“Crisil has the potential of consulting firms like McKinsey. It is an important time to choose what they want to be,” says Shah. And that’s Kudva’s job now.

Changing course when the situation demands isn’t something Kudva minds—she’ll do it even if it means changing the business drivers for her company midway. “It is dangerous to be fixated on how we are going to grow in an environment that is changing so rapidly. Who would have thought, for instance, that social media would become such a big force in analytics?” she asks. (Data from social media helps political bodies, advertisers, etc., track trends, even moods.) At the same time, Kudva is not ignoring rating: “We believe that our SME business has just scratched the surface.” (There are about 2 million SMEs in India.) With the lack of a bond market, Crisil also expects new business from rating bank loans, especially if the Reserve Bank of India lowers interest rates.

Six months ago, Crisil, to tap one such opportunity, put a six-member team in place to recommend a trading solution to a U.S. bank. The team members were hired from Italy, Cameroon, Venezuela, Pakistan, India, and the U.S. The bank had come to Crisil as it could not get the right talent for the job. (In the U.S., too, McKinsey has predicted that there will be a shortage of stats and math grads for analytics. Crisil has begun training new hires provided they sign a contract to stay with the company for at least two years.) G. Ravishankar, Crisil’s human resources president, says that despite company policy and a lack of vacancies, the new recruits were taken in as he (and Kudva) believed it would be a breakthrough for the Big Data business. Kudva says Crisil gets talent as it is able to offer employees a larger canvas than a bank.

A YEAR AGO, 37 CRISIL EXECUTIVES met for a workshop with Ram Charan, global management guru who has been an advisor to GE and Dupont, to identify opportunities for Crisil. After three days of brainstorming, the team identified three drivers: a structural change in investment banking due to strong pressure on costs; new regulations for banks demanding more services; and Big Data. “We are placing our bets on not one, but all three [drivers], as it is impossible to see the future,” says Kudva.

Jhunjhunwala was not available for comment. But a fund manager at a global investment bank says the excitement of new business from Big Data has not been visible in Crisil’s growth in the last three quarters. “The Coalition acquisition, till it proves itself, looks like a deal to plug sales growth rather than a strategic long-term move,” he adds.

But despite revenue growth, Crisil’s market capitalisation has stagnated at about Rs 6,500 crore. Recently, India’s ace investor Rakesh Jhunjhunwala sold 1 lakh shares of Crisil to bring down his holdings to 53 lakh shares. Last December, Crisil announced a buyback of shares at a price not exceeding Rs 1,000 a piece, and ended up buying
9.1 lakh shares at an average price of Rs 871.06.

Analytics firms such as Mu Sigma, Fractal Analytics, and Cross-Tab collectively claim revenues of more than Rs 500 crore, more than 50% of Crisil’s. Mu Sigma started operations in 2004, and employs 2,000 people—90% of them work out of India and the rest at client sites. Deepinder Dhingra, products and strategy head of Mu Sigma, says: “The sector’s growth rate is more than 50% because there is awareness of [the advantage of] data-based decision making.” Cross-Tab CEO Ashwin Mittal, admits: “Right now there is a lot of business for analytics but the key is the ability to scale up.” Crisil seems to be bracing up for that.

Sanjeev Sinha, head of Crisil’s global research and analytics business, says the turmoil in the global financial markets will bring in plenty of new business. Further, the Basel III norms require banks to comply with more rules, and many have already started working to address those concerns. Several banks and investment outfits have shut down or pruned their equity research desks in the U.S. and Britain, which has added to Crisil’s research business. “The trend is just gathering steam and more firms will outsource equity research,” says Sinha. The numbers so far look good: Sales grew from Rs 404 crore in 2007 to Rs 807 crore in 2011, while net profit moved to Rs 206 crore from Rs 84 crore in the same period. Crisil’s plans in analytics are expected to make them look better.

According to Kudva, the Coalition acquisition was “more like a natural progression than a planned one”, but now there’s a strategy for more such deals and the company is actively looking for firms that specialise in finance and banking. Company executives believe Crisil has an edge already—a group of mathematical experts in East Europe, an economics manpower base in Argentina, and S&P’s stake in it means access to a global skill pool. It has already begun snagging contracts with top banks overseas.

It’s not going to be as easy as it sounds. In its 25 years, Crisil has not been able to build a business in branded research products. CARE’s Dogra says, “There are Chinese walls around the data gathered for ratings—they cannot be used for anything else.” Rating agencies, in fact, sign exclusive agreements with clients in this regard. So, if it wants to build a portfolio of research products, Crisil will have to make more specific investments to build or buy skills as it has done with Coalition. (All of Crisil’s non-rating businesses were built on acquisitions.)

GOING FORWARD, KUDVA EXPECTS rating to bring in a third of the revenue. In the final mix, she wants half of Crisil’s revenues from overseas. In Big Data, Kudva is clear she’s eyeing segments such as “banking, finance, trading analysis using zillions of data points, and wealth management”.

For Kudva, Irevna was the stepping stone to specialise in financial services research offerings. Doug Peterson, president of global operations of S&P, says Kudva ensured that Crisil “developed capabilities to meet the sophisticated quantitative modelling and stress-testing requirements of the world’s largest banks on Wall Street. It has also augmented its language capabilities include research in Spanish, Mandarin, and Japanese.” (Peterson is also Crisil’s chairman and S&P’s representative on its board.)

Kudva knew rating alone could not sustain the company. For one, the market for bonds, which was key to Crisil’s rating business, was poor. Second, barely 40% of its SME customers returned the following year. (Ideally, they should do so every year.) Third, other rating companies, such as ICRA, CARE, India Ratings & Research (a Fitch Group company), and Brickwork Ratings, started by an ex-Crisil executive, were adopting aggressive pricing and other strategies. They were also offering advisory, equity and IPO grading, and consultancy services, like Crisil. Says D.R. Dogra, MD and CEO, CARE: “The growing Indian market is spurring competition; margins cannot be taken for granted.”

Under Ravimohan, the company had begun diversifying. In 2005, it bought research and analysis company Irevna. This made it a player to reckon with in the knowledge process outsourcing space. It also gave Crisil new competitors, such as eClerx, EXL, and Evalueserve.

By 2005, Kudva was head of rating. When Standard & Poor’s (S&P) took a 51% stake in Crisil, Kudva was invited to join the global company as director, financial institutions ratings, in Paris. In 2007, when R. Ravimohan, then Crisil CEO, quit to join Reliance Industries, Kudva, who was back in India by then, was asked to take over as MD. Her appointment was a reflection of the importance Crisil gave to rating; Kudva had spent all her years with the company growing that business. Among her early successes was bringing in a rating mechanism for small and medium enterprises; till now, some 35,000 SMEs have been rated by Crisil.

SET UP IN 1987 primarily as a rating agency, Crisil is an acronym for its original name, Credit Rating and Information Services of India Ltd. It focussed on rating a range of debt instruments, including bonds, bank loans, certificates of deposit, etc. In two decades or so, it has rated over 50,000 instruments, making it one of the most sought-after rating agencies in the country. When Kudva joined Crisil in 1992, rating was still a new business. Pradip Shah, founder MD of Crisil, took a liking to Kudva, an IIM Ahmedabad product, and gave her a job as a senior rating analyst in Bangalore. “She didn’t have an appointment and walked in without a resume. We had a long chat and I liked what I heard,” says Shah.

In September, Crisil and Nasscom, an association of IT and BPO companies, jointly released a report, Big Data—The Next Big Thing, putting the opportunity from Big Data at $25 billion (Rs 1.39 lakh crore) by 2015. Kudva believes the core analytics business, without accounting for hardware and software, will be $10 billion to $11 billion: of this, a tenth will be in financial services. That’s the opportunity for which she wants to scale up. “With Coalition, we are publishing research and analytics under our own name in the international market. That is changing the way we deliver services in the analytics business,” she says.

Kudva plans to expand even more, and aims to increase the share of the data analytics business with a slew of acquisitions. That has already begun with the buyout of British data analytics company Coalition for Rs 250 crore in June. The change in focus has been showing in the company’s revenue breakup: Rating, till recently the bread-and-butter business, accounts for just 40% of its 2011 revenue. With Coalition, Kudva wants to be a contender in Big Data (the industry term for the large volumes of data that a company outsources to analytics firms because it doesn’t have the processing capabilities). This puts Crisil in the running against global biggies such as IBM, Cisco, SAP, and Accenture, home-grown IT giants Tata Consultancy Services (TCS) and Infosys, BPOs such as WNS, and analytics firms such as Mu Sigma. Kudva feels Crisil stands a good chance because of its experience in risk modelling jobs for banks.

This is the lesson she’s trying to teach at Crisil as she works to transform the company from a rating agency to a financial intelligence services player. She has already caused a shift in the company’s approach to business—from local to global. Crisil’s client base has grown from under 1,000 in 2007 when Kudva took over as MD, to around 50,000 today. And they are all over the world—in 150 cities, including New York and London—instead of being clustered in the major Indian cities. Revenue has grown at 28% annualised.

EVERY YEAR, MUMBAI-BASED ROOPA KUDWA heads to Guwahati in the North East to catch up with school friends. It’s the exact opposite of what she used to do through her school years: travel from Guwahati to Mumbai to visit relatives during her summer vacation. “Revisiting the good old days refreshes me,” says Kudva, managing director and CEO of the Rs 807 crore credit rating and financial research company, Crisil. But more than catching up with old friends, the visits remind her of what she learnt in school—“to get better at whatever you are good at”.

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