Surveillance Process

SURVEILLANCE PROCESS

1. Surveillance

Infomerics Ratings, during the lifetime of securities/bank loans/bank facilities rated by it shall continuously monitor the rating of such securities/bank loans/bank facilities. Accordingly, all accepted ratings shall be reviewed on an ongoing basis till the maturity of the security/bank loan/bank facility. Annual surveillance of accepted ratings shall be carried out after publication of annual audited/ provisional results unless regulatory requirements/specific events stipulate it to be more frequent. Infomerics monitors the performance of the issuer and the economic environment in which it operates to analyze changes in the rating fundamentals, if any, based on which rating has been assigned.?It shall be ensured that the time gap between two press releases of the rated entity would not exceed 12 months in the case of NCDs and 15 months in all other cases.

2. Surveillance Mechanism 

The surveillance process requires the analyst team/analyst to maintain periodic contact with the issuer to collect the required information. Steps in the rating surveillance process include: 

• communicating with the entity at regular intervals to understand developments and trends in performance in order to compare the performance of the entity against projections, as well as against peers. 
• reviewing the status of probable developments that may affect the entity’s credit quality (such as an initial public offering, follow-up public offering, raising fresh debt etc.), exploring the possibility of such developments occurring in the near future and assessing the management’s perspective in respect thereof. 
• discussing financial performance with the entity on the declaration of interim financial results; 
• understanding strategic plans or new initiatives that could have rating implications; and 
• analyzing of media reports on the rated entity to assess impact if any, in credit profile 

 Ratings are subject to change at any point in time, based on changes in the business profile or financial profile of the issuer, or the prospects for the industry in which the issuer operates. 

2.1. Monthly Declaration from Client 

Infomerics Ratings shall seek to obtain, on a monthly basis, a ‘No Default’ declaration (in the standard format) from all clients (including INC cases) or a declaration giving details of any delay/default in debt servicing. Such declaration for a particular month shall be obtained by the first working day of the next month. List of clients who have not furnished the declaration by 10th of every month shall be published on Infomerics’ website. 

The rating decision or a rating revision on account of receipt of an information of default/delay from the rated entity or debenture trustee/bankers of the rated entity shall be disseminated through press release within two working days from the date of receipt of such information. 

2.2. Tracking of Repayment Schedules 

Analyst/analyst team track the repayment of borrowing/principal or payment of interest on the rated instruments/facilities. Default shall be recognized as per Default Recognition Policy of Infomerics Ratings, listed on its website. 

https://www.infomerics.com/policies-and-procedures-details/default-recognition-policy

In case no confirmation of servicing of debt obligation by the issuer is received by Infomerics from the debenture trustee within 1 day post the due date, Infomerics shall immediately follow up with the issuer for confirmation of payment. In case no response is received from the issuer within 2 days of such communication, Infomerics shall issue a press release and disseminate the same on its website and to all stock exchanges where the security is listed. In such cases, Infomerics shall also make a reference to SEBI regarding such suppression of information by the issuer/ non-cooperation of Issuer with us. 

2.3. Quarterly Reviews 

Quarterly reviews are quick reviews conducted internally by Infomerics Ratings and rating(s) warranting special attention shall be taken up for detailed review by the Rating Committee. 

2.4. Annual Review 

The annual surveillance exercise is a detailed review of the client’s performance since the previous rating, involving management meeting and preparation of detailed review report. Reviews are considered by the rating committees as per the delegation of powers. The annual surveillance exercise shall be carried out after publication of audited/ provisional annual financial statements and shall be completed within the timelines mentioned earlier. In case of any delay in conducting the annual review, Infomerics Ratings shall promptly disclose on its websites the details of all such ratings mentioning therein the name of the rated entity, nature/type of debt instrument/facility, size, date of last review, reasons of delay and the same shall be hyperlinked to the last press release. 

Like the initial rating, Infomerics Ratings will issue a rating letter and press release for surveillance of ratings. The dissemination through press release shall be made within seven working days from the date of the Rating Committee meeting. 

2.5. Delay in Periodic Review 

This is applicable for rated instruments other than listed debt. In case PR is not published in 14 months from the last PR date, such case would fall under “Delay in Periodic Review” report which is published on the website. 

Reason for the delay could be 

• Information has not been received from client 
• Part information is received, and balance sought by Infomerics is pending 
• Complete information received and rating is under process. 

PR shall be published compulsorily within 30 days of the date of publishing the name in the above “delay in periodic review” report or 15 months from the previous PR date, whichever is earlier. 

In case of listed debt 

In case of listed debt, the PR shall be published compulsorily within 12 months of the date of the previous PR. 

2.6. Special Review 

Infomerics Ratings may initiate a special review of rating any time if the circumstances so warrant or on the happening of material events requiring a review. 

3. Appeal Post-Surveillance 

In case of surveillance of rating, the rated entity does not have the right not to accept the rating; however, a client may seek a review of the rating assigned based on surveillance. The same shall be considered as per Infomerics Policy on Appeal by Issuers. 

https://www.infomerics.com/policies-and-procedures-details/policy-for-appeal-by-issuers 

The press release of the rating decision based on such review shall be disseminated within five seven working days from the date of the Initial Rating Committee meeting. 

4. Non-cooperation by the issuer 

In the event of non-cooperation by the rated entity (such as, not providing the information required for review/surveillance of rating, NDS (for more than 3 months) and non-payment of annual surveillance fee, Infomerics Rating shall carry out the review/surveillance exercise on the basis of best available information in public domain or otherwise, as per the policy on ‘Issuer Not Cooperating’ uploaded on our website. https://www.infomerics.com/policies-and-procedures-details/policy-on-issuer-not-cooperating

In such cases of lack of cooperation by the issuer, if the rating is assigned based on the best available information, investor shall be advised of the fact that the rating is based on the best available information and the rating symbol shall accompany the suffix “ISSUER NOT COOPERATING”. The rating action in such cases shall be promptly disseminated through press release wherein the suffix to the rating symbol shall also be explained adequately in the press release. Such suffix shall be read as ‘Issuer did not cooperate; Based on best available information’. 

5. Withdrawal of Rating 

The rating already assigned and existing in the public domain shall be withdrawn as per the “POLICY ON WITHDRAWAL OF RATING” of Infomerics Ratings, as per hyperlink to the website. https://www.infomerics.com/policies-and-procedures-details/policy-on-withdrawal-of-ratings 

Reviewed and approved in the BM dated 02nd September 2024 (Version IV)

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