CREDIT RATING AGENCIES

Rate the companies based on various analysis

The credit worthiness of an individual, corporation, or even a country. Analyses financial history and current assets and liabilities. Tells a lender or investor the probability of the subject being able to pay back a loan. Faster and easier availability of loans

Increased publicity

INDIAN CREDIT RATING AGENCIES

FITCH ratings India private limited. ICRA : Investment Information & credit rating agency of India limited. CARE : Credit analysis & research limited. CRISIL : Credit rating information services of India limited.

Credit Ratings Methodology

Business Risk Profile Analysis

Financial Risk Profile Analysis

Validation of Company Position Trends Quality of Earnings & Analytical adjustments Peer Group Comparisons

Country Risk

Political Economic Industry Specific factors Foreign exchange

Profitability / Peer Group Comparisons

Business Risk

Industry Factors

Competitive Factors Market position Keys to Success Size Diversification Management

Company Position

Industry Trends Industry Structure Market Size Growth Potential Competition Changing Technology

Operating sources & uses Of liquidity Debt Characteristics Bank credit facilities

Accounting

Accounting Regime Reporting & Disclosure Analytical adjustments

Liquidity / Short-term Factors

Financial Risk

Governance Risk

Focus on debt service capability Analytical distinctions with profitability Cash flow measures / ratios

Cash Flow Adequacy

Ownership Board of directors Management practices Financial Strategy Risk Tolerance Accounting Practices Internal controls

CRISIL(CREDIT RATING AND INFORMATION SERVICES OF INDIA LTD.)

A global analytical company. Incorporated in year 1987. Provides ratings research and policy advisory services. CRISIL is India's leading rating agency, and is the fourth largest in

the world.
Offerings-real Timenews, Analysed data , incisive insights & opinions

&expert advice.
So far CRISIL has 30000 debt instruments covering the entire debt

market.

DEBT OBLIGATIONS RATED BY CRISIL INCLUDE

Non convertible debentures/bonds/preference shares Commercial papers/certificate of deposits/short term debt Fixed deposits

Loans

Structured debts

FUNCTIONS OF CRISIL

CRISIL LONG TERM RATING SCALE

CRISIL AAA CRISIL AA CRISIL A CRISIL BBB CRISIL BB (Highest Safety) (High Safety) (Adequate Safety) (Moderate Safety) (Moderate Risk)

CRISIL B CRISIL C CRISIL D

(High Risk) (Very High Risk) (Default)

CRISIL SHORT TERM RATING SCALE

CRISIL P1
P2= Safety Regarding Timely Payment On The P5= Instruments Is Expected Be Default P3= P4= Instruments It Is Likely To Is More Be Affected Vulnerable By To Short To The Term Or P1= Safety Regarding Timely Payment On Istrument Is Very Strong.However, Safety Is Lower Adverse Less Favourable Effects Of Conditions Changing Circumstances On Maturity The Instrument Is Very Strong Than Instruments Rated In P1

CRISIL P2 CRISIL P3 CRISIL P4 CRISIL P5

ICRA : INVESTMENT INFORMATION & CREDIT RATING AGENCY OF INDIA LIMITED.

ICRA was set up by IFCI on 16th january 1991. A public limited company. An authorized share capital of rs.10crores, rs. 5 crores is paid up. To provide information & guidance to investors. ICRAS major shareholders IFCI (26%). Determines the credit risk associated with a debt instrument.

ICRA LONG TERM RATING SCALE

ICRA LAAA

ICRA LAA
LD= Lowest Credit Rating & This LC= Poor Credit Quality Rating & This ICRA LA Instrument Very Low Prospectus Of Has Limited Prospectus Of LBBB= Moderate Credit Quality Rating LB= Risk Prone Credit Quality Rating And& LBB= Inadequate Credit Quality LAA= LA= Adequate High Credit Credit Quality Quality Rating Rating Recovery This Instrument Carries Higher Then It Carries VeryICRA High Credit RiskRisk LAAA= Highest Credit Quality Rating LBBB And It Carries High Credit And & It Carries It Carries Average Lowest Credit Risk Risk Average Credit Risk Credit

ICRA LBB ICRA LB

ICRA LC
ICRA LD

ICRA SHORT TERM RATING SCALE

ICRA A1
A5= Lowest Credit Rating To Term A3= Moderate Credit Quality Rating A4= Risk Prone Moderate Credit Quality A2= Average CreditQuality Quality Rating ToShort Short Term Debt Instruments & This Instrument Carry Very A1= Highest Credit Policy Rating To Debt Instruments & This Instrument Carries Higher Rating To Short Term Debt Instruments To Short Term Debt Instruments Low Prospects Of Recovery Credit Risk Than A1 Short Term Debt Instruments

ICRA A2 ICRA A3 ICRA A4 ICRA A5