MUMBAI, February 6: Rating agencies are gearing up for the fresh influx of business that they are likely to receive from plantation companies once SEBI makes it mandatory for them to have their collective schemes rated. The move follows a recommendation made by the SEBI-appointed Dave committee.Rating agencies are in the process of working out the various modalities in order to rate the different schemes launched by plantation companies.
Though there has been no formal communication from the market regulator to this effect, plantation companies are already doing the rounds of the rating agencies.
Many of them have been making enquiries on the procedure to be followed to get their schemes rated. Though they have welcomed the suggestion, there seems to be some apprehension about treating plantation schemes as pure fixed-deposit schemes without considering them as an agricultural investment.
Some of them have expressed concern over whether they would have to compulsorily give monetary returns as ratingagencies only rate debt instruments of companies which give a monetary return.
Currently, rating agencies rate only mutual funds schemes, deposit schemes, debentures and bonds which are mostly fixed-income schemes.
These schemes generally give fixed returns which are mostly monetary. Under the circumstances, the instruments of plantation schemes may have to be treated as a separate group.
Though some of the companies offer schemes on the basis of fixed deposits, many of them have schemes which offer the investor returns in the form of teak equity or ownership of land. They are now in a dilemma as to how to treat these instruments.
The rating agencies will have to evaluate these returns in a different mode, taking into consideration the valuation of trees, orchards and land. Rating agencies have been evaluating some service-oriented companies which are involved in building projects and, hence, they feel that rating a plantation company can be considered under the same criteria.
Some of the agencieshave already formed task forces to look into how plantation companies work and what are the different types of instruments that are in the market, their tenure, the terms of payment, etc.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
