Based on Sebi's initiative to rate companies on wealth value creation for stakeholders, Icra has assigned the first stakeholder value creation and governance practices rating to Godrej Consumer Products Ltd.

The company has received an SVG2 rating indicating that the company belongs to the high category on the composite parameters of stakeholder value creation and management as also corporate governance.

"Icra's opinion, however, is not a certificate of statutory compliance or a comment on the rated company's financial performance, credit rating or stock price," the agency said in a statement.

As part of his initiatives to revive the capital markets and increase investor confidence, Sebi chairman G N Bajpai had proposed a rating of value creation for stakeholders.

Icra and Crisil would be rating corporates on the subject and Godrej Consumer Products has become the first Indian company to receive the rating.

Icra managing director P K Choudhury said that there are five other companies which the agency is in talking to rate them on stakeholder value and good governance.

By the end of the financial year about six such ratings would be assigned by Icra, he said.

Industry sources, however, said that a number of companies would wait till the end of the financial year before they approach rating agencies to get a stakeholder value creation and governance practices rating.

Choudhury added that a large number of companies are also in the process of appointing consultants on advising them on putting in place the best practices and once these are adopted they will approach rating agencies.

The stakeholder value creation and governance practices ratings are based on the concept that it is the actual performance and its benefits that actually accrue to the stakeholders that are paramount rather than mere compliance with corporate governance codes.

At the same time, SVG ratings also take into account the quality of corporate governance and is combined in assessing the stakeholder value creation and management as well as quality of corporate governance practices that determines the ultimate rating.

The variable analysed in arriving at the rating include wealth creation, management and distribution, the shareholding structure, governance structure and management processes, board structure and processes, stakeholder relationship, disclosures and transparency and financial  disciplines including transactions with subsidiaries and associates.