ICRA Limited

Analysts Presentation, 2007-08

May 2008

Agenda
1 Background and Business

Financial Performance Review

Business Update

Business Outlook and Challenges

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#1

Background and Business

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Background and Business

ICRA Limited
Rating Services, Grading Services, Information Services, and Outsourcing Services

ICRA is one of the leading Credit Rating agencies in India, and an Associate of Moodys Investors Service Besides Ratings, ICRA Group offers Consulting services, IT-based services, Information services, and Outsourcing services.

ICRA Management Consulting Services Limited (IMaCS) (100% subsidiary of ICRA Limited)

ICRA Techno Analytics Limited (ICTEAS) (100% subsidiary of ICRA Limited) ICRA Online Limited (ICRA Online) (100% subsidiary of ICRA Limited)

Consulting Services

IT solutions in business applications and processes

Mutual Fund-based Information services Technology products and services Outsourcing services

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#2

Financial Performance Review

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Financial Highlights, 2007-08

ICRAs Revenues up by 47%

ICRAs Net Profit up by 65%

Consolidated Group Revenue up 40%; Consolidated Group Net Profit up 43%

All businesses register strong top line growth

Proposed Dividend of Rs 5 per share

Proposed Special Dividend of Rs 5 per share

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ICRA: Standalone Financials

Strong Financial Performance Ratings Income up by 55% Improvement in profitability margins Net Profits up by 65%

Due to change in accounting policy for surveillance income during 2007-08, Rating Income is lower by Rs. 70.6 million and PAT is lower by Rs. 39.9 million

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ICRA Group: Consolidated Performance

All businesses have reported strong top line growth Robust growth in profits
Due to change in accounting policy for surveillance income during 2007-08, Rating Income is lower by Rs. 70.6 million and PAT is lower by Rs. 39.9 million

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ICRA Group: Key Ratios

Overall Group profitability improved in 2007-08, mainly on the strength of Rating Services Income Profitability of other businesses has declined (discussed under Business Update Section)

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ICRA Group: Segment-wise Contributions

As Ratings Business, which is the most profitable (compared with other businesses), has reported the highest growth, its contribution to Revenues and Operating profits has increased

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#3

Business Update

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Business Update: Rating Services

Performance highlights:

Revenue grew by 55% (24% in the previous year)

Operating profits up by 61%

Growth driven by:

Basel 2 rollout Issuance by Financial sector entities boosted by buoyant capital markets Increased market access by Real Estate issuers New services, viz., IPO gradings and Recovery ratings of Securities Receipts Govt.s initiatives to prepare urban bodies to tap debt markets Significant increase in volume of rated debt to INR 2,586 billion (INR 1,776 billion in the previous year); this is in addition to Basel 2 ratings Acquisition of new clients

Profitability buoyed by:

Cost control and impact of Operating Leverage (with growth in revenues exceeding expenses)

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Business Update: Advisory Services

Performance highlight

Operating Revenue grew by 20% (24% in previous year)

Growth driven by:

Deeper inroads made into Energy and Infrastructure sectors Creation of a new growth vector in the form of Development Consulting Strengthening business relationships with multilateral institutions (e.g. ADB, World Bank, UNICEF) Increase in average mandate size

Profitability impacted by:

Longer than expected execution time for a few large mandates Investment of resources in creating new products in the risk management practice Outreach and business development efforts in the overseas markets

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Business Update: IT Related Services

Performance highlight

Revenue grew by 21% (38% in the previous year)

Growth driven by:

New business analytics domain Addition of new clients Steady growth in business from prominent (existing) clients

Profitability impacted by:

INR appreciation against the US dollar (by 11.38% from INR 45.15 to INR 40.01) Opening up of US office (incorporated as a wholly-owned subsidiary, ICRA Techno Analytics, Inc., in April 2007 to increase reach in the North American market)

Strengthening of middle management cadre and other HR related initiatives

Challenges

To scale up size of operations To better manage exchange rate risks, control costs, and improve profitability

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Business Update: Outsourcing Services

Performance highlight

Revenue grew by 37% (157% in the previous year)

Business impacted by:

Slowdown in work flow due to decline in issuances in the international credit markets INR appreciation against the US dollar

Challenges

To expand client base To scale up size of operations To better manage exchange rate risks, control costs, and improve profitability

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Business Update: Information Services

Performance highlights:

Revenue grew by 39% (26% in the previous year)

Losses declined following growth in revenues

Growth driven by:

Addition of prominent clients in the Financial sector domain Advertising revenues from web-portal

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#4

Business Outlook and Challenges

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Business Outlook: Rating Services

Outlook appears positive for all segments

Basel 2 implementation under standardised approach by Banks in India (Short-Medium term)

Larger corporate issuance in local debt market, which is relatively under-penetrated (Medium to Long term)

Buoyant economic conditions leading to increase in funding requirements Govt.s forex inflows management related concerns Govt. initiatives to revive the debt market Growth in assets under insurance and pension schemes Enhanced possibilities of Risk-based pricing by Banks (with loan exposures getting rated under Basel 2)

Expected sustained growth in credit demand and capital markets to drive financial sector related issuance
Expansion of under-penetrated structured finance market with growth in credit leading to increasing funding and capital requirements

Significant funding requirements of sub-sovereign entities

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Business Outlook: Rating Services

Other Opportunities

Mandatory Grading of Initial Public Offers (IPOs)

Initiative by Ministry of Finance for Grading of Public-Private Partnership (PPP) projects Rating of Security Receipts of Asset Reconstruction Companies Rating of Real Estate Mutual Funds

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Business Outlook: Rating Services

ICRA is well positioned to exploit the emerging opportunities, given its:

Strong brand and competitive strengths Proven ability to make product and service innovations Track record of Ratings Experienced Management team and rich talent pool Close association with Moodys

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Challenges/Risk Factors: Rating Services

Any significant slowdown in economic or investment growth, especially on account of rising interest rates

Protracted Slow down/disruption in domestic debt markets

Ease of access and relative cost economics of overseas funding alternatives

Adverse changes in regulations

Reputation related risks

Competitive pressures from other Rating agencies

Ability to retain and attract quality manpower; increasing compensation and related operating costs

Squeeze on Profitability margins from pricing and cost pressures, besides increasing penetration of relatively lower ticket business

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Disclaimer
This Review Presentation contains certain forward-looking statements (including expectations and plans) that may be identified by words, phrases, or expressions such as expected, will, would, continue, intend to, in future, opportunities or their variations. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed under Risks and Challenges section, which is a part of this review presentation. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect managements analysis only as of the date hereof. The Company assumes no obligation to publicly update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition.

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