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Credit Crisil in cement industry

Credit Crisil in cement industry

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Published by Shobhit Chandak
a document showing the impact of CRISIL agency on the Cement Industry on a whole... includes each company which is registered
a document showing the impact of CRISIL agency on the Cement Industry on a whole... includes each company which is registered

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Categories:Types, Research
Published by: Shobhit Chandak on Mar 31, 2009
Copyright:Attribution Non-commercial

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07/26/2012

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Birla Corporation Ltd.
CRISIL and the Cement Industry
1
1.Introduction
CRISIL is India's leading Ratings, Research, Risk and Policy Advisory Company. At thecore of CRISIL are its unimpeachable
and unmatched
.Leveraging these core strengths CRISIL delivers opinions and solutions that:
Make markets function better, and,
Help clients mitigate and manage their business & financial risks
Help shape public policy.CRISIL offers domestic and international customers a unique combination of localinsights and global perspectives, delivering independent information, opinions andsolutions that help them make better informed business and investment decisions,improve the efficiency of markets and market participants, and help shapeinfrastructure policy and projects. Its integrated range of capabilities includes
; research on India's
,
and
;
;
;
and
.CRISIL's majority shareholder is
, the world's foremost providerof independent credit ratings, indices, risk evaluation, investment research anddata.By Shobhit Chandak
 
Birla Corporation Ltd.
CRISIL and the Cement Industry
2
2.Ratings Offered by CRISIL
A CRISIL credit rating indicates CRISIL’s current opinion of the profitability of default.In other words, the credit rating indicated the probability of an investor in ratedinstruments, or a lender o a rated entity, not receiving interest and principalpayments due on time and in accordance with the terms of the initial contract. Theprobability is reflected in the form of an easily understandable alphabetical scale,with ratings such as ‘AAA’, ‘AA’, ‘A’, or ‘BBB’.A rating is assigned to debt alone and not to equity instruments. Typically,instruments such as non convertible debentures, partially convertible debentures,bonds, fixed deposits, commercial paper, short-term debt and structureddebentures, are rated. Entities issuing these instruments can also be rated on theircapacity to service their obligations on time.Broadly, CRISIL’s credit ratings fall under four categories: long-term, short term,fixed deposits and corporate credit ratings. The term ‘long term instruments’ include bonds, debentures, other securities, termloans, and other fund based and non fund based facilities with an original maturityBy Shobhit Chandak
 
Birla Corporation Ltd.
CRISIL and the Cement Industry
3of more than one year. Long term rating categories range from AAA to D; CRISILmay apply + (plus) or – (minus) signs as suffixes to ratings from ‘AA’ to ‘C’ to reflectthe comparative standing within the range category. The term Short term instruments refers to commercial papers, short termdebentures, certificates of deposits, working capital borrowings, and other fundbased and non fund based facilities with an original maturity of one year or less.Short term rating categories range from ‘P1’ to ‘P5’; CRISIL may apply + (plus) or –(minus) signs as suffixes to ratings from ‘P1’ to ‘P3’ to reflect the comparativestanding within the range category.CRISIL assigns ratings to the fixed deposit programs of corporate banks andfinancial institutions with the prefix, ‘F’. Fixed deposit rating categories range from‘FAAA’ to ‘FD’; CRISIL may apply + (plus) or – (minus) signs as suffixes to ratingsfrom ‘FAA’ to ‘FC’ to reflect the comparative standing within the range category.CRISIL also assigns corporate credit rating to issuers. The corporate credit ratingcategories range from ‘CCR AAA’ to ‘CCR D’ and ‘CCR SD’ (indicating selectivedefault); CRISIL may apply + (plus) or – (minus) signs as suffixes to ratings from‘CCR AA’ to ‘CCR C’ to reflect the comparative standing within the range category.
3.Rating For ACC Ltd.
Rs.4 Billion Non-Convertible Debenture Issue AAA/StableRs.1 Billion Non-Convertible Debenture Issue AAA/StableRs.1.50 Billion Cash Credit AAA/StableRs.5.00 Billion Letter of Credit P1+Rs.2.25 Billion Bank Guarantee P1+
CRISIL has assigned its rating of ‘AAA/Stable’ to ACC Ltd’s (ACC’s) non-convertibledebentures. The ratings on the company’s other debt programmes and bankfacilities have been reaffirmed at ‘AAA/Stable/P1+’. The ratings continue to reflectACC’s leading market position in cement, and its strong financial risk profile. Theserating strengths are partially offset by the commoditized and cyclical nature of thecement industry.For arriving at the ratings, CRISIL has combined the business and financial profilesof ACC and Ambuja Cements Ltd (Ambuja Cements). This is because both thecompanies have a substantive common shareholder, the international cement majorBy Shobhit Chandak

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