Making equity research pay for itself-some solutions from India

CRISIL, though perceived as a credit ratings firm, in fact gets a sizeable chunk of its revenues from research and analytics. No wonder then, that it tried to crowd source some strategic perspectives for its annual research paper award(http://www.crisil.com/crisil-young-thought-leader-2011/index.html) but did not find any award worthy entries for the topic Future of Global Research & Analytics business. Even in 2008, the topic 'Independent Equity Research: Is it a viable business model in the Indian context?' did not get any award winning entries. It was only in 2009 that Gaurav Joshi of IIT Delhi Business school won a CRISIL Young Thought leader award in 2009 for his paper on How is the sell-side research landscape changing (http://www.crisil.com/crisil-young-thought-leader-2009/dissertations/Dissertation_GauravJoshi-IITDelhi.pdf), and broke the jinx.When the best of Indian young brains have been working on this topic for 3yrs, one would expect some good models to come through. Let us see what is happening so far(so far the global cost centre model prevails where equity research is funded with brokerage/investment banking revenues, but the bonuses are not explictly tied to those revenues..).

1. CRISIL Independent Equity Research(a division of CRISIL not affiliated with the ratings arm) publishes company equity research reports for a fee of around Rs 7-10 lakh per annum. They publish it on their site(freely downloadable), send it to email subscribers etc. Here, company pans but CRISIL lends its objectivity.
2. Both BSE and NSE commission equity research reports from CRISIL, CARE, ICRA etc for stocks they deem worthy(usually illiquid undervalued midcaps with decent public float). The stock exchange pays for this, but questions arise about the allocation of work to the agencies, accountability, selection of companies etc.
3. Like abroad, some niche Indian sites like TED(The Equity Desk run by Basant) charge for access to their research. Other stock brokers charge for trading ideas in the guise of research. However, given the unpublished track record, one wonders how long will this last. 

 A friend of mine working in CRISIL joked that the independent equity research reports are 'independent from reality!' i.e the internal opinion is not high about the reports. nevertheless, solutions (1) and (2) are unique to India, and deserve more time to be evaluated.