CRISIL (An S&P Global Company)

 CRISIL, India's first credit rating agency, is incorporated on the

January 29,1987 , promoted by the erstwhile ICICI Ltd along
with UTI and other financial institutions. Mr. N Vaghul and Mr.
Pradip Shah are CRISIL's first Chairman and Managing Director,
respectively.
 CRISIL commences operations within a year of its incorporation
on January 1,1988.
 In Novemeber,1993 CRISIL goes public. CRISIL's IPO is a
whopping success - it's 20,00,000 shares, sold at a premium of
Rs.40 per share, are oversubscribed by 2.47 times.
 In December,1995 in partnership with National Stock Exchange
of India Ltd. (NSEIL), CRISIL develops and launches the
CRISIL500 Equity Index, helping investors clue in on stock
price movements.
 CRISIL (An S&P Global Company)

 In February 1996, CRISIL forges a strategic business alliance

with Standard & Poor's (S&P) Ratings Group. The tie-up is
part of CRISIL's strategy to develop its skills and processes.
 In May,1997 S&P acquires a 9.68 % stake in CRISIL on May 8,
1997. The alliance with the world's leading rating agency adds a
new dimension to CRISIL's methodologies. It provides CRISIL
with exposure to the international rating markets and to S&P's
rating processes.
 In October 1994, CRISIL diversifies business portfolio with a
strategic entry into advisory services.
 In 2005, The strategic alliance with S&P since 1996 culminates in
S&P's acquiring majority control of CRISIL.
 CRISIL (An S&P Global Company)

 In March,2008 CRISIL's revenue crosses Rs.5 billion in 2008.

 In August 2010, It launches CRISIL Real Estate Star Ratings.
 In January,2011 CRISIL launches Education Grading, beginning
with business schools.
 In 2016, CRISIL launches the first hybrid issuance ratings in the
insurance sector.
 In 2017, CRISIL buys 8.9% stake in CARE Ratings.
 In 2017, CRISIL Ratings was awarded the best credit rating
agency at the ‘Capital Market Intermediaries Excellence Awards
2016-17’ by ASSOCHAM, in association with SEBI’s National
Institute of Securities Markets (NISM).
CRISIL’s credit ratings are:
1. An opinion on probability of default on the rated obligations.
2. Forward Looking.
3. Specific to the obligation being rated.

But they are not:

1. A comment on the issuer’s general performance.
2. An indication of the potential price of the issuer’s bonds or
equity shares.
3. A recommendation to buy/sell/hold a particular security.
4. A statutory or non-statutory audit of the issuer.
5. An opinion on the associates, affiliates, or group companies,
or the promoters, directors, or officers of the issuer.
 • It includes rupee-denominated credit instruments-Long,
Debt medium & short term-namely debenture,preference shares,
Obligatio deposits, certificates of deposits, commercial paper.
ns

• It includes rating of real estate projects which is to help

prospective investors to identify and narrow down their
Real investment options.
Estate

• Creditworthiness of a bank’s borrower-clients is

assessed,offering comments on the likelihood of
Bank repayment of loans to banks.
Loan
 • It includes the rating of collective investment schemes of
Collective plantation and companies, offering opinions on the degree
Investme of certainty of the scheme to deliver assured returns.
nt
Schemes

• It is an opinion on the relative quality of healthcare

Healthca delivered by the institutions to its patients. The grade
re assigned is applicable for a specific healthcare facility and
Instituti not to the entire healthcare organisation.
ons
• As per the SEBI Regulations, it is mandatory for all issuers
in primary market who file their draft red-herring
prospectus offer document to get an IPO grading form
IPO SEBI-registered rating agency.
 CRISIL’s Revised Rating Symbols

 Long-term Debt Instruments  Short-term Debt Instruments

CRISIL Highest Safety CRISIL A1 Highest Safety
AAA
CRISIL A2 High Safety
CRISIL AA High Safety
CRISIL A3 Moderate Safety
CRISIL A Adequate Safety
CRISIL A4 Minimal Safety
CRISIL Moderate Safety
BBB CRISIL D Default
CRISIL BB Moderate Risk
CRISIL B High Risk
CRISIL C Very High Risk
CRISIL D Default
 CRISIL’s Revised Rating Symbols
 Long-term Structured Finance  Short-term Structured Finance
Instruments Instruments
CRISIL Highest Safety
AAA(SO) CRISIL A1(SO) Highest Safety
CRISIL AA(SO) High Safety
CRISIL A2(SO) High Safety
CRISIL A(SO) Adequate Safety
CRISIL A3(SO) Moderate Safety
CRISIL Moderate Safety
CRISIL A4(SO) Minimal Safety
BBB(SO)
CRISIL BB(SO) Moderate Risk CRISIL D (SO) Default

CRISIL B(SO) High Risk

CRISIL C(SO) Very High Risk

CRISIL D(SO) Default

 CRISIL’s Revised Rating Symbols
 Long-term Debt Mutual Fund  Short-term Debt Mutual Fund
Schemes Schemes
CRISIL AAAmfs Highest Safety CRISIL A1mfs Highest Safety
CRISIL AAmfs High Safety CRISIL A2mfs High Safety
CRISIL Amfs Adequate Safety CRISIL A3mfs Moderate Safety
CRISIL BBBmfs Moderate Safety CRISIL A4mfs Minimal Safety
CRISIL BBmfs Moderate Risk

CRISIL Bmfs High Risk

CRISIL Cmfs Very High Risk

 CRISIL’s Revised Rating Symbols
 Health Care Institutions  IPO Grading
5/5 Strong
Grade A Very Good
Quality
4/5 Above Average
Grade B Good Quality
3/5 Average
Grade C Average Quality
2/5 Below Average
Grade D Poor Quality
1/5 Poor
 FITCH RATINGS INDIA PVT. LTD.

 DCR India Pvt. Ltd or Duffs and Phelps Credit rating India Pvt
Ltd was a joint venture between Duffs & Phelps and Alliance
group.
 It was first private sector credit rating agency in India.
 Fitch Investors Service, USA aquired 33% stake in DCR and has
been renamed as Fitch Ratings India Pvt. Ltd.
 DCR India Pvt. Ltd has played an important role in rating India’s
forex debt obligations.
 Rates the securities of all kinds of companies including banking
and insurance
 Rating symbols used by Fitch are the same as that of CRISIL.
 RATING METHODOLOGY

 The Rating methodology involves an analysis of

industry risk, issuer’s business and financial risk. A
rating is assigned after assessing all factors that could
affect the credit worthiness of the entity. The industry
analysis is done first followed by the company analysis.
 Credit Rating for Manufacturing
Companies
The main element of rating methodology are as below:
• Business Risk Analysis: It begins with an assessment
of the company’s environment focussing on the strength
of the industry prospects, business cycle as well as
competitive factors affecting the industry. The
vulnerability of the industry to political factors is also
assessed. If a company is involved in more than one
business , each segment is analyzed separately. The
main factors include Industry Risk, Market position,
operating efficiency and legal position.
 Credit Rating for Manufacturing
Companies
Financial Risk Analysis: It is analysed mainly through financial
ratios. Emphasis is placed on the ability of the company to
maintain/improve its future financial performance.
 The profitability of a company is an important determinant of
its ability to withstand business adversity.The main measures
of profitability include operating and net margins and returns
on capital. The absolute levels of these ratios, trend and
comparison of these ratio with other competitors is analyzed.
Emphasis is also laid on cash flow patterns.
 The area analysed are accounting quality, earnings prospects,
adequacy of cash flows financial flexibility and interest and
tax sensitivity.
 Credit Rating for Manufacturing
Companies
Management Risk: A proper assessment of debt protection
level requires an evaluation of management philosophies
and its strategies. The analyst compares the company’s
business strategies and financial plans to provide insights
into a management’s ability to forecast and implement
plans. The areas analysed include track record of the
management, planning and control systems, evaluation of
capacity to overcome adverse situations, goals
,philosophy and strategies.
Credit Rating for Financial Service Sector
When rating debt instruments of financial institutions, banks,
NBFCs in addition to the financial analysis and management
evaluation the following factors are considered:
 Regulatory and competitive environment
 Fundamental analysis
 Capital adequacy
 Asset quality
 Liquidity management
 Profitability and financial position
 Interest and tax sensitivity