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Rate the companies based on various analysis

The credit worthiness of an individual,corporation, or even a country.

Analyses financial history and current assetsand liabilities.

Tells a lender or investor the probability of thesubject being able to pay back a loan.

Faster and easier availability of loans

Increased publicity

CREDIT RATING AGENCIES


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CRISIL : Credit rating information services of India

limited.

ICRA: Investment Information & credit ratingagency of India limited.

CARE : Credit analysis & research limited.

FITCH ratings India private limited.

INDIAN CREDIT RATING AGENCIES


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Credit RatingsMethodology

Business

Risk Profile

Analysis

Financial

Risk Profile

Analysis


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BusinessRisk

Country

Risk

Company

Position

Industry

Factors

Profitability

/ Peer GroupComparisons

Political

Economic

Industry Specific factors

Foreign exchange

Industry Trends

Industry Structure

Market Size

Growth Potential

Competition

Changing Technology

Competitive Factors Market position

Keys to Success

Size

Diversification

Management

Validation of Company

Position

Trends

Quality of Earnings& Analytical adjustments

Peer Group Comparisons


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FinancialRisk

Accounting

Cash Flow

Adequacy

GovernanceRisk

Liquidity /

Short-term

Factors

Accounting Regime

Reporting & Disclosure

Analytical adjustments

Ownership

Board of directors Management practices

Financial Strategy

Risk Tolerance

Accounting Practices

Internal controls

Focus on debtservice capability

Analytical distinctions with

profitability

Cash flow measures /

ratios

Operating sources & uses

Of liquidity

Debt Characteristics Bank credit facilities


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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.


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DEBT OBLIGATIONS RATED BY CRISIL

INCLUDE

Non convertible debentures/bonds/preferenceshares

Commercial papers/certificate of deposits/shortterm debt

Fixed deposits

Loans

Structured debts


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FUNCTIONS OF CRISIL


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CRISIL LONG TERM RATING SCALE

CRISIL AAA (Highest Safety)

CRISIL AA (High Safety)

CRISIL A (Adequate Safety)

CRISIL BBB (Moderate Safety)

CRISIL BB (Moderate Risk)

CRISIL B (High Risk)

CRISIL C (Very High Risk)

CRISIL D (Default)


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CRISIL SHORT TERM RATING SCALE

CRISIL P1

CRISIL P2

CRISIL P3

CRISIL P4

CRISIL P5

P1= Safety Regarding Timely Payment OnThe Instrument Is Very Strong

P2= Safety Regarding Timely Payment On TheIstrument Is Very Strong.However, Safety Is LowerThan Instruments Rated In P1

P3= Instruments Is More Vulnerable To TheAdverse Effects Of Changing CircumstancesP4= It Is Likely To Be Affected By Short Term OrLess Favourable ConditionsP5= Instruments Is Expected To Be DefaultOn Maturity


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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 : INVESTMENT INFORMATION & CREDIT

RATING AGENCY OF INDIA LIMITED.


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ICRA LAAA

ICRA LAA

ICRA LA

ICRA LBBB

ICRA LBB

ICRA LBICRA LC

ICRA LD

ICRA LONG TERM RATING SCALE

LAAA= Highest Credit Quality RatingLAA= High Credit Quality RatingAnd It Carries Lowest Credit RiskLA= Adequate Credit Quality Rating& It Carries Average Credit Risk

LBBB= Moderate Credit Quality Rating &This Instrument Carries Higher ThenAverage Credit Risk

LBB= Inadequate Credit QualityAnd It Carries High Credit RiskLB= Risk Prone Credit Quality Rating AndIt Carries Very High Credit Risk

LC= Poor Credit Quality Rating & ThisInstrument Has Limited Prospectus OfRecovery

LD= Lowest Credit Rating & ThisInstrument Has Very Low Prospectus OfRecovery


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ICRA SHORT TERM RATING SCALE

ICRA A1

ICRA A2

ICRA A3

ICRA A4

ICRA A5

A1= Highest Credit Policy Rating ToShort Term Debt Instruments

A2= Average Credit Quality Rating To Short Term

Debt Instruments & This Instrument Carries HigherCredit Risk Than A1

A3= Moderate Credit Quality Rating

To Short Term Debt Instruments

A4= Risk Prone Moderate Credit Quality

Rating To Short Term Debt Instruments

A5= Lowest Credit Quality Rating To Short Term

Debt Instruments & This Instrument Carry VeryLow Prospects Of Recovery


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