In 1992, a young assistant manager of the erstwhile Industrial Development Bank of India (IDBI) walked into the Mumbai office of rating agency Crisil to meet its managing director (MD), Pradip Shah. She did not have an appointment, but had read in a business magazine that Shah was planning to open an office in Bangalore. The IDBI assistant manager was looking for an opportunity in the southern city where her husband, who worked for a multinational bank, had been transferred.
Shah met her and offered her a job as senior analyst in Bangalore. This month, she was made MD and chief executive officer (CEO) of Crisil. Incidentally, global rating agency Standard & Poor’s (S&P), which holds a 51% stake in Crisil, is also run by a woman—Kathleen A. Corbet.
Roopa Kudva says her career at Crisil happened by chance. But that’s only one side of her story. There’s also her grit. The first time she appeared for the IIM entrance test, she did not make it despite qualifying at the tests as she was not yet a graduate. Exams had not been held as the anti-foreigner agitation, led by Prafulla Mahanta of the All Assam Students Union, was at its peak, forcing schools and colleges in the state to down their shutters. Kudva appeared for the entrance test again the next year and was accepted at IIM Ahmedabad. The first thing she did when she joined the S&P office in Paris in the 1990s, on deputation from Crisil, was to start learning French. She never did master the language but the fact that she made sincere efforts to learn impressed the S&P brass. In Saudi Arabia, Kudva wore a burka while visiting banks to rate them.
We are at Hornby’s Pavilion, the coffee shop at ITC Grand Central, on a rainy day for Business Lounge. She scans the menu thoroughly, then orders a fresh lime soda with salt. I thought she would go for a Margarita or a Pina Colada. “I’m a boring person,” she says as if she can read my thoughts, and asks for a basket of assorted pakoras that go with the day. The incessant Mumbai showers revive memories of growing up in Assam. “I’m a small-town girl brought up in different parts of the North East—Shillong, Jorhat, Tezpur and Guwahati,” she says. Her father, an IAS officer of the Assam cadre, made sure she was sent to the best schools. “I never saw the outside world till I came to IIM Ahmedabad. The biggest event of our life was our annual visit to Kolkata and every two years, we travelled to Mumbai using my father’s LTC (the leave travel concession, all government employees get, with a free ticket home once in two years). The Kudvas used to take the Assam Mail. At Barauni, the train would shift from narrow gauge to broad gauge (“we just needed to change the platform”) and the next big halt was Allahabad.
The first four years of her professional life were spent in Kolkata—“an easy city to start your life when you’re just married”. In 1993, Crisil became the first rating agency in the world to get listed on the stock markets and Kudva was put in charge of developing new products such as rating mutual funds and securitized debt. By 1996, when she was made the head of the western region that accounts for 50% of Crisil’s business, the Indian economy was passing through its worst phase with a slowdown impending. The first concrete sign of a downturn was reflected when Crisil downgraded 17 non-banking finance companies at one go and made newspaper headlines. “Our market share dropped from 70% to 40%; the stock price fell from Rs400 to Rs100 and people started calling us a downgrading agency. Corporations were leaving us as they had never seen downgrading before,” Kudva says.
Around that time, S&P picked up a 10% stake in Crisil and invited the firm to send one executive to the global rating agency’s Europe operations. Kudva was nominated. “My job was to rate the commercial banks in the East European and Mediterranean region. S&P’s Paris office was quite impressed when they found that I was speaking English.” To impress them further, Kudva started learning French. “I was not good at French but was never ashamed of making mistakes,” she says. In those days, she travelled a lot and often got detained at the Israeli airport for questioning, even missing flights. “They were curious—an Indian passport holder, working in Paris and visiting West Asia almost every week.”
In 2000, Kudva was back at Crisil as a chief rating officer and executive director. What is the biggest challenge before a rating agency? I ask. “First, get the analysis right. And that’s only the beginning. We need to constantly update the ratings and explain the rationale to investors.” She also believes in marketing Crisil well. “We should not be seen as cashing in on the first-mover advantage only. We must show our dynamism to justify our large market share,” she says. Crisil, according to Kudva, has around 70% of market share. It is aggressively tapping the small and medium enterprises (SMEs) for new business by creating a network of 100 chartered accountants who are convincing SMEs in small towns to go for a rating. It has already rated 1,000 SMEs and aims to do another 4,000.
I ask her whether the initial public offering (IPO) rating that the Indian capital market regulator has initiated is a good business. Should IPOs be rated at all? Kudva says Crisil will never make buy, hold or sell recommendations. “There are three issues involved—is the company good? Is the price right? And, is it the right investment for an investor? We will not deal with the pricing and investment parts. We will only look at whether the company is good. In that sense, there is no difference between an IPO grading and a bond rating.” I ask her about the Crisil experience in IPO grading since May, when it started. It’s not very encouraging, and some of the firms have got a lower grade as they are not fundamentally sound. “This is a very big opportunity—not in terms of revenue but to build credibility. Retail investors are involved and we need to be very careful,” she says.
She, however, does not like my suggestion that most corporate balance sheets hide more than they reveal. “In fact, Indian firms are way ahead of their European counterparts in terms of transparency. Governance could be an issue with some of the firms but, overall, on parameters such as disclosures and transparency, Indian companies are very good.” She also says that these days companies spend a lot of time with the analysts of rating agencies, explaining things. “They trust us and open their books,” says Kudva who, meets around 150 CEOs and CFOs round the year.
As the downpour intensifies and we plan to leave, I ask her if life will change for her in the new role. “Nothing will change. The biggest job at hand is managing people. Skilled professionals are in short supply and we need to customize executives’ careers to help them stay and grow with Crisil. We can’t follow the one-size-fits-all theory. An employee needs to tell me what works for her. I am flexible in terms of compensation, working hours….”
The P.G. Wodehouse fan suddenly stops and asks me what made me join Mint , as if to find a cue for employee retention. As we get out of the hotel and wait for our cars, Kudva tells me she plans to finish Alexander McCall Smith’s thriller Friends, Lovers, Chocolate that night and will probably see Gandhi, My Father over the weekend. Books, films and regular workouts are stress busters for Kudva, for whom office hours may now get longer.
Name: Roopa Kudva
Born: 1963 (in Mumbai)
Education: Cotton College, Guwahati; IIM Ahmedabad
Work Profile: Joined IDBI as a management trainee in 1986. Moved to Crisil as a senior rating analyst in 1992, became a chief rating officer in 2000, executive director in 2002 and MD and CEO in 2007