Overview   Credit Analysis & Research Ltd. (CARE Ratings) is a full service rating company that offers a wide range of rating and grading services across sectors. CARE has an unparallel depth of expertise. CARE Ratings methodologies are in line with the best international practices.

CARE Ratings has completed over 8488 rating assignments having aggregate value of about Rs.26609 billion (as at Sep 2010), since its inception in April 1993. CARE is recognised by Securities and Exchange Board of India (Sebi), Government of India (GoI) and Reserve Bank of India (RBI) etc.

CARE was promoted by major Banks/FIs (financial institutions) in India. The three largest shareholders of CARE are IDBI Bank, Canara Bank and State Bank of India. CARE, is set-up with two divisions:

CARE Ratings:

The ratings division of CARE has over a decade long experience in rating debt instruments/Enterprise ratings covering the full spectrum of Universe comprising:

Industrial Companies Service companies Infrastructure companies Banks Financial Institutions (FIs) Non-Bank Finance companies(NBFCs) Public Sector Undertakings (PSUs) State Government Undertakings Municipal Corporations Structured Finance Transactions Securitization Transactions SMEs SSI Micro Finance Institutions

In addition to debt ratings CARE Ratings has experience in providing the following specialized grading/rating services:

Corporate Governance ratings IPO grading Mutual Fund Credit quality Ratings Insurance Claims Paying Ability Ratings Issuer Ratings Grading of Construction entities Grading of Maritime training institutes LPG/SKO Ratings

CARE Ratings is well equipped to rate all types of debt instruments like Commercial Paper, Fixed Deposit, Bonds, Debentures, Hybrid instruments, Structured Obligations, Preference Shares, Loans, Asset Backed Securities(ABS), Residential Mortgage Backed securities(RMBS) etc.

CARE Ratings has been recognized by statutory authorities and other agencies in India for rating services. The authorities/agencies include: Securities and Exchange Board of India (Sebi), Reserve Bank of India (RBI), Director General, Shipping and Ministry of Petroleum and Natural Gas (MoPNG), Government of India (GoI), National Housing Bank (NHB), National Bank for Agriculture and Rural development (NABARD), National Small Scale Industries Commission (NSIC). CARE Ratings has also been recognized by RBI as an Eligible Credit Rating Agency (ECRA) for Basel II implementation in India.

CARE Ratings has significant presence in all sectors including Banks / FIs, Corporate, Public finance. Coverage of CARE Ratings has extended to more than 2811 entities over the past decade and is widely accepted by investors, issuers and other market participants. CARE Ratings have evolved into a valuable tool for credit risk assessment for institutional and other investors, and over the years CARE has increasingly become a preferred rating agency.

CARE‘s Credit Rating is an opinion on the relative ability and willingness of an issuer to make timely payments on specific debt or related obligations over the life of the instrument. CARE rates rupee denominated debt of Indian companies and Indian subsidiaries of multinational companies. CARE ratings are not recommendations to buy/sell or hold any security.

CARE Research : The Research and Information division of CARE provides contemporary research and information covering various industries and financial markets. Publications include Industry Research Reports with Updates, Debt Market Review, Budget Analysis, other policy impact analysis, and special commentaries on topical issues.

CARE Research offers both subscription based reports and also customised reports on request. The division has an established network of primary and secondary sources, which enable the analyst to form unbiased opinion on the industry segments. It has also developed different methodologies for forecasting the future demand-supply situation in a particular industry.

Ratings – The International Perspective

CARE has over a decade of experience and track record of rating various types of debt instruments covering varied sectors. CARE has all along built its rating methodologies in congruence with international best practices in the sector. CARE constantly tracks international developments in rating analytics and research and incorporates the latest tools and techniques of analysis in its methodologies. As a founder member of ACRAA, CARE is regularly in dialogue with international rating agencies to understand the latest developments in the field of ratings. CARE analysts regularly attend international training conferences on ratings / research to assimilate and incorporate the best practices in our ratings.

CARE ratings are followed by a large number of domestic and international investors. This gives us an opportunity for dialogue with users of ratings and, based on their feedback, we constantly strive towards analytical excellence.

People Strength

CARE is a Board managed independent and professional company. CARE’s Board consists of professionals with experience in industry, capital markets and Government.

CARE analysts are pre-dominantly post-graduate professionals such as MBAs with engineering background, finance professionals with engineering / economics background, chartered accountants, economists and chartered financial analysts.

The business development team reaches out to the corporate world to explore new business opportunities in the realm of rating.

CARE assigns ‘CARE IPO Grade 5’ grading to the IPO of Coal India Ltd.

CARE ass  CARE assigns ‘CARE AA+’ and ‘PR1+’ ratings to the Bank Facilities of EWAC Alloys Ltd.igns ‘CARE BBB+’ and ‘PR2’ ratings to the Bank Facilities of Genesis Colors Pvt Ltd.

   CARE assigns ‘CARE AA- & PR1+’ rating to the Bank Facilities of Ernst & Young Pvt. Ltd.

CARE assigns ‘CARE BB-’ and ‘PR4’ ratings to the bank facilities of SPS Metal Cast & Alloys Ltd.

CARE assigns ‘CARE BBB+’ and ‘PR2’ ratings to the Bank Facilities of Genesis Colors Pvt Ltd.

   CARE assigns ‘CARE BBB+ (SO)’ and ‘PR2 (SO)’ ratings to the Bank Facilities of Genesis Luxury Fashion Pvt Ltd.

CARE assigns ‘CARE BB’ and ‘PR4’ ratings to the Bank Facilities of Ginni International Ltd.

CARE assigns ‘CARE BBB- (SO)/ PR3 (SO)’ rating to the Bank Facilities of OSS Air Management Services Pvt Ltd

CARE Research CARE Research & Information Services is an independent division of CARE. CARE Research services a variety of business research needs with credible, high quality research and analysis on various facets of the Indian Economy and Industries. It provides an insightful input on industry performances by assessing trends and predicting their impact on the future.

The research division has a two pronged objective of providing an in-house support to the ratings division as also high quality sectoral research to financial intermediaries, corporates, analysts, policy makers etc, as an aid to their decision making process. CARE Research draws its strengths from CARE’s decade long experience and in-depth understanding of the Indian

economy/industries, use of rigorous analytical methods and its knowledge team. CARE Research has an in-house team of qualified, experienced analysts. CARE Research is committed to provide accurate, reliable research to its clients with consistent updates in timeframe.

The research division is growing steadfastly, capturing new avenues apart from providing contemporary research and information covering various industries and Indian financial markets.

CARE Research has established a network of primary and secondary sources, which enable the team of analysts to form unbiased opinions on industry segments. CARE Research has also developed different methodologies for forecasting the future demand-supply situation in a particular industry. These forecasts are deliberated with industry experts and then the methodologies for the same get validated and finalised.

CARE Research offers both subscription-based reports as also customised reports on request by customers. The reports by CARE Research provide insightful data and analysis on various industry sectors and CARE’s outlook on the same.

Customised Research

The rising level of volatility in complex markets with lots of opportunities to tap necessitates thorough understanding and guidance provided by a well known research firm. To address such needs CARE Research offers need-based solutions by completely checking the facts, market scenario, past trends, etc to help you realise your futuristic goals and transform your businesses. Customised Research involves business analysis and position in the market, financial analysis, and future outlook etc. It helps the clients to make better credit / investment decisions

Sector Research

In depth analysis of business environment of industry, trends, future direction, coverage on sectors in India, including updates at regular intervals for a year forward. A dedicated team of sector specialists track various industries on daily basis.

The Research Report includes:

SWOT analysis of the industry alongwith three year forward analysis and free updates one year forward. The industry research report incorporates demand/supply situation, price variations, cost estimation, analysis on new and existing policies, business trends, etc.

Our Research Methodology:

We are independent research company We stress on facts Trend Analysis Extent of competition Global competition

Key Players Cyclicity/ Seasonality Ecomonic Scenario Latest Developments Future Perspective We trace five year track record for each industry We meet the top people of that industry for inputs. Information from primary and secondary sources is used Government Rules & Policies adhering to that business are studied Market survey, wherever necessary is conducted

Research Report services

CARE Research is known as a leading provider of value research. Investors, bankers, analyst, etc use CARE Research reports for in-depth understanding of present situation, issues etc to arrive at opinion. The reports contain high quality data, trends, opinions and outlook. The services are today subscribed to by a vast number of clients.

The updates provide quarterly /half-yearly review of issues/environment, updated information about the significant changes that occurred during the period along with review of outlook. The clients can talk to our analysts regarding any clarifications in the report purchased.

Rating Process The rating process takes about three to four weeks, depending on the complexity of the assignment and the flow of information from the client. Rating decisions are made by the Rating Committee.

FREQUENCY OF RATING ACTIONS

The rating assigned is communicated to the client along with a detailed rationale. The ratings accepted by the clients are published and then monitored on a continuous

basis over the life of the instrument. CARE has a comprehensive in-house data base which facilitates surveillance of the

various industries and companies operating in these industries. Each rating is reviewed formally at least once a year, when analysts meet the issuer's

management. A review can also be triggered by a major development in the company or in the industry,

which may have a significant bearing on the credit-worthiness of the company. As a part of the review exercise, actual financial performance is analysed in the light of

the estimates made earlier and deviations are examined. CARE puts the rating under Credit Watch, when any event or deviation from the

expected trend has occurred or is expected and additional information is necessary to take rating action.

The rating may be retained, upgraded or downgraded based on the changed prospects for the issuer. A rating change is at the absolute discretion of CARE, without concurrence of the client.

Rating Criteria/Methodology CARE undertakes rating exercise based on

information provided by the company In-house database and data from other sources that CARE considers reliable. CARE does

not undertake unsolicited ratings. The primary focus of the rating exercise is to assess future cash generation capability and

their adequacy to meet debt obligations in adverse conditions. The analysis attempts to determine the long-term fundamentals and the probabilities of

change in these fundamentals, which could affect the credit-worthiness of the borrower. The analytical framework of CARE's rating methodology is divided into two

interdependent segments. The first deals with the operational characteristics and the second with the financial characteristics.

Besides quantitative factors, qualitative aspects like assessment of management capabilities play a very important role in arriving at the rating for an instrument.

The relative importance of qualitative and quantitative components of the analysis vary with the type of issuer.

Rating determination is a matter of experienced and holistic judgement, based on the relevant quantitative and qualitative factors affecting the credit quality of the issuer.

Definition of Default

CARE defines default as any missed payment on its rated instrument. As an exception, however, cases of missed payments attributable to technical reasons e.g. procedural delays caused by government machinery etc. which are likely to be rectified within a short time, are not placed in

the default grade immediately. If, however, such delays are not rectified within a short time, ratings are placed in the default grade.

WHAT RATINGS DO NOT MEASURE

It is important to emphasise the limitations of credit ratings. They are not recommendations to invest. They do not take into account many aspects which influence an investment decision. They do not, for example, evaluate the reasonableness of the issue price, possibilities for capital gains or take into account the liquidity in the secondary market. Ratings also do not take into account the risk of prepayment by issuer. Although these are often related to the credit risk, the rating essentially is an opinion on the relative quality of the credit risk.

Rating Methodologies

Manufacturing Ratings Manufacturing Companies(General) Cement Companies Shipping Companies Fertilizer Companies Pesticide Companies Commercial Vehicle Industry Cotton Yarn Industry Steel Companies

Financial Sector Ratings Banks Non Banking Finance companies Housing Finance Companies ABS and MBS Fund Credit Quality Ratings Capital Protection Oriented Schemes Market Linked Notes

Infrastructure Ratings Private Power Projects Urban Infrastructure Projects Debt issues of Toll Road Projects Port Projects

Others / Sub-sovereign Ratings Municipal Bonds State Governments SME Rating Short-term Instruments Issuer Rating Recovery Rating Organized Retail Companies Mobile Service Providers

CARE’s Rating Committee Members1 include:

Mr. Y. H. Malegam(Chairman)

  

Former Managing Partner - S. B. Billimoria & Co. Member of the Board of Directors of a number of companies and organisations including the Reserve Bank of India

Mr.P.P.Pattanayak  

Former Managing Director of State Bank of Mysore. Former Dy. Managing Director & Chief Credit Officer of State Bank of India.

Mr. V. Leeladhar   

Former Dy. Governor, Reserve Bank of India.

Mr. V.K. Chopra    Former Wholetime Member of Securities & Exchange Board of

India and Chairman and Managing Director of Corporation Bank.

Mr.D.R.Dogra  

Managing Director,CARE.

Credit Rating of Debt instrumentsA. Long /Medium -term instruments (NCD/FD/CD/SO/CPS/RPS/L)Symbols Rating DefinitionCARE AAA Instruments with this rating are considered to be of the best credit quality,offering highest safety for timely servicing of debt obligations. Suchinstruments carry minimal credit risk.CARE AA Instruments with this rating are considered to offer high safety for timelyservicing of debt obligations. Such instruments carry very low credit risk.CARE A Instruments with this rating are considered to offer adequate safety fortimely servicing of debt obligations. Such instruments carry low creditrisk.CARE BBB Instruments with this rating are considered to offer moderate safety fortimely servicing of debt obligations. Such instruments carry moderatecredit risk.CARE BB Instruments with this rating are considered to offer inadequate safety fortimely servicing of debt obligations. Such instruments carry high creditrisk.CARE B Instruments with this rating are considered to offer low safety for timelyservicing of debt obligations and carry very high credit risk. SuchInstruments are susceptible to default.CARE C Instruments with this rating are considered to be having very highlikelihood of default in the payment of interest and principal.CARE D Instruments with this rating are of the lowest category. They are either indefault or are likely to be in default soon.NCDFDCDSOCPSRPSNon Convertible DebentureFixed DepositCertificate of DepositStructured ObligationsConvertible Preference SharesRedeemable Preference SharesAs instrument characteristics or debt management capability could cover a wide range ofpossible attributes whereas rating is expressed only in limited number of symbols, CAREassigns '+' or '-' signs to be shown after the assigned rating (wherever necessary) to indicatethe relative position within the band covered by the rating symbol.B. Short term instrumentsSymbols Rating DefinitionPR1Instruments with this rating would have strong capacity for timelypayment of short-term debt obligations and carry lowest credit risk.

Within this category, instruments with relatively better creditcharacteristics are assigned PR1+ rating.PR2Instruments with this rating would have adequate capacity for timelypayment of short-term debt obligations and carry higher credit risk ascompared to instruments rated higher.PR3Instruments with this rating would have moderate capacity for timelyrepayment of short term debt obligations at the time of rating and carryhigher credit risk as compared to instruments rated higher.PR4Instruments with this rating would have inadequate capacity for timelypayment of short-term debt obligations and carry very high credit risk.Such Instruments are susceptible to default.PR5 The instrument is in default or is likely to be in default on maturity.As instrument characteristics or debt management capability could cover a wide range ofpossible attributes whereas rating is expressed only in limited number of symbols, CARE assigns'+' or '-' signs to be shown after the assigned rating (wherever necessary) to indicate the relativeposition within the band covered by the rating symbol.Suffix (L) will be used for loans.

C. Issuer RatingSymbols DefinitionCARE AAA (Is) Issuers with this rating are considered to be of the best credit quality, offering highestsafety of timely servicing of debt obligations. Such issuers carry minimal credit risk.CARE AA (Is) Issuers with this rating are considered to offer high safety for timely servicing of debtobligations. Such issuers carry very low credit risk.CARE A (Is) Issuers with this rating are considered to offer adequate safety for timelyservicing of debt obligations. Such issuers carry low credit risk.CARE BBB (Is) Issuers with this rating are considered to offer moderate safety for timelyservicing of debt obligations. Such issuers carry moderate credit risk.CARE BB (Is) Issuers with this rating are considered to offer inadequate safety for timelyservicing of debt obligations. Such issuers carry high credit risk.CARE B (Is)Issuers with this rating are considered to offer low safety for timely servicingof debt obligations and carry very high credit risk. Such issuers aresusceptible to default.CARE C (Is) Issuers with this rating are considered to be having very high likelihood ofdefault in the payment of interest and principalCARE D (Is) Issuers with this rating are of the lowest category. They are either in default orare likely to be in default soon.

Care’s Issuer Rating (CIR) reflects the overall credit risk ofthe issuer. The rating scale has been aligned with the longterminstruments rating scale ranging from AAA(Is)signifying ‘Highest Safety’ to D(Is) signifying ‘Default’. ‘Is’signifies ‘Issuer Rating’

ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited) was set up in 1991 by leading financial/investment institutions, commercial banks and financial services companies as an independent and professional Investment Information and Credit Rating Agency.

Today, ICRA and its subsidiaries together form the ICRA Group of Companies (Group ICRA). ICRA is a Public Limited Company, with its shares listed on the Bombay Stock Exchange and the National Stock Exchange.

Range of Services

Rating Services

As an early entrant in the Credit Rating business, ICRA Limited (ICRA) is one of the most experienced Credit Rating Agencies in the country today. ICRA rates rupee denominated debt instruments issued by manufacturing companies, commercial banks, non-banking finance companies, financial institutions, public sector undertakings and municipalities, among others. ICRA also rates structured obligations and sector-specific debt obligations such as instruments issued by Power, Telecom and Infrastructure companies. The other services offered include Corporate Governance Rating, Stakeholder Value and Governance Rating, Credit Risk Rating of Debt Mutual Funds, Rating of Claims Paying Ability of Insurance Companies, Project Finance Rating, and Line of Credit Rating. ICRA, along with National Small Industries Corporation Limited (NSIC), has launched a Performance and Credit Rating Scheme for Small-Scale Enterprises in India. The service is aimed at enabling Small and Medium Enterprises (SMEs) improve their access to institutional credit, increase their competitiveness, and raise their market standing.

Grading Services

The Grading Services offered by ICRA employ pioneering concepts and methodologies, and include Grading of: Initial Public Offers (IPOs); Microfinance Institutions (MFIs); Construction Entities; Real Estate Developers and Projects; Healthcare Entities; and Maritime Training Institutes. In IPO Grading, an ICRA-assigned IPO Grade represents a relative assessment of the “fundamentals” of the issue graded in relation to the universe of other listed equity securities in India. In MFI Grading, the focus of ICRA’s grading exercise is on evaluating the candidate institution’s business and financial risks. The Grading of Construction Entities seeks to provide an independent opinion on the quality of performance of the entities graded. Similarly, the Grading of Real Estate Developers and Projects seeks to make property buyers aware of the risks associated with real estate projects, and with the developers’ ability to deliver in accordance with the terms agreed. ICRA’s Healthcare Gradings present an independent opinion on the quality of care provided by healthcare entities. In the education sector, ICRA offers the innovative service of Grading of Maritime Training Institutes in India.

Consulting Services

ICRA Management Consulting Services Limited (IMaCS), a wholly-owned subsidiary of ICRA Limited, is a multi-line management and development consulting firm with a global operating footprint. IMaCS offers Consulting Services in Strategy, Risk Management, Regulation & Reform, Transaction Advisory, Development Consulting and Process Re-engineering. IMaCS’ clientele includes Banks and Financial Service Companies, Corporate Entities, Institutional Investors, Governments, Regulators, and Multilateral Agencies. Besides India, IMaCS has consulting experience across 35 countries in South East Asia, Northern Asia, West Asia, Africa, Western Europe, and North America.

Software Development, Business Intelligence and Analytics and Engineering Services

ICRA Techno Analytics Limited (ICTEAS), a wholly-owned subsidiary of ICRA Limited, offers a complete portfolio of Information Technology (IT) solutions to meet the dynamic needs of present-day businesses. The services range from the traditional development of client-server, web-centric and mobile applications to the generation of cutting-edge Business Intelligence applications and analytics solutions. With years of experience in data-mining and predictive data modelling, ICTEAS offers various analytics solutions such as sales analytics and spend analytics. An in-depth knowledge of various technology areas, coupled with its strengths in various verticals, enables ICTEAS provide end-to-end services of excellent quality. It uses a mix of onsite/offshore strategies to optimise bottom-line benefits for its customers. ICTEAS is a Microsoft Gold Partner and is ISO 27001 certified.

The Engineering Division of ICTEAS offers multidisciplinary computer aided engineering design services. The activities cover design and drawing in the mechanical, civil/structural, electrical and instrumentation space. ICTEAS engineers and designers are well-versed in AutoCAD, MicroStation, PDS and Staad pro with experience in the Oil & Gas, Petrochemical and Power Sectors. The services range from providing Engineering Design Services to CAD Vectorisation and Conversion Services. Over the years, ICTEAS has successfully deployed skilled resources to work for large engineering consulting companies both in the domestic and international market.

ICTEAS has two subsidiaries, ICRA Sapphire Inc. (ICSAP) and Axiom Technologies Limited (AXIOM). ICSAP is based in Connecticut, USA, while AXIOM operates out of Kolkata, India.

ICSAP, a wholly-owned subsidiary of ICTEAS, offers US clients a full array of leading edge Business Analytics and Software Development services backed by offshore teams, which work out of ICTEAS, Kolkata. This hybrid engagement model of onsite and offshore teams allows for seamless project management, execution and rapid offshore scaling of teams while bringing down development costs.

Based on the experience gained from working with the City of New York in the tragic days after the World Trade Center attacks, ICSAP developed for New York City the Unified Victim Identification System (UVIS), a Disaster Response Solution. ICSAP is now implementing UVIS in other states. ICSAP Analytics helps companies make meaning out of their data and bring visibility on their business, thus allowing them to modify their strategy for better Returns on Investment. ICSAP services various verticals, including state and city Governments, besides Finance, Banking, Life Sciences and Healthcare, Manufacturing, Law and Internet companies.

AXIOM, a wholly-owned subsidiary of ICTEAS, specialises in customisation and implementation services on the Oracle E-Business Suite. Its services include process study, fitment analysis, customisation, implementation and post-implementation maintenance services. AXIOM focuses on the Financial Modules of the Oracle E-Business Suite, which include Order Management, General Ledger, Accounts Payable, Accounts Receivable, Cash Management, Purchasing and Inventory, Fixed Assets and Global Consolidation.

Knowledge Process Outsourcing and Online Software

ICRA Online Limited (ICRON) is a wholly-owned subsidiary of ICRA Limited. ICRON was incorporated in January 1999 and has over the period since then established itself as an independent and credible source of authentic information, software and outsourcing solutions provider.

ICRON caters for some of the biggest names in the financial services sector in India and abroad, which is a testimony to its product quality, commitment and credibility. ICRON has two Strategic Business Units (SBUs) with a list of reputed global and domestic clients:

• The Knowledge Process Outsourcing Division (KPO Division); and• The Information Services and Technology Solutions Division (MFI Division).

Encouraged by the emerging dynamics of the outsourcing business, ICRON diversified into the Knowledge Process Outsourcing (KPO) business in April 2004, with focus on the Banking, Financial Services and Insurance (BFSI) vertical as well as other verticals like Retail, Healthcare and Pharmaceuticals.

The KPO Division of ICRON offers Knowledge Process Outsourcing services that combine advanced analytical abilities and deep domain expertise to deliver value by translating data and information into structured business inputs. It provides back-end analytical services support to its clients in the areas of Data Extraction, Aggregation, Validation and Analysis, Accounting and Finance, Research, Report Preparation and Modelling. The Division has attained ISO 27001 certification through rigorous adherence to data security policies and practices.

The MFI Division serves the Mutual Fund Industry through Research, Analytics and Mutual Fund Ranking. Besides, it leverages its domain expertise to deliver high quality technology solutions, in the form of products, to a large number of Banks, Mutual Funds, Financial Institutions, Third Party Products’ Distributors, Insurance Companies, Investment Advisors, Portfolio Managers, Stock Brokers, Treasury Managers, and Academic Institutions, among others. The Company has developed several innovative products to meet the varied needs of its clients. The products are customised to meet specific client requirements, enabling them in research, analysis and decision making while also helping them achieve automation in business operations.

ICRON has a wholly-owned subsidiary M-Serve Business Solutions Private Limited, a KPO services company headquartered in Kolkata, India.

CORPORATE DEBT RATING

An ICRA Rating is a symbolic indicator of ICRA's current opinion on the relative  capability of the corporate entity concerned to timely service debts and obligations, with reference to the instrument Rated. The Rating is based on an objective analysis of the information and clarifications obtained from the entity, as also other sources considered reliable by ICRA. The independence and professional approach of ICRA ensure reliable, consistent and unbiased Ratings. Ratings allow investors to factor credit risk in their investment decision. ICRA Rates long-term, medium-term, and short-term debt instruments. ICRA offers its Credit Rating services to a wide range of issuers including:

- Manufacturing companies- Banks and financial institutions- Infrastructure sector companies- Service companies- Municipal and other local bodies- State governments- Non-banking finance companies- Small and medium sector entities

Rating Process

ICRA's Rating process is initiated on receipt of a formal request (or mandate) from the prospective issuer. A Rating team, which usually consists of two analysts with the expertise and skills required to evaluate the business of the issuer, is involved with the Rating assignment. An issuer is provided a list of information requirements and the broad framework for discussions. These requirements are worked out on the basis of ICRA's understanding of the issuer's business, and broadly cover all aspects that may have a bearing on the Rating. ICRA also draws on secondary sources of information, including its own Research Division, while working on the Rating assignment. The Rating involves assessment of a number of qualitative factors with a view to estimating the future earnings of the issuer. This requires extensive interactions with the issuer's management, specifically on subjects relating to plans, outlook, competitive position, and funding policies.

In the case of manufacturing companies, plant visits are made to gain a better understanding of the issuer's production process, make an assessment of the state of equipment and main facilities, evaluate the quality of technical personnel, and form an opinion on the key variables that influence the level, quality and cost of production. These visits also help in assessing the progress of projects under implementation. After completing the analysis, a Rating Report is prepared, which is then presented to the ICRA Rating Committee. A presentation on the issuer's business and management is also made by the Rating Team. The Rating Committee is the final authority for assigning Ratings. The assigned Rating, along with the key issues, is communicated to the issuer's top management for acceptance. Non-accepted Ratings are not disclosed and complete confidentiality is maintained on them unless such disclosure is required under any laws/regulations.

If the issuer does not find the Rating acceptable, it has a right to appeal for a review. Such reviews are usually taken up if the issuer provides certain fresh inputs. During a review, the issuer's response is presented to the Rating Committee. If the inputs and/or fresh clarifications so warrant, the Rating Committee would revise the initial Rating decision. As part of a mandatory surveillance process, ICRA monitors all accepted Ratings over the tenure of the Rated instruments. The Ratings are generally reviewed once every year, unless the circumstances of the case warrant an earlier review. The Rating outstanding may be retained or revised (that is, upgraded or downgraded) on surveillance.

Methodology

ICRA considers all relevant factors that have a bearing on the future cash generation of the issuer. These factors include: industry characteristics, competitive position of the issuer, operational efficiency, management quality, commitment to new projects and other associate companies, and funding policies of the issuer. A detailed analysis of the past financial statements is made to assess performance under "real world" business dynamics. Estimates of future earnings under various sensitivity scenarios are drawn up and evaluated against the claims and obligations that require servicing over the tenure of the instrument being Rated. Primarily, it is the relative comfort level on the issuers' cash flows to service obligations that determines the Rating.

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