INTRODUCTION TO CREDIT RATING

The Ratings industry in India has been built up to its present position over a period of fifteen years. Over the years, credit ratings have evolved into a 90-crore market, with four agencies providing rating services, and significant pull from investors for the product. The ratings business in India has seen three phases. During the first of these phases, as described above, there was no experience of credit ratings, and virtually no awareness, on the part of investors and issuers. The second phase saw the advent of regulatory support for credit ratings, with the introduction and increasing rigour of regulations covering primarily the markets for public issue of debt and for fixed deposits. Aimed at protecting smaller investors, these measures also amounted to regulatory recognition of the role of credit ratings and the quality of the effort put in till then, in estimating credit quality. With these measures, credit ratings rapidly passed out of the arcane realm of high finance, and into the lexicon of the individual market participant. This phase also saw the arrival of competition, in the form of other domestic agencies entering the market. Recent years have seen a third phase of the markets development with public issues of debt reducing in volume; the focus has shifted to the market for private placements. Almost all the privately placed debt issued in the Indian market is rated, even though this is not a regulatory requirement. This shift is entirely driven by investors in these securities, who typically tend to be highly sophisticated financial sector entities. We are looking therefore at a qualitative maturing of the market, where a rating is required not as a compliance issue or a mandatory requirement, but as an opinion on credit quality demanded by discerning buyers. Going forward, following trends are expected to intensify in the Indian market: - More intensive use of ratings by investors. - Increasing sophistication in use of ratings. These two trends will result in credit ratings not being used only as a go- no-go input, as is currently often the case. We expect the major use of credit ratings to be in the pricing of debt instruments. The correlation of yields and ratings, already strong, will deepen as the bond market evolves further. Measures increasing the sophistication of the market, such as the introduction of credit derivatives, will add a further dimension to the use of ratings. Credit rating is also known as SECURITY RATING in India. It is mandatory for the issuance of debt instruments, debentures, commercial paper issued by corporates and public deposits of all NBFCs (Non Banking Financial Companies).

DEFINITION OF CREDIT RATING

Credit ratings are judgments about firms financial and business prospects. Credit rating is defined as a process by which a statistical service prepares various ratings identified by symbols which are indicators of the investment quality of the credit rated. The credit may be a debt instrument or equity. In case of debt, ratings are given while in the case of shares grading is done. It is an independent assessment of the creditworthiness of a bond (note or any security of any indebtness) by a credit rating agency. It measures the probability of the timely repayment of principal and interest of a bond. Generally, a higher credit rating would lead to a more favorable effect on the marketability of a bond. The credit rating symbols (long term) are generally assigned with triple A as the highest and triple B as the lowest in investment grade. Anything below triple B is commonly known as a junk bond. Credit rating is the process of assigning standard scores which summarize the probability of the issuer being able to meet its repayment obligations for a particular debt instrument in a timely manner. Credit rating is integral to debt markets as it helps market participants to arrive at quick estimates and opinions about various instruments. In this manner it facilitates trading in debt and money market instruments especially in instruments other than Government of India Securities. Credit rating is not a recommendation to buy, hold or sell. Rating is usually assigned to a specific instrument rather than the company as a whole. In the Indian context, the rating is done at the instance of the issuer, which pays rating fees for this service. If it is unsatisfied with the rating assigned to its proposed instrument, it is at liberty not to disclose the rating given to it. There are 4 rating agencies in India. These are as follows: Credit rating is a dynamic concept and all the rating companies are constantly reviewing the companies rated by them with a view to changing (either upgrading or downgrading) the rating. They also have a system whereby they keep ratings for particular companies on "rating watch" in case of major events, which may lead to change in rating in the near future. Ratings are made public through periodic newsletters issued by rating companies, which also elucidate briefly the rationale for particular ratings. In addition, they issue press releases to all major newspapers and wire services about rating events on a regular basis.

ORIGIN OF CREDIT RATINGS

The concept of Credit Rating originated in the United States. The first Credit Ratings were published by John Moody during 1909 in his analysis or rail road investments. This evolved into the rating company, Moodys Investors Services Inc, a division of Dun and Bradstreet Inc. Moody was followed by Poors publishing Company in 1916 and the Standard Statistics Company in 1922, which merged, into Poor to become the largest bond rating concern, Standard and Poors corporation, a subsidiary of Mc Graw Hill, Inc. The third is Fitch publishing company of New York, which was established in 1924. The fourth agency is Duff & Phelps of Chicago, which was recognized by Securities and Exchange Commission in 1982. It acquired Crisanti and Maffei Inc. of New York in 1991. These four security raring agencies are the only ones with Securities and Exchange Commission recognition as national bond rating agencies. There are other services that rate securities especially stock, like Value Line Investment Survey. The recognition of rating agency by Securities and Exchange Commission in U.S.A does not constitute approval. Actually, such recognition is not necessary to enter the security rating business. SEC uses the ratings of recognized agencies for evaluation of bong assets of brokers and dealers registered with it. In India there are 4 credit rating agencies. First, Credit Rating Information Services Of India Limited (CRISIL) set up by ICICI AND UTI in 1988. Secondly Investment Information and Credit Rating Agency of India limited (ICRA) set up by IFCI in 1991. Thirdly, Credit Analysis and Research Limited (CARE) promoted by IDBI in 1993 in association with financial institutions. Fourthly, Duff and Phelps Credit Rating India Private Limited (DCR India) for rating non-banking financial companies for fixed deposits.

DETERMINANTS OF CREDIT RATINGS

Credit rating is a symbolic indicator of the current opinion of a rating agency of the willingness and relative of an issuer debt instrument to pay interest and repay principal as per the terms of the contract. A rating agency assigns quality ratings that measures the default risk of a security and sells rating to their subscribers. The default risks primarily determined by the amount of work available to the issuer relative to the amount of funds to be paid to the security holders. The ability to pay is evaluated by financial ratios. Ratio analysis is done to analyze the present and future earning power of the company issuing the security. Ratio analysis of the issuers financial statements yields insights about the strength and weaknesses of the company. The credit rating agencies have written guidelines about what values particular ratios should have in order to earn each different quality ratings. Credit rating appraises the default risk which is a combination of business risk and financial risk. Business Risk: Business risk relates to the market position of the company, operating efficiency and management quality. The key factor taken into consideration are: the nature of the industry the company is in, the demand-supply position, cyclical/ seasonal factors and government policies vis--vis the industry; and the competition its facing within the industry. Market Position: The market share the company enjoys, it is competitive advantages and selling and distribution arrangements. Operating Efficiency: Locational advantages, labor relationships, cost structure, technological and manufacturing efficiency as compared to its competitors. Legal Position: Terms of prospectus, systems for timely payment, and for protection against fraud. Financial Risk: Financial risk is a function of the profitability, debt leverage flexibility and adequate cash flow. The assessment of financial risk is done on the basis of: a) Financial analysis, including accounting quality: accuracy of statement of profit, auditors comments, valuation and depreciation policies. b) Earnings protection: Sources of future earning growth, profitability ratios and earnings in relation to fixed income charges. c) Adequacy of cash flow: Sustainability of cash flows and working capital management. d) Financial flexibility: Ability to raise funds. Management: An evaluation of the management, which is qualitative in nature and imparts certain amount of subjective element is done on the basis of track record of the management; planning and control system, depth of managerial talent, succession plans. Evaluation of capacity to meet adverse situations, goals, philosophy and strategies. Environment: An analysis of environment covering regulatory and operating environment, national economic outlook, pending litigation and unpaid taxes are also attempted.

Rating thus is not based on a predetermined formula which specifies the relevant variables and as well as weights attached to each one of them. Further the emphasis on different aspects varies from agency to agency. Broadly the rating agencies assures itself that there is good congruence between assets and liabilities of a company and downgrades the rating if the quality of the assets depreciates. The rating agencies employ qualified professionals to ensure consistency and reliability. The agencies also ensure the integrity of rating by insulating rating from conflicts of interest. The rating agencies employ nearly identical symbols. They examine the above factors before assigning a grade. The symbols are A, B, C and D and each symbol is graded with associated risk by adding two or one of the same symbol, like AAA, AA and A; BBB, BB and b; and so on.

UTILITY OF RATINGS
Investors have always received credit ratings with enthusiasm. But issuers do not share the enthusiasm since they have to share their securities at higher yields if their issue gets inferior rating. Credit rating gives an investor a simple and easy indicator to the credit quality of the debt instrument, the risks and likely returns, thus providing a yardstick against which the risk inherent in an instrument can be measured. An investor uses the rating to assess the risk level and compares the offered rate of return, which is expected rate of return (for the given level of risk) to optimize his risk return trade- off. Ratings also provide a comparative framework, which allows the investor to compare investment opportunities. Credit rating also benefits the issuer. If a public offer is contemplated, the financial manager must bear in mind the rating while determining the appropriate leverage. Additional debt may lower the rating from an investment to a speculative grade category, thus rendering the security ineligible for investment by many institutional investors. It may well be that the advantages of debt outweigh the disadvantages of the lower credit rating. Junk bonds, for instance, are a high risk and a high yield (16 to 25% in USA) instruments. Investment may be limited in such instrument to what an investor can afford to loose. Ratings will also effect the pricing of the issue. Actually pricing should reflect the rating. The marketability of a relatively unknown issuer who is competent is enhanced and the role of name recognition in an investment decision is minimized. In actual practice ratings are reflected in prices. There is no difference between the interest rates that are paid on the fixed deposits of two companies even if they are rated differently. Same is true of long dated debentures. But in commercial paper market where banks are major players differentials in ratings are reflected in pricing. A reliance CP would be cheaper than of a company, which is not rated well. Ratings are used by brokers for opinions and as a service for their customers. Insurance companies and mutual funds use them in the purchase of securities even though their own staff prepares investment analysis. Portfolio managers also use them in security management. Banks depend on them for their investment in commercial paper. Individual investors depend on them for their decisions to place fixed deposits. Ratings are bound to assume greater importance with the institutionalization of investors in the form of unit trusts, mutual funds, pension and provident funds. The debt has shown considerable buoyancy in 1996 not only at the wholesale level (institutional investors) but also at retail level in view of poor offerings of equity in the primary market. This has come about largely on account of the availability of ratings on debt instruments, which boosted investor confidence.

THE GROWTH OF CREDIT RATING INDUSTRY IN INDIA

The prominent rating agencies in India are: i) ii) iii) iv) CRISIL: - Credit Rating Information Services of India Limited. ICRA: - Investment Information and Credit Rating Agency of India Limited. CARE: - Credit analysis and Research Limited. Fitch Ratings India Private Limited.

Fitch Rating India Limited was formally known as DCR India- Duff and Phelps Credit Rating Co. USA and DCR India merged to form a new entity called Fitch India. Fitch India is a 100% subsidiary of Fitch IBCA, and is the only wholly owned foreign operator in India. Fitch is the only international rating agency with a presence on the ground in India. The Indian credit rating industry is next to US in terms of number of ratings issued and in the number of agencies. Between the four rating agencies in India, over 5,000 ratings have been issued for around 1,400 issuers. CRISIL is the market leader in credit rating agency with a 65% market share. The regulators support played an important role in the development of the credit rating industry. In 1992, for the first time, the Reserve Bank introduced the requirement of rating for commercial papers. SEBI followed up by introducing mandatory ratings of bonds. The other growth drivers of the credit rating industry were declining interest rates, a shift towards market borrowings from bank loans and a steep increase in the state government borrowings through special purpose vehicles. Besides these factors the growth in the private placement market of debt increased business volume in the credit rating industry. For private placements, rating is not mandatory but mutual funds and banks ask for a rating. In 1997, the penetration of rating, that is, the number of rated issues, out of the total number of issues was 35%. In the year 2002, it was 97%. This means that the credit rating industry has transited from a regulatory driven market to an investor driven market in the growing debt markets. Between fiscal 1997 and 2001, rated debt volumes increased from Rs. 13,743 crore to Rs. 52,746 crore, which is 84% of the total issuance.

RATING SYMBOLS
Rating agencies use symbols such as AAA, AA, BBB, B, C, D, to convey the safety grade to the investor. Ratings are classified into three grades: High investment grades, investment grades and speculative grades. In all ratings is classified into 14 or 15 categories. Signs + or - are used to show the certainty of timely payment. The suffix + or may be used to indicate the comparative position of the instrument within the group covered by the symbol. Thus FAA- lies one notch above FA+. To provide finer gradations, rating industry attach + or to their ratings. The rating symbols for different instruments of the same company need not necessarily be the same. High Investment Grades AAA: - Triple A denotes highest safety in terms of timely payment of interest and principal. The issuer is fundamentally strong and any adverse changes are not going to affect it. AA: - Double A denotes high safety in terms of timely payment of interest and principal. The issuer differs in safety from AAA issue only marginally. Investment Grades A : - denotes adequate safety in terms of timely payment of interest and principal. Changes in circumstances can adversely affect such issues. BB: - Triple B denotes moderate safety in terms of timely payment of interest and principal speculative grades. Speculative Grades BB: - Double B denotes inadequate safety terms of timely payment of interest and principal. Uncertain changes can lead to inadequate financial capacity to make timely payments in the immediate future. B: - denotes high risk. Adverse changes could lead to inability or unwillingness to pay timely payment. C: - denotes substantial risk. Issue rated is vulnerable to default. D: - denoted default in terms of timely payment of interest and principal. These symbols are just a current opinion of an agency and they are not recommendations to invest or not to invest. The rating assigned applies to a particular instrument of the company and is not a general evaluation of the company. Rating Fees: - In the credit rating business, the users of rating service, such as investors, financial intermediaries and other end- users, do not pay for it. The issuer of the financial instrument pays fees to the credit rating industry and this is the major source of revenue to the rating agency. Today issuers fees constitute 95% of the total revenues of the rating agencies. In India rating agencies charge 0.1 % of the instrument size as rating fees. They also charge an annual surveillance fees at a rate of 0.03% to monitor the instrument during his life.

SEBI REGULATIONS FOR CREDIT RATING AGENCIES

SEBI issued regulations for credit rating agencies in 1999. These regulations are called as Securities and Exchange board of India. (Credit Rating Agencies) Regulations, 1999. 1) Only commercial banks, public financial institutions, foreign banks operating in India, foreign credit rating agencies, and companies with a minimum net worth of Rs 100 crore as per its audited annual accounts for the previous five years are eligible to promote rating agencies in India. 2) Rating agencies are required to have a minimum net worth of Rs 5 crore. 3) Rating agencies cannot assess financial instruments of their promoters who have 10 % stake in them. 4) Rating agencies cannot rate a security issued by an entity, which is (a) a borrower of its promoter. (b) a subsidiary of its promoter. (c) an associate of its promoter, if (i) there are common chairman, directors between credit rating agency and these entities (ii) there are common employees (iii) there are common chairman, directors, employees on the rating committee. 5) Rating agencies cannot rate a security issued by its associated or subsidiary, if the credit rating agency or its rating committee has a chairman, director or employee, who is also a chairman, director or employee of any such entity. 6) A penalty of suspension of the certificate of registration or a penalty of cancellation of registration may be imposed on the rating agency if it fails to comply with the condition or contravenes any of the provisions of the Act.

REGISTRATION OF CREDIT RATING AGENCIES

1) Grant of Certificate i) Any person proposing to commence any activity as a credit rating agency on or after the date of commencement of these regulations shall make an application to the Board for the grant of a certificate of registration for the purpose. ii) A non- refundable application fee shall accompany an application for the grant of a certificate. 2) Promoter of Credit Rating Agency The Board shall not consider an application under unless a person belonging to any of the following categories promotes the applicant, a) A Public Financial Institution. b) A Scheduled Commercial Bank. c) A Foreign Bank operating in India. d) A foreign credit rating agency having at least five years experience in rating securities. e) Any company or a body corporate, having continuous net worth of minimum rupees of one hundred crores for the previous five years prior to filling of the application with the board for the grant of certificate under these regulations. 3) Eligibility Criteria The Board shall not consider an application for the grant of a certificate unless the applicant satisfies the following condition: a) The applicant is set up and registered as a company under the Companies Act, 1956; b) The applicant has, in its memorandum of Association, specified rating activity as one of its main objects; c) The applicant has a minimum net worth of rupees five crores. d) The applicant has adequate infrastructure, to enable it to provide rating service. e) The applicant and the promoters of the applicant have professional competence, financial soundness and general reputation of fairness and integrity in business transactions, to the satisfaction of the Board. f) Neither the applicant, nor its promoter, nor any director of the applicant or its promoter, s involved in any legal proceeding connected with the securities market, which may have an adverse effect on the interest of the investors; g) Neither the applicant, nor its promoters, nor any director, or its promoter has at any time in the past been convicted of any offence involving moral turpitude or any economic offence. h) The applicant has, in its employment, persons having adequate professional and other relevant experience to the satisfaction of the Board. i) The applicant in all other respects is a fit and a proper person for the grant of a certificate. j) The grant of certificate to the applicant is in the interest of the investors and the securities market.

4) Application to Conform to the Requirements

The Board shall reject any application for a certificate, which is not complete in all aspects or does not confirm to the requirements of regulation or instructions. Providing that, before rejecting any such application, the applicant shall be given an opportunity to remove. Within thirty days of the date of receipt of relevant communication, from the Board such objections as may be indicated by the Board. Provided further, that the Board may, on sufficient reason being shown, extend the time for removal of objections by such further time, not exceeding thirty days, as the Board may consider fit to enable the applicant to remove such objections. 5) Furnishing of Information, Clarification and Personal Representation i) The Board may require the applicant to furnish such further information or clarification, as the Board may consider necessary, for the purpose of processing of the application. ii) The Board, if it so desires, may ask the applicant or its authorized representative to appear before the Board, for personal representation in connection with the grant of a certificate. 6) Grant of certificate i) The Board. On being satisfied that the applicant is eligible for the grant of a certificate of registration, shall grant a certificate. ii) The grant of certificate of registration shall be subject to the payment of the registration fee specified. 7) Conditions of Certificate and Validity Period The certificate shall be granted subject to the following conditions, namely; a) The credit rating agency shall comply with the provisions of the Act, the regulations made there under and the guidelines, directives, circulars and instructions issued by the Board from time to time on the subject of credit rating. b) Where any information furnished to the Board by a credit rating agency: i) is found to be false or misleading in any material particular; or ii) has undergone change subsequently to its furnishing at the time of the application for the certificate; the credit rating agency shall forthwith inform the Board in writing; c) The period of validity of the certificate of registration shall be three years. 8) Renewal of certificate A credit rating agency, if it desires renewal of the certificate granted to it, shall make to the Board an application for the renewal of the certificate or registration within 3 months before expiry of the period of the validity of the certificate. The application for the renewal shall be accompanied by a renewal fee.

CRISIL

INTRODUCTION: The rating industry in India was ushered in 1988 with the setting up of Credit Rating and Information Services of India Limited (CRISIL) followed by three more, the latest entirely devoted to rating NBFCs. The industry is sustained by mandatory requirement for rating debt instruments. Crisil was set up by ICICI and UTI in 1988. Standard and Poor rating service (S&P) has formed a strategic alliance in 1996 with CRISIL for providing analytical and business development co-operation. S&P will share with CRISIL its advanced rating methodologies and analytical criteria and assist on other aspects of credit rating agency operations. CRISIL would in turn offer business development assistance in India and insight into local debt market and issuers. The purchase by S&P of 6 lakhs shares in 1997 of CRISIL from Asian development Bank to acquire a stake of 9.6 % in CRISIL is a logical culmination of the strategic alliance into earlier. Asian Development Bank invested in 1988 in CRISIL as an effort to play a catalystic role in its establishment. WHAT DOES CRISIL DO: From a pioneering step taken in 1988, to playing an integral role in India's development milestones, CRISIL has emerged as India's leading Ratings, Financial News, Risk and Policy Advisory company. Extending the expertise and repute to other continents, with a significant enhancement of the relationship with Standard & Poor's, CRISILs recent acquisition of UK based gas information and advisory company EconoMatters Ltd. and CRISILs strategic investment in the world's first ever regional credit rating agency - the Caribbean Information & Credit Rating Services Limited (CariCRIS) are, but beginnings of a global footprint. a) CRISIL RATINGS: CRISIL Ratings is the only ratings agency in India to operate on the basis of sectoral specialization. It reflects their 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. Till December 31, 2003,they rated more than 4,600 debt instruments worth over INR 5.09 trillion (over USD 100 billion) issued by over 2,200 companies. The Rating Criteria & Product Development Center, 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. They have helped set up ratings agencies in Malaysia (RAM), Israel (MAALOT) and in the Caribbean. Their strategic alliance with Standard & Spoors , the world's leading ratings agency, enables CRISIL to anticipate new market challenges and introduce value-added ratings methodologies. They partner with Standard & Poor's on several projects in the US and East Asia and jointly promote business and services in India. b) CRISIL INFRASTRUCTURE ADVISORY:

CRISILs Infrastructure Advisory enhances their franchise in the areas of policy-making and economic development. Their spectrum of activities includes catalyzing economic development through creation of appropriate policy frameworks, sector reforms, regulatory support, project structuring and global competitive bid process management for large and complex projects. CRISILs Infrastructure Advisory blends the best global practices with analytical excellence and a deep understanding of the local environment to provide policy, regulatory and transaction level advice to governments and leading organizations across sectors. They work closely with their clients to facilitate an environment for public-private partnerships and ensure the success of projects undertaken. c) INTERNATIONAL GAS BUSINESS: CRISIL has acquired UKs leading gas advisory and information company, EconoMatters Ltd. and its subsidiary companies. CRISIL now has a significant presence in the international gas and LNG markets. CRISIL is uniquely positioned to share its expertise, insights and perspectives with global majors in the energy and gas industry. CRISILs international gas and LNG businesses comprise: i) GAS Strategies GAS MARKET ADVISORY SERVICES Gas Strategy. is a leading global consulting firm in the domain of natural gas and liquefied natural gas (LNG). The Company focuses on market studies, project finance due diligence, regulation and liberalization of markets, pipeline financial and demand studies, pricing and contracts. Gas Strategies data provision service, GasStrategiesOnline provides gas pricing and supply/demand data and an LNG database to companies worldwide. Gas Strategies has a substantial resource base of associates with over 100 years of cumulative consulting experience.

Gas Strategies is a gas project finance advisor to: -International banks, such as RBS, ABN AMRO, Socit Gnrale, HSBC and Citigroup. -Export Credit Agencies such as JBIC, SACE, ECGD and US Exim. -Multilaterals such as the World Bank and EBRD.

Alphatania Management Training and Courses Alphatania is a one-of-a-kind training system that builds institutional capabilities in gas businesses globally through simulated case studies, lectures and staff access. Alphatania organises and administers a suite of energy training courses, both public and customised, staffed by experts under the leadership of a group of Alphatania course directors. Alphatania courses, customised training and private executive briefings have set the standard for gas industry training with the depth of understanding imparted to delegates through interactive case studies, discussions and high levels of staff access. To learn more about Alphatania, click here Overview Outreach Meetings where Energy connects Overview Outreach organizes regular annual conferences on the natural gas industry. The Company focuses on the direction of the gas industries in different countries and regions. Speakers are drawn from the top decisionmaking strata of the companies and organizations involved. To learn more about Overview Outreach, click here

Gas Matters Convenient Information and Insight on Natural Gas Gas Matters is a well-known monthly journal on the global gas business. Along with its electronic daily version, Gas Matters Today and its online database service, GasMattersOnline, Gas Matters is a must-read for professionals, policy makers and regulators globally. Keeping abreast of developments as they unfold in the gas industry demands reliable information sources, business insight and informed analysis. Unlike other gas journals and newsletters, Gas Matters, Gas Matters Today and GasMattersOnline bring together the skills of a team of specialist writers and rigorous input and quality control from industry experts. To learn more about Gas Matters, click here Investment and Risk Management The Risk Advisory business provides integrated risk management solutions and advice to Banks and Corporate by leveraging the experience and skills of CRISIL in the areas of credit and market risk. Taking cognizance of the market needs for integrated solutions that quantify and manage complex risks, the Risk Advisory Group uses cutting-edge research and methodologies. Also, the Group brings together the experience of all business teams to offer modular or integrated solutions and advisory services that are customised to

meet

client

needs.

Integrated Research business CRISIL has built India's largest independent, integrated research business. CRISIL's research model is based on its unique analytical understanding of macro-micro linkages, Its well-researched, insightful solutions help clients take informed investment and resource allocation decisions. The Centre for Economic Research The Centre for Economic Research is uniquely positioned to provide benchmarks and analyses for India's policy and business decision makers. Manned by a team of senior economists, the Centre applies economic principles to live business applications, creating conceptual and contextual linkages that are

unique

to

CRISIL.

The Centre also works with other CRISIL businesses, contributing to both the range and depth of products, services and consulting assignments that CRISIL offers. CRIS INFAC CRIS INFAC is Indias largest independent, integrated research business. The research model is based on our unique analytical understanding of macro-micro linkages. Our well-researched, insightful solutions enable clients to take informed investment and resource allocation decisions. CRIS INFAC provides business research and opinion on issues impacting the competitiveness of Indian industries and companies. CRIS INFAC helps over 500 clients make better credit and investment decisions, thereby enabling them to mitigate and manage their risks. Manned by a team of sector specialists who offer analytical insights to clients, CRIS INFAC has an extensive research base on over 80 industries, 300 commodities and 3,000 companies, and a network of over 1,200 primary sources.

Global Data Services of India Limited Global Data Services of India Limited, the financial data analysis business of CRISIL, offers consistent, high quality financial data

To learn more about Global Data Services of India Limited, click here. India Index Services & Products Limited (IISL) India Index Services & Products Limited (IISL) is a 50:50 joint venture with the National Stock Exchange of India, India's leading stock exchange. IISL is the only entity in India dedicated to providing indices, index products and services to investors in Indian equities. Its main indices, the S&P CNX Nifty and S&P CNX 500 are licensed with Standard & Poor's, the world's leading index provider. To learn more about India Index Services & Products Limited, click here. CRISIL MarketWire Ltd. CRISIL MarketWire is CRISIL's cutting-edge financial market newswire. A "Wire" agency with a strong India understanding and an unparalleled combination of news, views, analytics and tools, CRISIL MarketWire enables clients to take pricing and investment decisions to stay ahead of the curve.

It is widely acknowledged to provide unmatched expert coverage on India's money and fixed income markets. Backed by the experienced team of the erstwhile Bridge News, CRISIL MarketWire spearheads CRISIL's offerings in the market place with real-time news on multi-delivery platforms.

CRISIL FundServices

CRISIL FundServices is India's leading provider of fund evaluation services and risk solutions to the mutual fund industry. Through innovative analytics, benchmarks and analytical tools, CRISIL FundServices plays a significant role in shaping investor confidence and facilitating the introduction of best practices in the mutual fund industry. Widely reputed as the industry standard, CRISIL Fund Services is the official provider of valuation tools and market benchmarks.

VALUES

CONCLUSION
Ratings are opinions on credit worthiness based on objective and subjective analysis. Rating agencies play an important role in the world markets; they can best serve markets when they operate independently, adopt and enforce internal guidelines to avoid conflicts of interest and protect confidential information received from issuers. Credit rating agencies cannot afford to commit too many mistakes as it the investors who pays the price for their mistakes. Credit rating agencies should be made accountable for any faulty rating by panelizing them or even de-recognizing them, if needed.