INTRODUCTION – CREDIT RATING

Credit rating is an assessment of the credit worthiness of individuals and corporations. It is

based upon the history of borrowing and repayment, as well as the availability of assets and
extent of liabilities.

Credit rating, however is neither a general purpose evaluation of a corporate entity nor an
overall assessment of the credit risk likely to be involved in all the debts/financial instruments
contracted/ to be contracted by such issuers. A rating is specific to a debt/ financial
instrument and is intended to grade different and specific instruments in terms of the credit
risk associated with the particular instruments. Although it is an opinion expressed by an
independent professional organization, on the basis of a detailed study of all the relevant
factors, the rating does not amount to any recommendation to buy, hold or sell an instrument
as it does not take into consideration factors such as market prices, personal risk preferences
of an investor and such other considerations, which may influence an investment decision.

As a fee based financial advisory service, credit rating is, obviously, extremely useful to
investors, corporate (borrowers), banks, and financial institutions. For the investors, it is an
indicator expressing the underlying credit quality of an (debt) issue program. The investor is
fully informed about the company as any effect of changes in business/economic conditions
on the company is evaluated and published regularly by the rating agencies. The corporate
borrower can raise funds at a cheaper rate, with a good rating. It minimizes the role of ‘name
recognition’ and lesser-known companies can also approach the market on the basis of their
rating. Fund ratings are useful to the banks and other financial institutions when they decide
on lending and investment strategies.

Thus, the assessment of risk associated with particular security/financial instrument regarding
timely repayments of interest and principal is termed as credit rating.

Credit Rating is, that thus a symbolic indicator of the current opinion of the rating agency on
the relative ability and willingness of the issuer of a financial (debt) instrument to meet the
(debt) service obligations as and when they arise.

In other words, credit rating provide grades to the securities by which Prospective investor of
these securities can judge the capability of the companies (issue of these securities) regarding
the timely repayment of interest and principle.

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A rating is specific to a debt/instrument. Thus, a rating is a general-purpose evaluation neither
of the company or issuer, nor an overall assessment of the credit risk likely to be involved in
all the debts contracted or to be contracted by such issues.

DEFINITION

Following are some definitions of credit rating given by a few well-known rating agencies:-

“A rating is an opinion on the future ability and legal obligation of the issuer to make
timely payments of principle and interest on a specific fixed income security. The
rating measures the probability that the issues will default on the security over its life,
which depending on the instrument may be a matter of days to 30 years or more. In
addition, long term ratings incorporate an assessment of the expected monetary loss
should a default occur.”

The above definition emphasizes the use of credit rating to access the probability of timely
repayment of principle and interest by the issuer of debt security.

EVOLUTION OF CREDIT RATING AGENCIES

After the financial crisis of 1837, Louis Tappan established the first mercantile credit agency
in New York in 1841. So the origin of credit rating can be traced to the era of 1840’s. The
agency rated the ability of merchants to pay their financial obligations. It was subsequently
acquired by Robert Kun and its first rating guide was published in 1859. Another similar
agency was set up by John Bradstreet in 1849, which published a rating book in 1857. These
two agencies were merged together to from Dun and Bradstreet in 1933, which became the
owner of Moody’s Investors Service in 1962. The history of Moody’s itself goes back about
100 years. In 1900 Joyn Moody founded Mooky’s Investors Service, and in 1909 published
his Manual of Railroad Securities’. This was followed by the rating of utility and industrial
bonds in 1914, and the rating of bonds issued by U.S. cities and other municipalities in the
early 1920s.

Further expansion of the credit rating industry took place in 1919, when the Poor’s
Publishing Company published its first rating followed by the Standard Statistics Company in
1922, and Fitch Publishing Company in 1924. The Standard Statistics Company merged in
1941 to form Standard and Poor’s which was subsequently taken over by McGraw Hill in
1966. For almost 50 years, since the setting up of Fitch Publishing in 1924, there were no

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major new entrants in the field of credit rating and then in the 1970s, a number of credit
rating agencies commenced operations all over the world. These included the Canadian Bond
Rating Service (1972), Thomson Bankwatch (1974), Japenese Bond Rating Institute
(1975)Dominican Bond Rating Service (1997), IBCA Limited (1978), and Duff and Phelps
Credit Rating Company (1980).

There are credit rating agencies in operation in many other countries such as Malaysia,
Philippins, Mexico, Indonesia, Pakistan, Cyprus, Korea, Thailand and Australia. In India, the
Credit rating and information Services of India Ltd. (CRISIL) was set up as the first rating
agency in 1987, followed by ICRA Ltd. (formerly known as Investment Information and
Credit Rating Agency of India Limited) in 1991, and Credit Analysis and Research Ltd.
(CARE) IN 1994. The ownership pattern of all the three agencies is institutional. Duff and
Phelps has tied up with two Indian NBFCs to set up Duff and Phelps Credit Rating India Pvt.
Ltd. In 1996.2

SEBI GUIDELINES FOR CREDIT RATING AGENCIES

GENERAL OBLIGATIONS OF CREDIT RATINGAGENCIES

CODE OF CONDUCT:

a) Every Credit Rating agency shall abide by the Code of Conduct contained in the Third
Schedule.

b) Agreement with the client.

c) Every Credit Rating agency shall enter into a written agreement with each client
whose securities it proposes to rate, and every agreement shall include the following
provisions, namely:-

a. The rights and liabilities of each party in respect of rating of securities shall be
defined;

b. The fee be charged by the rating agency shall be specified;

c. The client shall agree to a periodic review of the rating by the Credit Rating
agency during the tenure of the rated instrument;

d. The client shall agree to co-operate with the Credit Rating agency in order to
enable the latter to arrive at, and maintain, a true and accurate rating of the

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 clients’ securities and shall in particular provide to the latter, true, adequate
and timely information for the purpose.

e. The Credit Rating agency shall disclose to the rating assigned to the securities
of the latter.

Every Credit Rating agency shall carry out periodic reviews of all published ratings
during the lifetime of the securities.

If the client does not co-operate with the Credit Rating agency so to enable the Credit Rating
agency to comply with its obligations under regulation, the Credit Rating agency shall carry
out the review on the basis of the best available information, the Credit Rating agency shall
disclose to the investors the fact that the rating is so based.

A Credit Rating agency shall not withdraw a rating so long as the obligations under
the security rated by it are outstanding, except where the company whose security is rated is
wound up or merged of dissemination, irrespective of whether the rating is or is not accepted
by the client;

The client shall agree to disclose, in the offer document;-

 The rating assigned to the client’s listed securities by any Credit Rating agency during
the last three years and.

 Any rating given in respect of the client’s securities by any other Credit Rating
agency, which has not been accepted by the client.

The client shall agree to obtain a rating from at least two different rating agencies for any
issue of debt securities whose size is equal to or exceeds rupees one hundred crores 7.

WHAT MAKES UP YOUR CREDIT SCORE

When you borrow money your lender sends information to a credit bureau which details, in
the form of a credit report, how well you handled your debt. From the information in the
credit report, the bureau determines a credit score based on five major factors:

 previous credit performance,

 current level of indebtedness

 time credit has been in use

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  types of credit available

 pursuit of new credit

Although all these factors are included in credit score calculations, they are not given equal weighting.
Here is how the weighting breaks down:

As you can see by the pie graph, your credit rating is most affected by your historical
propensity for paying off your debt. The factor that can boost your credit rating the most is
having a past that shows you pay off your debts fairly quickly. Additionally, maintaining low
levels of indebtedness (or not keeping huge balances on your credit cards or other lines of
credit), having a long credit history, and refraining from constantly applying for additional
credit will all help your credit score.

TYPES OF CREDIT RATING

There is various type of credit rating. The most common forms of credit ratings are:

 Long Term Instrument Rating

 Equity Rating

 Short Term Instrument Rating

 Customers/Borrowers Rating

 Sovereign Rating

 Individual Rating

 Compulsory Rating

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Long Terms Instruments Rating :

Long-term instrument rating refers to the rating of bonds, debentures and another long-term
debt securities issued by a government or quasi-governmental body.

Equity Rating:

Equity rating refers to the rating of equity issued in the capital market. The concept of equity
rating is still not adopted by the rating agencies in India.

Short term Instrument Rating :

In this kind of rating we include the rating of commercial papers, short-term public deposits
etc.

Customer or Borrower Ratings:

Customer/Borrowers rating require the assessment credit worthiness of the customers to

whom the credit sale is being made or grant of loan is under consideration.

Sovereign Rating:

Sovereign rating refers to evaluation of credit worthiness of a country in which investment by

a foreign body (foreign Govt. or corporate body) is envisaged or to which a loan is to be
given. This kind of rating is generally done by the international rating agencies. The
international rating agency standard and poor has improved its outlook on India foreign
currency rating to positive from stable but retained the sovereign rating at junk grade due to
high public debt and serious fiscal inflexibility. S&P said the revision reflects “India’s
improving external liquidity and better prospects for the government’s debt burden to
stabilize”. S&P had last revised India’s foreign currency outlook from negative to stable in
December 2003 on account of improved external finance.6

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Individuals Rating:

Rating of individuals is called as individual’s credit rating.

Compulsory Rating:

The rating at which the government bound the obligation is called the compulsory rating like
commercial papers etc.

IMPORTANCE OF CREDIT RATING

In today changing scenario where corporate are increasingly dependent on the public credit
rating, which provides a unbiased judgment to the general public has emerged as a critical
element in the functioning of Indian financial market.

A rating published by a rating published by a rating agency provides superior information to

various groups, which is not publicity available.

Credit rating provides several benefits to different sections of people that are summarized as
follow:

Benefits to the Investors:

- Provides cost-effective and reliable information.

- Investor can evaluate risk-return trade off on the basis of rating.

- Provides investor with an insight of risk involved in an investment.

Benefits of the company:

- A company with high credit rating can mobilize large amount of funds.

- High credit rating indicates less associated with security. So, the company with
high credit rating can lower its cost of borrowing.

- High credit rating helps companies to build its image among customers, lenders
and creditors.

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 Benefits to brokers and financial intermediaries:

- -Brokers can convince clients to put money in investments with high credit
rating.

- Financial intermediaries such as banks can be assured of their investing in a

company.8

Providing better corporate governance

Recently, godrej consumer products improved its corporate governance ratings from Icra to
CGR2 TO CGR2+. And one of the measures it adopted to attain the higher governance rating
was by increasing frequency of audit committee meetings. Says Adi Godrej, chairman of
Godrej group, “increase in frequency of audit committee meetings and adoption of better
board procedures were key to enhancement of our corporate governance rating from Icra”.

ROLE OF CREDIT AGENCIES

Rating agencies gather and analyze a variety of financial, industry, market and economic
information, synthesize that information and publish independent, credible assessments of the
creditworthiness of securities and issuers thereby providing a convenient way for investors to
judge the credit quality of various alternative investment options. Rating agencies also
publish considerable independent research on credit markets, industry trends and economic
issues of general interest to the investing public.

By focusing on credit analysis and research, rating agencies provide independent, credible
and professional analysis for investors more efficiently than the investors could perform that
analysis themselves.

Ratings are used by a diverse mix of both short-term and long-term investors as a common
benchmark to grade the credit risk of various securities.

In addition to their ease of use, efficiency and wide availability, we believe that credit ratings
are most useful to investors because they allow for reliable comparisons of credit risk across
diverse investment opportunities.

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Credit ratings accurately assess credit risk in the overwhelming majority of cases. Credit
ratings have proven to be a reliable indicator for assessing the likelihood that a security wills
default.

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 CREDIT RATING AGENCIES IN INDIA

In India, the credit rating agencies are governed by the SEBI Regulations, 1999 and the SEBI
(Amendment) Regulations, 2003. Accordingly, any body corporate that is engaged in or
proposes to be engaged in the business of rating of securities has to obtain a certificate of
registration from the SEBI and comply with the provisions of the Act.

Further, according to the SEBI (Disclosure and Investor Protection) Guidelines, 2000, a
company offering convertible/non-convertible debt instruments through an offer document
must comply with the requirements of credit rating. The provisions are as follows:

No public or rights issue of debt instruments) including convertible instruments) in respect of

their maturity or conversion period shall be made unless credit rating agency has been
obtained and disclosed in the offer document.

For a public/rights issue of debt security greater than or to Rs 1 billion, two ratings from two
different credit rating agencies shall be obtained.

In cases where credit rating is obtained from more than one credit rating agency, all the credit
rating/s, including the unaccepted credit ratings, shall be disclosed.

All the credit ratings obtained during the three years preceding the public or rights issue of
debt instrument (including convertible instruments) for any listed security of the issuer
company shall be disclosed in the offer document.

The progressive liberalization of economic policies, which led to the establishment of new
projects and corporate sectors increasing dependence on primary market for raising funds,
highlighted the need for setting up a credit rating agency in India.

During this period primary as well as secondary market witnessed a phenomenal growth. So
in order to provide unbiased assessment of the credit worthiness of companies issuing debt
instrument. The first credit rating agency (CRISIL) was established in1987 and it started its
operations in 1888.

In response to the ever-increasing role of credit rating, two more agencies were not up in
1990 (ICRA) and 1993 (CARE) respectively.10

Today, following are the credit rating agencies functioning in India:

1. Credit Rating Information Service Service of India Ltd. (CRISIL)

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2. Investment Information and Credit Rating Agency. (ICRA)

3. Credit Analysis and Research Ltd. (CARE)

4. Phelps Credit Rating India Ltd. (DCR)

5. Onida Individual Credit Rating agency. (ONICRA)

CRISIL

The Credit Rating Information Service of India Ltd. was promoted in 1987 jointly by the
ICICI Ltd and the UTI. Other shareholders include the Asian Development Bank Life
Insurance Corporation of India, HDFC Ltd., General Insurance Corporation of India and
several foreign and India banks.

It commenced its operation in January 1998. In 1996 CRISIL forged a strategic business
alliance with Standard and Poors with purpose to drive benefits such as international
experience revamping of operating systems, introduction of value added methodologies in
new areas and assist the client-companies in raising funds across the country.

CRISIL was set up with a basic purpose to rate debt obligations, which would guide investors
as to the risk of timely payment of interest and principle. At present, functions performed by
CRICIL fall under three board categories:-

1. Credit Rating Services

2. Advisory Services

3. Research and Information Services

Credit Rating Services: -

The principle function of CRICIL is to rate mandated debt obligations of Indian Companies,
chit funds, real estate developers, non-banking finance companies, and Indian States and so
on. It is the core business of CRISIL while new business has begun to make a moderate
contribution, which is about 80% to the revenue.

Following functions has been included in the rating services by CRICIL

-Rating the debt obligations

-Rating of structural obligations `

-Rating of real estate developers projects

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 -bond fund rating

-Rating of collective investment schemes.

CRISIL Research and Information Service:-

CRISIL Advisory Services for consultancy services to various state Government,

Disinvestments Commission on disinvestments plan for public sector enterprise, major port
authorities, and state Electricity Boards and so on. Other clients availing of advisory services
from CRISIL are the Public sector enterprises, banks and financial institutions and instigating
risk. It also formulates and executes strategies for that.

CRISIL Research and Information Services: -

CRISIL Research and Information Services include value-added research activities and
customized studies in following areas.

-Indian Capital Market

-Indian Industries, and

-Indian Corporate Sector.

Following are the services, which are included in CRIS

A. CRISIL Sector Wise

B. CRISIL View

C. International Information Vending

D. CRISIL Index Services

Crisil CPR: -

The Crisil CPR is a scientific and objective methodology for assessing all parameters
affecting fund performance by synthesizing both risk-return parameters as well as portfolio
related attributes including liquidity, credit quality and diversification to arrive at a composite
rank. A Crisil Fund Services analysis indicates that the predictive power of the Crisil~CPR
has been demonstrated thus considerably enhancing its utility as a measure of mutual fund
performance on a forward looking paradigm. Fund managers need a dynamic approach to
measure the risks and returns of financial portfolios, one based not just on historical trends

12
but also on a projection of inherent portfolio risks and their impact on future performance.
The Crisil~CPR is an analytical tool for measuring fund performance that fulfills this goal.
The methodology is superior since it also overcomes market imperfections and the lack of
long history in the Indian capital market while the inclusion of the portfolio attributes gives it
the ability to look forward.

CRISIL Rating symbols: -

CRISIL assigns ratings only to rupee denominated debt instruments. These symbols are
symbolic expression of opinion/assessment of the credit rating agency. Here is a brief
summary of CRISIL’s rating symbols used for the rating of:

1. Debenture.

2. Fixed Deposits.

3. Short Term Instruments.

4. Structured Obligations.

5. Foreign Structured Obligations.

6. Instrument Carrying Non-credit Risk.

7. Financial Strength ratings of insurance companies.

8. Debt Fund Portfolio

9. Real Estate Projects.

10. Government and Creation Ratings

Difference between A And AA

There is a slightly difference between these. The differences between fundamentals of ‘A’
and ‘AA’ instruments, we believe, are not significant enough to justify the complete neglect
of ‘A’ rated paper by the bond market,” Roopa Kudva, CRISIL’s executive director and chief
rating officer, said. Explaining Crisil’s perspective at a seminar on investment opportunities
in the debt market, Kudva said, A-rated papers provide an untapped opportunity for investors.
There is an increasing trend of rating upgrades, she said.13

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Note:-CRISIL may apply ‘+’or ‘-‘ signs for ratings with rating symbols to reflect
comparative standing within the category.14

Controversy regarding A and AA symbols: -

Corporate papers with ‘A’ rating provide good investment opportunities as their credit ratings
have stabilised and financial ratios improved, rating agency Crisil Ltd said Tuesday. “The
differences between fundamentals of ‘A’ and ‘AA’ instruments, we believe, are not
significant enough to justify the complete neglect of ‘A’ rated paper by the bond market,”
Roopa Kudva, CRISIL’s executive director and chief rating officer, said. Explaining Crisil’s
perspective at a seminar on investment opportunities in the debt market, Kudva said, A-rated
papers provide an untapped opportunity for investors. There is an increasing trend of rating
upgrades, she said. According to Kudva, A-rated papers were victims of a vicious circle of
investor apathy wherein these companies are unable to raise money from the market due to
poor demand and there is no liquidity—as demanded by investors—because there is no
issuance. Weak investor appetite for A-rated papers was prompting companies not to accept
and publish the ‘A’ rating. As a result, A-rated companies are seeking finance from banks
instead of tapping the bond market. “As a result, issuance volumes in A-rated papers tend to
be low, which in turn leads to low liquidity for this paper, which again increases bias against
these papers among bond market investors,” Kudva said. According to Kudva, issuance of A-
rated papers fell to 9% of the total issuance in 2000-2003 from about 60% in the previous
three years. Kudva noted that the financial ratios of the A-rated papers were increasing and
their ratings had become more stable. “We believe A-rated papers present significant
untapped opportunities for investors,” she said. R. Ravimohan, managing director and chief
executive officer, CRISIL, said, “We are making a plea to support endangered species called
A-category paper.” Explaining the investor perspective, Alok Vajpeyi, president, DSP Merrill
Lynch Fund Managers, said liquidity was the key issue for investors. “Is there enough
liquidity in AAA before we go down the line?” Vajpeyi said. “Liquidity is the key.” To
revive the corporate bond market, Vajpeyi said trading infrastructure and transparency should
increase. There is also a need for market making in corporate bonds, he said.15

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Market position of CRISIL: -

SHAREHOLDERS of CRISIL can continue to hold the stock. They, however, will need to
nurse a long-term perspective for the stock to deliver returns that are commensurate with risk.

Regulatory shock

For many years now, CRISIL has been a beneficiary of the changes in regulations governing
debt securities. Regulations such as mandatory rating for securities helped the company notch
steady growth in revenues and profitability. However, in the quarter ended December 2003,
regulatory changes became a hurdle for revenue growth. The requirement that banks can
invest in only listed debt securities affected activity in the market for private placement of
debt securities. The restriction on raising loans from the overseas markets also played a part.
Consequently, rating income declined.

The impact on profitability turned out to be quite significant. In the first half of 2003-04,
rating revenues rose about 10 per cent; in the third quarter ended December 2003, they
declined by about 17 per cent. Importantly, operating profits from rating rose 24 per cent in
the first half suggesting that CRISIL was enjoying the benefits of scale. However, the slump
in rating revenues led to a 33 per cent fall in operating profits. With ratings accounting for
about 90 per cent of profits, net profits too fell by about 43 per cent.

However, the shock to rating revenues is likely to prove temporary. The requirement of
listing of debt securities is unlikely to stop triple-A rated companies from participating in the
market for private placement. The volume of activity is only likely to improve with the debt
issuers likely to take the listing requirement in their stride. The step up in economic activity is
another growth driver. Over the long-term, structural changes such as the shift in investor
preference for mutual funds vis-à-vis bank term deposits and issuance of complex securities,
such as mortgage-backed securities, have the potential to augment ratings revenue growth for
CRISIL.

ICRA Ltd

Investment Information and Credit Rating Agency has been promoted by IFCI to meet the
requirements of companies based in north India. IECI holds 26% stake in ICRA and the other

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shareholders, which are UTI, Banks, LIC, GIC, HDFC and Exem Bank, hold rest. This credit
rating agency started its operation in 1991. ICRA has entered into a memorandum of
understanding (MoU) with Monday’s Investors Services in order to bring international
experience and practices to the Indian capital market.

Like CRISIL, the objective of ICRA is to unbiased information to the individual and
institutional investors regarding instruments, so that they can take better investment decision.
In the twelve years of its operation, it has diversified into variety of services. At present it
provides following kind of services:

i. Rating Services

ii. Information Services

iii. Advisory Services

Rating Services: - In these services, ICRA rates debt instruments issued by

Manufacturing companies, Commercial Banks, Non-Banking Finance Companies, Financial
Institutions, Public Sector Undertaking etc. Apart from this Rating Services includes credit
assessment of large, medium and small-scale enterprises, which are looking for financial
assistance from commercial banks, financial institutions and financial services companies.

Information Services: - Information Services offered by ICRA focuses on providing

authentic and unbiased information to various intermediaries, financial institutions, banks,
assets managers, individuals and institutional investors etc.

This includes corp. reports, equity assessment, mandate based studies and industry specific
publications.

Advisory Services: - Under these services, ICRA provides consultancy to the various
player in financial markets such as investors, issuers, regulators, intermediaries and the media
on business and organizational issues. For this, it has also signed a MoU with international
credit rating agency “Moody Investor Services”.

These services include:

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1. Strategic Consultancy

2. Risk Management

3. Inputs for Policy Formulation.19

ICRA BPO venture

ICRA Ltd on Thursday said that its business process outsourcing facility in Kolkata will be
operational by the month-end. The facility will cater to the analytical and research-based
requirements of diverse users, an ICRA release said here. The operations would be conducted
through ICRA Online. ICRA has roped in Mr Joydeep Bhattacharya, head of the Indian
operations of research body Zacks, to head the BPO venture.

MARKING the entry of the first Indian credit rating agency into the European market, ICRA
Ltd has signed a memorandum of understanding (MoU) with the Bulgarian Credit Rating
Agency (BCRA).

As per the MoU, according to an ICRA statement here, the Indian rating agency will provide
technical assistance to BCRA in designing rating methodologies, besides imparting training
to its analysts, and help them in carrying out rating assignments.

Commenting on the development, ICRA Managing Director, Mr P.K. Choudhury, said: "The
entry into Bulgaria underscores ICRA initiatives towards lending its proven expertise to
rating entities beyond India. The MoU with BCRA is important not only because it marks our
entry into Europe, but also because it highlights the growing international acceptance of the
expertise that our country has built up in the area of credit rating within a relatively short
span of 14 years or so."

For BCRA, the MoU with ICRA is a critical step in the direction of institutionalizing the
system of credit rating in Bulgaria. Said Ms Sonya Sofronova, Executive Director, BCRA:
"We propose to use ICRA expertise in establishing a firm base for the system of credit rating
in our country. Through credit rating, we want to assist Bulgarian companies find new
opportunities of financing and market expansion."

Besides, BCRA has set for itself the target of becoming "a leader in providing correct and
unbiased assessment of Bulgarian companies' creditworthiness” and the MoU with ICRA is a
move towards this goal, she said.
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For ICRA, the MoU marks yet another step by the Indian agency beyond national borders.
Already, it has helped in the establishment of a credit rating agency in Kuwait and also
signed an MoU in another country in West Asia.21

ICRA Rating Symbols: -

The ICRA rating is a symbolic indicator of the current opinion of the relative capability of
timely servicing of the debt obligations. ICRA rates long term, medium term and short-term
debt instruments.

Following is a brief summary of the rating symbols used by ICRA for the following: -

 Long Term Instruments (Debentures Bonds, Preference Shares)

 Collative Investment Schemes.

 Rating of Insurance Companies.

 Corp. Governance Rating.

Note:- The Suffix of ‘+’ or ‘-‘ may be used with rating symbols to indicate the comparative
position within the group covered by the symbols.22

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Business Overview    

Who we are 

CRISIL is a leading agile and innovative, global analytics company driven by its mission of
making markets function better.

We are India’s foremost provider of ratings, data, research, analytics and solutions. A strong
track record of growth, culture of innovation and global footprint sets us apart. We have
delivered independent opinions, actionable insights,and efficient solutions to over 1,00,000
customers. Our businesses operate from India, the US, the UK, Argentina, Poland, China,
Hong Kong and Singapore.

We are majority owned by S&P Global Inc., a leading provider of transparent and
independent ratings, benchmarks,analytics and data to the capital and commodity markets
worldwide.

Who we serve

Our clients range from micro, small and medium companies to large corporates, investors,
and top global financial institutions. We work with commercial and investment banks,
insurance companies, private equity players and assetmanagement companies globally.

We also work with governments and policy makers in the infrastructure space in India and in
other emerging markets.

How we add value

Our analyses, insights and solutions help lenders, borrowers, issuers, investors, regulators and
intermediaries make sound decisions. We help clients manage and mitigate risks, take pricing
and valuation decisions, reduce time to market, generate more revenue and enhance returns.

 By helping shape public policy on infrastructure in emerging markets, CRISIL helps catalyse
economic growth and development in these geographies.

Our Purpose    

Vision

To be a leading agile and innovative, global analytics company.

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Mission

To make markets function better by providing independent opinions, actionable insights and
efficient solutions.    

Values

Integrity

We are independent in our thinking and act with unimpeachable integrity at all times. Our
opinions and analyses are credible, unbiased and not bound by any company, government or
market.    

Excellence

We continuously innovate to deliver actionable analyses and solutions that help customers
make informed business decisions and mitigate risk. We are committed to the highest quality
standards, while robust analytical rigour ensures that our insights are objective, distinct,
consistent and reliable.

Accountability

We are committed to what we do, we stand by our opinions and analyses, and we assume
complete responsibility and ownership of our decisions and actions.

Teamwork

We collaborate with, and incorporate the expertise and insights of each team member to
enhance the value of our deliverables to customers, investors and other market participants.    

Respect

We treat everyone with mutual trust and respect, be they colleagues, customers or other
stakeholders. We embrace and cherish the inclusivity and diversity of our organisation.   

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Ratings

We pioneered credit rating in India in 1987, and emerged a leader with our independent,
analytical rigour and innovation. As a full-service rating agency, we rate the entire gamut of
debt instruments, and provide a globally unique and affordable rating service for
SMEs. We’ve not only set business standards but also instituted several innovations with our
best practices.  

We serve lenders, investors, issuers, market intermediaries and regulators by covering

manufacturing companies, banks, NBFCs, PSUs, financial institutions, state governments,
urban local bodies, and mutual funds. 

Issuers and borrowers leverage our ratings for enhancing their access to funding, widening
range of funding alternatives, and optimising cost of funds. Investors and lenders use our
ratings to supplement their internal evaluation process and benchmark credit quality across
investment options. Our ratings act as benchmarks for pricing and trading of debt instruments
for markets at large.

SME Offerings

With ratings or assessments of over 110,000 Micro, Small and Medium Enterprises (MSMEs)
in India, we have been able to expand the market for ratings and improved SMEs' access to
affordable finance. We also play a key role in evaluating and benchmarking performance of
dealers, vendors, customers, franchisees and partners of large corporates. Our evaluations
facilitate a 360 degree insight into the financials, management capabilities and business risks
of SMEs, which have helped them optimize and improve their operations.

CRISIL Verified

We undertake independent verification of MSMEs and provide them with a CRISIL

VERIFIED ID - a unique code valid for one year. Verified organisations can display "CRISIL
VERIFIED" logo on their website as a proof of our verification.

CRISIL Verified helps MSMEs:

 Build credibility

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 Enhance the confidence of potential customers, suppliers and bankers

 Leverage on the CRISIL brand and gain advantage over competitors

 Create greater visibility

 Build better market identity and attract global customers

 Increase business opportunities

 Reduce delay in lead-maturity by expediting decision-making

 Reduce transaction failure risk

 Access an effective medium to showcase their products, services, and business activities

CRISIL Real Estate Star Gradings

This gradings provide city specific all-round assessment of real estate projects and help
buyers benchmark and identify quality projects within their city.

CRISIL Real Estate Star Gradings address two critical needs in the realty sector: improved
transparency and objective benchmarking of projects.

 The key factors evaluated in the Star Gradings process are:

 Quality of legal documentation,

 Construction related risks,

 Financial flexibility/viability of the project besides the background, and

 Track record of the project sponsor.

Star Gradings is based on an eight-point scale that is specific to the city - from ‘City 7-Star’,
the highest to ‘City 0-Star’, the lowest.

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Real Estate Agent Verification

Real Estate Agent Verification is an exclusive offering by CRISIL for the clients of
magicbricks.com. It is a unique proposition, and will affirm that the presented credentials of
the organisation/firm/service provider have been verified and validated at site.

How Real Estate Agent Verification helps real estate agents:

 Positions the agency as a reliable and credible potential partner

 Helps the agency gain a competitive advantage by setting it apart from its peers

 Attracts global customers, thereby enhancing the business’ growth potential

 Supports the organisation’s marketing effort and enables it to differentiate itself, build its
reputation and attract new business opportunities in the crowded online marketplace

 Lets the organisation leverage the CRISIL brand

To know more about this product, please contact:

Mr. Gautam Verma

Associate Director, Institutional SME, CRISIL Limited

Email: gautam.verma@crisil.com

Land line:  0124-6722428

Mobile: 099990-21752

About magicbricks.com: magicbricks.com is a high-end property portal that caters to a

global market with its unique services and novel online features. Having been launched in the
year 2006 by Times Group, Magicbricks has quickly risen to being the No. 1 Property Portal
in India. 

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 MFI Grading

Microfinance involves providing credit, thrift, and other financial services and products to the
economically underprivileged, to enable them to raise their income levels and living
standards. Microfinance Institutions (MFIs) act as facilitators towards this end.

In line with its objective of helping markets function better, CRISIL pioneered the concept of
MFI grading and assessment services in India. We have, so far, assessed over 270 MFIs.

CRISIL MFI Grading is 

 CRISIL's opinion on sustainability and scalability of the rated MFI

 One-time assessment based on the information provided by the MFI

 Based on an eight-point scale - mfR1 (highest) to mfR8 (lowest)

CRISIL MFI Grading is not 

 A credit rating does not indicate the credit worthiness of the graded MFI

 A proxy for timely payment of interest and principal by, or to, the rated MFI

 A recommendation to purchase, sell, or hold any debt instrument issued by the rated MFI

 Monitored on an ongoing basis

 For use by the rated MFI to mobilise deposits/savings/ thrift/insurance funds/other funds
(including equity) from its members/clients or the general public

Renewable Energy Grading

Our Renewable Energy Grading offers an in-depth assessment of the performance capability

and financial strength of enterprises. It assists enterprises who undertake solar photovoltaic and
thermal technology projects,  energy efficiency projects, and/or seek to avail IREDA's
Renewable Energy Financing scheme.

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Our services include

CRISIL Solar Energy Gradings

The Jawaharlal Nehru National Solar Mission (JNNSM) is one of eight national missions
launched by the Government of India. 

Energy Service Company Gradings

Bureau of Energy Efficiency (BEE) is promoting energy efficiency initiatives in the country
under the Energy Conservation Act, 2001.

CRISIL-IREDA Credit Rating Model (ICRM)

The Indian Renewable Energy Development Agency (IREDA) has appointed CRISIL to
undertake assessment of prospective borrowers seeking to avail of IREDA's Renewable Energy
Financing scheme. 

SME Ratings

Our SME Ratings indicates the performance capability and financial strength of Micro, Small
and Medium Enterprises. The entity-specific rating reflects the SME’s creditworthiness in
relation to other SME.

SMEFIRST is a new online service by CRISIL that enables SMEs to avail CRISIL services and
offerings digitally. Register with smefirst and accelerate your business growth.

Why do you need a CRISIL Rating?

 A trusted unbiased evaluation

 Access to funding A good rating from CRISIL carries weight with lenders, and can help
SMEs get faster credit at a lower cost.

 Credibility and confidence building with business partners A CRISIL rating is an

indicator of overall credit worthiness of an enterprise arrived at by analysing its operating
performance and financial strength. A good rating provides comfort to all your
stakeholders.

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 Rating helps improve visibility Rated enterprises get a free listing on www.crisil.com.
The name of the rated entity is also published in CRISIL SME Connect (A journal by
CRISIL SME Ratings), reaching out to all leading banks and financial institutions as well
as over 1,10,000 SMEs.

 Useful as a marketing tool Publish your rating on their website, brochures,

advertisements, and marketing material.

 Self-improvement tool Along with the rating, CRISIL gives a detailed, analytical report
on the strengths and weaknesses of the rated enterprise. This functions as a powerful self-
improvement tool, enabling enterprises to strengthen their operations.

India Research

We are India's largest independent integrated research house, providing insights, opinion and
analysis on the Indian economy, industry, capital markets and companies. Our industry
research covers 86 sectors and is known for its rich insights and perspectives. We play a key
role in India's fixed income markets, being largest provider of valuation of fixed income
securities to the mutual fund, insurance and banking industries in the country. We are also
the sole provider of debt and hybrid indices to India's mutual fund and life insurance
industries. Our access to proprietary and public data across economy and sectors gives us a
distinct edge in developing analytics, which can be leveraged to provide deep and actionable
insights to our clients.

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Economy Research

The CRISIL Centre for Economic Research (C-CER) reflects CRISIL's commitment
to providing an integrated research offering to help corporates and policy-makers take
informed decisions. C-CER provides an outlook on the Indian economy and in-depth analysis
of emerging trends, and also engages in customised presentations and panel discussions with
policy-makers and corporate leaders.

Industry Research

CRISIL industry research covers 86 sectors and is known for its rich insights and
perspectives. Our analysis is supported by inputs from our large network sources, including
industry experts, industry associations and trade channels. Delivered through an innovative
web-based platform, our views, commentaries and reports help our clients take informed
lending, investment and strategic decisions.

Sectoral Research 

We analyse millions of data points using a large network of primary data sources to provide
our clients with long-term and short-term future outlook on 90 core sectors in India including
automobiles, consumer products, construction and capital goods, infrastructure, metals, and
others. We also provide an in-depth analysis of the factors that affect the performance and
profitability of these sectors.

Our sectoral research covers the following areas:

 Outlook: demand-supply, prices, and an update on the industry’s performance among

other parameters

 Researched information: actionable insights on everything from capacities and exports

to industry structure, technology, regulations, and player profiles

 Premium tools and analysis (Research+): Our tools include ratings information, credit
analysis, and financials for 1,100 listed entities

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Our analysis and views are delivered nearly real-time through a web based platform, that
allows our clients to understand regional dynamics of industries, apply multiple scenarios to
help in credit evaluation, get access to emerging trends in niche industries, interact with
sectoral experts, among others.

Based on market feedback and emerging trends, we provide special reports on Indian
economy including SME, NBFC, agriculture and emerging sectors. These reports cover our
views on the growth prospects, competitive scenario & attractiveness of these segments.

Features of our research delivery platform

 What if analysers - for sensitivity analysis by creating multiple scenarios of an industry,

thus helping better credit evaluation

 Video clipping of industry experts - 2-3 minute video clippings of our experts covering
topical issues on the industry and demand drivers for quick understanding of impact of
changes

 Analyst presentation - for quick reference, an entire report is condensed into a few slides

 Discovery - interactive tool for understanding regional dynamics of industries

 Thematic reports - analysis of new areas/concepts/trends across industries and coverage

on niche industries

 Ask the Analyst - interact with our sectoral experts for any analytical queries,
clarifications, or additional data requirements

SME Report

Micro, small and medium enterprises (MSMEs) lending of over Rs 15 trillion, accounted for
around 22% of corporate lending in India as of fiscal 2018. The segment continues to offer
attractive business opportunities for financiers, especially with the Goods and Services Tax
(GST) regime in place. The challenge lies in spotting the sectors and clusters that are likely to
offer the desired risk-adjusted returns. And that entails tracking the performance and riskiness
of sectors and clusters on a timely basis.

Our report addresses this by providing: 

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 Insights and outlook on business and financial prospects across sectors and clusters

 Industry and cluster attractiveness matrices to differentiate between sectors and clusters

 An interactive business and financial tool to assist in benchmarking across clusters and
sectors

 A database of ~7,000 SMEs, along with key financial ratios of ~6,000 of these

 A six-month monitoring mechanism for SME sectors and clusters

 Views on asset quality sector-wise and cluster-wise

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Benefits of the report: 

 Identification of sectors with strong growth opportunities to aid focused lending

 Assessment of risks and factors influencing the competitiveness of SME units across
sectors and geographies, to enhance risk-monitoring capabilities for existing portfolio

 Selection of promising geographies to focus on within a sector, based on business and

financial analysis

 Tools and databases for prospecting

 Effective review and monitoring with introduction of six-month surveillance dashboard

 Gauging the asset quality risk sector-wise and cluster-wise

Coverage of the report 

1. Outlook on 73 manufacturing, services and trading industries that have a large SME
presence

o Placement in industry attractiveness matrix

o Industry size, structure, SME presence

o Demand-supply scenario and forecasts

o Impact analysis of implementation of GST on the relevant sectors and SMEs

o Growth drivers

o Key risks for SMEs

o Financial performance of SMEs

o Ratings distribution of CRISIL-rated companies

2. Outlook from SME perspective (profiles of ~157 clusters across 73 industries)

o Placement in cluster attractiveness matrix

o Cluster snapshot (size, product profile, number of units, historical growth)

o Comparison of financial performance of companies in a cluster vis-à-vis in the industry

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o Cluster competitiveness

o Key risks faced by companies in a cluster

o Ratings distribution of CRISIL-rated companies in the cluster

o Outlook for the cluster from SME perspective

o Voices from the industry

3. Asset quality sector-wise

o Views on asset quality sector-wise

o Benchmarking a cluster’s asset quality with overall sector

4. List of Around 7,000 SMEs

o Location

o SME/NSIC Rating

o Constitution

o Key financial parameters (select companies)

5. Six-month surveillance dashboard

o Demand/ supply sentiment over the past six months

o Trend in key raw material movement

o Impact of regulatory change/ new developments

o Any reason for change in business potential/ financial strength

o Any cluster severely impacted with reasoning

o Ratings upgrade to downgrade ratio

o Financial performance update

6. Tools

o Interactive tools to assist in benchmarking across clusters and sectors.

 Financial tool to facilitate comparison on the basis of the past three years’
financial information, within sectors and clusters, and between sectors and clusters

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  Business tool offering information related to main products, capacities, plant
locations, key clients, key risks, future capital expenditure plans, exports presence,
etc. across ~6,000 SMEs rated by CRISIL

7. Latest news and analysis

8. SME related CRISIL releases

9. Annexures

10. Revenue cut-wise financials (provided on request basis only)

o Rs 0-250 million

o Rs 250-750 million

o Rs 750-1250 million

o Rs 1250-1750 million

o Rs 1750-2500 million

Agriculture Report

Despite a mere 18% contribution to India's GDP (as per the new GDP series), agriculture
remains a paramount factor in rural consumption and has an indirect impact on the industry.
In addition, it helps widen the job market. With limited scope to increase area under
cultivation, in recent times the focus has shifted to productivity improvement by deploying
modern techniques such as the use of hybrid or genetically modified seeds, fertilisers,
pesticides, bio-pesticides, bio-fertilisers, and micro-irrigation. These areas provide
tremendous growth opportunity, and have attracted significant interest of lenders and
investors in the last few years. However, in many of these areas there is still a dearth of high
quality information, insightful research and competitive intelligence.

The report also covers government initiatives such as the recent decision to enhance
compensation by 50 per cent to farmers facing crop loss, or the change in classification and
targets of priority sector lending by the Reserve Bank of India. This report covers

o Agri-credit

o Assessment of state-wise opportunity and risks (top 15 states)

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o Pre and post-harvest perspective

o Role of NBFCs in agri financing

o Agri insurance market: Structure and coverage

o Key agri inputs

o Current market size (2015-16)

o Growth outlook for next 3 years (2016-17 to 2018-19)

o Key agri input segments and sub-segments

o Industry structure (including import-export trends)

o State-wise emerging trends

o Competitive scenario

o Outlook on profitability

o Regulatory framework and government policies 

o Total of 950 data tables, including data points across 10 key parameters for 400 districts
encompassing agricultural credit, seed and pesticides usage, farm equipment ownership,
and irrigation penetration 

o Profile of 250 companies

Benefits for investors/lenders

o Opportunity - Risk matrix by state to aid portfolio planning

o Sizing of overall Agri lending segment by key segments of pre and post harvesting

o Assessment of opportunities and risks across 8 Agri input segments

o Financial and operational benchmarking on 250 companies

o Continuous tracking of mandi prices and arrivals for key crops by states to aid portfolio
assessment

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Benefits for corporates

o Sizing of Key Agri Input segments along with forecast until 2018-19     

o State wise trends emerging for key input segments       

o District-level data points to aid in planning and business development        

o Financial and operational benchmarking with peers        

o Key government policy and regulations impacting the segments

Industry Risk Scores

We capture the influence of industry variables the extent of positive/negative impact on the
cash flows and debt repayment ability of companies in an industry over a 3-4 year horizon.
The risk score for an industry is arrived at by aggregating the scores assigned to the relevant
parameters like demand supply outlook, cost structures, competition and financial
performance. 

We have developed and regularly update scores on about 154 industries that are provided to
banks as critical inputs for their risk assessment models. The scores also help banks:

o Identify 'positive and negative' industries and set industry-wise exposure norms

o Take more informed strategic decisions by focusing on industries that are likely to
perform well and reduce exposure in below-investment-grade industries

o Assess the borrower risk through an accurate assessment of industry risk

o Monitor industries proactively and on a continuous basis

We also have the SME Industry Risk Scores on 129 industries capture the impact of variables
on SMEs and on their cash flows and debt repayment ability over a 1-2 year period. The risk
score is arrived at by aggregating scores assigned to relevant parameters. Each parameter
factors regional opportunities and challenges in the cluster

Scale: The Industry Risk Scores have been graded on a six-point scale, with 1 indicating high
risk and 6 indicating low risk. Relative risk scores are calculated by considering various
business and financial parameters. 

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 Real Estate Research

We provide an in-depth analysis on residential, commercial, and retail markets across 103
micro-markets in 10 Indian cities through our real estate research solution, City Real(i)ty.
Our research is based on intensive primary sourcing through a series of interactions by our
sector specialists with developers, real estate agents, market intermediaries and financing
institutions. We leverage CRISIL's decades of research and understanding of demand-driving
industries.

The cities covered under real estate research are Ahmedabad, Bangalore, Chandigarh,
Chennai, Cochin, Hyderabad, Kolkata, Mumbai, NCR and Pune.

The following City Real(i)ty analysis is accessible on an annual subscription through a web
based platform:

o Three annual detailed analyses and three updates

o Monthly price trends across micro markets in the residential, commercial, and retail space

o City-specific real estate news

o City-specific project launches

o Video offering a market outlook for top 10 cities

o Snapshot of key private equity and land deals

o Impact analysis: real-time analysis of key regulations or policies impacting the real estate
sector

Company Research

Our Company Research covers data analysis of the top 150 listed companies in India, providing an in-
depth perspective into their performance and outlook. Our offerings include:

CRISIL Views

CRISIL Views provides independent and unbiased perspective on the financial performance,

relative market position and future outlook of 150 listed Indian companies across sectors. These
research reports, published every quarter, covers the following key areas: 

35
Business Risk:

Recent three-year financial performance of the company, accounting quality and others

Financial Risk:

Prospects of the sectors the company operates in, relative position of the company in its
businesses on operating efficiency, market position in comparison to the sector average, or the
major peers, and others

Rating Analytics

CRISIL Rating Analytics is a high-end analytics and benchmarking tool that allows for
tracking and analysing the performance of rated companies in India. Delivered through a web-
based platform, the tool provides actionable insights that can help investors effectively monitor
their portfolios and take informed financial decisions. 

It also covers all the ratings issued by any Credit Ratings agency in India for the above
corporate and financial entities. 

Features of this tool: 

 Advanced Search on financial & non-financial parameters

 My Portfolio - build, upload and monitor the companies in your portfolio

 Compare - between companies/industries/portfolios, company to industry, portfolio to

industry

 Company Profile - view company details, rating information & financials

 Rating List - single-screen view for ratings across agencies

 Rating History - users can access history of ratings migration

 E-mail Alerts - on rating changes

 Commentaries and Analyses - opinions from CRISIL Ratings along with views on
topical themes

 Rating Methodologies and Criteria - for various sectors & instruments

36
 Capital Markets Research 

We play a key role in India’s fixed-income markets. We are the largest provider of valuation of
fixed-income securities to mutual funds, insurers and banks, and the sole provider of debt and
hybrid indices to mutual funds and life insurers. We also pioneered independent equity research
in India, and are the country’s largest independent equity research house. Our fixed income
valuations and indices provide greater transparency in the fixed-income markets and empower
investors with independent benchmarks to evaluate the performance of their investments. Our
independent equity and company research reports provide insights to investors on under-
researched companies. Our reports have improved transparency and trading volume for
companies under our coverage.

We play a critical role in India’s funds and fixed-income markets. Our offerings include:

 Running the largest and most comprehensive database on India’s debt markets, covering
more than 18,000 securities

 Providing valuations for fixed-income and hybrid securities to asset managers, including
mutual funds, insurers, banks and retirement funds

 Evaluating more than Rs 81 trillion (USD 1,275 billion) of Indian debt securities

 Providing debt and hybrid indices to mutual funds, insurers and retirement funds

 Maintaining 91 standards and over 100 customised indices

 Maintaining customised benchmarks for fixed-income portfolios

 Providing due-diligence and ranking services to mutual funds and insurers that are used
by asset managers, distributors and institutional investor

CRISIL’s fixed-income valuations and indices are insightful, as they are comprehensive
gauges that help investors independently evaluate the performance of investments. CRISIL is
also the Business Review Consultant to the Employees’ Provident Fund Organisation (EPFO)
and the National Pension System (NPS) Trust, assisting in selection and monitoring the
performance of their fund managers. Our offerings under CRISIL Equities are classified
into Independent Equity Research (a unique concept globally) and Initial Public Offer (IPO)
Grading. CRISIL Equities also provides equity outsourcing and customised research for

37
information memoranda and offer documents that are prepared by companies as part of their
fund-raising initiatives.

SME Fundamental Research

CRISIL’s SME Fundamental Research offers evaluation of SMEs from an equity investor’s
perspective and helps small and medium-sized enterprises in accessing equity funding
through the SME Exchange. In the past decade, CRISIL has pioneered many solutions for
the development of India’s SME sector, and this service offering is another step in that
direction. Evaluation of SMEs from an equity investor’s perspective needs a specialised
approach, as their characteristics are different from large companies. CRISIL’s SME
Fundamental Research bridges this gap. The SME Exchange, set up by the National Stock
Exchange, provides an exclusive trading platform for SMEs, facilitating the flow of equity
capital to companies on a growth path, but not large enough to list on the main bourses.
CRISIL offers SME Fundamental Grading services for companies that plan to get listed on
the SME Exchange. It also offers the SME Independent Equity Research for companies that
are already listed on the SME Exchange.

IPO Grading

CRISIL IPO Grading is designed to provide investors an independent, reliable and consistent
assessment of the fundamentals of new public issues. It includes an assessment of business
and financial prospects, management quality and corporate governance. Introduced under the
aegis of the Securities and Exchange Board of India (SEBI) regulation, an IPO grade is
particularly useful to retail investors who are seeking to invest in companies unknown in the
equity markets. Our IPO grading is assigned by a separate equity-focused team (and not by
credit rating analysts) to bring the necessary equity orientation to the outcome. It is much
more than due diligence - it is an independent view on equity fundamentals. An unmatched
track record of independent research and strong domain knowledge in all industries add to
our credibility.

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Equity Valuation

With a universe of about 100 companies under coverage, we are the best equipped to provide
both public and private companies with an independent opinion on fair value. Our valuation
represents the most likely price around which a deal can happen, if more than one
independently acting potential buyer/seller is found after adequate efforts, but within a
limited timeframe after our analysis.  The buyer/seller should have similar knowledge of the
business being transacted and its environmental factors. They should have no other strategic
factors weighing upon their mind as regards potential of this business.

Equity Support Services

CRISIL provides outsourcing services for both buy-side and sell-side firms. The advantages

of CRISIL’s equity support services include:

1. Cost savings of at least 30%

2. Flexible delivery models: both project and full-time employee (FTE) models are offered

3. Leverages CRISIL’s knowledge:

o Experienced analysts with sector-specific knowledge

o Refined research processes and proprietary techniques, ensuring high-quality output

o Focused training programmes to ensure analysts are kept abreast with the latest
analytical techniques.

Mutual Fund Research

CRISIL is a front runner of the mutual funds research services industry in India. CRISIL
Mutual Fund Ranking (CMFR) is highly popular among investors, intermediaries, and asset
management companies (AMCs). We also provide customised mutual fund ranking to wealth
managers, distributors, private banks, and advisory firms. Given CRISIL’s strength in
research and analytics for institutional clients such as provident funds (PFs) and treasuries,
we are widely engaged for our investment portfolio evaluation services.

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Mutual Fund Ranking

Our methodology for CRISIL Mutual Fund Ranking (CMFR) is based on global best
practices. It was launched in June 2000 and since then it has gained high acceptance among
investors, intermediaries and asset management companies. CMFR covers various categories
across equity, debt and hybrid asset classes. Unlike most other ranking models, which are
based purely on returns or net asset value (NAV), CMFR uses a combination of NAV
and portfolio-based attributes for evaluation. This provides a single point analysis of mutual
funds, taking into consideration key parameters such as risk-adjusted returns, asset
concentration, liquidity and asset quality. The ranks are assigned on a scale of 1 to 5, with
CRISIL Fund Rank 1 indicating 'very good performance'. In any peer group, the top
10 percentile of funds are ranked as CRISIL Fund Rank 1 and the next 20 percentile as
CRISIL Fund Rank 2. For further details, please check the ranking methodology document.

Customised Mutual Fund Rankings

Customised Mutual Fund Rankings are provided to wealth management, private banking and

advisory firms. The benchmarking of Indian mutual fund schemes is based on a combination
of qualitative and quantitative parameters. The customised rankings are based on the fund
houses and fund categories shortlisted by the client, who then receives monthly or quarterly
rankings based on mutually defined methodology and criteria.

PF Analytics

Being in the business of providing Valuation and Benchmarking services, CRISIL launched

Portfolio Analysis and Valuation Services for Retirement Funds. As an independent third
party, CRISIL lends greater credibility and transparency to the process of
portfolio evaluation. It also equips investment managers with a better understanding
of investment alternatives and risk mitigation. 

Services under Portfolio Analysis and Valuation Services include:

 Review of  retirement funds’ portfolio

o Performance benchmarking

40
 o Pay-out sustainability analysis  

o Analysis of exposure to credit risk

o Asset-liability management

o Interest rate sensitivity analysis   

 Valuation of retirement funds’ portfolio

 Investment policy compliance

Treasury Analytics

Corporates can obtain in-depth third-party evaluation of their investment portfolio with

our Investment Portfolio Evaluation Services. This considers various risk-related parameters
such as credit, interest rate, concentration, and liquidity of portfolios, on a quarterly or
ongoing basis.

Services encompasses: 

 Investment research for selection of Asset Management Companies and mutual fund
schemes

 Analysis of debt oriented schemes and fixed income securities, including bank fixed
deposits, involving both pre-investment and post-investment evaluation

 Comprehensive evaluation of portfolios on a quarterly basis

 Performance benchmarking

 Investment policy compliance

 Valuation of investments in the treasury portfolio

Global Research & Analytics

We are the foremost provider of high-end research and analytics services in the world. We
also offer custom research, equity and credit research services, business & marketing
analytics across sectors such as technology, telecom, energy, materials, healthcare,

41
pharmaceuticals, consumer packaged goods amongst others. Our high quality research
enables clients improve their institutional ranking, increase their coverage, enter new
markets, access better business insights, and deliver path-breaking research. Our research
centres in Argentina, China, India and Poland are geared towards providing cutting-edge
analysis, opinions, and solutions.

Infrastructure Advisory

We are leading advisors to governments and regulators, multilateral agencies, investors and
large corporates. We help shape public policy and enable infrastructure development. We
work in the areas of policy and regulatory, project advisory, public private partnership
frameworks, infrastructure financing mechanisms, and implementation support to large
infrastructure programmes. Our teams have expertise across the infrastructure spectrum,
including urban development, energy and natural resources, transport and logistics, and
infrastructure financing in India and other emerging countries. Our operations are based out
of India and 22 emerging economies in Asia, Africa, and the Middle East.

Risk Solutions

We provide a comprehensive range of risk management tools, analytics and solutions to

financial institutions, banks and corporates in India, the Middle East, Africa, South Asia and
South-East Asia. Our solutions help clients identify, measure, and calibrate a comprehensive
range of risks: credit, price, market, exchange and liquidity, operational, strategic and
regulatory. Our expertise in executing and managing diverse risk-related engagements
globally, in-depth understanding of geography-specific regulatory and implementation
requirements, and a pool of experienced professionals enable us to deliver enterprise risk
management frameworks from ideation to implementation. We supplement our core
consulting strength and analytical skills with robust proprietary software to provide efficient
solutions for risk management.

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Global Analytical Centre

Who We Are

CRISIL’s Global Analytical Centre (GAC), provides analytical, research and data services to
S&P Global (earlier known as McGraw Hill Financial) globally. The GAC support
encompasses research and analysis, complex data analytics and modelling assignments, risk
and regulatory services, and improving workflow efficiency. GAC acts like a
centralised research and analytics hub for SPGI teams spread across US, EMEA and APAC
regions.

Our Services Include:

 Credit analytics

 Industry, Company, and Country research

 Data management and enrichment (including specialised, adjusted economic data)

 Modelling and forecasting (including quantitative research and analytics)

 Sales and Marketing support

 Risk Management and Compliance Analytics

How We Add Value

GAC support goes beyond Ratings and pans across critical and emerging focus areas for
S&P Global. As a global research unit, GAC allows quick and seamlessly implementation of
global initiatives, and assists S&P Global in its mission to deliver essential intelligence.

 GAC enables standardisation and consistency of analysis and workflows through its
centralised operations.

 GAC’s round-the-clock support on critical time-sensitive assignments enables SPGI

increase coverage and improve time-to-market of analysis, insights and opinions.

 Create operating efficiencies by leveraging GAC’s culture of continuous improvement

through lean management tools and process re-engineering. 

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 GAC provides a large pool of high-quality and well-trained talent to SPGI to help scale-
up specialised support.

Major Shareholders

 Moody's Investment Company India Private  Indian Bank

Limited  UCO Bank
 IFCI Limited  Canara Bank
 State Bank of India  Andhra Bank
 Life Insurance Corporation of India  Indian Overseas Bank
 Unit Trust of India  Oriental Bank of Commerce
 Punjab National Bank  Others
 General Insurance Corporation of India

 Central Bank of India

 Allahabad Bank

44
 CARE

Credit analysis and research Ltd. was promoted by IDBI jointly with financial institution,
banks and private finance companies. It started its operation in 1993 and now it offers a wide
range of products and services in the field of credit information and equity research. These
services are categorized into the following categories:-

i. Credit Rating Services

ii. Information Services

iii. Equity Research

Credit Rating Services:-CARE rates all types of debt instruments including long term. It is
the core business of this rating agency.

Information Services:-Like CRISIL and ICRA. It also provides information services to

various players in the financial market. It provides information on any company, industry or
sector to individuals, mutual funds, and investment companies. So that they can take well
informed investment decision.

Equity Research: -Equity Research involves extensive study of the shares listed or which are
going to be listed on stock exchange and forecasts Potential looser and winner on the basis of
this study. For this purpose, it analyzes all the fundamentals affecting the industry, market
share, management capabilities etc.

Apart from basic services, CARE also provides some other services like:

 CARE Loan Rating

 Credit Analysis Rating etc.

Rating Symbols:-

CARE rating symbols are related with the rating of following:

 Long term and Medium term Instruments, which includes which includes fixed deposits,
certificate of deposits structured obligations, debenture and bonds etc.

 Short Term Instruments

 Credit Analysis Rating

45
 Long Term Loan

 Short Term Loan

 Collective Investment Schemes

NOTE: CARE may assign ’+’ or ‘-‘ signs after the assigned rating, where necessary, to
indicate the relative position within the brand covered by the symbol.

Grading Scales

Each of the rating agencies has different codes for expressing rating for different instruments;
however, the number of grades and sub-grades is similar For Example; for long term
debentures/bonds and fixed deposits, CRISIL has 4 main grades and sub-grades. In
decreasing order of quality, these are AAA, AA+, AA, AA-, A+, A, A-, BBB-, BBB, BBB+,
BB+, BB, BB-, B+, B, B-, C and D 23. ICRA, CARE and Duff and Phelps have similar
grading systems.

The following table contains a key to the codes used by CRISIL, ICRA and CARE

DEBENTURE AND BONDS

RATING
SCALES
RATING CRISIL ICRA CARE
AGENCY

Highest Security AAA LAAA CARE AAA

High Safety AA LAA CARE AA

Adequate Safety A LA CARE A

Moderate Safety BBB LBBB CARE BBB

Inadequate Safety BB LBB CARE BB

High Risk B LB CARE B

Substantial Risk C LC CARE C

Default D LD CARE D

46
COMMERCIAL PAPER

RATING

AGENCY CRISIL ICRA CARE

RATING SCALE

Highest safety P-1 A1 PR 1

High Safety P-2 A2 PR 2

Adequate Safety P-3 A3 PR 3

Inadequate Safety P-4 A4 PR 4

Default anticipated P-5 A5 PR 5

Duff and Phelps Credit Rating Pvt Ltd

It is the latest entrant in the credit rating business in the country as a joint venture between the
international credit rating agency Duff and Phelps and James Martin Financial and Alliance
Group. In addition to debt instruments it also rates companies and countries on request.

Rating services:

 Credit Rating Services: - Duff and Phelps rates all types of debt instruments including
long term. It is the core business of this rating agency.

 Company rating services: - Duff and Phelps rates all types of company.

 Country rating services: - In addition to debt instruments it also rates companies and
countries on request.

47
 ONICRA – Onida Credit Rating Agency

Onicra is promoted by well known Onida group a 900 crore market leader in consumer group
in India. In 1992, the Government decided to open provision of Cellular Mobile Telephone
Service for private participation. India adopted the Global System of Mobile Communication
(GSM). The Cellular Service operates in the frequency band 890-902.5MHz. and 935-947.5
MHz. Today, India has 25 private companies providing Cellular Services in 18 Telecom
Circles and 4 Metro Cities (Delhi, Mumbai, Calcutta and Chennai). Onicra serves mobile
telecommunication majors in different circles all across India.

Onicra Credit Rating Agnecy of India Ltd. is recognised as the pioneers of the concept of
individual Credit Rating in India. After being the first to introduce the concept, Onicra has
been continuously conducting in-depth research into all aspects of the behaviour of credit
seekers and has developed a comprehensive rating system for various types of credit
extensions. Onicra provides a platform to credit seekers and granters build long lasting
relationship.

ONICRA are the first to launch commercial services and provide individual credit rating and
reporting services to the Indian financial market. ONICRA has been acknowledged as
pioneers of Individual Credit Rating in the Economic Survey of India 1993-94 issued by
Ministry of Finance, Government of India and its services have been hailed by the financial
sector and in the media. Today we proudly have premier NBFCs, banks and loan agencies on
our portfolio.

Onicra has been working closely with the industry through network of branches and
investment in technology with a vision to provide online/offline services to the credit
seekers/extenders with fast, authentic and objective information.

Onicra has conducted intensive research into the credit analysis of small business as well as
into the rating of fixed deposits programmes of various non-banking finance companies based
upon which it has developed systems and procedures for performing rating in these areas.

The creditworthiness of the individual is based on various parameters. Onicra has divided the
parameters on a 100 point scale where every aspect of the credit seeker’s history like age,
qualification, occupation, stability at work, savings etc, will come under microscopic
examination. They also consider the extent of repayment and the history of payment. The

48
extent of payment, i.e., the amount of loan that an individual can avail of is calculated by
discounting the present earnings over the five years. The history of repayment includes the
intention of an individual to repay which in turn leads to a higher exposure to risk. A rated
individual is given a certificate which he can use to obtain credit.

An individual cannot approach Onicra directly for a rating and it is the finance company that
will insist on its customer obtaining an ICR. Onicra takes up the credit rating for individuals
at the request of a leading institution which writes to Onicra whenever a potential customer
approaches such a lending firm or institution for the customers credit. The customer is
required to fill in a prescribed form. Onicra takes up the rating exercise in hand and swiftly
establishes a credit rating of the individual customer. Depending upon the rating, the lending
institution takes decisions objectively on the financial exposure.

A lender can focus on the core interest areas of finance and investment without undertaking
the credit appraisal of the individual borrower. A lender can depend upon the rating of the
individual customer done by Onicra based on a highly sophisticated system of credit
appraisal, which pools to provide a comprehensive picture about his or her credit worthiness.

Onicra maintains a centralized pool of information about the credit performance of thousands
of potential customers by creating a linkage amongst a number of financial institutions across
the country and continuously update this massive database on day-to-day basis which any
individual institution would not find it easy to take on.

Onicra credit rating system is based on the sophisticated software developed in collaboration
with James Martin and co. (which has a collaboration with Duff and Phelps rating agency)
the world’s largest information engineering consultancy company. James Martin and Co. has
provided to Onicra the most comprehensive methodology that addresses the needs of mega
credit rating system.

Onicra Rating Scale: -

ONICRA has been pioneer to introduce the concept of individual credit rating.It has
developed a rating system for various types of credit extension by conducting in-depth study
of all aspects of the behaviour of credit seekers.

Rating system takes into account number of parameters which influence individual’s credit
behaviour.

49
The creditworthiness of the individual is measured on various parameters divided into 100
point scale. The parameters include-

1. Age

2. Qualifications

3. Occupation

4. Stability at work

5. Saving

6. Extent of payment i.e. the amount of loan that an individual can avail of

7. History of repayment.

Every individual being rated is issued a certificate which helps him in obtaining loan/credit.

Onicra Rating Process: -

Every bank or financial institution wants to know creditworthiness of its potential customers
so as to minimize the financial risk. In India there has been no agency to rate the individuals.
But Onicra has filled in this gap. It provides credit ratings of individuals on international
patterns, for use of banks and financial institutions.

(i) An individual cannot get rated himself directly. Onicra takes up the credit rating for
individuals at the request of lending institution.

(ii) A lending institution/firm writes to the Onicra whenever a potential customers visit
the firm for customer’s credit.

(iii) The customer is requird to fill in a prescribed form.

(iv) Onicra uses 100 point scale to rate the individual on various parameters.

(v) Depending upon rating assigned by Onicra the lending institutions proceed with
granting of consumer credit.27

50
 RATING PROCESS

In India all the four credit rating agencies adopt almost a similar rating process for rating new
debt issues and reviewing the rating of existing instruments. The steps generally taken by the
rating agencies in rating process are shown as under: -

RATING PROCESS

Findings
Analytical team Meets
Issuer CRISIL presented to
collects and company’s
request for Assigns an a rating
analyses management
rating analytical committee
information and resolves
team Interaction
Questions with
back up team
for industrial
formation

Rating Notification of
committee rating to
decides the issuer Rating is
r
rating ue No released
i ss
es
Do Yesto
s
a nt
w al
Additional datappe
a
provided is reviewed
and rating revised if
necessary

1. Rating Request: - the purpose of the rating starts with the rating request made by the
issuer of the instrument issues a letter to the rating agency and signed an agreement
with the agency.

2. Assignment of Analytical Team: - On the basis of rating request credit rating

agencies assign an analytical team comprising two or more analysts. These analysts
would be the experts in the relevant business area. It is a very detailed process.
Normally, two-three persons with the required technical skills team up for
investigations (due diligence) for about three weeks.

51
 They go to the company, talk to the people, go through the company's books and
records, its accounts, talk to its auditors, its bankers, its consumers, look at how the
company has handled investor grievances, look at its track record in servicing debt
obligations and so on. This pile of data is then screened and, based on that, the team
arrives at a structured report.

This report is then presented before the rating committee. A brainstorming session on
due diligence ensures that no one gets away by making a sweeping statement. After a
lot of interaction, the matter is finally put to vote for a decision on the rating.

3. Analytical Team Obtains & Analysis Information:- After assignment of Analytical

Team, the team obtains and analysis information relating to its financial statements,
cash flow and other relevant information which have impact on the company’s
functioning. Generally, following kind of information is obtained and analyzed by this
team:

A. Annual reports for past five years including cash flow statements and interim
reports.

B. Two copies of the prospectus offering statement and application for listing on
any major stock exchange.

C. Consolidated financial statements for the past three fiscal years.

D. Two copies of the projected financial statements along with assumptions on

the which projection have made.

E. A certified copy of resolution passed by the Board of Directors authorizing the

insurance of debentures instruments, including the name of authorized
signatories.

F. List of bank showing lines of credit along with the contact officers. Apart from
this, analytical team may obtain some addition information, which it considers
to be necessary for this purpose.

4. Meeting with Management: - After obtaining and analyzing the information

explained in previous step, analytical team meets with the management of the
company and obtains more information on some important aspects which have impact
on the credit quality of the instrument being rated. Though the topics discussed during

52
 the management meeting are wide ranging but discussion with management might
reveal more information like:

- Management’s Philosophy and Plan for the company in future.

- Business segment analysis.

- Competitive position, strategies, financial polices.

- Historical performance.

5. Interaction with Back Up Team:- While Analytical team collects the information
from company; its back up team collects the information on industry which this
company belongs. It also makes interaction with back up team in order to collect
information on industry along with the industry prospects in near future.

6. Rating Committee:- After collecting and analyzing information from company and
its management, the analytical team presents their report to a rating committee which
then decides on the rating. The rating committee meeting is the only aspects of the
process in which the issuer does not participate.

7. Deciding on Rating by Rating Committee:- Now the rating committee makes

assessment or evaluate all the factors concerning the issuer giving greater attention to
some key issues. After proper analysis rating committee arrives at the rating, which is
suitable to the proposed issue.

8. Notification to the issuer:- after the committee has assigned the rating, this decision
is communicated to the issuer along with the reasons or rational supporting the rating.
If the issuer agrees with the ratings and does not wish to appeal fo9r reviewing the
rating given to the instrument, then as a last movement rating is released through print
media by the rating agency. But if issuer raises objection on the rating given by the
rating agency and wants to furnish additional data for that, then this additional
information is reviewed and rating agency may revise previous rating. Then this
revised rating is released through media and formal notification of final rating
assigned to the issuer

53
How are bonds rated?

The rating process begins with an application to the rating agencies by the issuer or its agent
either via a telephone call or in writing. The State of California has engaged Standard &
Poor's, Moody's and Fitch in rating all its debt instruments for decades.

The rating request is usually done several weeks before the issuance of the bonds to allow
time for the rating agencies to perform their review and analysis.

Generally, the following documentations are provided to the rating agencies as soon as
possible:

- The preliminary official statement;

- Latest audited and unaudited financial statements:

- The latest budget information, including economic assumptions and trends;

- Capital outlay plans;

- The bond counsel opinion addressing the authority and tax-exempt status of the
bond issuance;

- All legal documents relating to the security for the bonds; and

- Any other documents that may pertain to the bond issuance as requested by the
rating agencies.

Following this, a meeting is set up at the rating agency's or issuer's office to present the credit
worthiness. The credit analyst prepares a municipal credit report, which discusses key
analytical factors. The credit analyst presents credit for "sign-off" with the senior analyst and
makes a recommendation for rating. The credit analyst makes a presentation before a rating
committee comprised of senior analysts. Finally, the rating is released to the issuer, then to a
wire service, followed by a publication of full credit report.

54
 ELEMENTS INVOLVED IN DETERMINING A CREDIT RATING

Economy and Industry Risks

CRA's rating analysis begins by assessing the characteristics of the industry/ industries in
which the borrower operates. Some important factors are:

Effect of economic cycles on the industry.

Business cycles in the industry and their severity.

Tariff structure, threat from imports, price competitiveness of the domestic industry,
and pace of technological change.

Basis of competition and key success factors.

Structure of the industry; entry and exit barriers.

Environmental and political factors.

Business Risks

Against the backdrop of the issuer's industry, Credit Rating Agencies then assesses the
issuer's strengths and weaknesses vis-a-vis its competitors. Factors considered include:

Size of the company and market share.

Locational advantages and disadvantages.

Supply of raw materials and marketing arrangements.

Bargaining power of the issuer's suppliers and customers.

Diversification of income sources.

Technology.

Financial Risk

Financial management philosophy and track record (capital structure, profitability,

liquidity position, financial flexibility and cash flow adequacy).

55
 Financial projections (with particular emphasis on achievability of sales targets, the
components of cash flow and ability to meet debt obligations as and when they fall
due).

Free cash flows and their sensitivity to various economic, industrial and business risks
over the term of the instrument.

Inter-firm comparison of the financial structure and profitability margins.

Accounting policies and practices.

Management Assessment

Background and history of the issuer.

Corporate strategy and philosophy.

Quality of management and management capabilities under stress.

Organizational structure, personnel policies including succession planning.

Instrument Terms
Rating may vary according to such factors as:

Maturity of instrument.

Nature of security - secured or unsecured, senior or subordinated, covenants and other

provisions that may reduce the amount of recovery in case of default.

Repayment terms - moratorium period, repayment in installments or bullet repayment

etc

As mentioned earlier ratings are assigned to instruments and not to companies and two
different ratings may be assigned to two different instruments of the same company e.g. a
company may be in a fundamentally weak business and may have a poor rating assigned for 5
year debentures while its liquidity position may be good, leading to the highest possible
rating for a 3 month commercial paper. Very few companies may be assigned the highest
rating for a long term 5 or 7 year instrument e.g. CRISIL has only 20 companies rated as

56
AAA for long term instruments and these companies include unquestionable blue chips like
Videsh Sanchar Nigam, Bajaj Auto, Bharat Petroleum, Nestle India apart from institutions
like ICICI, IDBI, HDFC and SBI 22.

Derived Ratings and Structured Obligations

Sometimes, debt instruments are so structured that in case the issuer is unable to meet
repayment obligations, another entity steps in to fulfil these obligations. Sometimes there is a
documented, concrete mechanism for recourse to the third party, while on other occasions the
arrangement is loose. On such occasions, the debt instrument in question is said to be "credit
enhanced" by a "structured obligation" and the rating assigned to the instrument factors in the
additional safety mechanism. The extent of enhancement is a function of the rating of the
"enhancer", the nature of the arrangement etc and usually there is a suffix to the rating which
expresses symbolically that the rating is enhanced e.g. A bond backed by the guarantee of the
Government of India may be rated AAA (SO) with the SO standing for structured obligation.
Credit Rating is a dynamic concept and all the rating companies are constantly reviewing the
companies rated by them with a view to changing (either upgrading or downgrading) the
rating. They also have a system whereby they keep ratings for particular companies on
"rating watch" in case of major events, which may lead to change in rating in the near future.
Ratings are made public through periodic newsletters issued by rating companies, which also
elucidate briefly the rationale for particular ratings. In addition, they issue press releases to all
major newspapers and wire services about rating events on a regular basis.

Advantages

Investors are benefited in very many ways if the corporate security in which they intend to
invest their saving has been rated by credit rating agency. Some of the benefits, which
become a reason for trustworthiness to investors are as:

 Safeguards against bankruptcy:

Credit rating of an instrument done by credit rating agency give an idea to the investors about
degree of financial strength of the issuer company, which enables him to decide about the

57
investment. Highly rated instrument of a company gives an assurance to the investors of
safety of instrument and minimum risk of bankruptcy.

 Recognition of risk:

Credit rating provides investors with rating symbols, which carry information in easily
recognizable manner for the benefit of investors to perceive risk involved in investment.
Rating symbol gives them the idea about the risk involved or the expected advantages from
the investment.

 Saving of resources:

Investors rely upon credit rating. This relieves investors from the botheration of knowing
about the fundamentals of a company, its actual strength, financial standing, management
details, etc. The quality of credit rating done by professional experts of the credit rating
agency repose confidence in him to rely upon the rating for taking investment decisions.

 Independent of investment decisions:

For making investment decisions, investors have to seek advice of financial intermediaries,
the stock brokers, merchant bankers, the portfolio managers etc. about the good investment
proposal, but for rated instruments, investors need not depend upon the advice of these
financial intermediaries as the rating symbol assigned to a particular instrument suggests the
credit worthiness of the instrument and indicates the degree of risk involved in it.

 Benefits of rating surveillance:

Investors get the benefit of credit rating agency’s on-going surveillance of the rating and
rated instruments of different companies. The credit rating agency downgrades the rating of
any instrument if subsequently the company’s financial strength declines or any event takes
place, which necessitates consequent dissemination of information on its position to the
investor.

 Lower cost of borrowing:

A company with highly rated instrument has the opportunity to reduce the cost of borrowing
from the public by quoting lesser interest on fixed deposits or debentures or bonds as the
investors with low risk preference would come forward to invest in safe securities through
yielding marginally lower rate of return.

58
 Wider audience for borrowing:

A company with a highly rated instrument can approach the investors extensively for the
resource mobilization using the press media. Investors in different strata of the society could
be attracted by higher rated instrument as the investors understands the degree of certainty
about timely payment of interest and principal on a debt instrument with better rating.

 Rating as marketing tool:

Companies with rated instrument improve their own image and avail of the rating as a
marketing tool to create better image in dealing with its customers feel confident in the utility
products manufactured by the companies carrying higher rating for their credit instruments.

 Reduction of cost in public issues:

A company with higher rated instrument is able to attract the investors and with least efforts
can raise funds. Thus, the rated company can economise and minimize cost of public issues
by controlling expenses on media coverage, conferences and other publicity stunts and
gimmicks. Rating facilitates best pricing and timing of issues.

 Motivation for growth:

Rating provides motivation to the company for growth as the promoters feel confident in their
own efforts and are encouraged to undertake expansion of their operations or new projects.
With better image created through higher credit rating the company can mobilize funds from
public and instructions or banks from self-assessment of its own status, which is subject to
self-discipline and self-improvement, it can perceive and avoid sickness.

 Unknown issuer:

Credit rating provides recognition to a relatively unknown issuer while entering into the
market through wider investor base who rely on rating grade rather than on ‘name
recognition’.

 Benefits to brokers and financial intermediaries:

Highly rated instruments put the brokers at an advantage to make less efforts in studying the
company’s credit position to convince their clients to select an investment proposal. This
enables brokers and other financial inter-mediaries to save time, energy, costs, and man-
power in convincing their clients about investment in any particular instrument.

59
 THE PERFORMANCE OF CREDIT RATING AGENCY IN INDIA

(CRISIL)

A simple way to evaluate credit risk is to think in terms of past credit worthiness. Apart from
the big credit rating agencies like Moody’s, Standard & Poors or Fitch-IBCA, there are the
databases compiled by Equifax and CCN on people whose credit- worthiness is frequently
queried by companies and banks.

Crisil believes that for radically improving credit risk management, the use of better tools and
techniques needs to be complemented by improved information systems, redesigned
organizational structures and processes, skill up gradation and most of all, the willingness and
ability to adapt attitudes and organisational cultures to suit the changing environment. The
RBI guidelines for risk rating on credit risk management are as:

- Set up comprehensive risk scoring system (6 to 8 point scale)

- Clearly define rating thresholds.

- Periodic (half yearly) review of ratings

- Map rating migrations to estimate expected loss.

For purpose of better control, the RBI study group (Tandon Committee) has also suggested a
system of borrower classification in each bank within a credit rating scale.

The study group has suggested a five point-point scale in which borrowers could be classified
as excellent, good, average, Below-Average or Unsatisfactory: an alphabetical range would
do equally well. Such a system of classification according to credit risk, which results for
periodic review will facilitate easy identification of the borrower whose affair require to be
watched with more than ordinary care. Moreover, such classification will be advantageous for
the formulation of a rational base for fixing the rates of interest according to the credit rating
of the borrower.

A customer who is given the finest credit rating may be given the lowest lending rate of the
bank. On the other hand, a customer who is rated as a poor risk, will have to pay the worst
interest rate. In such a case the bank should take appropriate action to improve the quality of
loan and lessen the bank’s exposure.

60
The recommendation of the study group have been, by & large, accepted by the Reserve
Bank. Banks have, therefore accepted the suggested procedure as a regular part of their
follow-up machinery. A procedural consideration will have to do how management chooses
to deal with loans graded anything less than satisfactory, that is, those that are classified
‘below average’ or unsatisfactory. In effect, the entire administration of a substandard loan
should be shared or regularly reviewed with management.

RATING INDUSTRY PERFORMANCE

Surprisingly, the largest wealth creating sectors are the industrials-oil & gas, utilities,
transportation, financial services, and metals & mining. On the other hand, growth oriented
sectors like leisure, telecom, and FMCGs have destroyed shareholders wealth. Moreover
wealth-creating sectors have created more wealth than the growth-oriented sectors.

ROLE OF RATING AGENCIES IN CAPITAL MARKET

The capital and financial markets in developing countries are remarkable for their lack of
sophistication. Apart from a few stock exchanges and government-appointed regulators, there
aren’t many reliable intermediaries like Credit rating agencies, investment analysts, merchant
bankers, or venture capital firms.

Credit rating agencies have played an important role in the capital markets for almost
a century by providing analytic opinions to investors on the ability and willingness of issuers
to make timely payments on debt instruments over the life of those instruments. Issuers pay
for the ratings in order to lower the cost of and increase their access to capital. Investors trust
the agencies’ impartiality and quality, and rely on the ratings.

LIMITATIONS OF CREDIT RATING AGENCIES

Rating agencies have always been subject to periodic complaints and criticism, the recent
wave of corporate scandals has led many to call their contribution to market efficiency into
question. In light of such criticism, studies conducted by lawmakers and regulators sought to
further examine the role and effectiveness of Credit Rating Agencies. Although the studies
revealed no particular wrongdoing on the part of Credit Rating Agencies, they warned of
61
potential problems that could disrupt the smooth operation of capital markets. These
problems relate to the reliability and integrity of ratings, as well as to possible anti-
competitive practices on the part of Credit Rating Agencies.

Rating agencies all across the world have often been accused of not being able to predict
future problems. In part, the problem lies in the rating process itself, which relies heavily on
past numerical data and standard ratios with relatively lower usage of judgment and
understanding of the underlying business or the country economics. Data does not always
capture all aspects of the situation especially in the complex financial world of today. An
excellent example of the meaningless over reliance on numbers is the poor country rating
given to India. Major rating agencies site one of the reasons for this as the low ratio India’s
exports to foreign currency indebtedness. This completely ignores two issues – firstly, India
gets a very high quantum of foreign currency earnings through remittances from Indians
working abroad and also services exports in the form of software exports which are not
counted as "merchandise" exports. These two flows along with other "invisible" earnings
accounted for almost US$11bn in FY 99. Secondly, since India has tight control on foreign
currency transactions, there is very little error possible in the foreign currency borrowing
figure. As against this, for a country like Korea, the figure for foreign currency borrowing
increased by US$50bn after the exchange crisis began. This was on account of hidden
forward liabilities through swaps and other derivative products 25.

1. Different Rating Symbols Create Confusion- Since Credit Rating is done by different
agencies individually. This type of rating is related to symbols. Sometimes, rating
symbols according to the tenure of the instrument and not by the instrument’s
characteristics create confusion. For example the instruments like Fixed Deposit, Non
Convertible Debentures or Commercial papers are rated by ICRA on the basis of their
maturity period, so these will be given same rating by ICRA. But on the other hand
CRISIL provides rating symbols in accordance with the characteristics of the
instrument. CRISIL prefix ‘F’ to the rating for Fixed Deposits. This problem of
assigning rating symbols cause confusion among treasury managers and investors
who determine the instrument on seeing its rating.

2. Unavailability of Significant Information- The rating agencies do not perform an

investigation regarding significant information or the firm being rated may not
provide significant material or information to the investigation team of Credit Rating
62
 company. Companies will never like to convey non-public information to Credit
Rating Agencies. As a result quality of rating suffers. Thus any decision taken in the
absence of such significant information may put investor in loss.

3. Static Study- Rating is a static study of present and past historic data of the company.
Number of factors including economic, political, environmental and government
policies have direct bearing on working of a company 26. There may occur changes
in any of these factors, therefore rating is independent for future results. Thus, in
future the situation of rated company may become entirely opposite to its expected
grade.

4. Rating Does Not Certify Soundness- Grades which are assigned by rating agencies are
only an opinion about the trustworthiness of the company to meet investors’ needs. It
does not certify the complete soundness of the company. Thus rating sometimes
considered as a certificate to the quality of products or management of the rated
company.

5. It is Considered as a Recommendation to Buy- Credit Rating provides only guidance

to the investor and creditors in determining the risk associated with an instrument. It
does not recommend buying or selling a particular security because it does not take
into account factors like market price, and personnel risk preferences, which might
influence the investors, decision. So apart from Credit Rating, investors have to
analyze all those factors depending on their proposed investment decision.

6. Rating may be Biased- The personnel biasness on the investigating team might affect
the quality of rating. Also the companies having lower rating don’t advertise or use
rating for raising funds. Thus such type of biasness may affect the investor’s benefits.

7. Rating Process can be Cheated- Sometimes, certain instrument of a specific company

is provided lower rating by a rating agency. Now the company has an incentive to go
around for the best possible rating by compromising the authenticity of the rating
process itself. In other words, company can select the reasons for lower rating and
mold those in such a way to cheat the rating process.

8. Unable to Predict Future- Since for rating a firm, data is not collected from every
aspect. Rating done by Credit Rating Agencies is purely based on past data.
Therefore, there is no forecasting for future. It is not wrong to say that Credit Rating

63
 Agencies are unable to predict future because markets are fluctuating continuously
that nothing can be forecasted.

9. Rating Under Unfavorable Conditions- Rating grades are considered as representative

of the true image of a company but these are not always. A firm might have low rating
due to its temporary unfavorable conditions when rated. In this way, judgment in such
conditions diversifies from actual.

10. Tool to Cheat Investors- Some companies use Credit Rating as a tool to cheat the
investors. They get rating done by more then one rating agency and publish only that
rating which reflects highest safety. But this published rating may not be true which
can mislead investor’s decision.

11. Risky Projects are not Rated- Credit Rating Agencies does not rate risky investments
like equity shares, venture capital etc. Because by definition, Credit Rating is an
opinion on the issuers capacity to service debt. In the case of equity, there is no pre-
determined servicing obligation, as equity is in the nature of venture capital 27. So,
Credit Rating in the conventional sense does not apply to equity shares.

12. All Ratings are not Published- In India, ratings are undertaken only at the request of
the issuers and only those ratings, which are accepted by the issuers, are published.
But there is a view that the rating agencies should publish all ratings, even those
found unacceptable by the issuers. This is a matter for further discussion, so that a
generally acceptable industry practice emerges. Once a rating is accepted, it will be
published and subsequent changes emerging out of the monitoring by the agency will
be published even if such changes are not found acceptable by the issuers.

DEBT MARKET

With rising inflationary tendencies in the economy driving the RBI's policy of monetary
tightening, theaverage yields on the benchmark 10-year G-sec hardened in the current fiscal
compared to the previous one. Capital flows and variation in cash balances of the central
government remained the key drivers of liquidity conditions in the economy. However, rising
crude oil prices and falling US interest rates also played a part in guiding the liquidity
scenario. To control the surge in capital flows in the economy,the RBI re-activated the CRR

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as a policy instrument after an interval of over 2 years. In the current fiscal, the CRR has been
hiked by 150 bps, and currently it stands at 7.5 per cent. The CRR hike pushed the call rates
outside the official corridor of repo and reverse repo (6.0-7.75 per cent) to touch 10 percent,
as commercial banks increased their demand for funds to meet the enhanced CRR
requirements.

The current fiscal could easily be described as one where easy liquidity prevailed interspersed
with transient periods of tightness. This led the RBI to raise the ceiling on the outstanding
amount under the MSS on four occasions to Rs 2500 billion. All the other key policy rates,
viz, repo and reverse repo were kept unchanged at 7.75 per cent and 6.0 per cent respectively.
The existence of suppressed inflation in the economy was cited as one of the major reasons
behind RBI's decision on status-quo on these key policy rates. All these events resulted in
hardening of the yields across all categories.

IMPACT ANALYSIS

The budget impact on the debt market could be largely gauged as a positive one. The Finance
Minister has stressed on the development of the corporate debt market so that revenue
generated from it could be used as an additional income source for various infrastructural
projects. Steps would also be taken to create exchange-traded fund for corporate funds.
Trading in domestic convertible bonds would be made easier by placing a suitable
mechanism in place. Indian bonds yields eased as the FM put a lower deficit figure target for
the next year. The yield on the benchmark 10-year G-sec ended the day at 7.60 per cent. The
limit on issuance of MSS bonds has been kept unchanged at Rs 2,500 billion. In conclusion,
we can say that with the continued emphasis on taming inflation in the economy, the stress in
the next fiscal year would be using monetary measures to target inflation growth in the
economy. On balance, we expect benchmark 10-year yield to be at 7.5-7.7 per cent by the end
of 2008-09.

The rupee gained significantly during the current fiscal, appreciating by around 10 per cent
up to February. Strong investor sentiments, driven by robust economic growth, kept capital
inflows strong over the year.

There were significant inflows not only because of the FIIs, but also due to the ECBs.
Monetary tightening, adopted by incorporating a series of rate hikes, improved the interest

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rate differential, further aiding the inflow of funds. Most of the appreciation was witnessed in
the first quarter, when the Rupee gained from over 43 a dollar to around 40.75 a dollar. From
the second quarter onwards, the RBI intervened significantly to curb the rate of appreciation
and its volatility and the currency remained range-bound.

On the contrary, in recent weeks, the RBI was seen intervening in the market to support the
currency and curb the rate of depreciation, as capital outflows began due to profit booking
and the expected slowdown/recession in the US economy.

Impact analysis

With its focus on increasing expenditure on infrastructure, health and education sector, the
budget has on the whole remained pro growth. Fiscal consolidation sends positive signals to
the investor community, thereby strengthening the overall sentiment on the economy. These
measures should boost capital flows.

In contrast, the expected slowdown in the US and the world economy may result in lower
capital flows. The Finance Minister announced in the budget that capital flows would be
carefully monitored and moderated, if necessary, though temporary restrictive measures. The
short term capital gains tax has also been increased from 10 to 15 per cent, which may have a
dampening effect on capital flows. Also, having an exchange traded currency futures market
means easier access to a market instrument to hedge currency risk, thereby allowing more
elbow room to the RBI to manage the exchange rate. In balance, we expect the rupee to trade
around 38.5-39.0 against the dollar by the fiscal year end 2008-09.

Equity market

While the equity markets were bullish for the most part during the current fiscal year,
supported by robust capital inflows and domestic corporate investment, the market remained
volatile, especially after mid-October. The BSE Sensex lost over 4,000 points within a
month's period starting in the second week of January. The S&P CNX Nifty lost close to
2000 points during the same period. Setting off from the index value of 3473, the S&P CNX
Nifty gained over 573 points over the year. The BSE Sensex touched its all time high of
14,652 on February 8, 2018, while the Nifty touched its high of 4224.25 on February 7, 2018.

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Impact Analysis

The budget has announced a scheme for agriculture loan waivers to the extent of Rs 60,000
crores. It was also announced that banks would be compensated for their losses. However, the
mechanism for the same was not clarified; as a result, banking stocks plunged. Also, a rise in
short term capital gains tax, from 10 to 15 per cent, was announced in the budget. These
developments were viewed negatively by the market and the BSE Sensex ended down 246
points. The S&P CNX Nifty ended 62 points below the February 28 mark. An increase of 5
per cent in the short term capital gains tax, raising it to 15 per cent, should help reduce the
speculative flows in the market. Overall, however, the budget should not have a negative
impact on the stock market, unless some sort of capital controls are put in place to
significantly moderate foreign capital flows.

Credit rating agencies can rate its associates

A Credit rating agency can now rate a security issued by its `associate' having a common
`independent director' with the agency or its rating committee. Prior to this partial relaxation,
a Credit rating agency was forbidden from rating a security issued by its associate or
subsidiary if the agency or its rating committee had a common Chairman, director or
employee with such associate or subsidiary.

This relaxation, made by the Securities and Exchange Board of India (SEBI) in its regulations
on Credit rating agencies, is expected to provide a new avenue of revenue streams for the
Credit rating agencies in the country.

SEBI has, however, held that a Credit rating agency cannot rate the security of an associate, if
the agency has common Chairman, director or employee with that associate and such
associate is connected with the promoter of the Credit rating agency as a borrower or
subsidiary or an associate.

The rating of the security issued by an associate would be permitted so long as the
independent director does not participate in the discussion of rating decisions.

Further, the Credit rating agency would have to make a disclosure in the rating announcement
of such associate about the existence of common independent director on its board or of its
rating committee.

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It should also be specified that the common independent director did not participate in the
rating process or in the meeting of its board of directors or in the meeting of the rating
committee, when the securities rating of such associate was discussed.

SEBI has now inserted an explanation to the expression `independent director' in the sub-
regulation (2) of regulation 27 of Credit rating regulations.

An independent director means a director who, apart from receiving remuneration as a

director does not have any other material pecuniary relationship or transaction with the
company, its promoters, its management or its subsidiaries, which in the judgment of the
board of the company may affect the independence of the judgment of such directors.

SEBI's existing regulations on Credit rating agencies have defined an "associate", in relation
to a promoter, to include a body corporate in which the promoter holds 10 per cent or more of
the share capital. A promoter is a person who owns 10 per cent or more of the shares of the
Credit rating agency.

Why Indian companies rate their companies by international rating agencies rather
than Indian rating agencies

India’s currency rating under threat: Fitch

International ratings agency Fitch Ratings said on Monday India’s local currency rating looks
to be under threat due to the government’s bloated fiscal deficit.

‘’The domestic credit picture is poor. The local currency rating looks to be under threat,’’
Brian Coulton, Senior Director of Asian sovereign ratings, told a client seminar here.

The International Monetary Fund (IMF) last week said India’s yawning fiscal deficit is a big
short-term risk and New Delhi needs to aggressively pursue reforms to overcome the
problem.

Fitch, which last revised India’s rating in November last year, has a speculative grade BB-
plus rating on local debt. The agency said in September it had planned to review India’s
rating in another two months. Fitch rates India’s local currency at BB-plus and foreign
currency at BB with a stable outlook.

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Fellow ratings agency Standard & Poor’s cut its long-term local currency credit rating on
India to BB-plus from BBB-minus in September, citing a rising debt burden and vulnerable
public finances.

The struggling privatisation programme is also a concern for Fitch, which said the
government lacked the appetite to deal with the deficit.

‘’There’s no political will to tackle the problem. You have weak state banks and there has
been stop-start privatisation,’’ Coulton said.

Despite the underlying economic risks, India’s foreign exchange reserves have risen to a
record $ 62.066 billion this year, boosted by stronger exports and remittances from overseas
Indians as the US dollar fell. Rival agency, Moody’s Investors Service, bucked the negative
trend last month by placing India’s ratings on review for a possible upgrade, based primarily
on a substantial strengthening of the country’s external financial situation.

The foreign currency issuer rating for India — the proxy for the rating that would likely be
assigned were the government to issue a foreign currency-denominated bond in the
international capital markets — has also been placed on review for possible upgrade. At
present, however, the government has no such bonds outstanding nor are there any rated
government-guaranteed eurobonds outstanding, Moody’s said. But the BA2 domestic
currency bond rating of the government is not on review and the outlook on that rating
remains negative due to continuing stress in India’s internal finances and last year’s broad-
based reduction in import tariffs.

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 OBJECTIVES OF THE STUDY

a) To study the origin and development of Credit Rating Agencies in India

b) To study the rating mechanism of selected Credit Rating Agencies in India

c) To make a comparison of selected Credit Rating Agencies in India

d) To study the performance of Credit Rating Agency in India (CRISIL)

e) To give suggestion on the basic of study.

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 RESEARCH METHODOLOGY

It is well known fact that the most important step in research process is to the problems
choose for investigation, because a problem well defined is half solved. That was the reason
that out most care was taken while defining various parameters of the problem. After giving
through brainstorming session objectives were selected set on the base of these objectives. A
questionnaire was designed major emphasis of which was gathering new ideas or insight so
as to determine and bind out solution to the problems.

DATA COLLECTION

Primary Data

Primary data was collected through structured questionnaire.

Secondary Data

Secondary data in the form of internal sources come from books and internet.

SAMPLING METHOD

Sampling Techniques

Non-Probability sampling method was selected, under which I went for convenience
sampling.

SCOPE OF THE STUDY

This project is to find out the impacts of the Credit Rating Agencies on the investor’s
decision and to find put awareness of Credit Rating Agencies amongst the Brokers.

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 OBSERVATIONS AND FINDINGS

INCASE OF INVESTORS

From the project it is clearly shown that the investor has the lack of knowledge and
awareness regarding credit rating agencies. They are not aware that what kinds of services are
given by the credit rating agencies and their role in debt and equity ratings. As the study
shows that only 18% of the respondents know about the CRISIL and out of 60 respondents
25% did not know anything about the credit rating agencies working in India.

The majority of the investors do not made their investment decision on the rating
given to the instrument by credit rating agencies. As shown in the table and chart 30 % of
those investors who give no answer. While only 10% investors make their investment based
on rating. Only 24% of the investors have the opinion that credit rating agencies will prove to
be an effective tool for risk management. While 18% said no. Most of the investors i.e. 28%
have none kind of opinion. Only one service i.e. credit rating service is recognized by the
respondents while the have full ignorance regarding others

INCASE OF BROKER AND FINANCIAL INSTITUTIONS

After analyzing, the information given by the process in the questionnaire it can be included
that although they all invest in Shares and Debentures but not all have the knowledge of the
Credit Rating Agencies. At the time of rating any investment decision in any debt instrument,
only few Brokers take put consideration the rating given to the instrument by the different
rating agencies. The Brokers who have the knowledge about Credit Rating Agencies they
also have the knowledge “Multiply Credit Rating” & Sovereign Rating”. Most of the Brokers
only knows what this Multiple Credit Rating & Sovereign Rating but they do not know
whether those are helpful in booming the capital market or not. Most of the Brokers have or
opinion that if the rating any country goes up or down it has a long impact on the country’s
economy and the stock market. When it is asked from the brokers that there should be
separate Credit Rating Agencies at Asia level who rates all the countries of Asia and this
debt investments, most of the brokers said Yes that they should be, but they are enable to told
the advantages or disadvantages of this.

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 SUGGESTIONS AND RECOMMENDATIONS

 Rating agencies should engage in active dialogue with market participants regarding
their credit information and risk management needs

 Rating agencies in India (Crisil) should work towards shortening of its publishing
cycle to provide more frequent commentary on individual results. Its commentary
will also have to be linked to market events and focused on situations where market
sentiment, as evidenced by the price volatility of a company’s securities, is
demonstrating the market’s uncertainty or concern..

 CRISIL maintains absolute independence from market participants to provide

unbiased opinions

 For the equity investor, CRISIL introduced the Earnings Prospects and Risk Analysis
(EPRA) range of services offering Equity Grading and Equity Assessment. The
services provide authentic information on the relative quality of equity in diverse
corporate with respect to the earnings prospects and the risks inherent in these
earnings prospects.

 The CRA should adopt procedures and mechanisms to protect the confidential nature
of information shared with them by issuers under the terms of a confidentiality
agreement or otherwise under a mutual understanding that the information is shared
confidentially. Unless otherwise permitted by the confidentiality agreement and
consistent with applicable laws or regulations, the CRA and its employees should not
disclose confidential information in press releases, through research conferences, to
future employers, or in conversations with investors, other issuers, other persons, or
otherwise. The CRA should use confidential information only for purposes related to
its rating activities or otherwise in accordance with any confidentiality agreements
with the issuer.

 In preservation of confidential information, CRA employees should familiarize

themselves with the internal securities trading policies maintained by their employer,
and periodically certify their compliance as required by such policies.

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 CRA employees should not selectively disclose any non-public information about
rating opinions or possible future rating actions of the CRA, except to the issuer or its
designated agents.

 CRA employees should not use or share confidential information for the purpose of
trading securities, or for any other purpose except the conduct of the CRA’s business.

 The credit rating agencies should merge with the foreign agencies to start the credit
rating in the equity trading

 Security market awareness campaign should be conducted by Sebi in the other states
of the countries.

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 REFERENCES

1. Vasant Desai CREDIT RATING: AN INTRODUCTION Ch. Credit Rating

Institution quoted from the book The Indian Financial System Himalya Publication
House Delhi second edition 1997.p375-378

2. V.K. Bhalla Definition and Evolution of CRA Ch. Credit Rating quoted from the book
Investment Management S. Chand and Co. Ltd. New Delhi Eighth edition 2001.p
132-133

3. www.icraindia.com/services/inves/sebi.htm, “SEBI Guidelines for Rating Agency”

Dated: -8/18/2004.

4. Editor’s views SEBI proposes `corporate governance rating' soon — In touch with
CRISIL, ICRA BUSINESS LINE Friday, Aug 30, 2002

5. Vasant Desai Importance of CRA Ch. Credit Rating Institution quoted from the book
The Indian Financial System Himalya Publication House Delhi second edition
1997.p377-378

6. http://www.crisil.com/NASApp/cs/ContentServer?
pagename=Crisil/AboutUs/inv_pg_mainpage Capital History 8/18/2004.

7. http://www.icraindia.com/services/about/profile.htm About CRA Dated on

8/18/2004.

8. M Y Khan ICRA Ltd. rating quoted from the book Financial service Tata McGraw
Hill Publishing Company Limited New Delhi sixth edition 2003.p16.16-16.24

9. M Y Khan ICRA Rating Symbols Credit rating quoted from the book Financial
service Tata McGraw Hill Publishing Company Limited New Delhi sixth edition
2003.p16.39-16.47.

10. http://www.icraindia.com/services/about/history.htm Major Shareholders Dated on

8/18/2004.

11. M Y Khan Rating Process Ch. Credit rating quoted from the book Financial service
Tata McGraw Hill Publishing Company Limited New Delhi sixth edition
2003.p16.25-16.31.

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12. V.K. Bhalla Limitation of credit rating in India Ch. Security Credit Rating quoted
from the book Investment Management S. Chand and Co. Ltd. New Delhi Eighth
edition 2001.p 136-137.

13. http://www.adbi.org/publications/ Qualitative andquantitative risk. Dated: 8/18/2004.

14. www.onicra.com

15. www.sebiguidelinesratings.com

16. www.indiaonestop.com

17. Tripathy, Financial services

18. www.rbi.org.in/scripts/FAQView

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