Crisil says TFL did not submit timely data

Said Crisil executive director and chief rating officer, Roopa Kudva: “Ratings are as good as the information that goes into it. If facts are not made known, ratings will reflect that”.

It was pointed out that Crisil’s ratings started reflecting the reality once information was provided, and it is possible that TFL’s top brass was also coming to grips with the extent of the problem.

Sample this. On May 22, 2000, the ratings assigned to TFL’s NCDs, FD and CP were at ‘AA-’, ‘FAA’ and ‘P1+’ respectively. This stayed unchanged until July 27, 2001, when these ratings became ‘A-’, ‘FA’ and ‘P2+’ with the qualification: placed on ratings watch with developing implications.

Under extant Reserve Bank of India (RBI) guidelines—more pronounced after the CRB scandal of 1996-97—it has been repeatedly stressed by the central bank that ratings are a must for public deposit taking entities. In the case of TFL, for the period between May 2000 and July 2001, the ratings assigned by Crisil were not entirely reflective of the goings on in the company.

In the case of TFL, from September 7, 2001 onwards, the ratings on NCDs, FDs and CPs first fell to ‘A-’, ‘FA’ and ‘P2+’ and then on December 4, 2001 to ‘BBB-’, ‘FA-’ and ‘P3’. In other words as the true picture emerged, ratings moved down dramatically.