-4.1%).In terms of bank borrowings by industry the large enterprises accounted for the largestshare at over 80%. Credit offtake by them has however been 6% lower (year-on-year). On theother hand incremental credit off take by medium-size enterprises has seen a notablegrowth of 23%. This can be credited to the central government's credit guarantee supportprovided to these enterprises.

Commercial paper issuances during the fiscal stood at Rs. 17.4 lakhcrore 21% lower than the previous year (Rs. 21.96 lakh crore). The decline has been tiedto the lower requirement of short-term funds by corporates consequent to the lower levelsof activity due to the pandemic.

Bond issuances in 2020-21 aggregated Rs. 7.73 lakh crore a 12.2%growth over the previous year. Higher issuances during the fiscal were aided by the RBI'spolicy measures including LTROs and TLTROs which made funds available at a cheaper rate.Issuances were high in Q1- FY21 as companies took efforts to prepare their balance sheetto weather economic uncertainties owing to the pandemic. Nearly 75% of the issuancesduring the year were by Banks and NBFCs. 46% of the issuances during the fiscal have beenraised by public sector undertakings (PFC REC HUDCO NABARD NHB NTPC NHAI EXIM IRFCamong others).

G-Sec yields witnessed significant volatility during 2020-21 and endedthe year around the levels at the start of the year. Yield movement was largely driven bythe demand-supply dynamics and the RBI's open market operations (OMO's) and monetarypolicy actions.

Retail inflation in 2020-21 averaged 6.4% compared with 4.8% in2019-20 and was the highest annual increase since 2015-16. Despite the high levels ofinflation the RBI has been maintaining its accommodative monetary policy stance with theobjective of supporting a durable economic recovery. The underlying inflationary pressureshowever have limited the RBI's ability to lower rates further.

Paving the road for the future: The Response

Your Board was cognisant of these challenging developments and tookseveral decisions with a focus on improving the overall performance of your Company:

a. Strengthening the leadership and overall quality of the team at alllevels

b. Reviewing and toning-up processes end-to-end

c. Creation of a Strategy and Investment Committee

d. Induction of new members in the External Rating SupervisionCommittee

e. Emphasis on increased use of technology

f. Bolstering the business of subsidiaries

g. Brand building

We now have in place systems that are resilient enough to make ourbusiness agnostic to the work location be it remote or in-office. The fact that we haveweathered the storms of the COVID-19 pandemic has given us the confidence to not just dobetter but also to face future uncertainties .

The performance of the Company has to be seen in this backdrop.

Financial Performance

Your Company's Financial Performance for the year ended March 31 2021is summarised below:

Summary of Financial Performance

( Crore)

For the year ended March 31 2021 For the year ended March 31 2020
Income from Operations 219.66 219.10
Other Income 32.12 31.34
Total Income 251.78 250.44
Total Expenditure 139.05 150.19
Profit Before Tax (PBT) 112.73 100.25
Provision for Tax 26.90 19.75
Profit After Tax (PAT) 85.83 80.50
Other comprehensive income/ (loss) 2.04 (0.70)
Total comprehensive income for the period 87.87 79.80
Interim Dividend 32.41 50.08
Tax on Interim Dividend - 10.29
Final Dividend 7.37 35.35
Tax on Final Dividend - 7.27
Total (Dividend Outflow) 39.77 103.00
Transferred to General Reserve - -

Total income of the financial year FY21 is Rs. 251.78 crore 0.53 %higher than FY20. Other income of Rs. 32.12 crore is higher than the previous year whilethere has been only a slight increase in the revenue from operations which stood at Rs.219.66 crore in FY21. This is despite the impact of the pandemic on the industry.

Total expenditure of Rs. 139.05 crore is 7.42% lower in FY21 on accountof notable decline in the other expenses and finance costs. Salary expenses at Rs. 103.24crore in FY21 are 6.77% more than previous year.

Net profit for the year buoyed at Rs. 85.83 crore reasonably higherthan corresponding Financial Year due to savings on certain expenses.


The Company paid a total interim dividend of Rs. 11/- per equity shareamounting to a pay-out of Rs. 32.41 crore. The Board has recommended final dividend of Rs.6/-per equity share amounting to a pay-out of Rs. 17.68 crore for FY 2020-21 for approvalof members at the ensuing Annual General Meeting. The dividend recommended is inaccordance with the Company's Dividend Distribution Policy and would be paid in compliancewith the applicable rules and regulations. The Dividend Distribution Policy is appended asAnnexure-I to the report and is available on the website of the Company at DividendDistribution Policy.pdf.

The Company has adopted a slightly conservative dividend policy toconsider investing retained earnings in the future growth of the Company. In this contextthe Board of Directors has constituted a Strategy and Investment Committee to evaluate anystrategic investment to support the growth plan of the Company.

Transfer to Reserves

On account on having ESOPs lapsed of employee who had resigned ? 2.44crore has been transferred to the General Reserve of the Company during the said period.Apart from above no other amount has been transferred to any reserves during the yearunder review.

Share Capital

During the financial year under review the Authorised Share Capital ofyour Company has been increased from 30000000 Equity Shares of face value Rs. 10/- eachamounting to Rs. 300000000/- (Rupees Thirty Crore only) to 35000000 Equity Shares offace value Rs. 10/- each amounting to Rs. 350000000/- (Rupees Thirty Five Crore only)and the Paid-up Share Capital remains unchanged comprises of 29461214 Equity Sharesamounting to Rs. 294612140/- (Rupees Twenty Nine Crore Forty Six Lakh Twelve ThousandOne Hundred and Forty only). During the financial year ended March 31 2021 the Companyhas not issued and allotted any Equity Shares.

Annual Return

Pursuant to the provisions of Section 92(3) of the Companies Act 2013read with Companies (Management and Administration) Rules 2014 and Section 134(3)(a) ofthe said Act the Annual Return containing details as on March 31 2021 is available onthe Company's website on:

Organisational developments

The year began with a change in leadership when the Board of Directorsappointed Mr. Ajay Mahajan as the MD & CEO in April 2020. There have been appointmentsfor the CITO (Chief Information and Technology Officer) CRO (Chief Ratings Officer) CFO(Chief Financial Officer) Company Secretary and Head of Compliance and CCO (ChiefCulture Officer).

There was also the appointment of a new CEO for our subsidiary CART. Atthe senior management level your Company has hired all these professionals from theindustry with a long and established track record in their respective fields. With allthese new appointments in place the leadership team is all set to take usher the Groupinto a new era of high growth.

The agenda that has been carried out by the management in the year canbe clubbed under three heading: business operations outreach and human resources.

Toning up Processes

Your Company continued to be the second largest credit rating agency inIndia. The focus was on constantly reviewing the prevailing process and improving them.This meant sharpening the analytical output increasing the use of technology tofacilitate productivity & superior analysis and to focus on better value productofferings/ segments.

Creation of a Strategy and Investment Committee

Your Company was conscious of the need to pursue a growth path -organically & inorganically. A Strategy and Investment Committee constituted by theBoard on April 15 2021 with three Directors has been established to explore variousoptions. While income from Credit Ratings forms the core of your Company's business ourresearch indicates that there are new-age businesses in our known domains which willcomplement the Group's product offerings and catapult CARE into the right growthtrajectory. Without losing focus on our core competence it was felt that going forward adiversification strategy into other service-oriented segments needed to be explored. Thusour subsidiaries CARE Risk Solutions Private Limited (CRSPL) and CARE Advisory Researchand Training Limited (CART) are being revitalised with an emphasis on enhancing both ourproduct offerings and functionalities.

Business Operations: Retaining our Position

In a highly challenging and uncertain scenario your Company's focuswas on consolidating its client presence with high-quality rating output. Right during Q1a comprehensive review of COVID-19's impact on major sectors and companies was undertaken.Over the rest of the year this initial impact assessment was continually mapped againstthe unravelling sectoral developments as the economy was gradually 'unlocked'. YourCompany took special efforts to share its assessments and views with a wide spectrum ofstakeholders including corporates industry associations investors lenders regulatorsand policy makers. Various measures were taken to disseminate our views and this includedtop-quality webinars which had a broad-based presence from leading experts from theindustry.

On the business front your Company's focus continued to remain onlarge and mid-corporates. While the number of new entities rated showed a decline acrossthe industry for second successive year your Company managed well to retain its positionas the second largest rating agency in the country. To achieve this consistent clientoutreach and focused engagements helped. Although the SME BLR rating business did getimpacted to a greater extent in terms of new entities rated the technology-enabled modelshelped your Company to service this segment well.

On the side of Structured Finance we added many new products such asReplenishment Securitisation Structure Covered Bonds Pooled Loan Issuances (PLIs) andPTCs backed by corporate NCDs. We added several new clients/ issuers all being NBFCsserving the underprivileged and providing credit-access to a deprived population.

Effective May 2020 some of the products were transferred to CART inline with regulatory guidelines. Another segment of the business MLD Valuation Servicesgot transferred to another subsidiary CRSPL. During H2FY21 the RBI introduced the OneTime Restructuring (OTR) scheme for corporate borrowers. Such OTR proposals required theResolution Plan (RP) rating. Your Company served the requirements of the lenders for suchratings.

Strengthening the External Rating Supervision Committee

The External Rating Supervision Committee which is a supervisory bodyfor doing a post-facto review of criteria & processes and suggests means forimprovement has been strengthened with the induction of experienced industryprofessionals. Their inputs have been useful.

Focus on Technology

In a pathbreaking technology-led initiative your Company signed aMemorandum of Understanding with Tresata Inc. a global leader in AI & predictiveanalytics software to join forces to launch predictive intelligence business solutions inIndia. Tresata's Analytics Operating System will allow CARE Ratings to deliver superiorproducts and services that manage risk and identify opportunities by leveraging the latestadvances in Artificial Intelligence and Data Science. CARE Ratings will implementTresata's proprietary state-of-the-art cloud-based analytics software to help transformCARE Ratings' data management data validation analytical modelling and risk intelligencecapabilities. With this system the rating analysts will leverage the latest artificialintelligence and machine learning techniques to analyse client data when evaluating risk -both current and emerging. Tresata has also tied up with CARE's subsidiary CRSPL forbuilding a market-wide distribution of fraud control systems and product capabilitieswhich are proprietary products of Tresata in the Indian market.

Your Company is also implementing a comprehensive IT-led interventionfor the revamp of the operating system for its core functions. The project is targeted tobe fully operational by H2FY22.

Outreach - Making Our Voice Heard

Your Company has made the most of the hybrid office environment modeland took special efforts to extend the outreach plan. Because unlike in previous years -where we used to do it without fail - holding in-person on-location programmes were notpossible we conducted a series of webinars over the course of the year.

30 live interactive webinars on various industries and the Indianeconomy were hosted between April 2020 to March 2021. The speakers were Senior Directorsand analysts from the industry research and economics team along with sector specialistsfrom the ratings team. The discussions focused on current developments in variousindustries like sugar metals and mining oil & gas banking microfinance NBFCsinsurance power roads real estate fertilisers pharmaceuticals textiles ceramicsgold and many more. Other webinars were based on corporate performances and overall impacton Indian economy in the context of the pandemic.

As part of this outreach Mr. Ajay Mahajan (MD and CEO CARE Ratings)hosted various webinars along with other senior management including Mr. Mehul Pandya(Executive Director) and Senior Directors Ms. Swati Agarwal Mr. Amod Khanorkar Mr.Sanjay Agarwal Mr. Padmanabh Bhagavath and Mr. Milind Gadkari. Each of these webinars waswell-attended with over 500 participants in each session which included industryexecutives from other companies.

To spotlight the CARE Rating brand we have participated in severalconferences including those of CII like the 11th Financial Markets Summit on"Rebooting the Economy through Financial Market Reforms" where we published aKnowledge Paper. Mr. Ajay Mahajan participated in the Summit by moderating a paneldiscussion.

CARE Ratings was a partner in events like "ET Rise - Top MSMEsIndia Ranking" "IPF Industrial Excellence Forum 2021 (IIEF 2021) - Awards &Conference" with participation by Mr. Ajay Mahajan and Mr. Saikat Roy.

Telling our story and building our brand further among mediacorporates and investors was an essential task that your Company pursued during the year.With this in mind Mr. Ajay Mahajan MD & CEO — along with Senior Managementpersonnel — hosted our company's investors' call on our Q4FY20 and FY20 FinancialResults. Mr.Mahajan added new zest to these calls and explained the growth plans of theCompany to the satisfaction of the investors. This will be an ongoing process as theCompany regains its position in the credit rating field and seeks to take investorconfidence to new levels.

Mr. Ajay Mahajan has been contacting all major debt investors andexplaining the transformation agenda that we have for the Company .

Our MD & CEO Mr. Ajay Mahajan had several interactions withvarious media channels like ZEE Business Times Now and ET Now. Other senior executivesalso helped to enhance the brand of CARE Ratings. Mr. Sanjay Agarwal Senior Directorspoke in "India Revival Mission" by Times Group; Mr. Shiju Rawther ChiefInformation & Technology Officer spoke at the International Cyber & InformationSecurity Conference 2021; Mr. Mehul Pandya Executive Director participated in the"Finance Continuum 2020" in School of Management IIT Bombay while Ms. RevatiKasture Senior Director was on the Jury at "The Credit Research Challenge(CRC)" an annual competition conducted by Association of International WealthManagement of India. Mr. Amod Khanorkar Senior Director and his team held multipleknowledge sharing sessions with industry executives on power transmission anddistribution road sector renewables InvIT structure (Energy) etc.

Mr. Umesh Ikhe CEO CARE Risk Solutions Pvt. Ltd. (A subsidiary ofCARE Ratings) and Mr. Shiju Rawther Chief Information & Technology Officer CARERatings Ltd. featured in CIO Look magazine as the "The Influential Business Leadersto Watch".

Apart from this we have taken all efforts to ensure that the CAREbrand is regularly seen in prominent news channels and our views & opinions arepublished in major print editions and online news portals. CARE Ratings' reports andinsights have often been quoted by prominent columnists thought leaders and influences onsocial media. CARE Ratings received over 2000 quotes in leading daily newspapers.

Our continued focus on economic and industry research remains thebackbone of knowledge dissemination on a near real-time basis to the outside world. Withthe environment changing rapidly last year there was a need to change the perspectivesand outlook for the economy and industries. CARE Ratings' published reports updates andnewscasts on various sectors and economy were widely covered across all media. We alsobrought out surveys that mainly dealt with the impact of COVID-19 on the economy andindustries. Our Chief Economist Mr.Madan Sabnavis and his team have played a key role inthis regard.

Human Resources

Your Company has been a lean organisation where the focus has been onefficiency by using technology on a large scale to deliver better results. As of March2021 there were 592 full-time employees compared with 646 last year with the attritionat 22% for FY21. Of this 531 are management graduates postgraduates engineers andprofessionally qualified personnel with 67 off-roll staff (109 as of March 2020).

Retention of our workforce is focused through approaches such asemployee engagement training interventions Rewards & Recognition program andemployee connect communication through multiple platforms. We have conducted 66 trainingprograms in the current year covering 583 employees with the focus more on e-learningplatform due to the COVID-19 pandemic. These training programs have been conducted bysubject matter experts in the field.

Update on Certain Matters:

The following are the update on certain matters

A. During FY2019-20 SEBI had advised the Company to conduct a forensicaudit in the matter of anonymous complaints received by it. The former MD & CEO wassent on leave and subsequently his employment was terminated. SEBI had further advisedthe Company to carry out an investigation in a matter relating to the former Chairman andformer MD & CEO and other employees for alleged interference in the ratings.Accordingly an independent inquiry has been initiated and is presently ongoing.

B. SEBI had conducted adjudication proceeding in relation to the creditrating assigned to one of the Company's customers and imposed a penalty of ? 1 crore underSection 15HB of SEBI Act 1992 to which the Company filed an appeal before the SecuritiesAppellate Tribunal (SAT). SAT on hearing the facts surrounding circumstances andjustification provided by the Company concluded the case by reducing the penalty to ? 10lakhs.

C. SEBI initially imposed a penalty of ? 25 lakhs and subsequentlyenhanced it to ? 1 crore in respect of an adjudication proceeding initiated by it inrelation to the credit ratings assigned to one of the Company's customers and thecustomer's subsidiaries under Section 15HB of SEBI Act 1992 .An appeal has been filedbefore the SAT. The case is pending as on date.

Strengthening the Subsidiaries:

CARE Ratings (Africa) Private Limited

CARE Ratings (Africa) Private Limited (CRAF) is the first credit ratingagency to be licensed by the Financial Services Commission of Mauritius from May 7 2015.It is also recognized by Bank of Mauritius as External Credit Assessment Institution(ECAI) from May 9 2016. In February 2019 CRAF has received the approval of the CapitalMarkets Authority of Kenya to operate as a Credit Rating Agency in Kenya under the CapitalMarkets Act and the Regulations and Guidelines issued thereunder.

CRAF's shareholders are CARE Ratings Limited (78.01%) AfricanDevelopment Bank (9.99%) and MCB Equity Fund (6.00%) and SBM (NFC) Holdings Limited(6.00%). The experienced mix of shareholders enables the Company to have stronger brandrecognition in the African continent.

During the financial year under review (FY21) CRAF has assignedratings to several corporates of Mauritius including renowned Corporates like TheMauritius Commercial Bank Ltd. Bank One CIEL CIM Ascencia SBM Factors LavastoneOmnicane Alteo MUA and ENL. In FY21 CRAF has assigned credit ratings to almost 38%higher debt as compared to FY20. There has been an increase in awareness about the conceptof Credit Rating among Banks and Corporates and clear understanding of the benefits fromsuch Ratings.

CARE Ratings Nepal Limited

CARE Ratings Nepal Limited. (CRNL) incorporated in Kathmandu Nepalis an authorised credit rating agency licensed by Securities Board of Nepal w.e.f.November 16 2017.

CRNL offers a wide range of rating services in the Republic of Nepal.Despite a challenging business environment where the GDP growth rate of the countryshrank CRNL registered a significant growth of revenue from operations in FY21 (April 01- March 31). Revenue growth was primarily driven by the increase in bank loan and issuerratings with continuous addition of new clients through our marketing efforts.

It is important to note that the credit rating business depends on theoverall size of the rateable universe and the same has been increasing on account of newguidelines issued by the Nepal Rastra Bank. The current market of rating business is at anascent stage and lot of initiatives are required by the credit rating agencies to educatethe industry bankers and the issuers. Going forward the opportunities for the growth ofbusiness in Nepal continue to remain good.

CARE Advisory Research and Training Limited

CARE Advisory Research and Training Limited (CART) is a wholly-ownedsubsidiary of your Company which was incorporated on September 06 2016 and is in thebusiness of Advisory and Research. CARE Advisory offers advisory services in the areas ofcredit capacity assessments (of State Governments Government bodies and Corporate)preparation of business improvement plans TEV studies enterprise valuations businessand financial restructuring markets & industry studies financial modellingdiagnostic studies project appraisals bid process management feasibility studiesdesign of credit appraisal systems formulation and implementation of risk managementstrategies due diligence studies etc. The past year has seen a change in its leadershipwith Mr. Sudip Sural taking over as CEO.

CART aims to build a stressed assets advisory practice leveraging onits extensive experience in the area of stressed asset resolution with project-specificservices including TEV for restructuring proposals vetting of resolution plansassessment of restructuring plans valuations etc.

In FY21 total revenue increased to ? 5.37 crore from ? 3.29 crore inFY20.

CARE Risk Solutions Private Limited

CARE Risk Solutions Private Limited as wholly owned subsidiary of CARERatings Ltd. has over 15 years global experience in providing cutting-edge Risk &Compliance solutions to banks and financial institutions. With a sustained presence inmore than 10 countries and with over 80+ implementations CARE Risk Solutions hasconsistently focused on customer experience and helping financial institutions manageGovernance and control Financial & Operational risk. Its state-of-the-art RiskManagement products powered by cognitive technology cutting-edge AI and ML helps banksdetect risk at an early stage. CRSPL also helps banks continuously monitor and implementrisk frameworks for effective controls and governance.

We are happy to inform you that CARE Risk Solutions has been recognisedas one of the Best 100 Risk Management Providers across the globe as part of "ChartisResearch's Market-leading RiskTech100" by renowned Risk Analyst Firm ChartisResearch.

In addition for our contributions in the Risk & Compliance spaceCARE Risk Solutions has been awarded with the reputed award of "Rising Stars for Year20-21". This has created visibility of the organisation across globe and amongpartners leading to better traction. The above recognition has given confidence andthrust to the organisation's growth plan.

For the year FY21 CRSPL witnessed an increase in revenue from ? 15.53crore in FY20 to ? 16.12 crore.

Number of Meetings of the Board of Directors

The Board of Directors met nine (9) times during the Financial Year2020-2021 on April 15 2020 June 18 2020 July 10 2020 August 10 2020 November 032020 November 12 2020 December 01 2020 January 09 2021 and February 06 2021. Theparticulars of meetings held and attended by each Director are detailed in the CorporateGovernance Report which forms part of this Report.

Directors' Responsibility Statement

The Board of Directors to the best of their knowledge and abilityconfirm that:

1. In the preparation of the annual accounts for financial year endedMarch 31 2021 the applicable accounting standards have been followed along with properexplanation relating to material departures;

2. They have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of financialyear and of the profit and loss of the Company for the said year;

3. They have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

4. They have prepared the annual accounts for financial year endedMarch 31 2021 on a going concern basis;

5. They have laid down internal financial controls to be followed bythe Company and that such internal financial controls are adequate and have been operatingeffectively;

6. They have devised proper systems to ensure compliance withprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

Declaration by Independent Directors

The Independent Directors of the Company have submitted theirdeclaration of independence as required under Section 149(7) of the Companies Act 2013confirming that they meet the criteria of independence under Section 149(6) of theCompanies Act 2013 and Regulation 16 (1) (b) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.

The Board is of the opinion that the Independent Directors fulfill theconditions specified in these Regulations and are independent of the management. There hasbeen no change in the circumstances affecting their status as Independent Directors of theCompany. Further the Independent Directors of the Company possess requisitequalifications experience and expertise in the field of finance strategy auditing taxrisk advisory and financial services and they hold the highest standards of integrity.

Policy on Directors' appointment and remuneration

The Policy of the Company on Directors' appointment and remunerationincluding criteria for determining qualifications positive attributes independence of aDirector and other matters provided under sub-section (3) of section 178 is appended as Annexure- II to this Report and is also available on the website of the Company at

Particulars of Loans Guarantees or Investments under Section 186

The details of Loans guarantees and investments covered under Section186 of the Companies Act 2013 read with Companies (Meetings of Board and its Powers)Rules 2014 are given in the notes to the Financial Statements forming part of this AnnualReport.

Particulars of Contracts or Arrangements with Related Parties

All transactions entered into during the Financial Year 2020-21 withRelated Parties as defined under the Companies Act 2013 and Regulation 23 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 were in the ordinarycourse of business and on an arm's length basis. During the year the Company had notentered into any transaction referred to in Section 188 of the Companies Act 2013 withrelated parties which could be considered material. Accordingly the disclosure of RelatedParty Transactions as required under Section 134(3) of the Companies Act 2013 in FormAOC-2 is not applicable.

Attention of the members is drawn to the disclosures of transactionswith related parties as required under IND AS-24 set out in Notes to Accounts - Note No.34 of the Standalone Financial Statements forming part of this Annual Report.

As required under Regulation 23 (1) of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 the Company has formulated a Policy onMateriality of and dealing with Related Party Transactions which is available on thewebsite of the Company at pdf

Material Changes and Commitments affecting the Financial Position ofthe Company

There have been no material changes and commitments affecting thefinancial position of the Company which have occurred between March 31 2021 and the dateof this report other than those disclosed in this report.

Particulars regarding Conservation of Energy Technology Absorption andForeign Exchange earnings and outgo Conservation of Energy and Technology Absorption

Your Company has taken necessary steps and initiative in respect ofconservation of energy to possible extent to conserve the resources as required underSection 134(3)(m) of the Companies Act 2013 and rules framed thereunder. As your Companyis not engaged in any manufacturing activity the particulars of technology absorption asrequired under the section are not applicable.

Foreign Exchange Earnings and Outgo

During the year under review the Company has earned a foreign exchangeequivalent to Rs. 149.21 Lakhs and has spent a foreign exchange equivalent to Rs. 29.99Lakhs.

Business Risk Management

The Board of Directors of the Company has constituted a Risk ManagementCommittee consisting of members of the Board of the Company to frame implement andmonitor the risk management plan for the Company. The composition of the Committee is incompliance with Regulation 21 of SEBI Listing Regulations 2015 and the detailedcomposition is provided in the Corporate Governance Report. The Company has a RiskManagement framework to identify evaluate business risks and opportunities. Thisframework seeks to create transparency minimise adverse impact on the business objectivesand enhance the Company's competitive advantage.

The business risk framework defines the risk identification and itsmanagement approach across the enterprise at various levels including documentation andreporting. The framework helps in identifying risks trend exposure and potential impactanalysis on a company's business.

Corporate Social Responsibility

As a part of CARE Ratings' initiatives under Corporate SocialResponsibility (CSR) in 2020-21 your Company released payments amounting to Rs. 1.74crores (P.Y.: Rs. 5.27 crores) in areas of education infrastructure developmentcommunity development child welfare art and culture and Healthcare. The Company hasclaimed a set-off during the year under review for an excess amount of ? 1.38 Crore spenton March 31 2020 pursuant to an appeal made for contribution to "Prime Minister'sCitizen Assistance and Relief in Emergency Situations Fund" (PM CARES Fund).

The Board has constituted a Corporate Social Responsibility (CSR)Committee in accordance with Section 135 of the Companies Act 2013. The CSR Policy hasbeen devised based on the recommendations made by the CSR Committee. The brief outline ofthe Corporate Social Responsibility (CSR) policy of the Company and the initiativesundertaken by the Company on CSR activities during the year under review are set out in Annexure- III of this report in the format prescribed in the Companies (Corporate SocialResponsibility Policy) Rules 2014. The CSR policy is available on the website of theCompany at CSR-Policy-on-website.pdf.

Vigil Mechanism - Whistle Blower

The Company has established a vigil mechanism for Directors andEmployees in compliance with the provisions of Section 177(10) of the Companies Act 2013and Regulation 22 of the SEBI Listing Regulations 2015 to report their genuine concernsand to provide for adequate safeguards against victimisation of persons who may use thismechanism. During the year your Company affirms that no employee of the Company wasdenied access to the Audit Committee. The said policy is also available on the website ofthe Company at

Annual Evaluation of Performance of the Board

Pursuant to the provisions of the Companies Act 2013 and SEBI ListingRegulations 2015 an annual performance evaluation of the Board and its Committees andother individual directors is required to be undertaken to assesses the performance of theBoard and its Committees with the aim to improve effectiveness.

The Board Evaluation Cycle for FY 2020-21 was completed by the Companyinternally which included the Evaluation of the Board as a whole Board Committees andother individual directors of the Company.

The Board's functioning was evaluated after taking inputs from theDirectors on various aspects including inter alia degree of fulfillment of keyresponsibilities board structure and composition establishment and delineation ofresponsibilities to various committees effectiveness of board processes information andfunctioning.

The Committees of the Board were evaluated after taking inputs from theCommittee members on criteria such as degree of fulfillment of key responsibilitiesadequacy of Committee composition and effectiveness of meetings.

The Board reviewed the performance of the individual directors onaspects such as attendance and contribution at Board/ Committee Meetings and guidance/support to the management outside Board/ Committee Meetings.

Further a separate meeting of independent directors was held by theIndependent Director where the performance of the Board and its Committees and thequality quantity and timeliness of flow of information between the Company Managementand the Board was assessed.

Material Non-Listed Indian Subsidiary

There was no material (non-listed) Indian subsidiary of your Company ason March 31 2021.

Details relating to Deposits covered under Chapter V of the CompaniesAct 2013

Your company has not accepted or renewed any deposits within thepurview of Chapter V of the Companies Act 2013 during the year under review.

Significant and Material Orders passed by the Regulators or Courts orTribunals

There are no significant material orders passed by the Regulators/Courts which would impact the going concern status of your Company and its futureoperations.

Instances of fraud if any reported by the Auditors

There have been no instances of fraud reported by the Auditors underSection 143(12) of the Companies Act 2013.

Adequacy of Internal Financial Control with reference to FinancialStatements

The Company has an Internal Financial Control System commensurate withthe size scale and complexity of its operations.

The Company has adopted accounting policies which are in line with theIndian Accounting Standards notified under Section 133 and other applicable provisions ifany of the Companies Act 2013 read together with the Companies (Indian AccountingStandards) Rules 2015.

The Company in preparing its financial statements makes judgments andestimates based on sound policies and uses external agencies to verify/ validate them asand when appropriate. The basis of such judgments and estimates are also approved by theStatutory Auditors and Audit Committee.

The Internal Auditor evaluates the efficacy and adequacy of internalcontrol systems accounting procedures and policies adopted by the Company for efficientconduct of its business adherence to Company's policies safeguarding of Company'sassets prevention and detection of frauds and errors and timely preparation of reliablefinancial information etc. Based on the report of internal audit function process ownersundertake corrective action in their respective areas and thereby strengthen the controls.Significant audit observations and corrective actions thereon are presented to the AuditCommittee of the Board.

Directors and Key Managerial Personnel

In accordance with the Articles of Association of the Company andprovisions of the Section 152(6) (e) of the Companies Act 2013 Mr. Ajay Mahajan willretire by rotation at the ensuing Annual General Meeting of the Company and beingeligible offers himself for re-appointment.

Mr. Ajay Mahajan was appointed as the Managing Director & ChiefExecutive Officer of the Company with effect from April 15 2020 for a period of fiveyears. The shareholders approved his appointment at their previous Annual General Meetingheld on September 08 2020.

During the year Mr. Navin Kumar Jain Company Secretary &Compliance Officer resigned from the services of the Company with effect from February 282021 and your Company has appointed Ms. Nehal Shah as Company Secretary & ComplianceOfficer with effect from June 12 2021.

Further Mr. Bharat Assudomal Adnani Chief Financial Officer of theCompany resigned from the services of the Company with effect from February 27 2021 andyour Company has appointed Mr. Jinesh Shah as the Chief Financial Officer with effectfrom June 12 2021.

The term of office of Mr. Adesh Kumar Gupta (Non-executive IndependentDirector) concludes at the ensuing Annual General Meeting. A confirmation from Mr. AdeshKumar Gupta has been received that he fulfils all criteria and is independent of Company'smanagement pursuant to the requirements of the Companies Act 2013 and SEBI ListingRegulations 2015 accompanied by other disclosures.

The Board on approval of the Nomination and Remuneration Committeerecommends his re-appointment to shareholders for a second term of 3 (Three) years i.e. upto the conclusion of Annual General Meeting for the financial year 2023-24. He is notdebarred from holding the office of Director pursuant to any SEBI Order.

Auditor and Auditor's Report

Khimji Kunverji & Co. LLP Chartered Accountants (Firm RegistrationNo. 105146W) were reappointed as the Statutory Auditors of the Company at the 23rd AnnualGeneral Meeting to hold office from the conclusion of 23rd Annual General Meeting till theconclusion of the 28th Annual General Meeting to be held in 2021.

Accordingly the term of office of Khimji Kunverji & Co. LLPChartered Accountants shall expire at the ensuing Annual General Meeting. Pursuant to theprovisions of Section 139 of the Companies Act 2013 it is proposed to appoint M/s. BSR& Co. LLP (Firm Registration No. 101248W/W -100022) as the Statutory Auditors of theCompany for a period of five years up to the conclusion of 33rd Annual GeneralMeeting of the Company.

The Company has received a consent letter from BSR & Co. LLP (FirmRegistration No. 101248W/W -100022) for being appointed as Statutory Auditors and aconfirmation to the effect that they are not disqualified to act as Auditors within themeaning of Section 141 and other applicable provisions of the Companies Act 2013 andrules made thereunder.

The Notes on financial statement referred to in the Auditor's Reportare self-explanatory and do not call for any further comments. The Auditor's Report doesnot contain any qualification reservation adverse remark or disclaimer.

Status of Investors Complaint

During the financial year 2020-21 your Company has received complaintsgenerally with regards to non-receipt of annual report and non-receipt of dividend whichwere resolved within the prescribed timeframe. The details of complaints are appended tothis Report as Annexure - IV.

Secretarial Audit Report

The Board of Directors of your Company have appointed M/s A. K. Jain& Co. Company Secretaries Mumbai to conduct the Secretarial Audit of the Companyfor FY 2020-21. The Secretarial Audit Report is appended to this Report as Annexure - V.

There are no qualifications reservations or adverse remarks ordisclaimers made by M/s A. K. Jain & Co. Company Secretaries Mumbai in theirsecretarial audit report.

Maintenance Of Cost Records & Cost Audit

Maintenance of cost records and requirement of cost audit as prescribedunder the provisions of Section 148(1) of the Companies Act 2013 are not applicable forthe business activities carried out by the Company.

Change in the nature of Business

During the financial year 2020-21 there was no change in the nature ofbusiness of the Company.

Employees Stock Option Schemes

As required in terms of the Securities and Exchange Board of India(Share Based Employee Benefits) Regulations 2014 the disclosure relating to CARE RatingsLimited ESOP Schemes is available on the Company's website at: aspx

Management Discussion and Analysis Report

The Management's Discussion and Analysis Report for the year underreview as stipulated under Regulation 34(2)(e) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 with the Stock Exchanges is annexed as Annexure- VI to this report.

Particulars of Employees

Disclosures with respect to the remuneration of Directors and employeesas required under Section 197 of the Companies Act 2013 and Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 has been appended as Annexure- VII to this Report.

The information required pursuant to Section 197 of the Companies Act2013 read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration ofmanagerial Personnel) Amended Rules 2016 in respect of employees of your Company isavailable for inspection by the members. Any member interested in obtaining suchinformation may address their email to

Business Responsibility Statement

A Business Responsibility Report as per Regulation 34(2) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 detailing the variousinitiatives taken by the Company on the environmental social and governance front isprovided as Annexure - VIII and forms an integral part of this Annual Report.

Performance and Financial Position of Subsidiary Associate and JointVenture Company and their Contribution to the Overall Performance of the Company

As required under Section 129 of the Companies Act 2013 and Regulation33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 theConsolidated Financial Statements have been prepared by the Company in accordance with theapplicable Accounting Standards and form part of the Annual Report. Statement on thehighlights of performance of the subsidiary companies and their contribution to theoverall performance of the Company are given in the Form AOC-1 has been appended as Annexure-IX to this report.

The financial statements of the subsidiaries as required areavailable on the Company's website and can be accessed at

The Company has formulated a Policy for determining MaterialSubsidiaries. The Policy is available on the Company's website and can be accessed at pdf.

Association of Indian Rating Agencies (AIRA)

Association of Indian Rating Agencies (AIRA) a non-profit organisationwas incorporated on May 15 2021 with an Authorised Share Capital of ? 500000/- and apaid-up capital of ? 105000/-. The Company has decided to acquire 5250 Equity Sharesi.e. 50% of initial shareholding of AIRA.

AIRA has been incorporated to meet the objectives of promoting theadoption of best practices and common standards that ensure high quality and comparabilityof credit ratings across agencies following the highest norms of ethics and professionalconduct.

Corporate Governance

The Company is committed to maintaining the highest standards ofCorporate Governance and adhering to the Corporate Governance requirements as set out bySecurities and Exchange Board of India. The Report on Corporate Governance as perRegulation 34(3) read with Schedule V of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 forms part of the Annual Report. The Certificate from theAuditors of the Company confirming compliance with the conditions of Corporate Governanceas stipulated under Schedule V (E) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 Certificate by the Managing Director affirming thecompliance of Code of Conduct and a certificate of Non-disqualification of Directorsprovided by Practicing Company Secretary form part of the Corporate Governance Reportwhich has been appended as Annexure X.

Audit Committee of the Company

Your Company's Audit Committee comprises the following directors as itsmembers:

1. Mr. Adesh Kumar Gupta Chairman (Independent Director)
2. Ms. Sonal Gunvant Desai Member (Independent Director)
3. Mr. Ananth Narayan Gopalakrishnan Member (Independent Director)

The composition of the Audit Committee is in compliance with therequirements of Section 177 of the Companies Act 2013 and Regulation 18 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.

Disclosures under the Sexual Harassment of women at workplace(Prevention Prohibition & Redressal) Act 2013

Your Company has always believed in providing a safe andharassment-free workplace for every individual working in the Company's premises throughvarious interventions and practices. The Company always endeavours to create and providean environment that is free from discrimination and harassment including sexualharassment.

Your Company has a policy on Prevention of Sexual Harassment atWorkplace in place. The policy aims at prevention of harassment of employees and lays downthe guidelines for identification reporting and prevention of undesired behaviour. AnInternal Complaints Committee (ICC) has been set up as per the provisions of SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 inorder to investigate any complaints/ issues related to sexual harassment. ICC isresponsible for redressal of complaints related to sexual harassment and follows theguidelines provided in the Policy.

During the year ended March 31 2021 the ICC did not receive anycomplaint pertaining to sexual harassment.

Compliance of the Secretarial Standards 1 & 2 Issued by theInstitute of the Company Secretaries of India (ICSI)

The Company has complied with the applicable Secretarial Standards 1& 2 issued by ICSI related to the Board and General Meetings.


The Board places on record its appreciation of the contribution of itsemployees to the company's operations and the trust reposed in it by marketintermediaries issuers and investors. The Board also appreciates the support provided bythe Reserve Bank of India Securities Exchange Board of India and the Company's BankersIDBI Bank and HDFC Bank.

On behalf of the Board of Directors of CARE Ratings Limited
Sd/- Sd/-
Najib Shah Ajay Mahajan
Chairman Managing Director & CEO
DIN: 08120210 DIN:05108777
Place: - Bengaluru Place: Mumbai
Date: August 03 2021 Date: August 03 2021