CRISIL

CRISIL is Indias leading Ratings, Research, Risk and Policy Advisory Company. CRISILs
majority shareholder is Standard & Poors. Standard & Poors, a subsidiary of The McGrawHill
Companies, is the worlds foremost provider of independent credit ratings, indices, risk evaluation,
investment research and data. CRISIL offers domestic and international customers a unique
combination of local insights and global perspectives, delivering independent information,
opinions and solutions that help them make better informed business and investment decisions,
improve the efficiency of markets and market participants, and help shape infrastructure policy
and projects. Its integrated range of capabilities includes credit ratings and risk assessment;
research on Indias economy, industries and companies; financial research and analytics
outsourcing; fund services; risk management; and infrastructure advisory services.

At the core of CRISILs credibility are its values:

Analytical Rigour
Independence
Integrity
Innovation
Commitment
CRISILs BUSINESS

CRISIL

Rating Research Advisory

Financial Ressearch
Bond Rating and Analytical off- Infrastructure
shoring

Economy, Industry,
SME Rating Risk Analysis
Company Research

Mutual Fund
Bank Loan Rating
Researc

Global Analytical
Equity Research
Center

CRISILs Global Analytical Centre (GAC) supports Standard & Poors Global Resource
Management initiative. GAC assists in improving workflow efficiencies, handles end-to-end
analytical processes and information processing, and executes complex modelling assignments

Research

CRISILs high-end financial research and analytics outsourcing division, services financial
institutions with investment banking operations, insurance companies, asset management firms,
and corporates, across the world. Its teams of highly trained professionals at delivery centers in
Chennai and Mumbai in India, Buenos Aires in Argentina, and Wroclaw in Poland, provide
coverage across time zones, at the worlds major financial centers. CRISIL Research CRISIL
Research is Indias largest independent research house, with a unique, integrated research platform
and capabilities spanning the entire economy-industry-company spectrum. About 90 per cent of
Indias commercial banks subscribe to CRISIL Research products. CRISIL Fund Services is
Indias leading provider of fund evaluation and risk solutions to the mutual fund industry. CRISIL
is also the official provider of tools and market benchmarks for valuation of fixed-income
investments held by Indian mutual funds, insurance companies, and banks. CRISIL Equities
provides two services - Independent Equity Research (IER) and Initial Public Offer (IPO) Grading.
CRISIL IER grades listed companies on fundamentals and valuations, and includes detailed reports
on the companies being graded. IPO Grading is a one-time assessment of the fundamentals of a
company that is making an IPO.

ADVISORY

Advisory CRISIL Risk and Infrastructure Solutions (CRIS) Limited is a wholly owned subsidiary
of CRISIL. CRISIL Infrastructure CRISILs Infrastructure business assists clients across India,
Africa, the Middle East, and Southeast Asia in shaping infrastructure policy, Public Private
Partnerships (PPP), and investment assessment. CRISIL Infrastructure is the preferred advisor to
governments, multilateral lending agencies, and private sector companies. Its activities range from
developing enabling legislations and sector policies, to structuring concessions, undertaking
complex feasibility studies, managing project procurements through global competitive bidding,
assisting with fiscal and public sector reforms, and valuations. CRISIL Risk Solutions CRISIL
Risk Solutions (CRS) provides risk management solutions to financial institutions, banks, and
corporate houses, both in India and overseas. CRS develops technology solutions that help clients
perform expert analysis of credit, market, and operational risks. It also works closely with Standard
& Poors Risk Solutions to deliver assignments across the Asia-Pacific region
WHY CRISIL IS SUCCESSFUL?

The most vital reason behind CRISIL success is its core values which CRISIL has been following
since its inception. Character define the organization. CRISIL has always valued independence
and analytical rigour. These have not just remain bedrock for the organization, many of CRISIL
business decision have been driven by a choice between doing what is right, albeit inconvenient,
and gainful transgression. It has been matter of pride for CRISIL that former has won at every
time.

The people at CRISIL are the main force behind CRISIL success. All of them have commitment
to integrity and independence of thought deeply ingrained within them. They have shaped CRISIL
credibility and are ambassador of goodwill for the organization.

CRISIL also believes in and practice an open work culture where the power of what you say is
more than what you are which is also backed by non-political environment.

Various Initiative taken by CRISIL such as, when CRISIL started its operations, the Indian capital
market were regulated. Capitalism was the poor cousin of a well-entrenched socialist regime.
Getting a business to business enterprise off the ground was all about getting a license and
managing system. The business environment was very promoter centric. On the other hand
liberalization was the new buzzword and was a much anticipated phenomena. CRISIL was one of
the first idea to ride that wave. CRISIL sought not only to be independent but also to be seen
independent. As a corollary,, being commercially successful became imperative, vital even .

As CRISIL grew over the years many things changed, business grew global footprint expanded
leaders changed. What remain constant is purpose. Every new product CRISIL conceptualized,
each new decision it made had passed acid test before it has seen day light. Even today the purpose
stand like a beacon that not only help CRISIL to remain humble despite their achievements but
also illuminate the path they need to take as they look ahead.

Building Character

Profit is the current value of past performance. If this were the corporate credo with which CRISIL
had operated it would never have been the iconic organization that it is today. The company was
founded on bedrock of independence and credibility. Almost all the business decision that were
taken invariably found their genesis in an unwavering desire to be independent of undue external
influence on their operations and decision making. The need to be profitable were arose from the
desire for independence, since being profitable lent financial strength that impaired the ability to
be truly independent and preempted business pressures from affecting objectivity of analysis. Tis
subjuction of business profits to an organization ideology went counter to the prevalent corporate
mindset at the time as was famously summed up by Peter Drucker, a renowned management expert
and thinker. For CRISIL the business was always business of confidence. Rating fees are charged
upfront and the fees is paid by the client for the rating services, and not for the rating itself. The
fundamental difference in how CRISIL viewed service render versus consideration received
aligned client expectations with how rating was done and not with what the rating outcome was.
The customer was paying for the means, the rating process, rather than the end or the rating
outcome.

With time as CRISIL grew, customer based also grew. Being service is an intangible product the
business faced customer grievances. But CRISIL has successfully developed grievances solving
mechanism. As Indias largest and most influential rating agency, CRISIL has always adopted
and pioneered best practices relating to transparency, disclosures and good governance. While
conflicts of interest can never be fully eliminated, CRISIL firmly believes that they need to, and
can, be managed effectively. CRISILs over 20-year-old track record stands testimony to its
consistently successful approach in managing such conflicts. The key to managing conflicts lies
in adequate disclosures and a strong governance architecture comprising codes of conduct and
robust firewall mechanisms. Two types of conflicts of interest are inherent in CRISILs operations.

a) The generic conflict of interest inherent in the "issuer pays" rating business model theoretically,
this could lead to a rating agency assigning higher ratings than warranted in order to increase its
revenues from the issuer. In CRISILs opinion however, the benefits of the issuer pays model far
outweigh any other business model such as investors or regulators paying for ratings. Ratings are
a tool to increase transparency and efficiency in the debt securities market. A model in which
investors pay for the ratings would lead to a situation where ratings would enable some investors
(subscribers) to price debt securities correctly. In contrast, the issuer-pays model, where ratings
are in the public domain and the information is available to the market as a whole, facilitates the
functioning of an efficient market. Hence, the latter approach is preferable as it avoids asymmetry
of information between various market participants. Moreover, there is the practical difficulty of
often not knowing who the investors are at the time of assigning the rating. In a regulator pays
business model, typically, the regulator will only specify minimum standards for rating agencies.
In the current model, research quality standards are determined by market demands while investor
needs provide the impetus for improving analytical practices. The continuous improvements in
analytical standards that are being witnessed today may thus be impaired in a regulator pays
model, which may ultimately reduce the flow of information to the financial markets. Given these
limitations of the investor or the regulator paying for ratings, the issuer pays model has, over
time, been accepted globally, and in India, as the most efficient and sustainable business model.

b) Conflict of interest induced by non-rating engagements with issuers Advisory or research

engagements with rating clients could lead to more favourable ratings being assigned in order to
increase revenues for the advisory or research businesses. CRISIL believes that conflicts of
interests need to be managed well rather than attempt to completely eliminate them.

The success of the ratings business model is driven by the credibility enjoyed by the agency in the
eyes of investors. Any attempt to assign higher than warranted ratings to issuers will result in a
clear loss of credibility. This, in turn, will erode the rating agencys future business from issuers.
Hence, this is a strong disincentive for rating agencies to let conflicts of interest undermine their
rating decisions. Moreover, non-ratings businesses (such as advisory or research activity) enhance
the quality of the ratings activity by virtue of the following:

i. A separate revenue stream provides a cushion against volatility in the ratings business income,
and hence reduces business pressures on the ratings activity (an inherently cyclical business).

ii. A rating agency draws upon its knowledge and information base to evaluate credit quality. A
rating agency, which also undertakes advisory and research activities in related areas, will enrich
its knowledge and information base and thereby enhance the quality of its credit rating opinion.
While conflicts of interest do exist, the onus is on the rating agency to manage these conflicts
effectively and to reassure all its stakeholders of its ability to do so. How CRISIL manages such
conflicts CRISIL believes that the key to managing conflicts lies in adequate disclosure, effective
codes of conduct, and strong firewall mechanisms. The measures taken by CRISIL in each of these
areas are outlined below: a) Transparency and disclosure CRISIL believes that transparency and
adequate disclosure about its businesses, practices and rating criteria enable the market to assess a
rating agencys integrity. If need be, that is, if the market perceives that the integrity of the ratings
is being compromised because of business considerations, it can then create appropriate pressure
on the agency. To this end, CRISIL makes the following disclosures:

i. Non-ratings activities: In its financial results, CRISIL discloses its non-ratings businesses and
their revenues.

ii. Measures to avoid conflict of interest: CRISIL discloses the measures that it takes to avoid
conflicts of interest. In case CRISIL and the issuer have any common directors, such directors do
not participate in the Rating Committee Meeting and rating process. A disclosure to this effect is
also made with the announcement for the rating and the credit rating report.

iii. "Issuer Pays" model: CRISIL publicly discloses the fact that the issuer pays for the ratings.

iv. Multi-layer process: Each CRISIL rating has to pass through multiple iterations in the analytical
process and is then brought up before a rating committee comprising eminent and experienced
professionals. This ensures that individual biases or shortcomings, if any, do not colour CRISILs
rating opinions.

v. Rating criteria: CRISILs rating criteria are disseminated through its website, publications and
investor discussions. CRISIL has published criteria for all the major business segments in the
corporate, infrastructure and financial sectors in addition to those for structured finance,
governance and value creation, mutual funds, real estate developers and projects, maritime
institutions, educational institutions, microfinance institutions and small and medium enterprises
this is the widest range of criteria in India.

vi. Rationale for each rating: Rating Rationales for all the ratings assigned by CRISIL are publicly
available. CRISILs analysts are also accessible for discussions on the rationale of any rating. In
addition, CRISIL organizes seminars and workshops to discuss its criteria and rationale for ratings.

vii. Default and transition data: CRISIL was the first rating agency in India to publish its default
and rating transition data. This data can also be used to validate CRISILs rating standards at a
broader level. b) Code of conduct i. Rating fees are not in any way linked to issue success or rating
level: CRISILs rating fees are decided upfront before the rating exercise commences. The fee
payable to CRISIL is in no way linked to the rating that is assigned to the instrument nor is there
any linkage with the potential success or failure of the proposed issue. ii. Separate business
development, criteria and analytical teams: CRISIL has separate teams for business development,
for developing criteria, and for executing assignments. This ensures that business pressures do not
in any manner influence the teams involved in developing rating criteria and in assigning the rating.
iii. Analyst compensation is not linked to rating fees: There is no linkage between the analysts
compensation and the rating fees paid by issuers. This ensures that there is no potential conflict of
interest faced by the team undertaking the rating assignment. iv. Team approach to avoid
individual bias: CRISIL ensures that all rating assignments are conducted in teams. This ensures
that there is always a second opinion and that individual biases, if any, do not influence the rating
committees decision. v. Ethical business development: The business development function within
CRISIL adheres to the highest ethical standards. Rating mandates are not solicited by promising
specific ratings to issuers. c) Firewalls i. Physical separation of non-ratings and ratings activities:
The ratings and non-ratings businesses have firewalled office premises and separate business
development teams and analytical teams. In fact, the separation of the ratings businesses from
other businesses exists right through the business hierarchy with separate division heads for the
ratings and non-ratings businesses. The advisory business is also housed in a different legal entity
and not in the entity which carries out ratings activities. ii. Firewall policy to regulate information
transfer: CRISIL has put in place a rigorous firewall policy to ensure that the ratings and non-
ratings businesses do not have access to each others non-public information. iii. No non-ratings
employee is a member of CRISILs rating committee. iv. No non-ratings employee is allowed
access to rating committees There has not been a single instance of CRISIL having assigned an
inappropriate rating to any entity on account of a business relationship in a non-ratings business
area. In fact, CRISIL has been the first rating agency to effect rating actions on some of its key
nonratings customers. These instances exemplify CRISILs commitment to maintaining the
integrity of its ratings activity and are perhaps the reason why the market has never felt the need
to doubt the credibility of CRISILs ratings regardless of its non-ratings business relationships. In
fact, third-party surveys reveal that CRISILs ratings are highly regarded by both investors and
issuers with respect to their credibility, independence and analytical rigour. CRISIL believes that
maintaining the credibility of its ratings activity is an ongoing process. CRISIL remains committed
to taking all the necessary steps to insulate its ratings activity from any emerging situation that
could create a potential conflict of interest. In order to disclose this document to the public, this
document is available without charge to the public on CRISILs public website, www.crisil.com.
However, by making this document available to the public, CRISIL does not assume any
responsibility or liability to any third party arising out of or relating to the contents of this
document. This document shall not form a part of any contract with any third party and no third
party shall have any right (contractual or otherwise) to enforce any of this document's provisions,
either directly or indirectly. CRISIL in its sole discretion may revise the contents of this document
to reflect changes in market, legal and regulatory circumstances and changes to CRISIL's controls,
policies and procedures.

Project I Credit Risk Analysis

1. Credit Risk Analysis in India.
2. Credit Risk Analysis of various Industries.
3. Risk Assessments models of large companies.
4. Need for Credit Risk Analysis by banks and other financial intermediaries.
5. Strategic Position of Credit Risk management.
6. Fundamental Firm level risks.
7. Different types of risk levels.
8. Credit Risk Analysis of Financial Firms.
9. Credit Risk Analysis of Non-Financial Firms.
10. Credit Risk Analysis in Peer-to-Peer Lending System.
11. Best practices of conducting credit risk analysis.
12. Effect of Credit Risk Management in Public and Private Sector.
13. Credit Risk Analysis Process.
14. Impact of Credit Risk Analysis.
15. Give credit risk analysis report of one company of your choice.