Securities and Exchange Board of India is set to announce the country's first corporate governance index on Friday. The index - which focuses on two parameters: corporate governance and wealth creation - has been developed by rating agency Crisil.

According to corporate sources, four companies have been judged by the index and a formal announcement on their ratings will be made in New Delhi at the investors' conference.

A brainchild of Sebi chairman G N Bajpai, the corporate governance index has created new rating model which has effectively captured two attributes, creation of wealth and corporate governance.

The plan is to capture the level of compliance of a corporate by measuring it on parameters such as wealth creation, management and distribution of investors wealth among others. The mandate for preparing the instrument was been given to Crisil.

At the initial stage the feeling was that wealth creation is not always compatible with good corporate governance practices.

A company might be creating good wealth for its shareholders but at the same time might not be following good corporate governance. Or a company with excellent corporate governance practices in place might not be so efficient at wealth creation. In short, a correlation between the two in the short-term does not exist.

However, it is believed that the final product has captured the imagination of top rated companies. They are willing to be rated by the new index.

In his interactions with the media, Bajpai had stressed on the necessity of introducing such a rating model. According to him, the current corporate governance framework was not serving the objectives of optimum creation, management and distribution of wealth.