Last Reviewed On: October 28, 2022 (Version 1)

An engagement with the management or the leadership of the rated entity is an integral part of any rating exercise. While the business and the financial data provided by the issuer helps the analyst to assess the credit quality to some extent, a credit assessment is never complete without an interaction with the management. The interaction can be in several ways – site visits to the clients’ location, meeting arranged in the premises of Acuité or in any convenient location or a call (audio or video) between the team and the client.

The key aspects of the policy on management meetings are as follows:

1. For every new issuer, a management interaction is inevitable. Physical interactions / site visits including outstation visits are encouraged provided the issuer is willing to reimburse the site visit expenses.
2. For an issuer with an existing rating, a management interaction is also necessary during the annual review exercise or an interim review if the time gap with the previous review has exceeded six months. This principle will also apply for any new mandate from an existing client (BLR enhancement or fresh non BLR instrument rating).
3. It is to be noted however, that during any material event review (MER) including cases where defaults have been reported by a lender or trustee, the team will endeavour for a management interaction but given the prescribed timelines, it will not be mandatory in such a scenario.
4. The analyst team will also endeavour to engage with the issuer management on a regular basis to get a perspective of the latest developments in the industry or in the entity.
5. For an existing client with rated debt that is listed, an interaction with the audit committee of the board is necessary on an annual basis. The team will make all the efforts to schedule such a meeting anytime during the year.
6. Acuite will seek management interactions only after the minimum information required for the rating exercise is furnished by the issuer and the analytical team has been able to process the same.
7. For all issuers who have not provided adequate information during a rating review and who are tagged as non-cooperative (INC) clients, management interactions are not essential.
8. In order to maintain firewalls, the analytical team will have to ensure that no person from the BD team is present in such management interactions, whether physical or virtual.
9. The analytical team will refer every matter of a commercial nature to the Business Development team and will not discuss such matters with any client representative.
10. The analytical team will not participate in any discussion on the potential rating outcome from a client / authorised representative before the conclusion of the rating exercise.
11. Acuite will not proceed with a management interaction in situations where only an authorised third party (consultant / advisor) is available / present for such interaction without the presence of any employee from the issuer entity undergoing the rating exercise.
12. Acuite encourages management interactions in every rating exercise (whether new or outstanding rating).

The above guidelines are complementary to "Guidelines for site visit” available through this link.