CareEdge Group

CareEdge Group, formerly known as CARE Ratings, is an Indian credit rating agency that also offers research, analytics, risk management, and advisory services. It provides credit ratings services in sectors like manufacturing, infrastructure, financial services, and structured finance. It is headquartered in Mumbai, Maharashtra.

History

CareEdge Group was established in 1993 as Credit Analysis and Research Limited. It had its Initial Public Offering in December 2012. The company established international subsidiaries in Mauritius in 2015, Nepal in 2017, and South Africa in 2023, to offer ratings and advisory services in those regions.

Sovereign Ratings

In 2024, CareEdge published its sovereign rating methodology to assess the creditworthiness of sovereign debt issuers globally. In 2024 the African Peer Review Mechanism and Care Ratings (Africa) signed a Memorandum of Understanding to collaborate in developing credit rating standards for Africa.

In 2023, V. Anantha Nageswaran, Chief Economic Advisor to the Government of India, published a paper suggesting reforms to the methodologies used by global credit rating agencies, indicating potential bias against developing countries. In the paper, Nageswaran, along with his co-author, Rajiv Mishra stated that, the global ratings agencies risked "sowing suspicion about discriminatory intent". The paper went on to say that "developing countries have seen over 95% of all downgrades despite experiencing milder economic contractions than their advanced economy counterparts."

Involvement in the Infrastructure Leasing & Financial Services Crisis

CareEdge Group was one of the credit rating agencies responsible for rating Infrastructure Leasing & Financial Services (IL&FS) and its subsidiaries. CareEdge, along with ICRA Limited and other rating agencies, continued to assign high ratings to IL&FS group entities despite being aware of their deteriorating financial condition. This resulted in a delay in downgrading IL&FS's debt instruments until after defaults had already begun.

Regulators and media scrutinized the role of CareEdge Group during the IL&FS crisis. An audit by Grant Thornton found that IL&FS management interfered with the credit rating process, exerting pressure on CareEdge and other agencies to assign or maintain favorable ratings.
This interference included providing incomplete or incorrect information to avoid downgrades.

As a result, the Securities and Exchange Board of India (SEBI) imposed penalties on CareEdge and ICRA for lapses in their rating process related to IL&FS.

Analysts and regulators, including SEBI, identified shortcomings in credit rating methodologies and oversight mechanisms following the IL&FS crisis. As one of the rating agencies involved, CareEdge Group faced criticism and regulatory action for its role in the crisis.

CareEdge, similar to other rating agencies, operates under an issuer-pays model, a system frequently criticized for potential conflicts of interest by analysts and regulators. There have been concerns about the quality and timeliness of some of its ratings during periods of stress.

An independent enquiry into the leadership of Rajesh Mokashi who was the CEO of CareEdge during the time of the crisis revealed that there was no wrongdoing on his part.

Subsequent to the crisis, the company hired an outside CEO, Ajay Mahanjan to take over leadership of the business. In 2022, Mehul Pandya was internally promoted to become CEO of the group.

Company structure

CARE Ratings Limited is the parent company of the CareEdge Group. It commenced operations in April 1993 and became publicly listed on 26 December 2012 on both the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE).

As of June 2024, CARE Ratings Limited operates several subsidiaries across analytics, ESG assessments, and international credit rating services. These include CARE Analytics & Advisory Private Ltd, a wholly owned subsidiary previously known as CARE Risk Solutions Pvt Ltd, and CARE ESG Ratings Ltd, formerly CARE Advisory Research and Training Ltd. The group also operates CareEdge Global IFSC Ltd, which is based in the International Financial Services Centre.

The company is present in Mauritius through CARE Ratings Africa Private Limited. It was licensed by the Financial Services Commission (Mauritius) in May 2015 and recognized as an External Credit Assessment Institution (ECAI) by the Bank of Mauritius in May 2016. In South Africa, it operates CARE Ratings South Africa (Pty) Ltd. In Nepal, CARE Ratings Nepal Limited was incorporated in Kathmandu and became the second credit rating agency to be licensed by the Securities board of Nepal (SEBON) on 16 November 2017.

References

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External Links

CareEdge Group

Finance
Financial services companies based in Mumbai
Credit rating agencies in India
1993 establishments in India
Financial services companies established in 1993
Companies listed on the National Stock Exchange of India
Companies listed on the Bombay Stock Exchange