CHAPTER - 1

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 India’s largest and
most respected rating agency. CRISIL’s majority share holder is standard $ Poor’s the
world’s foremost provider of independent credit rating, indices, risk evaluation,
investment research and data. Leading corporation worldwide are rated by S&P. S&P’s
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 Poor’s .The relationship got strengthened with
S&P with CRISIL’s working credibility, competence and management. The relationship
got further strengthened with S&P taking up a majority stake in CRISIL.

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 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 India’s 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. CRISIL’s 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. CRISIL’s 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 CRISIL’s
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. CRISIL’s news services (CRISIL
Market wire – CMW) are India’s leading provider of real time news and analysis on India
debt markets.

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1.2.a CRISIL’SME RATING SERVICES

CRISIL commenced its SME (small & medium enterprises) rating services in
April 2005. CRISIL has two product 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 CRISIL’s opinion on company’s performance

capability and financial strength. Rating is assigned on following rating scale.

NSIC rating scale TABLE NO .1

Financial Strength
High Moderate Low
Performance Highest SE 1A SE 1B SE 1C
Capability High SE 2A SE 2B SE 2C
Moderate SE 3A SE 3B SE 3C

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 Weak SE 4A SE 4B SE 4C
Poor SE 5A SE 5B 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

CRISIL SME Rating Definition

SME 1 Highest
SME 2 High
SME 3 Above Average
SME 4 Average
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 SME 5 Below Average
SME 6 Inadequate
SME 7 Poor
SME 8 Default

1.2b CRISIL Rating Symbols For Long Term Ratings

AAA Instruments rated 'AAA' are judged to offer the highest degree of
(Triple A) Highest safety with regard to timely payment of financial obligations. Any
Safety 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
(Double A) High with regard to timely payment of financial obligations. They differ
Safety only marginally in safety from `AAA' issues.
A Instruments rated 'A' are judged to offer an adequate degree of
Adequate Safety 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
(Triple B) Moderate regard to timely payment of financial obligations for the present;
Safety however, 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
(Double B) regard to timely payment of financial obligations; they are less
Inadequate Safety likely to default 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;

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High Risk while 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
Substantial Risk them 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
Not Meaningful the 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.

NSIC operates through 9 Zonal Offices, 33 Branch Offices, 14 Sub Offices, 10

NSIC Business Development Extension Offices, 5 Technical services Centers, 3

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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 SSI’s

Turnover (Rs . Lakh) Turnover (Rs. Lakh) Turnover (Rs.

< 50 50-200 Lakh) > 200

Rating fees (Rs.) 40,000 45,000 60,000

Service tax @ 4,120 4,635 6,180

10.30% (Rs.)

Total fees (Rs.) 44,120 49,635 66,180

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Subsidy from NSIC 25,000 30,000 40,000
(Rs.)

Amount payable by 19,120 19,635 26,180

SSIs (Rs.)
*Concessional Fees 7,456 9,927 13,236

*concessional fees are applicable for CRISIL’s 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 fees 60,000 65,000
(Rs.) 70,000 85,000 110,000

Service tax 6,180 6,695 7,210

8,755 11,330

Total fees (Rs.) 66,180 71,695 77,210

93,755 121,330

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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).
CRISIL’s 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 clusters across 8 industries. CRISIL’s SME risk

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 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 26 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
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 3. Canara Bank
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

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.

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

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 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.

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.

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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 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)

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 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 country’s

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

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.

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

TABLE NO .3
Manufacturing enterprises Services Enterprises
Investment in Plant and Machinery Investment in Equipment

Micro Up to Rs.25 lakh Up to Rs.10 lakh

Small Above Rs. Lakh up to Rs.5 crore Above Rs.10 lakh up to
Rs.2crore
Medium Above Rs.5 crore up to Rs.10 crore Above Rs.2 crore up to
Rs.5crore

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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 House (Pinnacle Chambers) 121/122 Andheri Kurla Road Andheri (East)
Mumbai,Maharashtra,400093
India

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Phone:-912256913001
Fax: 91 22 56913000

Headquarters Bombay Area, India

Industry Financial Services

Type Public Company

Status Operating

Company Size 2,000 employees

Revenue 2,873 mil [INR] (65%)

Founded 1987

Website www.crisil.com

Parent Standard & Poor’s

company

subsidiaries Irevna

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1.4. HISTORY OF THE COMPANY

Year Milestone
1987 › CRISIL is incorporated
› Pradip Shah is Managing Director
1987-88 Commences the rating of Companies
1990-91 Establishes the Information Services Group
1991-92 Provides technical assistance and training to Rating Agency
Malaysia Berhard and MAALOT, the Israeli Securities Rating
Company Ltd.
1993-94 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
1994-95 › Mr. R Ravimohan takes over as Managing Director
› Sets up the Advisory Services Group
1995-96 Forges a strategic alliance with Standard & Poor's Ratings Group.
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 1996-97 Standard & Poors' acquires 9.68% shareholding in CRISIL
1997-98 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
Structured Obligations
› Launches the Risk Assessment Model (RAM)
› Develops a web presence, launches the official website
1999- › Acquires the business of Information Products and Research Services
2000 (India) Pvt. Ltd. along with its brand INFAC
› Secures the Certificate of Registration under SEBI (Credit
Rating Agencies) Regulations, 1999
2001- › Launches CRISIL Market Wire, a real-time financial news service
2002 › Launches Mutual Fund Composite Performance Rankings
(CRISIL CPRs), Fund Risk Analytics Model and CRISIL Mutual
Funds Portfolio Tracker
2003- › Change of name of the company from "The Credit Rating
2004 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
2004- › S&P acquires 3,120,948 equity shares of CRISIL from CRISIL
2005 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

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 and sales efforts.
› Irevna ranked the top investment research outsourcing firm by buy-
side 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
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

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 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 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.

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» 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.
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.

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1.7 CRISIL's Performance at a glance

(Rs. Lacs) Year ended Year ended

Particulars Dec. 31, 2008 Dec. 31, 2007

Total Income for the year was 40,389.03 27,088.00

Profit before depreciation and taxes was 18,696.71 10,481.23

Deducting there from depreciation of 1,184.38 1,333.87

17,512.33 9,147.36
Profit before tax was

Deducting there from taxes of 3,774.52 2,080.28

Profit after tax was 13,737.81 7,067.08

The proposed appropriations are:

Dividend 5,057.50 1,806.25

Corporate Dividend Tax 859.52 337.07

General Reserve 1,373.78 706.71

Balance carried forward 17,663.64 8,775.36

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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

• Ratings could be used for all green-field projects where CRISIL’s 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

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BENEFITS OF CRISIL SME RATING

1. FASTER AND EASIER AVAILABILITY OF LOANS -:

Banks appreciate the independence and analysis involved in CRISIL’s

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 WITH BANKERS, CUSTOMERS AND

BUSINESS ASSOCIATES -:

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
organization’s 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 CRISIL’s website and on CRISIL’s

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 CRISIL PUBLICATION and website, to identify
and research companies in greater detail.

5. SUPPORT FOR EXPORT INITIATIVES -:

For exporters, CRISIL’s International Linkage offers an additional

advantage:- STANDARD & POOR’s, a globally respected rated agency,

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 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.

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HOW RATING DONE

Step 1: Collect and process preliminary information

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Step 2: Analyse 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.CUSTOER 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

OBJECTIVES:

 To check the awareness of credit rating among the industries.

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  To provide knowledge of credit rating to the industrialists of focal point
Ludhiana.

 To know the share of MOU banks in the market.

 To know the number of units having SSI number.

And at last but not the least-

 To gain the marketing survey experience so as to enhance my marketing

skills.

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REASON FOR CHOICE OF PROJECT

Through this project I would like to gain the knowledge about SME rating
provided by the prestigious company like CRISIL and also intend to enhance the
awareness of credit rating among the industrialist of the focal point Ludhiana.

This project would be useful to all those who are interested in SME RATING and
NSIC. And to those who are interested in banking .

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 CHAPTER - III

METHODOLOGY

 INTRODUCTION TO MARKETING RESEARCH

 RESEARCH METHODOLOGY

 LIMITATION OF THE STUDY

III.1 INTRODUCTION TO MARKETING RESEARCH

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 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 Ludhiana 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.

Data collection

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 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 Ludhiana city as to study,
the awareness of CRISIL SME RATING KNOWLEDGE IN Ludhiana

Sample Size:

The sample size for the research was 65.

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Sample Technique:

Random sampling technique is used.

Time:

The research was conducted in the months of July and august, 2009.

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.

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.
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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

 TO KNOW ABOUT CRISIL SME RATING KNOWLEDGE:

TABLE NO.4 1 (showing sme rating knowledge)

KNOWLEDGE NO.OF PERSONS PERCENTAGE

YES 15 23%

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 NO 50 77%

This is evident from the table number .1 that there are very less industrialists who have
knowledge about SME rating. Only 23% of people have knowledge whereas rest 77% is
unaware.

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

YES
23%

NO
77%

 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 PERCENTAGE
ACCOUNT IN THESE

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 BANKS

HDFC 6 9.23%
SBI 22 33.84%
PNB 6 9.23%
CBI 7 10.76%
ICICI 3 4.61%
OTHER 21 32.30%

From the table no. 4.2 it is clear that major part of the industry have their accounts in
MOU banks specially SBI with 34% market share followed by CBI and PNB.

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

HDFC
9%

OTHERS
32%

SBI
34%

ICICI CBI
5% 11% PNB
9%

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

TABLE NO.4.3 (showing the turnover of the companies)

TURNOVER in (lakh) Number of company Percentage

10-50 2 3.07%
50-100 8 12.30%

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100-200 13 20%
200 above 42 64.61%

It is clear from the above table that 65% of the industries of focal point have turnover of
more than 200 lakh and 20 % of industries have turnover from 100-200 lakh.

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

10_50
3%

50_100
12%

100_200
20%

200above
65%

 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 NO. OF COMPANIES PERCENTAGE
CERTIFIED
SSI 16 24.61%
ISO 26 40%
ISI 6 9.23%
OTHER 4 6.15%
NONE 13 20%

According to the survey it is found that 40% of units are ISO certified and approximate
25% units have SSI number and 20% of units have not registered under any certificate.

Figure 4(showing the graphical representation of the table no. 4.3)

 TO KNOW THE NUMBER OF EMOPLOYED PERSONS:

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 TABLE NO. 4.5 (showing the number of employed persons)
NUMBER OF PERCENTAGE
EMPLOYES
5-10 4 6.15%
10-15 6 9.23%
15-20 9 13.84%
20-ABOVE 46 70.76%

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.

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

5_10
6%
10_15
9%

15_20
14%

20above
71%

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  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

10 4 1

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.

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 Figure 6 (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)
PERCENTAG
TURNOVER NO. OF E
PERSONS

100 – 200 lakh 1 7%

200 above 14 93%

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

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Figure 7(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.

* The turnover of most of the units is more than 2 crore.

* Mostly units are being ISO certified but few units have SSI number.

* 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.

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 CHAPTER – V

SUGGESTIONS AND RECOMMENDATION

SUGGESTIONS

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* 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 aware ness of CRISIL SME
credit rating is very less among the industrialist of LUDHIANA. 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.
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 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.

BIBLIOGRAPHY

BOOKS:

Kotler, Philip, “Marketing Management”, (2004) Prentice Hall, India

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 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

ANNEXURES

DETAILS OF THE COMPANIES VISITED

 Company Name :
 Promoter name :
 Nature of the company :
 Crisil SME rating knowledge :
 Bank name :
 Relation with company :
 Contact number :
 Turnover (lakh):

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 10-50
50-100
100-200
200-ABOVE

Certified by agencies:

SSI
ISO
ISI
OTHERS

Number of employed persons

5-10
10-15
15-20
20-ABOVE

ADDRESS:

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