CREDIT RATING AGENCIES AN INTRODUCTION

DR. VIVEK SHARMA

M.Com, MBA, Ph.D.

Faculty Of Management Studies

Gurukul Kangri University,
Haridwar 249 404

TYPES OF INVESTORS
Investors need proper guidance and direction for
investment decision because usually they do not
possess enough of analytical wisdom to help them
in judging the creditworthiness of corporate
houses.
There are four types of investors in the market.

Investors having money but not the

investment skill .
Investors having money and investment skill
both.
Investors having investment skill but less money.
Investors possessing less money and poor investment
skill.

STRUCTURE OF FINANCIAL
MARKET
I)
II)

Money Market
Capital Market

MONEY MARKET
Call Money Market
Bill Market

Treasury Bill Market

Commercial Bill Market

Commercial Paper Market

Certificate of Deposit Market.

Government Securities (Guilt-Edged market)

Financial Guaranties Market

Foreign Exchange Market

Mortgages Market

Money Market Mutual Funds

Industrial Securities Market.

CAPITAL MARKET

PRIMARY MARKET

SECONDARY MARKET

COMPANIES WORKING IN
INDIA

The number of companies registered on 31st March 2000 was 5,45,707.00 of

which 5,42,434.00 were limited companies with a paid up capital 2,96,071.46
crore of rupees. The number of private limited companies was 4,68,572 and
that of pubic limited was 73,862.
TABLE

COMPANIES WORKING IN INDIA (LIMITED BY SHARES)

Pubic Ltd.
Private Ltd.
Total
No. Paid Up No.
Paid Up No.
Paid Up
Capital
Capital
Capital
(in crores)
(in crores)
(in crores)

31 March 1998 68546

31 March 1999 71055
31 March 2000 73862

140771 415954 72667.99 484500 23438.99

162879.69 440998 84021.79 5120
246904.43
NA
468572
NA
542434 296075

MEANING OF CREDIT
RATING
The credit rating is a symbolic indicator of the
current opinion of the relative capability of the
issuer to service its obligation to pay its dues in
due course of time, with the particular type of
instrument to be rated by the agency.
"Thus, a credit rating is neither a general
purpose evaluation of the issuer, nor an overall
assessment of the credit risk likely to be
involved in all the debts contracted or to be
contracted by such entity".

Definition Of Credit Rating

" A rating is an opinion on the future ability and
legal obligation of the issuer to make timely
payments of principal and interest on a specific
fixed income security. The rating measures the
probability that the issuer 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."
Moodys
"Credit ratings help investors by providing an
easily recognizable , simple tool that couples a
possibly unknown issuer with an informative and
meaningful symbol of credit quality."
Standard & Poors

CREDIT RATING

C Credit Worthiness
R Risk Analysis
E Equity Assessment
D Dividend and Earning Prospects
I
Intentions of Promoters
T Transparency of Organization
R Relative Strength
A Authentic Information
T Technical Analysis
I
Industrial Climate of Profile
N Network Assessment
G Guidance to Investors, Companies, and the
Government

WHAT CREDIT RATING IS

NOT?
Credit rating is not a sort of recommendation to
buy, hold or sell the instruments because it does
not take into consideration factors like the
market prices, preferences to the personal risks,
market trend and certain other considerations
which may influence an investor's decision while
investing. The whole process has to depend
upon whatever is being provided by the issuer.

FACTORS LEADING TO
GROWING IMPORTANCE OF
CREDIT RATING
1.
2.
3.
4.
5.
6.

The increasing role of money and capital markets

consequent to dis-intermediation.
Increased securitization of borrowing and lending
consequent to disintermediation.
Globalization of the capital market.
The continuing growth of information technology.
The growth of confidence in the efficiency of the
market mechanism.
The withdrawal of Govt. safety nets and the trend
towards the privatization.

CREDIT RATING AGENCY

DEFINED
"Credit rating agency" is a commercial concern
engaged in the business of credit rating of any
debt obligation or of any project or program
requiring finance, whether in the form of debt or
otherwise, and includes credit rating of any
financial obligation, instrument or security, which
has the purpose of providing a potential investor
or any other person any information pertaining to
the relative safety to timely payment of interest
or principal.
Ministry of Finance, GOI

CREDIT RATING AGENCIESNRSROS

A credit rating agency is a firm that provides its opinion on
the creditworthiness of an entity and the financial
obligations (such as, bonds, preferred stock, and
commercial paper) issued by an entity. Generally, credit
ratings distinguish between investment grade and noninvestment grade. For example, a credit rating agency
may assign a "triple A" credit rating as its top "investment
grade" rating for corporate bonds and a "double B" credit
rating or below for "non-investment grade" or "high-yield"
corporate bonds.
Some credit rating agencies whose credit ratings are used
under the SEC's regulations are known as "Nationally
Recognized Statistical Rating Organizations" or
"NRSROs." There are currently four NRSROs - Dominion
Bond Rating Service Ltd., Fitch, Inc., Moody's Investors
Service, and the Standard & Poor's Division of the
McGraw Hill Companies Inc.

OBJECTIVE OF CREDIT RATING

AGENCY
The primary objective of credit rating
agency is to communicate the investor
about the present state of the instrument,
what are the probabilities of the issuer
company of repayment of loan or the
interest at the time of its discharge in
comparison to other related instruments.

INPUT- OUTPUT ANALYSIS

INPUT

ANALYSIS

Information on
Economic/
Political system Rating
Industry
AnalysisLocal Business Exercise
Accounting &
Financial Market

OUTPUT

Rating

ADVENT & EVOLUTION OF

CREDIT RATING SYSTEM - USA
1840's - The origin of credit rating can be traced in USA,
which is the motherland of the credit rating system
concept.
1841 - the first mercantile credit agency was established
by Louis Tappan in order to overcome the market and
problem caused by the financial crises in 1857. The ability
of merchants to pay the debts in due course of time was
rated by the agency.
1849 - One more rating agency was established by John
Bradstreet in the year 1849.
1857 - The first rating book was published in by John
Bradstreet.
1859 - Robert Dun, whose first rating was published,
subsequently acquired this agency.

Contd
1860 - The names of Henry Vernman Poor of
Standard & Poor's and John Moody of Moody's
investor service are linked with the origin of credit
rating in U.S.A. . Standard & Poor's published the
first Railroad Construction Company's Manual.
The prime objective of publishing such manual
was to divert the investor's attraction towards
railroad construction industry and project better
image of these companies.
1900 - John Moody (1868-1958) laid the
foundations for Moody's investor since 1900,
when he published Moody's Manual of Industrial
and corporate Securities.

Contd
1906 - The Standard Statistics Bureau was formed
to provide previously unavailable financial
information on U.S. companies;
1909 - The 'Manual of Railroad Securities' was the
first bond rating done by Moody's.
1914 - The rating of utility and industrial bonds and
the rating of bonds issued by US cities and other
municipalities, were published.
1916 - Standard Statistics began to assign debt
ratings to
corporate bonds, with sovereign
debt ratings following shortly thereafter.
1923 - Poor's Publishing Company started
assigning the rating to corporate bonds

Contd
1924 - Moody's ratings covered nearly 100 percent
of the US Bond Market. Moody's has assigned
sovereign ratings to debt of nation viz. Britain,
France, Republic of China, Japan and Italy and
Canada.
1924 - The Standard Statistics Company started
assigning the rating to corporate bonds.
1933 The rating agency of Robert Dun & John
Bradstreet were merged together and formed a
new agency named as 'Dun & Bradstreet',
1940 - Municipal bond ratings were introduced;
1941 - Poor's Publishing and Standard Statistics
merged to form the Standard & Poor's Corporation;

Contd
1962 - 'Dun & Bradstreet' became the owner of
"Moody's Investor Service" ,which was formed
by John Moody.
1966, The McGraw-Hill Companies, Inc.
acquired Standard & Poor's.
1969 - S&P started rating the commercial
paper.
1970s - In early 1970s, the bond issues of
Australia and Europe, Coal and Steel
Community, Eurobond issues of Barclays Bank
International, Japan Development Bank and
Societe National De Chenins De Fer Francais,
Electric De France were rated by Moody's.

Contd
1972 Establishment of Canadian Bond Rating
Services
1974 Establishment of Thomson Bankwatch
1975 Establishment of Japanese Bond Rating
Institute
1975 Establishment of McCrthy Crisanti & Maffei
1977 Establishment of Dominion Bond Rating
Services
1978 Establishment of IBCA Ltd.
1980 Establishment of Duff & Phelph Credit Rating
Company ( DCR)
1991 - McCarthy Crisanti & Maffei acquired by DCR
Company.

MAJOR INTERNATIONAL RATING

AGENCIES
Standard & Poor's

S&P
The unique power of S&P : Creating Independent
Benchmarks
$1.5 trillion in investors' assets indexed to Standard &
Poor's indices, including the premier U.S. portfolio index,
the S&P 500;
One of the world's top providers of stock quotes and
related financial content to Internet sites globally;
A global leader in providing objective information, insight
and analysis to customers in the equities, fixed income,
foreign exchange and mutual funds markets;
Investors globally look to Standard & Poor's credit ratings
for objective, insightful analysis on the ability and
willingness of governments, corporations and others to
repay their debts on time and in full with trillions of debt
rated globally;
The world's leading credit rating service, operating
through a global network of 18 offices and seven
affiliates.

S&P
History: creating standards, carving out firsts
S&P were the first to rate:
Securitized financings;
Bond insured transactions;
Letters of credit;
The financial strength of non-U.S. insurance
companies;
Bank holding companies
Financial guaranty companies

S&P
On the equity side, S&P led the way with:
Index tracking systems;
Exchange Traded Funds;
A database standardizing information on
publicly-traded companies, enabling financial
professionals to readily make comparisons
across categories;
A series of web-based services that support
analytical, planning, and investment
professionals globally.

S&P
Today, Standard & Poor's employs more than
5,000 people working in 20 countries.
Founded in 1888, The McGraw-Hill Companies is
a leading global information services provider
meeting worldwide needs in the financial
services, education and business information
markets through leading brands such as
Standard & Poor's, BusinessWeek and McGrawHill Education. The Corporation has more than
322 offices in 33 countries. Sales in 2003 were
$4.8 billion.

Moody's Investor Service

Moody's has been the leader in rating corporate
bonds since John Moody published the first
bond ratings in 1909. With the rapid expansion
of the capital markets, Moody's rating coverage
in the corporate sector has mushroomed to
encompass some 4,000 companies and more
than US$2.5 trillion of outstanding debt. On the
buyside, clients of Moody's consultative
research services manage more than 80% of
capital in the corporate markets globally.

Moody's Investor Service

Moody's Investor Service used the symbols Aaathrough-C which became benchmarks to rate
some 1,500 individual securities of over 200 US
railroads. From the very beginning, Moody
assigned independent rating opinion to help his
investor readers manage credit risk. Till date the
ratings are based upon the public information
and assigned without the request of issuers.

Moody's Investor Service

Moody services provide a uniquely reliable,
globally consistent method of managing credit
risk for investors. They help issuers reach the
widest range of buyers in the capital markets.
And they help the industry as a whole function
smoothly and effectively. To that end, Moody's
are constantly broadening their coverage,
refining their analytic techniques and investing in
communications technology.

BASIC PRINCIPLES OF RATING

Emphasis on the Qualitative Variables,

Focus on the Long Term Risk,
Global Consistency,
Level and Predictability of Cash Flow,
Reasonably Adverse Scenarios,
Seeing Through Local Accounting
Practices and
Sector Specific Analysis etc.

CANADA
Canadian Bond Rating Service (CBRS) is
Canadas oldest and largest and totally private
and independent credit rating agency.
Founded 1972
CBRS specializes in rating of Canadian
borrowers, reporting on over 500 corporate and
public sector issuers in the country. In addition,
CBRS covers international companies accessing
the markets in North America as well as
subsidiaries of MNCs.

JAPAN
Japan Credit Rating Agency Ltd. (JCR)
Established April 1985, authorized by Japans MOF as a
recognized rating agency in 1987.
Major Shareholders It enjoys the support from Japans
prominent institutional investors. The shareholders include
Japans major life insurance companies; Trust Banks; 60
of 64 regional banks, The Norimchukin Bank and the Bank
of Tokyo, Mitsubishi.
JCR is headed by Mr. Masao Fujiako,. President who is a
international financier with career as Director General,
International Finance Bureau of the MOF and the
President of ADB.
JCR has the honor of being the only Japanese rating
agency to be appointed to rate the issues of the major
multilateral development banks such as World Bank, ADB,
the European bank for Reconstruction & Development.

JAPAN
Japan Bond Research Institute (JBRI)
Credit Rating in Japan got prominence with
the establishment of Japan Bond Research
Institute some 25 years ago. JBRI is the
biggest bond rating agency in Japan.
JBRI's only shareholder is the Nihon Keizai
Shimbun (Nikkei)
JBRI is registered as an investment adviser
by the U.S. Securities and Exchange
Commission pursuant to the Investment
Advisers Act of 1940.

THAILAND

Thai Rating of Information Services Co. Ltd (TRIS)

Promoter - Industrial Finance Corporation of Thailand,
Established July 27,1993.
Shareholders - At present it has about 60 shareholders
representing public, private and international financial
institutions including The Asian Development Bank. No
shareholder of TRIS hold more than 5% of the share capital of
the company.
Collaborations - TRIS has concluded a technical assistance
agreement with Standard & Poor's, whereby S&P will provide
technical know how, management training and analyst training
to the personnel of TRIS.
TRIS is the founding member of AFCRA, Asean Forum of
Credit Rating Agencies, an association of credit rating
agencies established to provide additional training and
facilitate the exchange of information and ideas concerning
credit rating and the bond markets throughout Asia.

MALAYSIA
Rating Agency Malaysia (RAM), Behrad
Established on 19th November, 1990.
RAM offers researched credit assessment
on the risk quality of private debt securities
issued in the domestic market.
RAM is totally private and independent
credit rating agency.

ISRAEL
The Israel Securities Rating Company Ltd.
The Israel Securities Rating Company Ltd.
familiarly known as MAALOT, founded in
September 1991. It is Isarel's first rating agency.
It rates all types of debt instruments used in the
Israeli capital markets.
Established by - Israel Securities Authority, and
the Tele AVIV Stock Exchange. Despite the
involvment of these government sponsored
agencies MAALOT is a private company.
MAALOT has entered into a consultation and
technical assistance agreement with Fitch
Investors Service Inc.

EUROPE
FITCH-IBCA Ltd. is one of the active and prominent rating
agency of Europe having multi faced characteristics.
Founded in 1978,
Owned by a French Company, Centainaire Blanzy with 70%
stake in equity leaving balance 30% shared by
management.
IBCA is an international credit rating agency based at
London with offices at New York, Paris, Madrid, Barcelona
and Tokyo.
Hoping for an AAA rating itself Fitch IBCA, is the third largest
credit rating agency in the world behind Standard & Poors
and Moody's French parent Fimalac bought American
agency Fitch in 1997 and merged it with IBCA, Europe's
largest rating agency.
The company issues rating for banks, FIs, corporations and
local and sovereign governments.

PAKISTAN
Japan Credit Rating Agency Ltd. (JCR) Japan's
premier rating agency and VIS, Pakistan's only
data bank and financial research organization
have entered into a Joint Venture Agreement,
where by, JCR has acquired 15% share in DCRVIS Credit Rating Co. Ltd. Pakistan. As a result
of this agreement, the name of the company is
being changed to JCR-VIS Credit Rating Co.
Ltd. (JCRVI). This Joint Venture is the first
milestone in Pakistan.

ADVENT OF CREDIT RATING

SYSTEM IN INDIA
1980's - The concept of credit rating in India was
emerging in mid 1980's.
1987- Credit Rating Information Services of India
Ltd. (CRISIL) was established.
1991- Investment Information & Credit Rating
Agency of India Ltd. ( ICRA)
1994- Credit Analysis & Research Ltd. ( CARE )
1996- Duff & Phelph Credit Rating India (Pvt.)
Ltd. (DCR)

THE CREDIT RATING INFORMATION

SERVICES OF INDIA LIMITED
(CRISIL)
Established in 1987, CRISIL is the only
rating agency in India to operate on the
basis of a sectoral specialisation that
underpins the sharpness of analysis, the
responsiveness of the process and the
large-scale dissemination of opinion
pieces.

INSTRUMENTS RATED :
March 31, 2003, it had rated more than 4,438 debt
instruments worth over INR 4,463 billion (about
USD 97 billion), issued by over 2,000 companies.
Leveraging the core strengths, CRISIL delivers
opinions and solutions that
help clients mitigate and manage their business
& financial risks.
make markets function better.
shape public policy.

Board of Directors

B.V. Bhargava ,
Chairman
Dr. S. A. Dave
Director
B. R. Shah
Director
M. G. Bhide
Director
Rama Bijapurkar
Director
Dr. Bala V. Balachandran
Director
Edward Emmer
Alternate Director Cecile Saavedra
R. Ravimohan
MD & CEO
Hemant Y. Joshi
ED & COO
Roopa Kudva
Director and
Chief Rating Officer

SHAREHOLDING PATTERN
CRISIL was promoted in 1987 leading Indian
financial institutions like The Industrial Credit
and Investment Corporation of India Ltd.
(ICICI), Unit Trust of India (UTI) and Housing
Development Finance Corporation Ltd.
(HDFC). Other shareholders include the Asian
Development Bank (ADB), Life Insurance
Corporation of India (LIC), General Insurance
Corporation of India (GIC) and its subsidiaries
and a host of nationalized and foreign banks.

SHAREHOLDING PATTERN
The shareholding pattern of CRISIL as on March 31,
2001, is as follows: ICICI
11.03%
UTI
11.38%
S&P
9.68%
Other Indian Investment Institutions 20.59%
Domestic Mutual Funds
6.77%
FIIs
19.79%
NRI's/OCB
4.75%
Public
13.34%
Employees & Directors
2.67%
Total
100%

Company History - CRISIL

1987 Year of Incorporation
1987-88 Commences rating of corporates
1988-89 Publishes CRISIL - IDBI Bond Yield Tables
1989-90 Starts CRISIL Credit Assessment Service for
Banks. Launches CRISIL Rating Scan to announce
new and current ratings and disseminate CRISIL rating
rationale.
1990-91 Establishes Information Services Group and
started CRISILCARD Service.
1991-92 Provides technical assistance and training to
Rating agency Malaysia Berhard. and MAALOT, The
Israeli Securities Rating Company Ltd. Develops
methodology and framework for rating Structure
Obligations and Asset Securitisation Programmes.

Company History - CRISIL

1992-93 Evolves methodology and framework of
bank ratings. Publishes CRISIL 'RatingDigest
1993-94 Makes public offer of 20,00,000 equity
shares of Rs. 10 each at a premium of Rs. 40
per share. The offer was over subscribed by 2.47
times. Crosses the mark of 1000 debt
instruments rated. Launches CRISIL BanCard
Service. Sets up the Advisory Services Group.
1994-95 Introduces new products like Ratings
on real estate developers' projects Sets up a
separate department for securitisation.
1995-96 Enters into a strategic Alliance with
Standard & Poors' Ratings Group, New York.
Launches CRISIL ~ 500 Equity Index launched.

Company History - CRISIL

1996-97 Standard & Poors' acquisition of
interest in CRISIL by acquiring 9.68% of
shareholding in the Company.
1997-98Introduces CRISERVICE, a retainership
service for research. Introduces CRISIL MNC
Index and CRISIL Indian Business Groups Index
Sets up IISL, a Joint-venture between CRISIL
and National Stock Exchange for carrying out
index business and related activities.
1998-99 Launches website www.crisil.com

Company History - CRISIL

1999-2000 Develops new product on ratings of real
estate developers in association with National Real
Estate Development Council (NAREDCO). CRISIL is
granted Certificate of Registration under SEBI (Credit
Rating Agencies) Regulations, 1999.
2000-01 The first ever Mortgage Backed Securities
(MBS) issue originated by HDFC and LIC Housing
Finance Limited rated by CRISIL. Sets up a subsidiary
"Global Data Services of India Limited"for collecting data
relating to companies, trade and industry.
2001-02 Launches new website www.crisilratings.com.
2002-03 Launch of CRISIL Governance and Value
Creation (GVC) ratings. Introduction of evaluation
services for film and TV software producers.

Alliance with Standard & Poor's

CRISIL's relationship with US based
leading provider of credit ratings- Standard
& Poor's Ratings Services, goes back to
the fiscal 1996, with the company entered
into a strategic business alliance with the
US based rating major. The umbilical cord
was further strengthened in May 1997 with
S&P acquiring 9.68% equity stake in
CRISIL.

Assistance and Training

Services
Perhaps the only rating agency in India which
provides technical assistance and training to
Malaysian Rating Agency (RAM) and Israeli
Securities Ratings Agency (MAALOT).

SERVICES PROVIDED
Credit Rating Services.
CRISIL Research & Information Services (CRIS).
CRISIL Advisory Services (CAS).
CRISIL Card Services

CREDIT RATING SERVICES

The debt instruments include:long term instruments like preference shares and
debentures,
medium-term sources including fixed deposit
programs and
short term instruments viz. the commercial paper
programs and certificate of deposits.
New and innovative instruments include
asset backed securities,.
municipal bonds
bond funds.

CRISIL RESEARCH &

INFORMATION SERVICES (CRIS)
The major activities undertaken in CRTIS are the sector and company
analysis, capital market research, dissemination and specialized/
customized studies.
The efforts made by CRIS include
establishment of sector expertise,
analysis of the fiscal budget and
credit policy documents and timely dissemination of the same,
popularizing the usage of CRISIL equity index as the benchmark index
for the market,
development and dissemination of other benchmark indices and
undertaking specialized studies for a growing age of domestic and
international clients.
A new product known as CRISERVICE introduced which is a
retainership service positioned to service the total research requirement
of the clients.
One of the important developments announced in 1998 was the joint
venture between CRISIL, NSE and S&P Financial Information Services
for carrying out index business and related activities.

CRISIL ADVISORY SERVICES (CAS)

The basic purpose of CAS - providing the
financial advisory assistance in the two sectors
which have experienced the rapid changes as a
result of liberalization are the infrastructure and
banking sector.
Collaborations :
CAS, has signed a pact with National Economic
Research Associates (NERA), unit of Mercer
Consulting Group and a subsidiary of Marsh and
McLennan Companies Inc., Washington, USA to
strengthen its research and advisory services.

CRISIL CARD SERVICES

CRISIL has prepared a corporate database. The
CRISIL Card is compiled from published sources
and covers 500 large Indian companies whose
shares are listed on the major stock exchanges
of the country.
A company covered by CRISIL Card provides
the whole data about the company, which
includes the basic company data, and other
financial information, which can help the investor
in understanding the performances of the
company.

Index Services
India Index Services & Products Ltd.,
CRISIL's 50:50 joint-venture with the
National Stock Exchange, made
significant progress in licensing its
indices for index-related products.

Corporate Governance
The Directors on the Board of Directors are eminent
persons of proven competence and integrity. The
Board has constituted the following Committees
consisting of executive and non-executive Directors to
focus on the critical functions of the Company:
Executive Committee
Audit Committee
Management Committee
Investment Committee
Investor Grievance Committee
Compensation Committee

ICRA Limited
ICRA Limited (formerly, Investment
Information and Credit Rating Agency of
India Limited) was incorporated on
January 16, 1991 and launched its
services on August 31, 1991. ICRA is an
independent and professional company
providing investment information and
credit rating services.

HISTORY - ICRA MILESTONES ..

September 2001
Moodys Investment Company India (Pvt) Limited
became the largest shareholder in ICRA by
acquiring an additional 9% stake.
July 2001
ICRA Limited and the National Real Estate
Development Council (Naredco) jointly launched the
ICRA-Naredco grading system for real estate
developers.
June 2001
ICRA launches Corporate Governance Ratings
ICRA launched its Corporate Governance Ratings
(CGR) for the Indian Market.

HISTORY - ICRA MILESTONES

December 1999
ICRA launches ICRA Interactive corporate website making
all its research publications available through the internet in
the electronic format.
August 1999
Moody's and ICRA Announce Final Equity Agreement
The signing of the agreement follows the December 08,
1998 endorsement of a memorandum of understanding
(MoU) between the two rating agencies.
February 1999
Launched Rating services for Debt Funds of Indian Mutual
Funds.ICRA becomes the first Indian rating company to
rate all non Life Insurance Companies.
January 1999
Launched ICRA Corporate Review, a bi-annual publication
by ICRA Information Services, a division of ICRA, tailored
to meet the information needs of both the retail and
wholesale investor.

HISTORY - ICRA MILESTONES

December 1998
Moody's Investors Service and ICRA Limited announce
their joint agreement to Moodys taking up minority stake
in the equity capital of ICRA.
July 1998
Introduced Rating methodology for the Claims paying
ability of General Insurance companies in India
February 1997
Launched Money & Finance

HISTORY - ICRA MILESTONES ..

March 1996
Signed agreement with Financial Proformas Inc., a
Moodys company (now called Moodys Risk Management
Services )

December 1995
Launched credit assessment for small and medium
scale industry

April 1995
Launched EPRA (Earnings Prospects and Risk Analysis)
Launched, Information Service for the Equity Investor.

HISTORY - ICRA MILESTONES ..

March 1993
Launched Investment Information Service & Research
Publications
September 1991
Launched Rating Services
Launching of Credit Rating Services on 1st
September 1991.
January 1991
Incorporation
Promoted by leading financial institutions and
banks of India, Investment Information and Credit
Rating Agency of India Limited was incorporated
on 16th January 1991

BOARD
Mr. P.K.Choudhury
Managing Director
Mr. R.R. Rao
Joint Managing Director & Chief Consulting
Officer
Mr. Naresh Takkar
Joint Managing Director & Chief Rating Officer
Mr. Amul Gogna
Executive Director & Chief of Information &
Grading Services
Mr. Vijay Wadhwa
GM and Company Secretary

Major Shareholders
Moody's Investment Company India Private
Limited
IFCI Limited
State Bank of India
Life Insurance Corporation of India
Unit Trust of India
Punjab National Bank
General Insurance Corporation of India
Union Bank of India
Central Bank of India
Allahabad Bank
United Bank of India
Indian Bank

Major Shareholders

UCO Bank
Canara Bank Andhra Bank
Export - Import Bank of India
Housing Development Financial Corporation
Limited
Infrastructure Leasing & Financial Services
Limited
The Vysya Bank Limited
Indian Overseas Bank
Oriental Bank of Commerce

SERVICES OFFERED

Rating Services
Information Services
Advisory Services
Rating Services
ICRA rates rupee denominated debt instruments such as,
Bonds and Debentures (Long Term)
Fixed Deposit Programmes (Medium Term)
Commercial Paper and Certificates of Deposit (Short Term)
Structured Obligations and sector specific debt obligations (Issued by
Infrastructure companies)
Information Services
ICRA Information Services is focused on addressing the unique information
needs of investors and the capital markets community. The portfolio includes :
Industry and Sector Research
Bulletin on Money & Finance
Rating Profile
Customized Research
Grading Services

SERVICES OFFERED(Contd.)
Advisory Services
Strategy Consulting
Risk Assessment & Mitigation
Policy Formulation

CREDIT ANALYSIS & RESEARCH

LTD. (CARE)
CARE assigned its first rating in November 1993, and
upto August 31, 2003, had completed 2339 rating
assignments for an aggregate value of about Rs.3572
billion. CARE's ratings are recognised by the
Government of India and all regulatory authorities
including the Reserve Bank of India (RBI), and the
Securities and Exchange Board of India (SEBI). CARE
has been granted registration by SEBI under the
Securities & Exchange Board of India (Credit Rating
Agencies) Regulations,1999.
CARE was retained by Disinvestment Commission,
Government of India, for assistance in equity valuation of
a number of state owned companies and for suggesting
divestment strategies for these companies.

BOARD OF DIRECTORS
Mr.PV Narsimham
Former Chairman , IFCI Ltd.
ChairmanFormer ED, IDBI
Dr. NK Sengupta
Retd. IAS officer.
( Held very senior positions in Govt. like Controller of Capital
Issues, Revenue Secretary of Planning Commission.)\
Dr. RH Patil
Chairman of Clearing Corporation of India Ltd.
Former MD , NSE
MS Jayraman
Former CGM, IDBI

PROMOTERS OF CARE
CARE was promoted by Industrial Development
Bank of India (IDBI), Canara Bank, Unit Trust of
India (UTI), Private Sector Banks and nonbanking finance companies.
IDBI is one of the largest development banks in
the world, with an asset base of INR 666 bn as
on March 31, 2002.
UTI, largest mutual fund in India with an
investible fund base of INR 496 bn as on June
28,2002.
Canara Bank, one of the largest bank in India
with an asset base of INR 715 bn as on March
31, 2002.

 Credit Analysis & Research Ltd. (CARE),

incorporated in April 1993, is a credit
rating, information and advisory services
company promoted by Industrial
Development Bank of India (IDBI), Canara
Bank, Unit Trust of India (UTI) and other
leading banks and financial services
companies. In all CARE has 15
shareholders.

ORGANIZATION STRUCTURE
OF CARE
MD
G.M.'s
Four
Industry Wise
Analysts

R.O.
Five
Specific Branch Offices

Analysts

Various Industries include

Manufacturing companies.
Finance Companies.
Investment Companies.
Banks and FIs.

RATING SERVICES
CARE's Credit rating is an opinion on the
relative ability and willingness of an issuer
to make timely payment on specific debt or
related obligation over the life of the
instrument.
Credit rating thus provides a relative
ranking of the credit quality of debt
instruments.
CARE rates rupee denominated debt of
Indian Companies and Indian subsidiaries
of multinational companies.

CARE RATING PRODUCTS

Credit Rating Of Debt Instruments.

Long term.
medium term securities.
short term debt and deposit obligations.

CREDIT ANALYSIS RATING

(CAR)
The Credit Analysis Rating incorporates
credit risk over an intermediate time horizon for
three years.
Credit Analysis Rating is issuer specific
and not instrument specific.
- One time assessment of credit quality which
can be renewed on the specific request of the
issuer.
- Confidential ratings meant for specific use of
institutional investors/ lenders and not for raising
funds from the public

CARE LOAN RATING (CLR)

CARE Loan Rating is an opinion on the
ability and willingness of a borrower to
make timely payments on specific loan
obligations over its life. CLR is aimed at
providing an additional input in the
decision making process of banks,
financial institutions and non-banking
financial services companies.

OTHER RATING PRODUCTS

I- Rating of Parallel Marketers of LPG &
Kerosene .
II- Rating of Collection Income
Schemes .

The rating coverage

public utilities,
financial institutions,
infrastructure projects,
special purpose vehicles,
state governments and
municipal bodies

Information and Advisory

services group: prepares credit reports on specific
requests from banks or business
partners .
conducts sector studies .
provides advisory services in the areas of
financial restructuring, valuation and credit
appraisal systems.

SERVICES OFFERED :

Credit Rating of Debt instruments.

Credit Assessment of Companies for use by banks and financial
institutions.

Advisory Services for

Structuring financial instruments,
Infrastructure financing,
Municipal finances,
Securitisation transactions.

Credit Reports on Indian companies, on request.

Performance rating of parallel marketers of LPG and Kerosene,
under Government of India Scheme.
Rating of Collective Investment Schemes of Plantation Companies.

Publications:
'Rating Reckoner - an update on
accepted CARE ratings.
CAREVIEW - quarterly bulletin providing
information on CARE ratings.
Commenced operations in October 1993.
Assignments cover companies from a
wide range of manufacturing industries,
banks, and financial services.

RATING PROCESS
Issuer Company Client Rating Agency
Requests for rating
1. Assigns rating team
Submits information
and detailed schedules
2. The team analyses the
information.
Interacts with the team,
responds to queries raised
and provides any additional
data necessary for the
analysis
3. The team interacts with clients,
undertakes site visits, and analyses
data submitted
by the client
4. Internal committee previews analysis.
5. RATING COMMITTEE
awards rating to
client
Accepts rating * , ** 6. Notification in press
7. Periodic Surveillance
* : Client may ask for a review of the rating assigned and furnish additional
information for the purpose.

DUFF & PHELPS CREDIT

RATING AGENCY (DCR)
Servicing the global market place requires
a unique blend of local market expertise
and global resources. DCR has made its
local credit rating professional, the
foundation of its worldwide business. Their
long-standing experience in local financial
economic and social development is
critical to the effective rating and
monitoring of credits around the world.

SHAREHOLDERS & BOARD OF

DIRECTORS
DCR is a co-operative body managed by highly skilled
professionalsand financial analysts. List of top 20 shareholders
Along with there holdings :
ANZ Nominees Ltd.
6.29
Westpac of Custodian Nominees Ltd.
5.83
Cose Manhattan Nominees Ltd.
5.73
National Nominees Ltd. 5.49
Perpetual Trustee Australia Corp.
2.82
Permanent Trustee Corp.
2.81
AMP Groups 2.76
State Authorities
2.25
Qeensland Investment Corp.
1.9
Pendal Nominees Pvt. Ltd.
1.48
MLC Life Ltd. 1.25
National Mutual Corp. 1.09
NRMA Group 0.96
Cticorp. Nominee Pvt. Ltd.
0.86
Mercantile Mutual Life 0.84
Barclays Australia Custodian
0.73
Common Wealth
0.66
Prudential Australia Ltd.
0.62
National Mutual Trustees Ltd. 0.58

PHILOSOPHY OF DCR RATING

-LOCAL EXPERTISE GLOBAL
REACH
Duff & Phelps Credit Rating CO.
(DCR) is the local resource for fixed
income Issuers,intermediaries and
investors worldwide. With more
international offices than any other
rating agency, DCR is putting its
global experience to work in support
of local markets.

FOCUSE STRATEGY
'Local Expertise Global Reach' .
Sector specific analysis in DCR's local market
officers provide on the ground insight into debt
issues originated worldwide, while Regional
Rating Offices in the U.S., the UK and Hong
Kong provide the analytical framework within
which local market ratings take place.
This local global balance allows DCR analysts to
evaluate each credit on its own merits, laying the
groundwork for through monitoring of credit
quality and timely dissemination of in depth
research.

ISSUES RATED
DCR's Global Rating network has rated some
100,000 issues originated in more than 50
countries.
The company has staffed its 30 plus local
market offices with skilled rating professional s
whose understanding of local customers and
financial conditions enhances the value of
DCR's ratings and research.

THANK
YOU