Care Ratings: Hit by Management Crisis

The share price of India’s largest credit-rating firm CARE Ratings slipped nearly 8% on Thursday, after its chairman S B Mainak, tendered his resignation following the market regulator demand for his removal.

The Securities and Exchange Board of India (SEBI) nudged the rating agency after a forensic report said Mainak had asked his staff to not change the ratings of Infrastructure Leasing and Financial Services (IL&FS

Consultancy firm EY earlier this week gave Sebi a report recording employee statements, WhatsApp messages and call recordings of CARE employees.

This is the second setback for the rating agency in as many months. Earlier in December 2019, the company’s managing director and chief executive officer (MD & CEO) Rajesh Mokashi had stepped down following whistleblower complaints alleging management interference in ratings of certain companies, including IL&FS.

Meanwhile, on Tuesday, CARE Ratings reported 52% decline in its consolidated net profit at Rs 17.41 crore for the fiscal third quarter to December 31, 2019, as against Rs 36.49 crore a year ago.

The rating agencies total income eased at Rs 81.67 crore during the December quarter as against Rs 82.67 crore in the same quarter last year.

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