Ranking companies colluded with IL&FS executives: Audit – Times of India

The draft update by Grant Thronton is based on several e-mails exchanged between IL&FS group executives as well as some key functionaries of the agencies to accuse ratings companies of changing their action after “private meetings and discussions”. The mails point to instances of agencies ranging from ICRA, CRISIL, CARE, Fitch, India Ratings, Moody’s and…

Ranking companies colluded with IL&FS executives: Audit – Times of India

The draft update by Grant Thronton is constant with loads of e-mails exchanged between IL&FS group executives as smartly as some key functionaries of the agencies to accuse rankings companies of altering their motion after “internal most meetings and discussions”. The mails label conditions of agencies starting from ICRA, CRISIL, CARE, Fitch, India Rankings, Moody’s and Brickworks being manipulated by IL&FS management or ignoring the warning signs.

The mails urged that for no longer no longer as much as three years sooner than the cave in, the agencies overlooked stress in IL&FS, IL&FS Transportation Community Ltd (ITNL), in spite of having knowledge. Within the same trend, between 2012 and 2018, the rating agencies had more than one concerns on IL&FS, ITNL and IL&FS Financial Companies and products and yet, kept assigning excessive rankings.

As an illustration, in an electronic mail on September 24, 2015, IFIN CEO Ramesh Bawa told IL&FS vp Hari Sankaran, with a reproduction to then chairman Ravi Parthasarthy, about liquidity elements in ITNL attributable to cost overrun in various initiatives. He moreover highlighted the upward thrust in borrowing, which the market saw as a scenario.

Within the same trend, in March 2016, Parthasarthy, who stepped down as IL&FS chairman months sooner than it collapsed, wrote to high executives about the cash issues at ITNL and IL&FS Engineering and Enhance Company (IECCL) for six-seven months. IECCL had faced issues even in 2014-15.

The audit moreover capabilities to an electronic mail sent on November 21, 2011 highlighting concerns of the three rating agencies — CARE, ICRA and Fitch referring to profitability, divestment and feeble exposure in group companies but GT has acknowledged that there had been no downgrades even though the “agencies had been mindful that the group became as soon as beneath stress and had more than one elements”.

Any other time in December 2015, Parthasarthy wrote to ousted ICRA CEO Naresh Takkar referring to concerns flagged on ITNL operations, however the audit urged that there had been no rating motion.

IL&FS and CARE didn’t touch upon the issue, whereas Crisil, Fitch, Brickworks and India Rankings would possibly well no longer be reached for comment. “We are privy to the meantime issue commissioned by the ILFS board. We are reviewing the issue, alternatively, we are in a position to no longer touch upon the accuracy of the issue currently,” an ICRA spokesperson acknowledged.

What’s going to have helped avert a rating downgrade had been “internal most discussions and meetings” that IL&FS group executives had with the brass on the agencies, with the GT issue citing loads of conditions. What is more unfavorable for the agencies, whose role is already being probed by investigative and regulatory agencies, are references by IL&FS workers to alternate the rating rationale. Surprisingly, they no longer actual performed ball however the mails indicate that particularly conditions the words former by the rating companies had been the identical as those urged by the controversial group.

In actuality, there are conditions the attach agencies appear to have agreed to “requests” from the IL&FS management to extend antagonistic motion in opposition to ITNL and Gurgaon Metro to succor them full particular events akin to a transaction or conform to regulatory timelines.


One of the necessary crucial emails moreover indicate that the agencies went forward with their motion in spite of having incomplete knowledge. A mail seems to point to dilapidated ITNL MD K Ramchand instructing his colleague Ajay Menon to share “restricted knowledge” with CARE on an acquisition that took situation in 2008. About a years later, Menon allegedly wrote to Ramchand suggesting that he had projected earnings of Rs 325 crore for the 365 days in opposition to projections of Rs 240 crore.










Crisil acknowledged it had first rated ITNL in 2011, and withdrawn it in July 2016. “Since then Crisil has no prominent rating on ITNL. As a truth test, the rating history of ITNL (which is in the public domain) implies that the detrimental rating outlook (on the open assigned in Might perchance well well merely 2012) became as soon as reaffirmed by CRISIL at detrimental in January 2014,” acknowledged a observation. It added, “We discontinuance no longer touch upon speculations and internal most conversations”.


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