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Venkataraman Sankaranarayanan and Professor Sougata Ray wrote this case solely to provide material for class discussion. The
authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised
certain names and other identifying information to protect confidentiality.

This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the
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Copyright © 2014, Richard Ivey School of Business Foundation Version: 2014-09-12

In June 2007, Vijay Raghavan began his final month in office as the chief executive of Caribbean
Information and Credit Rating Services Ltd (CariCRIS). Raghavan believed that he was leaving
CariCRIS at a point when matters were looking encouraging, having overcome challenging
circumstances. The credit rating agency (CRA) had established a presence in more than 10 countries in
the Caribbean, had institutionalized requisite ratings expertise, and had an informal collaboration going
on with the international ratings major Standard & Poor’s (S&P). It had a fair diversity of customers and a
steady income stream, although it had not yet reached a critical mass. After months of battling, there was
also now a greater acceptance among regional stakeholders that they needed to support ratings, if the
financial system was to be strengthened.

But Raghavan also knew that much remained to be done: the company was yet to turn profits, though
losses had been declining. Also, even as it was barely finding its footing, CariCRIS now had to step up its
game and tackle some persisting challenges — enhance legitimacy and visibility, expand revenue
streams, arrest capital erosion and increase profitability. Before his departure, Raghavan scheduled a
handover session for the new CEO, Brian Howard, in the presence of Chairman Theodore Sinclair and
David Barnes. The purpose of the session, by way of serving as a quick baptism for Howard, an
accomplished finance professional who was relatively new to credit ratings, was also to review
CariCRIS’s strategies to date and the business outlook, and get some fresh ideas on the table to chart the
CRA’s future.


Building up to CariCRIS’s market launch, Raghavan had rallied his team:

People look for two things in a CRA. One, analytical sharpness — that is proven only over time;
two, integrity and independence. We cannot do much about the first — not for some time to
come. But we can do something about the second. We have a good pedigree — our shareholders,
our board, our rating committee, CRISIL, etc. But we can also show the market, even before we
start operations, that our governance, approach and conduct — all will be above-board.
Transparency is the key. We will be an open book to anyone who cares to inspect us.

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Accordingly, the team set about crafting the company’s mission, vision and values statement, and a host
of other policies that aimed to showcase to the market that CariCRIS meant to hold itself answerable to
the highest standards of integrity and best practices (see Exhibit 1). These were drafted, borrowing from
the International Organization of Securities Commissions’ code of conduct for rating agencies, the
Association of Credit Rating Agencies in Asia’s statement of best practices and CRISIL’s policies — but
were suitably customized and subsequently vetted by the board. These policies were applicable to all
“members” of CariCRIS — employees, board members, the rating committee (RC) and consultants.
Furthermore, it was decided that all rating methodologies would be made publicly accessible on the
company’s website.


In October 2004, after the soft build-up through Raghavan’s speeches at various seminars, CariCRIS held
its first formal launch at Port of Spain. For the occasion, Dr. Eric Martins, the governor of the Central
Bank of Trinidad and Tobago, was the feature speaker, while Edward Fernandez, chief of the Financial
Services Commission (FSC) Jamaica, was a guest speaker, serving to project the regional character of the
CRA. Raghavan and Sinclair also made presentations. While Manoj Banerjee had been keen to see
Raghavan secure a few mandates to showcase at the launch, this did not materialize.

A month after the launch, CariCRIS got its first mandate for a large debt issue by the National Gas
Company of Trinidad and Tobago (NGC). NGC, a cash-rich firm, had mandated both S&P and Moody’s
for its foreign-currency rating but, after Raghavan’s pitch, decided to mandate CariCRIS as well. When
CariCRIS completed its rating exercise well before the global CRAs, the NGC management commended
the team’s speed and professionalism, as well as the insights it brought to the management interviews
and, uniquely, to its rating report. CariCRIS had gained an important and highly satisfied customer.

After the first launch in Trinidad and Tobago (T&T), CariCRIS quickly followed up with similar high-
profile launches in Jamaica and Barbados. By then, the NGC rating had been completed and CariCRIS
had the CFO of NGC share his rating experience at these forums. This move resonated well with
prospective clients. The media reception was also excellent, especially in Jamaica.

However, business pick-up was slow and launches were expensive affairs. Sinclair was worried about the
upfront expenditure. Barnes, however, advised strongly that markets such as the Bahamas and the
Organization of Eastern Caribbean States (OECS) should not be ignored for long. To balance costs and
publicity needs, Raghavan tried a different model for the Bahamas. Leveraging one of Sawhney’s
contacts, Raghavan met with the head of the Bahamas International Securities Exchange (BISX), Marvin
Bishop, who was excited about the idea of a regional CRA. Jointly with Bishop, Raghavan then organized
an exclusive press-meet for a leading business daily. The next day, the paper carried a front-page story on
CariCRIS, almost as if it were in an alliance with BISX. For CariCRIS this was good press, tantamount to
a launch, at little cost. Raghavan repeated this in two of the OECS countries. CariCRIS was still some
distance from being a household name; but it was now getting around.


Business Development Efforts

Business development was directly and virtually single-handedly managed by Raghavan — he saw this
not only as his primary role but also as a good way to get familiar with the local businesses. Raghavan
systematically started calling on potential clients, and also used the Caribbean Money Market Brokers Ltd

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and other brokerages to identify firms seeking to issue bonds and commercial paper. He also met firms
that were already rated by the likes of S&P, in the hope that their ready familiarity with ratings might
predispose them to the additional value of regional ratings. As they returned from many meetings with
only polite responses, Raghavan reassured his analysts, Jason Kalicharan and Carolyn Hinkson, who
often accompanied him, that such responses were only to be expected in the early stages, and that their
job was to persist. Similar cold calls on potential clients in Barbados, Jamaica and the OECS followed.

Raghavan soon realized the need to connect with business leaders outside formal settings. Parties
organized by firms during Christmas and the annual Carnival were an integral element of Caribbean
culture, and an invitation to these events made it easier to connect with businessmen, bankers, ministers
and bureaucrats. Within 12 to 15 months, Raghavan was acquainted with the CEOs and CFOs of most
firms and banks in T&T and, to a lesser extent, those in Barbados, Jamaica and the OECS. It was not that
they were immediately willing to commission CariCRIS for a rating mandate — far from it. But the fact
that they were now familiar with the concept of ratings, and that a local CRA had started operations and
provided them a choice, itself seemed a step in the right direction. As time progressed, the leads under
development kept growing; but their conversion into mandates seemed to take an inordinate time, despite
regular follow-ups.

Market Response

Prospective Clients

Firms frequently quizzed Raghavan on CariCRIS’s shareholding, board and RC composition, and the
issue of conflicts of interest invariably emerged as a concern. Raghavan was intrigued, because this rarely
came up as a concern for clients back in India, even when the RC included several board members.
Details of CariCRIS’s elaborate governance architecture usually helped allay firms’ concerns.
Nevertheless, many prospects indicated that they were already “favoured” clients of their bankers or
investors and did not expect to get any extra benefits by accessing a rating; or that they understood the
benefits but were not sure about ratings being an immediate priority; or that they might wait until a few
other firms led the way.

Fee proposals received mixed responses. For very large firms, the maximum fee of US$150,000 was not
usually a primary concern. With some firms in the next rung and large banks, though they did not openly
say it, Raghavan got hints that fees in excess of US$50,000 seemed high. With mid-size and small firms,
even fees of US$10,000 to US$20,000 were sometimes met with resistance, although this was much
lower than the minimum fee of US$40,000 to US$50,000 reputed to be charged by the global CRAs.
Raghavan was disconcerted by this. The volumes, which had seemed very achievable when he came in to
the region, now seemed daunting. If the biggest firms could not be charged close to US$100,000, then the
average pricing assumed for 100-plus firms in the original projections needed to be reviewed, as well as
the breakeven scenario. But the problem was bigger — dropping prices at this stage was tricky: a price
revision did not assure more mandates, but it could signal desperation and/or the potential for fee
negotiation in all deals.

One sensitive issue that emerged was the need to spare time for discussions with the CariCRIS team and
sharing confidential information. To allay these concerns, Raghavan assured that the process would be
unobtrusive, that on-site meetings would rarely exceed two to three days, and that information demanded
would be only to the extent that critical information was not already available in published statements.
These “concerns” often seemed to be superficial excuses to Raghavan, when firms still demurred.

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The support of regulation was critical to the success of the ratings business — there was no record of any
CRA turning successful without such support. However, even after detailed representations from
CariCRIS, including details of international precedents, little action was forthcoming from Caribbean
regulators by way of introducing ratings-linked financial-sector regulations. To gain regulators’
confidence, CariCRIS also voluntarily offered to subject itself to inspection of rating processes and
criteria. The strategy was to project CariCRIS to be ahead of any forced regulation of CRAs. In 2005, the
FSC Jamaica announced guidelines for accrediting CRAs based on inputs from CariCRIS and
subsequently accredited CariCRIS in 2006. Raghavan hoped that other countries would follow Jamaica’s
precedent, but soon realized that they were not so willing; instead, each country wanted to take its own
time to debate the matter. Time and again, at meetings with the regulators, the issue of a lack of foreign
alliances would also come up.

Investors and Intermediaries

Although ratings were paid for by issuers, institutional investors and merchant bankers had a major
influence on ratings demand in developed debt markets. Most investors and merchant bankers in the
Caribbean, as Raghavan met with them, privately supported the idea of CariCRIS. However, when it
came to debt issues they themselves would manage, or invest in, they did little to push ratings within their
own sphere of influence, despite follow-up by CariCRIS around the time of such issues. When Raghavan
posed this conundrum to Rick Daniels, the CEO of a small but active Barbados bank, Daniels said,
“Vijay, I will be frank — no one wants to bell the cat! 1There is no problem with how things work now.
Why fix something when it isn’t broken! My advice — try to get the regulators to mandate ratings.”

An anecdote in late 2006 was instructive. A multinational bank, also a shareholder of CariCRIS, was
managing a large U.S. dollar debt issue for a T&T telecom firm. Raghavan and Sinclair followed up with
both the firm and the bank for over two months — but finally the firm went with only an S&P rating. The
head of the bank, a friend of Sinclair’s, conveyed his regrets to Raghavan, “We can only advise a client.
They bear the costs and it is finally their call.” After the event, however, the firm’s CEO told Raghavan,
“We left these details to our banker. They had a fixed fee contract. We went with their recommendation to
go with only S&P.”

Market education seemed to Raghavan the only way to break this deadlock, where investors and
investment bankers refrained from exerting pressure on one another with regard to using ratings. After
repeated interventions, in 2006, CariCRIS managed to get four of the largest investors in T&T to break
the above stalemate. At the behest of CariCRIS, but without appearing to specifically favour CariCRIS,
they issued a joint communiqué to the market, exhorting the market to move voluntarily towards adopting
ratings. Raghavan felt that it was only a semi-strong statement, but it was better than nothing — and he
hoped that it might at least foster a greater commitment to ratings.


CariCRIS also regularly engaged its shareholders by providing detailed business updates at the
company’s annual meeting, and through a communiqué from Sinclair around Christmas, as was the
accepted cultural practice. Since many of the shareholders were prominent investors/lenders, and potential

To perform a difficult or impossible task.

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issuers themselves, it seemed logical to both Sinclair and Raghavan that they should be among the first to
get rated, and set a precedent for others.

An extract from Chairman Sinclair’s message to shareholders around Christmas 2006 read:

Your activism and support, as a shareholder and as a member of the Caribbean community, with a
vested interest in making the regional financial markets more efficient and transparent, is critical
for CariCRIS’s success. I also urge you to lead by example, by getting your organization rated by

Raghavan followed up such messages by meeting the CEOs of these firms. The results were mixed. While
a few came forward eventually after repeated appeals, a majority continued to stay undecided, proffering
reasons such as “conflict of interest, since we are your shareholder,” “do not require ratings now” or “it
adds to costs.” Ironically, other prospective clients wondered why CariCRIS’s own shareholders were not
getting rated upfront. Raghavan was hard-pressed to give them a satisfactory response.

A Slow Start . . . and Not Too Steady

In the first few weeks after the T&T launch in October, business development was slow. After the first
rating of NGC, Raghavan quickly landed another one — a mid-size broking firm from Jamaica, which
however did not accept the rating. Raghavan and his team also hit the usual roadblocks encountered in the
Caribbean — the overhang of business holidays and festivities — especially during the extended
Christmas season and the famous T&T Carnival season in February, which hindered early business
conversion. For nine months after the T&T launch, the team had only two rating mandates to show for its
efforts, of which one could not be disclosed. In the meantime, CariCRIS conducted two credit training
programs and also got a mandate for conducting five private credit assessments.

The team was showing signs of occasional disillusionment, but since Raghavan had anticipated this, his
strategy was to keep the team and the RC busy with other analytical work. “Shadow” ratings of all the
listed companies across the Caribbean, particularly Barbados, Jamaica and T&T, based on publicly
available information and annual reports, was one such analytical project. Meanwhile, Maya George, the
Executive Director of CRISIL, and even Banerjee were getting concerned by the low traction after the
first two ratings; however, both Barnes and Sinclair seemed less perturbed.

Expanding Footprints and Products

By the summer of 2005, six months after the T&T launch, marketing visits outside of T&T were
becoming a regular affair. Raghavan needed someone to back him up for servicing client calls and
following up on leads. He hired Shane Williams, who had over five years’ experience in marketing at a
large trading firm across the region, as a business development officer. With Williams on the team, the
pace of proposal generation and scouting picked up. By early 2006, credit training programs had become
a regular fixture in the CRA’s activity plan, with one being conducted almost every quarter. Raghavan
explained his strategy to the board on training programs:

Training is profitable and also a great franchise-builder. We have designed two-day, basic-level
programs that credit and investment officers in banks and pension funds find useful; we will
graduate to advanced levels later. We use our own rated cases in the public domain as raw
material for case studies — the idea is to get participants excited about the way in which a CRA

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analyzes credits, which will hopefully make them ambassadors of ratings and CariCRIS as they
advance in their careers. This is also very profitable because we invest just once in the course
material preparation, and then we milk it repeatedly; it is also something we can repeat in
different countries with minimal marginal effort. We charge handsomely, but we are careful not
to price ourselves out of the market. When we hold programs outside of T&T, we also use the
opportunity to call on prospective clients or existing clients.

Sensing that many clients hesitated to expose themselves to ratings, or feared a “bad” rating, Raghavan
tried an innovation — essentially, rather than stress the point that ratings were confidential until a client
accepted them, he marketed ratings to such clients as “full service private ratings.” This had a different
engagement contract, with the deliverable being an “indicative” rating, a diagnostic report and an offer to
convert it to a regular rating at no extra fee within one year, subject to a few due-diligence clauses. This
found appeal with some issuers. While this was not ideal for CariCRIS from a franchise perspective, it
still was better than not having any rating mandates — it brought in revenues, enhanced the team’s
experience and kept it engaged on live cases. Albeit slowly, even as every opportunity-conversion was a
struggle, starting in late 2005, rating mandates started coming in from different places including
Barbados, Jamaica and the OECS. With each rating accepted by a client, CariCRIS’s opportunities to
publicize the concept increased. With mandates coming in from different sectors — banks, trading
companies, manufacturing companies, governments, etc. — the team’s exposure and experience also

Coordination Issues with CRISIL

As time progressed, Raghavan found George increasingly resistant to sending high-calibre people with
adequate drive from CRISIL. Raghavan had specific knowledge about the profile and capabilities of
analysts back at CRISIL, and the choice of “consultants” offered by CRISIL seemed invariably to be
people who were average performers (other than the initial three to four consultants, who were top-notch),
and in that sense more dispensable for CRISIL, and not so ideal for CariCRIS. In George’s view,
CariCRIS’s slow development did not call for higher-calibre resources that would likely be underutilized.
CRISIL also had the issue from time to time that identified resources were not always willing to opt for a
posting away from India for a period of six months, due to family-related reasons, even though CariCRIS
paid for a consultant’s family’s travel and comfortable accommodation. Raghavan could only partly
empathize with George’s perspective and the CRISIL situation; he argued that to complement a fledgling
and barely trained local team, he needed exactly the opposite — experienced analysts with a positive
attitude, and who could bring in creative ideas.
With CRISIL’s attitude with regard to CariCRIS seeming increasingly profit-oriented to Raghavan, after
the second phase of the consulting contract ended in late 2006, he moved to renew it only on an as-needed
basis. This not only reduced the substantial pay-outs by way of fees to CRISIL — about 15–18 per cent of
CariCRIS’s operating costs— but also forced the local analysts to become more independent; CRISIL
also found this arrangement satisfactory, as it was short on experienced resources for its own expansion

Signs of Stability

After signs of increasing business traction by the end of 2005, CariCRIS moved offices within the same
premises to a larger, better-furnished office, and in the process imparted a sense of progress and
permanence to the staff and other stakeholders. Temporary staffing arrangements were dispensed with in

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favour of regular full-time staff, where it made economic sense. The analyst pool was strengthened. In
October 2005, CariCRIS also launched a quarterly journal titled Rating Monitor, which was well received
in the market. Business newspapers in Barbados, Guyana, Jamaica and T&T by now carried regular
columns and articles contributed mostly by Raghavan and occasionally by other CariCRIS staff. Credit
training programs were being regularly hosted across the Caribbean, about once every quarter. At the
board meeting in July 2006, although CariCRIS seemed at least a year behind its original base-case
projections, Barnes seemed encouraged, “I now sense a positive momentum. There are still many
challenges, but I believe that we are close to getting over the hump.”


By mid-2007, about three and a half years after Raghavan had arrived in T&T to set up the CRA,
CariCRIS had completed more than 35 rating assignments (including private ratings) spread over 10
countries in the region — including one Spanish-speaking territory. The CariCRIS team was not yet fully
matured though, and needed more diverse experience — but Raghavan expected it to pick that up along
the way.

While Raghavan was satisfied with the progress the CRA had made, he knew that business was yet to
reach a critical mass. The lag between the original projections and the actual business performance also
bothered him. Nevertheless, he felt that it was time to hand over the reins to someone from the region,
who could build further on the foundation that was in place. His successor, Brian Howard, was an
engineer, with a master of business administration and a chartered financial analyst, with a background in
project finance and risk management.

Now, putting together his presentation for the handover session, Raghavan wondered what could have
been done differently, to leave CariCRIS in a stronger position. The original financial projections seemed
a distant reality — was it a case of the feasibility study setting expectations that did not reflect some of
the market realities? Were CRISIL’s recommendation for CariCRIS modelled too much on its Indian
experience? Did the knowledge that he would always be welcomed back at CRISIL affect his own drive
and commitment to CariCRIS? What was the best way ahead for CariCRIS now to achieve its objectives?

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The CariCRIS Mission

CariCRIS is the Caribbean’s regional credit rating agency. It is a unique market-driven initiative aimed at
fostering and supporting the development of regional debt markets in the Caribbean.

A CariCRIS credit rating is an objective assessment of an entity’s creditworthiness relative to other debt-
issuing entities. The CariCRIS regional scale rating compares an entity’s creditworthiness to all debt-
issuing entities in a defined Caribbean region. CariCRIS also offers a national scale credit rating where
the comparison set is all debt-issuing entities in the financial markets of a single nation.

CariCRIS ratings aim to provide a regionally relevant risk assessment of entities and the debt that they
issue within a wider context of an analysis of economic trends and financial developments. This will
significantly improve an investor’s ability to compare sovereign and corporate credits in the region. For
borrowers, CariCRIS ratings will enhance credibility and expand access to funding sources.

The CariCRIS Mission

To contribute to the development of a vibrant, integrated Caribbean capital market by setting the highest
standards of credible independent analysis and opinion to enable informed financial decisions.

CariCRIS’s Core Values

• Integrity
• Independence
• Analytical rigour
• Teamwork

CariCRIS Code of Ethics

Preamble: Ethics is now globally recognised as an essential component of professional knowledge. It is

particularly relevant where professionals are in a position of public trust as is the case with a rating
agency. This code is intended to guide the activities and decision-making of all personnel of CariCRIS
including Board, Rating Committee and staff members.

All personnel of CariCRIS shall:

• Act in an ethical and professional manner at all times, with integrity, fairness and dignity towards
clients, prospects, public, fellow employees and other members of the organisation.
• Ensure that CariCRIS conforms to the highest standards of best practice in the provision of its
• Exercise utmost care and due-diligence in accessing, using, analysing and disseminating information.
• Strive to continually improve individual competence and be committed to the sharing of knowledge in
order to nurture a learning organisation.
• Be very alert to conflict of interest and any such conflict, actual or perceived, shall be declared
promptly by the person who has the conflict or any other person, aware thereof.

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CariCRIS’s Standards of Conduct

All personnel of CariCRIS shall:

Fundamental Responsibilities

• Recognise credit rating as a function of serious responsibility and view it as a matter of great trust.
• Be aware of and adhere to all applicable laws, rules and regulations (including company policies,
practices and procedures) of any government, governmental agency, regulatory organisation,
licensing agency, or professional association governing the members’ professional activities.


• Presume the confidentiality of all information and decision-making processes within the company and
take all possible precautions to preserve that confidentiality.
• Maintain confidentiality of all information, even after termination of employment or association with the

Use of Information

• Desist from taking advantage of any proprietary knowledge or confidential information.

• Not render, directly or indirectly, investment advice about any security in any external interaction.
• Not be unethical or unfair in the disclosure of information, proffering of opinion or advice, or any other
• Disseminate ratings, changes in ratings and any other information in a fair and objective manner to all
intended recipients.
• Not copy or use, in substantially the same form as the original, material prepared by another without
acknowledging and identifying the name of the author, publisher, or source of such material.
Members may use, without acknowledgement, factual information published by recognised financial
and statistical reporting services or similar sources.

Conflict of Interest

• Conduct themselves in a manner such that their interests will not conflict with those of CariCRIS.
Should a conflict of interest arise in a specific situation, CariCRIS members shall disclose the source
of such conflict and not participate in the associated decision-making process.

Source: CariCRIS website.

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