DEPARTMENT OF MANAGEMENT

Report on Summer Training "AWARENESS OF CRlSIL SME RATINGS AMONG SME'S"

Submitted to University

In partial fulfillment of the Requirements for the award of Degree of Master of Business Administration

Submitted by:

DEPARTMENT OF MANAGEMENT

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ACKNOWLEDGEMENTS I would like to express my sincere thanks to CRISIL Ltd., Ludhiana for giving me the opportunity to carry out the Summer Internship Program in their organization. The whole period spent with the organization has been of immense learning experience about the SME Ratings. Preparing a project of such a kind is not an easy task in itself and I am sincerely thankful to all those people who help me lot, in preparing and completing this project. I am grateful to CRISIL Ltd. who has given me this opportunity to carry out the project AWARENESS AND IMPLEMENTATION OF CRlSIL SME RATINGS AMONG EMERGING SME'SA study on investors perception their behavior about equities. I would also like to thank Prof. Jyoti Sharma Faculty Guide, Lovely Professional University, Phagwara for her valuable guidance and insight amidst his busy schedule. Finally I would like to thank Sardar. Gurmukh Singh (Relationship Manager) my project supervisor without his help and guidance the completion of this project would have become difficult task.

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CHAPTER 1

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INTRODUCTION I.1 Introduction of the company. I.2 Business and services of the company.

I.3 Profile of the company.

I.4 History of the company.

I.5 Organization and Infrastructure.

I.6 Milestones of the company. 1.7 Product range of the company. 1.8 Performance of the company. 1.9 Benefits of SME Rating

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1.1

Introduction to CRISIL

An increased range of borrowers, increasingly complex financial transactions and large quantum of debt borrowed in India warranted the need of provider of objective, accurate and timely information of credit quality. To fulfill this objective, CRISIL was incorporated in 1987 as public limited company. Today CRISIL is Indias largest and most respected rating agency. CRISILs majority share holder is standard $ Poors the worlds foremost provider of independent credit rating, indices, risk evaluation, investment research and data. Leading corporation worldwide are rated by S&P. S&Ps credit risk tracer (CRT) has analyzed about 10 lakh SMEs in Europe

Established in 1987, CRISIL has been promoted by leading Indian financial institutions like The Industrial Credit and Investment Corporation of India Limited (ICICI), Unit Trust of India (UTI) and Housing Development Finance Corporation Limited. The major shareholders include Standard & Poor's, ICICI, UTI, Life Insurance Corporation, General Insurance Corporation and a host of nationalized and foreign banks. CRISIL became a public limited company in November 1993 and is presently a quoted company on the Bombay Stock Exchange and the National Stock Exchange . Crisil pioneered the concept of credit rating in India and developed the framework and methodology for rating debt in the context of the India financial, monetary and regulatory system. CRISIL today has attained a pre-eminent position in the rating industry. It is the largest rating agency in the South East Asia region and is amongst the four largest ratings agencies in the world. In February 1996, CRISIL entered into a strategic alliance with Standard and
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Poors .The relationship got strengthened with S&P with CRISILs working credibility, competence and management. The relationship got further strengthened with S&P taking up a majority stake in CRISIL. CRISIL started with the rating of corporate dept and other the years extended its scope of activities. Its range of services one includes rating services, advisory services and investment research related services.

1.2 CRISIL Business and Services

CRISIL Limited is Indias leading Ratings, Financial News, Risk & Policy Advisory Company. CRISIL helps clients manage and mitigate business and financial risk, enables markets to function better through benchmarks and best practices and provides workable inputs in shaping public policy. CRISILs services and products span the entire value chain starting from data collection and management to providing opinions and integrated solutions. These products and services are backed by highest standards of integrity, independence and analytical rigor, making CRISIL the most credible provider of these services in the market. CRISILs clients depend upon it to constantly deliver objective opinions and the most workable solutions. Through a sustained theme of innovation and thought leadership, CRISIL has led the markets with new thoughts, new analytical frameworks and new approaches, placing it in its leading position in the Indian market place. to all participants in the financial markets. CRISIL Infrastructure Advisory Group provides workable policy and transaction level solution to Central and State governments, public sector and private sector entities, that help them make the difference. CRISIL Investment and Risk Management Group (part of CRISILs advisory services) and Global Data Services India Ltd (GDSIL), both CRISIL subsidiaries. CRISIL Ltd provides business knowledge through research on industries, companies and the economy, GDSIL provides analytical data base to support CRISIL as well as external clients in there research and analysis. CRISILs news services (CRISIL Market wire CMW) are Indias leading provider of real time news and analysis on India debt markets.

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1.2.a CRISILSME RATING SERVICES

CRISIL commenced its SME (small & medium enterprises) rating services in April 2005. CRISIL has two products for rating small scale industries SSIs and SMEs viz. NSIC-CRISIL performance and credit rating for SSI and SME rating respectively CRISIL rates SSI and SMEs on two separate rating scales as given below:

A. NSIC-CRISIL performance and credit rating for SSIs

CRISIL signed an MOU with NATIONAL SMALL INDUSTRIES CORPORATION (NSIC) to rate SSIs in India at a subsidized cost.

An NSIC CRISIL RATING reflects CRISILs opinion on companys performance capability and financial strength. Rating is assigned on following rating scale.

NSIC rating scale

TABLE NO .1 Financial Strength High Moderate Low

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Performance Capability

Highest High Moderate Weak Poor

SE 1A SE 2A SE 3A SE 4A SE 5A

SE 1B SE 2B SE 3B SE 4B SE 5B

SE 1C SE 2C SE 3C SE 4C SE 5C

For example, a company with high Performance Capability and high Financial Strength will be rated 'SE2A', while one with weak Performance Capability and low Financial Strength will be rated 'SE4C'.

B. SME RATING

CRISIL SME Ratings will reflect the level of creditworthiness of an SME, adjudged in relation to other SMEs. CRISIL SME Ratings will be assigned with the following rating definition:

"The rating indicates that the level of creditworthiness of an SME, adjudged in relation to other SMEs is " (as per table below)

TABLE NO .2
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CRISIL SME Rating SME 1 SME 2 SME 3 SME 4 SME 5 SME 6 SME 7 SME 8

Definition Highest High Above Average Average Below Average Inadequate Poor Default

1.2b CRISIL Rating Symbols For Long Term Ratings

AAA (Triple Safety Instruments rated 'AAA' are judged to offer the highest degree of safety A) Highest with regard to timely payment of financial obligations. Any adverse changes in circumstances are most unlikely to affect the payments on the instrument AA Instruments rated 'AA' are judged to offer a high degree of safety with (Double A) High regard to timely payment of financial obligations. They differ only Safety marginally in safety from `AAA' issues. A Instruments rated 'A' are judged to offer an adequate degree of safety Adequate Safety with regard to timely payment of financial obligations. However, changes in circumstances can adversely affect such issues more than those in the higher rating categories. BBB Instruments rated 'BBB' are judged to offer moderate safety with regard (Triple B) Moderate to timely payment of financial obligations for the present; however, Safety changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal than for instruments in higher rating categories. BB Instruments rated 'BB' are judged to carry inadequate safety with regard
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(Double B) to timely payment of financial obligations; they are less likely to default Inadequate Safety in the immediate future than instruments in lower rating categories, but an adverse change in circumstances could lead to inadequate capacity to make payment on financial obligations. B Instruments rated 'B' are judged to have high likelihood of default; while High Risk currently financial obligations are met, adverse business or economic conditions would lead to lack of ability or willingness to pay interest or principal. C Instruments rated 'C' are judged to have factors present that make them Substantial Risk vulnerable to default; timely payment of financial obligations is possible only if favourable circumstances continue. D Instruments rated 'D' are in default or are expected to default on Default scheduled payment dates. NM Instruments rated 'NM' have factors present in them, which render the Not Meaningful outstanding rating meaningless. These include reorganisation or liquidation of the issuer, the obligation being under dispute in a court of law or before a statutory authority etc.

ABOUT- NSIC
National Small Industries Corporation Ltd. (NSIC), an ISO 9001 certified company, since its establishment in 1955, has been working to fulfill its mission of promoting, aiding and fostering the growth of small scale industries and industry related small scale services/business enterprises in the country. Over a period of five decades of transition, growth and development, NSIC has proved its strength within the country and abroad by promoting modernization, up gradation of technology, quality consciousness, strengthening linkages with large medium enterprises and enhancing exports - projects and products from small industries.

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NSIC operates through 9 Zonal Offices, 33 Branch Offices, 14 Sub Offices, 10 NSIC Business Development Extension Offices, 5 Technical services Centers, 3 Extension Centers and 2 Software Technology Parks supported by a team of over 500 professionals spread across the country. To manage operations in African countries, NSIC operates from its office in Johannesburg. NSIC carries forward its mission to assist small enterprises with a set of specially tailored schemes designed to put them in a competitive and advantageous position. The schemes comprise of facilitating marketing support, credit support, technology support and other support services.

NSIC carries forward its mission to assist small enterprises with a set of specially tailored schemes designed to put them in a competitive and advantageous position. The schemes comprise of facilitating marketing support, credit support, technology support and other support services.

RATING FEES NSIC-CRSIL PERFORMANCE AND CREDIT RATING FOR SSIs Turnover (Rs . Lakh)Turnover < 50 50-200 Rating fees (Rs.) Service tax 10.30% (Rs.) 40,000 @ 4,120 45,000 4,635 (Rs. Lakh)Turnover (Rs. Lakh) > 200 60,000 6,180

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Total fees (Rs.)

44,120

49,635 30,000

66,180 40,000

Subsidy from NSIC 25,000 (Rs.) Amount payable by 19,120 SSIs (Rs.) *Concessional Fees 7,456

19,635 9,927

26,180 13,236

*concessional fees are applicable for CRISILs partner MOU bank customers and industry association members. The fees mentioned above are inclusive of all expenses CRISIL will occur in connection with the exercise.

RATING FEES FOR CRISIL SME RATING Companies under Operations Turnover (Rs .Turnover Turnover Tunover (Rs.Turnover Crore) (Rs. Crore)(Rs. Crore)Crore) (Rs. Crore) < 10 10-25 25-50 50-75 >75 Rating (Rs.) Service tax fees 60,000 65,000 70,000 6,180 6,695 7,210 8,755 Total fees (Rs.) 66,180 71,695 77,210 93,755 121,330
12

85,000

110,000

11,330

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CRISIL

CRISIL has set up a dedicated team of specialists in SME rating, and designed separate rating scale for rating SMEs and SSIs (entities with valid SSI certificates). CRISILs SME Rating has a team of 25 professionals and a company wide network to provide the rating services to SMEs and SSIs in any part of the country.

In association with NSIC, CRISIL is now rating small scale industries (SSI) on special rating scale. NSIC provides subsidy for rating of SSIs. CRISIL has already rated 350 SMEs SSIs on the NSIC-CRISIL and the SME rating scale. More than 100 additional mandates are under the process of execution. CRISIL has conducted studies on 19 SME

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clusters across 8 industries. CRISILs SME risk assessment model installed in 8 reputed public and private sector banks. CRISIL provided its expertise in the SME sector for emerging India award 2006, organized by ICICI Banks and CNBC. Of 35000 entries received for the awards, best SMEs were identified across 10 categories.

Besides marketing the rating services directly to the SMEs through one-to-one contact, other alternative approaches were adopted to develop the business. To address the large number of SMEs (including SSIs) in India, CRISIL adopted an aggregator approach wherein SMEs could be accessed in groups through an aggregator like a bank, an industry association, or a large corporate with several SME dealers or vendors

Since bank in India have large SME portfolios as part of their priority sector business, and SMEs depends substantially on banks for their fund requirements, CRISIL decided to enter into national level tie-ups with banks to provide rating services to their SME borrowers

CRISIL SME Ratings Partner Banks CRISIL has partnered with 29 banks and two financial organisations to extend the special concessional rating fees to its customers. The following partner banks and financial organisations are giving interest rate benefits to the customers rated by CRISIL. 1. National Small Industries Corporation 2. Bank of India 3. Canara Bank
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4. Central Bank of India 5. Corporation Bank 6. Punjab National Bank 7. Syndicate Bank 8. UCO Bank 9. Union Bank of India 10. United Bank of India 11. Vijaya Bank 12. Kerala Financial Corporation 13. J&K Bank In addition to the above banks, CRISIL has partnered with the following 16 banks to give special concessional fees to rate their customers. 1. Allahabad Bank 2. Andhra Bank 3. Bank of Baroda 4. Bank of Maharashtra 5. Dena Bank 6. The Federal Bank Limited 7. HDFC Bank Limited 8. Indian Bank 9. Indian Overseas Bank 10. State Bank of Bikaner & Jaipur 11. State Bank of Hyderabad 12. State Bank of India 13. State Bank of Indore 14. State Bank of Mysore 15. State Bank of Saurashtra 16. State Bank of Travancore

It is in discussion with other banks to enter into similar tie-ups. CRISIL rating provide banks a ready reliable third party credit opinion and facilitate lending decision by helping fix appropriate quantum of loans, rate of interest, margin and security. As per these MOUs, CRISIL charges fees at concessional rates (as low as Rs. 7456 for small companies) to the banks, customers and the bank in turn offer favorable terms to entities with high CRISIL Ratings. UCO bank, United and Union bank have already announced reduced interest rates for highly rated entities.
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Though SMEs in India are dispersed across the country. There are certain pockets with concentrations of SMEs. These are called SMEs clusters. The SMEs in cluster or otherwise have organized themselves into industry associations which work as a platform for the welfare of members. CRISIL has reached an understanding with several industry associations across the country to provide rating service to their members at attractive terms.

Similarly, large companies in India deals with several SMEs in their supply chain as dealers for selling finished goods, and the vendors for procuring raw material or sub-assemblies. CRISIL has signed agreements with such companies for grading their deals or rating their vendors.

CRISIL, with its reliability, width, and depth of experience in rating services, made a world of difference to the corporate sector when it is pioneered the concept of rating in India. CRISIL believes it will make the same difference to the SME sector with its SME sector rating.

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1.2.c An overview of the SME\SSI sector in India

In the India market, the common concept was that of small scale industry (SSI); the definition of a medium enterprises is of more recent origin. The government of India has historically tracked the profile and growth of the SME sector in terms of SSIs. SSIs are a vibrant and important sector of the Indian economy. They make significant contribution to the annual GDP, exports and employment. In an environment of sustained high economic growth, economic reforms and economic liberalization, the role and the importance of the SSI sector will be even more significant in the future.

The small scale sector has grown rapidly over the years. The growth rate during the various plan periods has been very impressive. The number of small scale units has increased many folds over the years. Currently there are about 118 SSIs in India. The sector accounts for around 95 percent of the industrial units in the country, contributing 40% of the manufacturing sector output and approximately 35% of the nation exports. The total value of production by SSI units for the year 2004-2005 was approximately Rs. 418300 crore. In addition to the contribution of 40% towards direct export, the SSI contributes around 15% to export in directly.

It has been estimated that an investment of Rs. 10 lakh in fixed assets in the small scale sector reduces Rs. 46.2 lakh worth of goods or services.

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SSI sector in India creates the largest employment opportunities for the Indian populace, next only to agriculture. It has been estimated that investment of Rs. 1 lakh in fixed assets in the small scale sector generates employment for four persons. Overall, the sector currently employs around 2.83 crore people.

Small Scale Industries As defined by the ministry of SSI, government of India, the policy making and promoting body for SSIs in India, an SSI is defined as:

An industrial undertaking in which the investment is fixed assets in plant and machinery, whether held on ownership terms, on lease, or on high purchase, does not exceed Rs. 1 crore, subject to the condition that the unit is not owned or controlled by, or a subsidiary of, any other industrial undertaking.

SSI units mostly belong to the manufacturing sector. However some service enterprises such as software development enterprises, cold storage units etc. Have also been included under the SSI umbrella. Previously the ministry of SSI also defined small scale services and business enterprises (SSSBEs) as enterprises having investment equipment excluding investment in land
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and building up to Rs.10 lakh. SSSBEs include enterprises working in close association with manufacturing enterprises like CAD\CAM blueprinting, and industrial consulting etc.

Small enterprises both manufacturing and service sector are eligible for receiving subsidy in the rating fees norms national small industries corporation limited (NSIC)

As per the new SMED (small and medium enterprises development) act the limited for investment in plant and machinery in small enterprises has been increased to rs. 5 crore. the new act is expected to become operational with effect from oct,2,2006.

Consideration the growing importance of the service sector in the countrys economy, the SMED Act defined the small enterprises in the service sector as one having investment in equipment(excluding investment in land and building) up to RS. 2 crore

Small and Medium Enterprises

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The SMED Act defines a Medium Enterprises as one with investment in the plant machinery in excess of the SSI limit and up to Rs.10 crore. Before this there was no commonly accepted definition of medium enterprises.

The SMED Act defines a medium enterprises in the service sector as one having investment in equipment (in excluding investment in land and building) up to Rs.5 crore. Medium enterprises, which are relatively bigger in size, have different credit needs. Looking at this, CRISIL has developed a separate scale for rating these enterprises (an 8 point scale as given in the brochure for SME rating). For rating the medium enterprises, CRISIL goes by the definition of such enterprises by the banks.

Tabular representation of ceiling in investment for enterprises in manufacturing and service sector as per the new SMED Act:

TABLE NO .3 Manufacturing enterprises Investment in Plant and Machinery Micro Small Medium Up to Rs.25 lakh Above Rs. Lakh up to Rs.5 crore Above Rs.5 crore up to Rs.10 crore Services Enterprises Investment in Equipment Up to Rs.10 lakh Above Rs.10 lakh Rs.2crore Above Rs.2 crore Rs.5crore up up to to

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1.3 PROFILE OF THE COMPANY CRISIL is India's leading Ratings, Research, Risk and Policy Advisory Company. 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 efficient Locations. CRISIL Headquarters Address Crisil India Phone:-912256913001 Fax: 91 22 56913000 Headquarters Industry Type Bombay Area, India Financial Services Public Company House (Pinnacle Chambers) 121/122 Andheri Kurla Road Andheri (East)

Mumbai,Maharashtra,400093

Status

Operating

Company Size

2,000 employees

Revenue

2,873 mil [INR] (65%)

Founded

1987
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Website

www.crisil.com

Parent company Standard & Poors

subsidiaries

Irevna

1.4. HISTORY OF THE COMPANY

Year 1987 1987-88 1990-91 1991-92

Milestone CRISIL is incorporated Pradip Shah is Managing Director Commences the rating of Companies Establishes the Information Services Group
Provides technical assistance and training to Rating Agency Malaysia Berhard and MAALOT, the Israeli Securities Rating Company Ltd. Makes public offering of 20,00,000 equity shares of Rs. 10 each at a premium of Rs. 40 per share. The offer is oversubscribed by 2.47 times

1993-94

1994-95 1995-96 1996-97 1997-98

Mr. R Ravimohan takes over as Managing Director Sets up the Advisory Services Group Forges a strategic alliance with Standard & Poor's Ratings Group. Standard & Poors' acquires 9.68% shareholding in CRISIL Sets up IISL, a Joint Venture between CRISIL and National Stock Exchange for undertaking index business and related activities. The new Company enters into a Consultancy and License Agreement
with Standard & Poors'

1998-99

Develops a framework for rating debt obligations supported by credit enhancements based on overseas guarantees called Foreign
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Structured Obligations Launches the Risk Assessment Model (RAM) Develops a web presence, launches the official website 19992000 Acquires the business of Information Products and Research Services (India) Pvt. Ltd. along with its brand INFAC Secures the Certificate of Registration under SEBI (Credit
Rating Agencies) Regulations, 1999

20012002

Launches CRISIL Market Wire, a real-time financial news service Launches Mutual Fund Composite Performance Rankings
(CRISIL CPRs), Fund Risk Analytics Model and CRISIL Mutual Funds Portfolio Tracker

20032004

Change of name of the company from "The Credit Rating Information Services of India Limited" to "CRISIL Limited" Rates the first CDO transaction of working capital facilities in the Asia Pacific Makes an equity investment in the Caribbean Information & Credit Rating Services Limited (CariCRIS), (click here for more details) the first regional rating agency in the world, covering 19 countries. Acquires Gas Strategies Group Limited (earlier known as EconoMatters Limited), a London-based company engaged in gas consulting, information and training/conferences AMFI mandates CRISIL to provide daily fund indices as
benchmarking standards for the mutual fund industry

20042005

S&P acquires 3,120,948 equity shares of CRISIL from CRISIL shareholders through an Open Offer taking S&P holding in CRISIL to 58.46% CRISIL Board approves proposal to acquire Irevna group of
companies

2006 CRISIL transfers assets and staff of CRISIL Market Wire to TV18 CRISIL constitutes a new team to achieve greater integration with Standard & Poor's (S&P) in brand franchise, market development and sales efforts. Irevna ranked the top investment research outsourcing firm by buyside firms according to a recent survey by the Brown-Wilson Group; sets up second delivery centre in Buenos Aires Inter-company agreements signed between CRISIL and
Standard & Poor's - CRISIL now known as a Standard & Poor's Company

2007

CRISIL transfers its advisory business (CRISIL Infrastructure

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Advisory and CRISIL Investment & Risk Management Services) into a 100% subsidiary CRISIL Risk and Infrastructure Solutions Limited. CRISIL's subsidiaries CRISIL Research & Information Services Limited (CRIS), Global Data Services of India Limited, CRISIL Properties Limited and Irevna Research Services Limited merged into CRISIL Limited (CRISIL). Ms. Roopa Kudva takes over as Managing Director & CEO of
CRISIL following Mr. R. Ravimohan's appointment as Managing Director & Region Head of Standard & Poor's South Asia

2008

CRISIL announces sale of shareholding in Gas Strategies Group Ltd. CRISIL launches its formal sustainable development programmed for Corporate Social Responsibility Launches the CRISIL Complexity Levels Service - an initiative aimed at strengthening Indian capital markets through greater transparent for investors

1.5 MILESTONES OF THE COMPANY CRISIL is 23. At this important milestone, we reflect on our journey thus far and look into the horizon beyond. We began our journey as India's first rating agency. Today, we are a diversified global analytical platform with leadership positions in the ratings, research and advisory domains. Along the way, our growth has been closely intertwined with India's development milestones. We started in 1987 as a credit rating agency , at a time when lending rates in India were fixed, and there was, therefore, little demand for credit ratings. We firmly established ourselves as the country's leading rating agency, respected for our fiercely independent, highly credible, and analytically rigorous views. Shouldering the mantle of a pioneer and a market leader, we facilitated the development of India's credit market and built investor confidence in
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our risk assessment capabilities. India's transformation into a market-led economy greatly increased its need for capital, and required extensive reforms and institution building. Accordingly, we diversified into the infrastructure advisory and business research domains, and quickly built up a reputation for independent, reliable and incisive information, research, models and advisory services. Today, our services are key inputs in informed decision-making and the shaping of public policy in India. With increasing globalization, we also focused on making our income streams more global. We acquired Irevna, a pioneer in the investment research outsourcing space; Irevna has since been voted No.1 in high-end investment research and analytics outsourcing by the US-based Brown and Wilson Group two years in a row in 2006 and 2007. We have a thriving business that meets increasing global demand for better understanding of the Indian business environment, through the services offered by our research and advisory groups. Guided by our core values of integrity, independence, innovation, analytical rigor and commitment, we are proud to have built a globally-acknowledged institution of repute over these 20 years. We have facilitated the setting up of credit rating agencies in several countries around the world. Our association and integration with Standard & Poor's has further enhanced our capabilities and opened up newer vistas of opportunity, for our businesses and people. The macro environment trends, both in India and globally, present myriad business opportunities. At a youthful 20, we are ideally positioned to service the needs of our expanding client base by maintaining our focus on our mission: Making markets function better. Helping clients manage and mitigate business and financial risks. Shaping public policy. 1.6 PRODUCT OF THE COMPANY Ratings CRISIL Ratings CRISIL Ratings is the only ratings agency in India to operate on the basis of sectoral specialization. It reflects our sharpness of analysis, the responsiveness of the process and the large-scale dissemination of opinion. CRISIL Ratings plays a leading role in the development of the debt markets in India. ------------------------------------------------------------------------------------------------------------Page no.

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The Rating Criteria & Product Development Centre, responsible for policy research, new product development and ratings' quality assurance, has developed new ratings methodologies for debt instruments and innovative structures across sectors. CRISIL Ratings provides technical know-how to clients worldwide. We have helped set up ratings agencies in Malaysia (RAM), Israel (MAALOT) and in the Caribbean.

1.7 CRISIL's Performance at a glance

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(Rs. Lacs) Particulars Total Income for the year was Profit before depreciation and taxes was Deducting there from depreciation of Profit before tax was Deducting there from taxes of Profit after tax was The proposed appropriations are: Dividend Corporate Dividend Tax General Reserve Balance carried forward

Year ended Dec. 31, 2009 40,389.03 18,696.71 1,184.38 17,512.33 3,774.52 13,737.81

Year ended Dec. 31, 2008 27,088.00 10,481.23 1,333.87 9,147.36 2,080.28 7,067.08

5,057.50 859.52 1,373.78 17,663.64

1,806.25 337.07 706.71 8,775.36

How CRISIL SME/SSI ratings can be useful Banks Creates a strong platform for well rated SMEs to obtain CRISIL ratings under Basel II over a period of time An independent assessment of the SME portfolio will help in improving asset quality Client retention : Bank will be able to retain its good customers by providing interest rate concessions to highly rated entities
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Ratings could be used for all green-field projects where CRISILs appraisal skills will be useful in evaluating the unique project risks Mapping of the banks internal rating scale with CRISIL rating will reduce the appraisal process significantly for the branch managers and enable them to undertake quick and accurate decisions

BENEFITS OF CRISIL SME RATING 1. FASTER AND EASIER AVAILABILITY OF LOANS -: Banks appreciate the independence and analysis involved in CRISILs rating exercise. More than 31 banks have entered into a formal agreement with CRISIL SME ratings, under which, they extend favorable terms and conditions, to CRISIL rated units, including lower rate of interest. 2. INCREASED CREDIBILITY BUSINESS ASSOCIATES -: WITH BANKERS, CUSTOMERS AND

An SME rating from CRISIL, increases the credibility of the rated unit, in domestic and international markets, by providing the bank, customers, and business, associates with credible information about the company. This increases their confidence in the unit and helps in increasing business and building better relationships.
3. DETAILED RATING REPORT -:

Each CRISIL rated SME receives a rating report which provides comprehensive details about the rated unit, its functioning, as well as the organizations strengths and weaknesses. This rating report can be used by the unit in dissemination of credible information about their company to a wide variety of business associates, including, collaborators, joint venture partners and other market participants. Besides, the rating report also serves as a guide to focus on areas of improvement and enables the SME to benchmark against competition. 4. INCREASED PUBLICITY -: CRISIL SME ratings are listed on CRISILs website and on CRISILs monthly publications, the CRISIL SME CONNECT. This serves as a good source of publicity for the rated entity and further enhances the credibility of the unit, a wide variety of banks, financial institutions and, foreign counterparties use the
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CRISIL PUBLICATION and website, to identify and research companies in greater detail. 5. SUPPORT FOR EXPORT INITIATIVES -: For exporters, CRISILs International Linkage offers an additional advantage:STANDARD & POORs, a globally respected rated agency, is the majority shareholder in CRISIL, therefore, a CRISIL rating will help establish the credentials with international customers. 6. A TOOL FOR SELF IMPROVEMENT -: Along with its ratings, CRISIL provides detailed analytical reports on the Strengths and Weaknesses of rated entities. Based on CRISIL reports, one can take steps to strengthen their operations and become more efficient. Each repots provides reliable and independent feedback from customers, suppliers and, banks. 7. AFFORDABLE -: CRISIL SME rating services, while being highly credible, are also very much affordable. CRISIL offers an attractive concession in the rating fee for small enterprises. Also, NSIC Ltd., which is a corporation under the ministry of MSME, GOVT, OF INDIA, provides 75% subsidy in rating fee for small enterprises. Thus, the rating fee payable by the small enterprises ranges from Rs.7456 to Rs.13236. for enterprises not registered as small enterprises, the fee is higher, as the subsidy is not available from NSIC. CRISIL, with its reliability, width, and its depth of experience in rating services made a world of difference to the corporate sector, when it pioneered the concept of rating in India. CRISIL believes, it will make same difference to the SME Sector, with its SME sector ratings. HOW RATING DONE Step 1: Collect and process preliminary information

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Step 2: Analyze and assign the rating

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Step 3: Communication and publication of the rating

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CRISIL RATING REPORT

CONTENTS 1.NSIC-CRISIL PERFORMANCE AND CREDIT 2.RATING GRID 3.FACT SHEET 4.STRENGTH AND RISK FACTORS 5.MANAGEMENT PROFILE 6.FUTURE PLANS 7.OWNERSHIP PATTERN 8.MANUFACTURING FACILITIES 9.BUSINESS PROFILE 10.PRODUCT PROFILE 11. CAPACITY UTILISATION 12.SUPPLIER INFORMATION 13.CUSTOMER INFORMATION 14.ORDERS IN HAND 15.MARKETING ARRANGEMENTS 16.OTHER INFORMATIONS 17.BANK AND INSURANCE DETAIL 18.FINANCIAL PERFORMANCE 19.PROFIT & LOSS ACCOUNT 20. GRAPHS 21.BALANCE SHEETS 22. KEY RATIOS 23.SITE VISIT INFORMATION 24.PROMOTORS DETAIL

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Chapter - II INTRODUCTION TO THE PROJECT

II.1 OBJECTIVE OF THE PROJECT.

II.2 REASON FOR CHOICE OF PROJECT

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OBJECTIVES:
To find the level of awareness among industries about of credit ratings. To impart the knowledge about credit rating to the industrialists of Kathua . To check the awareness level of industrialist regarding various government schemes of the Ministry of MSME for the development of MSMEs.

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CHAPTER - III METHODOLOGY

INTRODUCTION TO MARKETING RESEARCH RESEARCH METHODOLOGY LIMITATION OF THE STUDY

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III.1 INTRODUCTION TO MARKETING RESEARCH

Market research and marketing research are often confused. Market research is simply research into a specific market. It is a very narrow concept. Marketing research is much broader. It not only includes market research, but also areas such as research into new product, or modes of distribution such as via the internet. Here are a couple of definitions:

Marketing research is the function that links the consumer, customer, and public to the marketer through information information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process.

Marketing research specifies the information required to address these issues, designs the methods for collecting information, manages and implements the data collection process, analyzes, and communicates the findings and their implication.

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III.2 RESEARCH METHDOLOGY

The present study was undertaken To Study the awareness of crisil SME rating knowledge in focal point Kathua City. This chapter gives as research design, data collection method, sampling techniques, fieldwork carried out, limitations inherent in the project and finally coverage of research work.

Research Design

The research design is the pattern or an outline of research project working. It is a statement of only the essentials of study being conducts follows a descriptive research design.

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Data collection

Primary data was collected with the help of questionnaires provided by the company The questionnaire consisted of Multiple choice questions, close ended questions, open ended question, so as to gain the information from the respondent.

The secondary data was collected through various websites, books, journals etc.

Sampling Plan

Sampling is an effective step of collection of primary data and has a great influence on the quality of results. The sampling plan includes the population, sampling size and sampling design.

Population:

The study aimed to include the industrialist of focal point Kathua as to study, the awareness of CRISIL SME RATING KNOWLEDGE in Kathua. . Sample Size:
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The sample size for the research was 100.

Sample Technique:

Tree sampling technique is used.

Time:

The research was conducted in the months of June and July, 2011.

Data Analysis & Interpretation:

In the view of the present study, the required data was collected through structured questionnaire designed by the company. The data so collected has been processed manually by editing, coding and tabulating. For analyzing the data, various statistical techniques used to draw meaningful results.

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III.3 LIMITATIONS OF THE STUDY

Though every care has been taken to make this report authentic in every sense, yet there were a few uncomfortable factors, which might have their influence on the final report. Linking factors can be stated as: Time constraint Due to lack of time i.e. 6 weeks, it was not possible to deeply study every aspect of customers and devote enough time for research work. But still sincere efforts were put to reach to the reliable conclusion. Data collection constraints There were many problems regarding the collection of primary data which are as follows:

1. As the questioners were filled during the working hours, the respondents had little time to devote for filling the questionnaires. 2. Some respondents did not have their serious attitude towards the questionnaire and hence their responses may not reflect the real picture 3. Some of the respondents were not candid enough to reveal all the required information. They might have given inflated or wrong data.
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4. The survey was conducted in the focal point region of Ludhiana city. Thus the respondent belonged only to this region of country. This could have brought biasness into the study. 5. However all the efforts were made to remove the biasness but it cannot be denied that there is no possibility of individual biasness on the part of respondent.

CHAPTER-IV ANALYSIS AND FINDINGS

FINDINGS AND ANALYSIS OF MARKET RESEARCH PROJECT FINDINGS

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 TO KNOW ABOUT CRISIL SME RATING KNOWLEDGE:

TABLE NO.4 1

(showing sme rating knowledge) NO.OF PERSONS 15 PERCENTAGE 15%

KNOWLEDGE YES

NO

85

85%

This is evident from the table number-1 that there are very less industrialists who have knowledge about SME rating. Only 15% of people have knowledge whereas rest 85% is unaware.

Figure .1 ( showing the graphical representation of table no. 4.1)

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 TO KNOW THE MARKET SHARE OF (MOU) BANKS :

TABLE NO. 4.2 (showing the market share of the (MOU) banks.) BANK NAME NO. OF PERSON HAVING ACCOUNT IN THESE BANKS SBI 5 PNB 19 J&K 55 CBI 2 ICICI 4 OTHER 15

PERCENTAGE

5% 19% 55% 2% 4% 15%

From the table no. 4.2 it is clear that major part of the industry have their accounts in MOU banks specially J&K with 55% market share followed by PNB.

Figure 2 (showing the graphical representation of the table no. 4.2)

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 To know about the TURNOVER of the various company in (lakh):

TO KNOW THE CERTIFICATION OF THE COMPANIES BY VARIOUS

AGENCIES : TABLE NO. 4.4(showing the number of companies certified)

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AGENCIES SSI ISO DIC OTHER NONE

NO. OF CERTIFIED 40 8 25 20 7

COMPANIES PERCENTAGE 25% 8% 25% 20% 7%

According to the survey it is found that 40% of units are SSI certified and approximate 25% units have DIC have certificate and 7% of units have not been registered under any certificate.

Figure 3(showing the graphical representation of the table no. 4.3)

7% 20%

25%

SSI ISO 8% DIC OTHER NONE

25%

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 TO KNOW THE NUMBER OF EMOPLOYED PERSONS:

TABLE NO. 4.5 (showing the number of employed persons) NUMBER OF COMPANY 5-10 8 10-15 9 15-20 13 20-ABOVE 70

PERCENTAGE 8% 9% 13% 70%

In the table number 4.5 it is shown that most of the industries in focal point have more than 20 employees working with them and only 14% of units have 15-20 employees and only 6% of units have 5-10 employees.

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Figure 4(showing the graphical representation of the table 4.5)

THOSE HAVING SME-RATING KNOWLEDGE AND ARE CERTIFIED

WITH ISO OR SSI: TABLE NO.4.6(SHOWING HAVING KNOWLEDGE AND ARE CERTIFIED)

ISO

SSI

OTHERS

14

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67%

27%

6%

In table number 4.6 it is shown that 67% of industries those which are aware about crisil SME rating are being certified by ISO and 27% of industries which are aware have SSI number.

Figure 5 (showing the graphical representation of the table 4.5)

RELATIONSHIP BETWEEN TURNOVER AND HAVING KNOWLEDGE

ABOUT SME RATING: TABLE NO. 4.7(showing the relationship between the turnover and having knowledge about sme rating) TURNOVER PERCENTAGE NO. OF PERSONS 7% 100 200 lakh 1
49 ------------------------------------------------------------------------------------------------------------200 above 14 93% Page no.

From the above stated data it is found that major chunks of industrial area which have knowledge about CRISIL SME RATING have turnover more than 200 lakh

Figure 6(showing the graphical representation of the table no.4.7)

FINDINGS: * The knowledge of SME rating is found to be very less in the city. * Most of the industrial units deal with banks which are connected with CRISIL.
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* The turnover of most of the units is less than 2 crore. * I found that companies mostly have more than 20 employees working with them. * I have found that units which have knowledge about SME rating are being ISO certified. * Units having turnover more than 20 crore are aware of SME rating knowledge.

CHAPTER V SUGGESTIONS AND RECOMMENDATION

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SUGGESTIONS

* As people are not much aware about SME rating, so company should work on it. * They should organize more industrial meetings so that people should know more about CRISIL. * Company should work with banks to give more interest rate benefit. * Company should request NSIC to give more subsidies to the SMEs. * Company should more advertise the rated companies so they can get more business.

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CHAPTER- VI CONCLUSION

Conclusion:
After collecting data we found that the awareness of CRISIL SME credit rating is very less among the industrialist of KATHUA. Industries which are being rated are satisfied but they are also not aware about all the benefits which they can get from it so if we make them aware about benefits it will be just like customer delight. MOU banks have high market share specially SBI and CBI which have very strong hold over the market so there are more chances for company to catch the customer. The support from NSIC also very good as they are providing more than 60% subsidy for the rating. The marketing team of city is working very hard but still lot of effort is required by the company to show commanding presence in the market.

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BIBLIOGRAPHY BOOKS: Kotler, Philip, Marketing Management, (2004) Prentice Hall, India Kothari .C.R., Research Methodology Method and Technology, New Age International Publication, Beri. G.S, Marketing Research, Tata Mc-Graw Hill, New Delhi.

WEBSITES:

WWW.CRISIL.COM WWW.NSIC.COM

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ANNEXURES
Survey on Awareness Level among MSMEs Date: ________________________ Name of the _____________________________________________________________ Product _____________________________________________________________ Place ___________________________________________________________________________ Contact Person and ____________________________________________________ Mobile: _________________________ _________________________________ E-mail: _________________________________________ Banker________________________________________ 1. Have you heard of Credit Rating for MSMEs? a) Yes b) No 2. Has any Credit Rating Agency approached you for rating? (please name if yes if No refer to Ques. 9) ___________________________________________________________________ 3. If Yes, have you undergone the Credit Rating exercise for your enterprise? a) Yes b) No (IF NO, MOVE TO QUES.9) ------------------------------------------------------------------------------------------------------------Page no. 56 Contact Designation number: company

4. If Yes, what motivated you to opt for the rating?

a) Interest rate concession b) Credibility among customers and suppliers c) Reputed third-party opinion d) All of the above e) Any other (please ___________________________________________________________ specify)

_____________________________________________________________________________________

5. Has the rating helped you in bringing improvement to your business? a) Yes b) No

6. If Yes, what was the kind of improvement?

a) Management Strategy b) Finance c) Human Resource (HR) d) Marketing e) Production Process f) All of the above

7. Has the rating helped you with your lenders and bankers? a) Yes b) No 8. If Yes, how did the rating help you in meeting your financial needs?
a) Getting adequate quantum of loan from bank b) Concession in interest rates c) Relaxation in providing collaterals d) Reduction in transaction cost e) Faster decision on the part of the lenders f) All of the above

9. If No, are you interested to go for rating and know the benefits of credit rating? a) Yes b) No

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10.Are you aware about the various government schemes of the Ministry of MSME for the development of MSMEs? a) Yes b) No

11.Have you heard of or taken assistance under any of the following government schemes in the past? a) No b) if Yes, Kindly tick

1. International Cooperation Scheme 2. Performance and Credit Rating Scheme 3. Technology Up gradation Fund Scheme (TUFS) for the textile sector 4. Marketing Assistance Scheme 5. Rajiv Gandhi Udyami Mitra Yojana (RGUMY) 6. Trade Related Entrepreneurship Assistance and Development (TREAD) Scheme for Women 7. Credit Linked Capital Subsidy Scheme for Technology Up gradation 8. Credit Guarantee Scheme 9. ISO 9000/ISO 14001 Certification Reimbursement Scheme 10.National Manufacturing Competitiveness Programme (NMCP) Schemes Under XI Plan: there are 10 schemes under NMCP like Marketing Support, Lean Manufacturing, Mini Tool rooms, etc 11.Micro & Small Enterprises Cluster Development Programme (MSE-CDP) 12.MSME MDA 13.Mini Tool Rooms 14.Scheme of National Award 12.How many government schemes are you aware of? a) None b) 1-5 schemes c) 6-10 schemes d) More than 10 schemes 13. If yes, how would you rate the usefulness of the schemes?

a) Very useful b) Moderately useful c) Not useful 14. Some of these schemes are operated through banks. Have the banks been supportive in channelizing assistance under these schemes? a) Highly supportive b) Somewhat supportive c) Not supportive ------------------------------------------------------------------------------------------------------------58 Page no.

15. Which media do you think will be most effective to make these schemes better known among the MSMEs? a) Radio b) TV c) Newspaper d) Website e) Any other suggestions . 16.Do you have any suggestions for the government to address

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