Page 307 - Crisil Annual Report 2023

Notice
Sr no.
Particulars
Details
4.
5.
Type of transaction
Tenure, value, material terms and particulars of the proposed transaction
Provision of support for financial and non-financial data, analysis and research, benchmarking, model validations, credit assessments, counter party risk assessments, ESG, operations, trainings and providing consulting, functional and technology support by CRISIL and/or its subsidiaries
CRISIL had entered into a Master Service Agreement (MSA) for provision of support for financial data and analysis services through its Global Analytical Centre (GAC) division to S&P Group Entities which are in the ordinary course of its business and on an arm’s length basis. During financial year 2023, the revenue generated under MSA aggregated to C 280.42 crore.
Considering various factors, including growth in business and future outlook, it is possible that the transaction value of the services provided by GAC division of CRISIL and/or its subsidiaries, to the S&P Group Entities under the MSA may exceed the current approved limit of C 300 crore per financial year, in the next fiscal year and the years thereafter.
Furthermore, in recent times, CRISIL and/or its subsidiaries have expanded their scope of services to support S&P Group Entities in various non-financial analytical streams beyond credit ratings, such as ESG assessments and consulting, model validation, counter-party risk assessments, data operations and technology support, which are provided by other divisions of CRISIL (other than GAC division). While these transactions rendered by other divisions of CRISIL and/or its subsidiaries to various S&P Group Entities, are currently below the materiality threshold individually, these may also assume significant proportions in the forthcoming financial years. Further, no single entity of the S&P Group crosses the materiality thresholds for Related Party Transactions under the Listing Regulations.
In light of the aforesaid, it is proposed to expand the scope and coverage of the related party approval already obtained from the members as of December 15, 2014, to all transactions of support for financial and non-financial data, analysis and research, benchmarking, model validations, credit assessments, counter party risk assessments, ESG, operations, trainings and providing consulting, functional and technology support, which are to be provided by CRISIL and/or any of its subsidiaries through any of its divisions to S&P Group Entities. Further, considering the expanded scope of the services, growth of business over the period of last few years and future outlook, it is hereby proposed to expand the existing limit from C 300 crore (Rupees three hundred crore only), already approved by the members as of December 15, 2014, to an amount of C 750 crore (Rupees seven hundred and fifty crore only) per annum, w.e.f. May 1, 2024, until April 30, 2029.
During this period, CRISIL will periodically evaluate contractual documentation to be executed for aforesaid Related Party Transactions to ensure business continuity and renewals from time to time.
The pricing mechanism followed for the aforesaid Related Party Transactions is and shall continue to be based on arm’s length principles applicable as per jurisdictional guidelines. Requisite valuation reports and confirmations are in place to the extent required and shall be obtained from time to time from reputed and independent consulting firms as may be required under the applicable laws, to establish compliance of arm’s length principles for all of the aforesaid Related Party Transactions.
It is clarified for the avoidance of doubt that the material Related Party Transactions placed for members’ approval under the terms hereof are specific in nature, approved by the Audit Committee and shall not be deemed to be an omnibus approval under the provisions of the Listing Regulations.
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