LOVELY PROFESSIONAL UNIVERSITY

DEPARTMENT OF MANAGEMENT

Report on Summer Training

"AWARENESS AND IMPLEMENTATION OF CRlSIL

SME RATINGS AMONG EMERGING SME'S"

Submitted to Lovely Professional University

In partial fulfillment of the

Requirements for the award of Degree of
Master of Business Administration

Submitted by:
Roopendra Singh Chandel
RS1904A57

DEPARTMENT OF MANAGEMENT
LOVELY PROFESSIONAL UNIVERSITY
PHAGWARA

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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'S”A study on investor’s perception their behavior about equities.
I sincerely thank to Mrs. Sarita Gupta (Trainning Co-ordinator,CRISIL Ltd., Ludhiana) for
providing me this valuable learning opportunity.

I would also like to thank Mr. Ashwani Panesar – Faculty Guide, Lovely Professional
University, Phagwara for her valuable guidance and insight amidst his busy schedule.

Finally I would like to thank Mr. Jatin Gupta (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

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
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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.

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 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 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
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

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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
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 SME 2 High
SME 3 Above Average
SME 4 Average
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 safety
(Triple A) Highest with regard to timely payment of financial obligations. Any adverse
Safety 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
(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

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 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 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.)

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

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 assessment model installed in 8 reputed
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 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
3. Canara Bank
4. Central Bank of India
5. Corporation Bank
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 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

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,

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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.

Small Scale Industries

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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)

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.

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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.

Tabular representation of ceiling in investment for enterprises in manufacturing and

service sector as per the new SMED Act:

TABLE NO .3
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 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

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

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Crisil House (Pinnacle Chambers) 121/122 Andheri Kurla Road Andheri (East)
Mumbai,Maharashtra,400093
India
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 company Standard & Poor’s

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.
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"

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 › 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
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

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 › 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
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.

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 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.
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

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(Rs. Lacs) Year ended Year ended

Particulars Dec. 31, 2009 Dec. 31, 2008

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

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 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

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
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 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, 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 Batala .

 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 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

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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

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:

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The study aimed to include the industrialist of focal point Batala as to study, the awareness of
CRISIL SME RATING KNOWLEDGE in Batala.

Sample Size:

The sample size for the research was 140.

Sample Technique:

Tree sampling technique is used.

Time:

The research was conducted in the months of June and July, 2010.

Data Analysis & Interpretation:

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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.

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:

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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.

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

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  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 21 15%

NO 119 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 PERCENTAGE
ACCOUNT IN THESE
BANKS
HDFC 7 5%
SBI 27 19.28%
PNB 77 55%
CBI 3 2.14%
ICICI 5 3.57%
OTHER 21 15%

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

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)

AGENCIES NO. OF COMPANIES PERCENTAGE
CERTIFIED

ISO 14 40%
ISI 02 9.23%
OTHER 03 6.15%
NONE 14 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.

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

 TO KNOW THE NUMBER OF EMOPLOYED PERSONS:

TABLE NO. 4.5 (showing the number of employed persons)

NUMBER OF PERCENTAGE
EMPLOYEES
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.
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Figure 4(showing the graphical representation of the table 4.5)

5_10
6%
10_15
9%

15_20
14%

20above
71%

 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 4 3

67% 27% 6%

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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)
PERCENTAGE
TURNOVER NO. OF
PERSONS
7%
100 – 200 lakh 1

200 above 14 93%

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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.

* 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.

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* 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:
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After collecting data we found that the awareness of CRISIL SME credit rating is very less
among the industrialist of BATALA. 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.

BIBLIOGRAPHY
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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 company

_____________________________________________________________

Product _____________________________________________________________

Place ___________________________________________________________________________

Contact Person and Designation

____________________________________________________

Mobile: _________________________ Contact number:

_________________________________

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)

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

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 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

10.Are you aware about the various government schemes of the

Ministry of MSME for the development of MSMEs?

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 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

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 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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