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Directors Report of Crisil Ltd.

Dec 31, 2015

Dear Member,

The Directors are pleased to present to you the 29th Annual Report of CRISIL Limited, along with the audited accounts, for the year ended December 31, 2015.

FINANCIAL PERFORMANCE

A summary of the Company's financial performance in 2015:

(Rs. in Crore)

Particulars Consolidated Standalone

2015 2014 2015 2014

Total income for the year was 1,423.16 1,277.07 1000.70 935.41

Profit before depreciation, exceptional item and 442.82 412.17 349.38 331.31 taxes was

Deducting depreciation of 37.12 36.12 24.03 23.92

Proft before tax was 405.70 376.05 325.35 307.39

Deducting taxes of 120.55 107.62 103.35 91.88

Proft after tax was 285.15 268.43 222.00 215.51

The proposed appropriations are:

Dividend 163.77 142.48 163.77 142.48

Corporate dividend tax 33.60 27.21 33.60 27.21

General reserve 22.20 21.55 22.20 21.55

Balance carried forward is 65.58 77.19 2.43 24.27

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211 (3C) of the Companies Act, 1956 (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of applicable rules of The Companies (Indian Accounting Standards) Rules, 2015) and the relevant provisions of the Companies Act, 1956 / Companies Act, 2013, as applicable and guidelines issued by the Securities and Exchange Board of India ("SEBI"). There are no material departures from the prescribed norms stipulated by the Accounting Standards in preparation of the Annual Accounts. Accounting policies have been consistently applied except where a newly issued accounting standard, if initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. Management evaluates all recently issued or revised accounting standards on an ongoing basis. The Company discloses consolidated and standalone financial results on a quarterly basis of which standalone results are subjected to limited review and publishes consolidated and standalone audited financial results on an annual basis.

a) Consolidated operations

Revenue from the consolidated operations of your Company for the year was Rs. 1,423.16 crore, 11% higher than Rs. 1,277.07 crore in the previous year. Overall operational expenses for the year were Rs. 1,017.46 crore, against Rs. 901.01 crore in the previous year. Operating Profit (EBITDA) improved to Rs. 442.82 crore, against Rs. 412.17 crore, in the previous year. Profit after Tax for the year at Rs. 285.15 crore, 20% of revenue, was higher by 6% over Rs. 268.43 crore, 21% of revenue, in the previous year.

b) Standalone operations

Revenue from the standalone operations of your Company for the year was Rs. 1,000.70 crore, 7% higher than Rs. 935.41 crore in the previous year. Overall operational expenses for the year were Rs. 675.35 crore, against Rs. 628.02 crore in the previous year. Operating Profit (EBITDA) improved to Rs. 349.38 crore, against Rs. 331.31 crore, in the previous year. Proft after Tax for the year at Rs. 222.00 crore or 22% of revenue, was 3% higher than Rs. 215.51 crore or 23% of revenue, in the previous year.

A detailed analysis on the Company's performance, both consolidated and standalone, is included in the "Management's Discussion and Analysis" Report, which forms part of this Annual Report.

DIVIDEND

The Directors recommend for approval of the members at the Annual General Meeting to be held on April 19, 2016, payment of Final Dividend of Rs. 7 per equity share and Special Dividend of Rs. 3 per equity share of face value of Re. 1 each for the year under review. During the year, the Company paid three interim dividends, first two interim dividends of Rs. 4 each and the third interim dividend of Rs. 5 per equity share of face value of Re. 1 each. The total dividend for the year works out to Rs. 23 per share (including a Special Dividend of Rs. 3 per share) on a face value of Re. 1 per share in 2015 as against Rs. 20 per share (including a Special Dividend of Rs. 4 per share) on a face value of Re. 1 per share in the previous year.

TRANSFER TO RESERVES

The appropriations for the year are:

(Rs. in Crore)

Particulars Consolidated Standalone

Year Ended December 31, 2015

Net proft for the year 285.15 222.00

Balance of Reserve at the 113.37 113.37 beginning of the year

Transfer to General 22.20 22.20 Reserve

Transfer to Capital (0.05) (0.05) Redemption Reserve

Used towards buy back of (3.65) (3.65) equity shares

Balance of Reserve at 131.87 131.87

the end of the year

BUYBACK OF SHARES

During year, the Company had sought the approval of shareholders to buy-back its own fully paid equity shares of Re. 1/- each ("Equity Share"), through the stock exchange mechanism prescribed under the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 1998 ("Buy-back Regulations") and the Companies Act, 2013 ("Act"), for an amount not exceeding Rs. 102 crore (Rupees One Hundred and two crore only) (hereinafter referred to as the "Maximum Offer Size"), (being less than 15% of the total paid- up equity capital and free reserves of the Company as per last standalone audited balance sheet as on December 31, 2014), at a price not exceeding Rs. 2,310/- (Rupees Two Thousand Three Hundred and Ten only) per Equity Share (hereinafter referred to as the "Buy- back") from the open market through BSE Limited and the National Stock Exchange of India Limited in accordance and consonance with the provisions contained in the Act and the provisions contained in the Buy-back Regulations.

The Company conducted a postal ballot seeking the approval of the shareholders for buy-back of shares. The result of the postal ballot was declared on June 15, 2015. The votes cast in favour of the resolution for the buy-back were 99.98% of the total valid votes polled and the special resolution for buy-back was thus passed with requisite majority.

The Buy-back commenced from July 2, 2015. The Company bought back 5,11,932 equity shares for a total consideration of Rs. 101.98 crore at an average price of Rs. 1,992.02 per share. In terms of the Buy-back Regulations, after expending 99.98% of the total approved amount of Rs. 102 crore towards the Buy-back, the Buy- back was closed on July 14, 2015.

The equity share capital of the Company before the Buy- back was 7,14,50,520 equity shares of Re. 1 each and after extinguishment of 5,11,932 equity shares, the equity share capital of the Company was 7,09,38,588 equity shares of Re. 1 each.

INCREASE IN ISSUED, SUBSCRIBED AND PAID-UP EQUITY SHARE CAPITAL

During the year, the Company issued and allotted 3,63,980 equity shares of the Company to eligible employees on exercise of options granted under Employee Stock Option Schemes of the Company. At the end of the year, the issued, subscribed and paid–up capital of the Company at the end of the year was 7,12,09,103 equity shares of Re. 1 each.

The movement of share capital during the year was thus, as under:

Particulars No. of shares Cumulative allotted / outstanding (extinguished) capital (No. of shares of FV Re. 1 each)

Capital at the beginning - 7,13,57,055

of the year i.e. as on January 1, 2015

Allotment of shares to 93,465 7,14,50,520 employees on exercise of options granted under Employee Stock Option Scheme, 2011 and Employee Stock Option Scheme, 2012

Extinguishment of shares (5,11,932) 7,09,38,588 consequent to buy back Allotment of shares to 2,70,515 7,12,09,103 employees on exercise of options granted under Employee Stock Option Scheme, 2011, Employee Stock Option Scheme, 2012 and Employee Stock Option Scheme, 2014 Capital at the end of - 7,12,09,103

the year i.e. as on December 31, 2015

REVIEW OF OPERATIONS 2015

A. RATINgS

Highlights

- Announced 3,312 new Bank Loan Ratings (BLRs) during the year; total BLRs outstanding exceed 13,776 Assigned over 16,000 SME ratings during the year

- Conducted a series of high profile franchise activities during the year that received wide coverage in media and were also well appreciated by our stakeholders

- Provided enhanced support through Global Analytical Centre (GAC) to Standard & Poor's Ratings Services by expanding Risk and Regulatory support; further engaged with other MHFI businesses that included deepening support for Plats

Business environment

India's economic and business environment remained subdued during 2015 due to weak investment demand and delay in decision-making by corporate. However, growth has picked up pace on the back of a modest recovery in consumption and increased government spending. We expect GDP growth to be 7.4% in FY16 on account of moderate improvement in capacity utilization rates. However, revival of private investments is expected only by the second half of next fscal. Also, the Seventh Central Pay Commission pay-outs could be an additional booster for consumption and growth in the next fiscal.

Credit growth of India's banking sector remained muted at 11.1% year-on-year (y-o-y) as of December 2015. Poor monsoon, muted investments, weak working capital demand, rising risk aversion owing to deteriorating asset quality of public sector banks, and an increase in cheaper funds raised via commercial papers slowed credit off take. We expect a gradual pick-up in banks' credit towards the end of FY16, driven by a rise in retail loans, public sector investments and finance requirements of small scale enterprises. Overall, banking sector credit growth is projected to increase to 11-12% by March 2016 vis-à-vis 10% in FY15.

The capital market witnessed an increase in activity in the third quarter of the year due to falling interest rates in line with easing policy rates. However, base rates of banks saw much weaker transmission; issuances were primarily driven by refinancing of debt and not by the need for capital investment. Hence the bond market which saw a big leg up in quarter three was again subdued in the last quarter. We believe the Reserve Bank of India (RBI) will keep policy rates unchanged for the rest of this fiscal unless inflation surprises on the downside. Additionally, the RBI is addressing the issue of weak transmission of its repo rate cuts in to lending rates of banks by fixing banks' base rate determination methodology on marginal cost of funds from April 2016. We believe that growth in capital market issuances will be linked to the pace of change in lending rates of banks and investment demand pick-up.

In 2015, CRISIL's BLR business witnessed a muted growth due to weak credit off take in the manufacturing sector and intensified competition. These factors adversely impacted average realizations. While pricing pressures are likely to continue, expectation of a pick-up in credit growth in 2016 could result in an improvement in the BLR market.

SME Ratings were impacted due to reduced budgetary support by Government of India under the nSIC – Performance & Credit Rating Scheme. However, CRISIL continues to serve small and medium enterprises (SMEs) without subsidy from the government and there has been an uptick in volumes in second half of 2015 due to enhanced efforts taken to scale the business. The outlook for the SME sector remains positive, supported by favorable policy changes and initiatives such as MUDRA Bank, Make in India, Digital India and Smart Cities. Furthermore, CRISIL is carrying out extensive outreach initiatives to enhance awareness about the benefits of ratings, and to increase banks' acceptance of CRISIL's SME ratings. We believe these efforts will positively impact the business.

Operations

CRISIL Ratings maintained its market leadership in 2015 backed by strong performance in its bond ratings, bank loan ratings and SME ratings businesses. CRISIL announced 3,312 new BLRs and 16,000 SME ratings during the year. It has, to date, assigned more than 13,776 BLRs and over 91,000 SME ratings/assessments. This year, SME ratings/ assessments were focused on newer geographies such as the northeast region of the country. The SME business added new clients from the interiors of north and south India.

In 2015, CRISIL Ratings rated various innovative instruments in the corporate bond and securitization market. We rated a partially-guaranteed debenture issue of a passive infrastructure special purpose vehicle (SPV). We assigned the first highest-safety rating for a future-fow securitization of an interstate transmission service project. We also assigned rating on the borrowings of chit funds for the first time. In another unique example, CRISIL rated pass- through certificates that were backed by receivables from both retail as well as corporate loans, instead of them being usually backed only by securitized retail loans. All the above innovations were well received by the market, and are seen as significant milestones in deepening of the corporate bond market in India.

CRISIL Ratings continued to conduct regular outreach programmers aimed at providing insights on credit issues to investors and other market participants. The outreach programmers included opinion pieces, bankers' meetings, investor discussion forums, web-conferences, and newsletters.

CRISIL Ratings held the 3rd edition of its annual bond market seminar titled 'new Templates to Fund Growth', which focused on innovation in India's corporate bond market. We organized an investor discussion forum on the power sector to address some of the crucial industry issues faced by both corporate and lenders. Our analysis was well received by all stakeholders including regulators and policy makers.

Some high-impact franchise activities during 2015 included web-conferences on loan against property market, road sector, real estate market, apart from press releases on banking sector, telecom sector, etc. We also launched Credit Conversations, a bi-monthly newsletter that highlights noteworthy developments in the credit space. This publication received appreciation from our key stakeholders including clients and investors.

GAC continued to work closely with S&P, growing in new areas such as risk management and regulatory support, including model validation and documentation support while increasing the level of integration with S&P teams globally. With the evolving global regulatory requirements, GAC continued its focus on strengthening its internal controls framework, in collaboration with S&P's control functions. GAC's culture of continuous improvement has created ongoing efficiency gains for S&P through lean management tools, work standardization and process reengineering.

GAC also expanded its support to the larger MHFI family, including increased support to Plats, a leading global provider of energy, petrochemicals, metals and agriculture information, and a premier source of benchmark price assessments for those commodity markets. The focus this year was to grow beyond traditional credit skills and enhance new and niche areas including quantitative skills for S&P and product support for Plats.

B. RESEARCH

B.1. Global Research & Analytics (GR&A)

Highlights

- Financial Research and Risk & Analytics built a strong base across business segments driven by new opportunities arising out of the changing regulatory environment

- Risk & Analytics vertical registered strong business growth with addition of new customers and substantial expansion with existing clients

- In Corporate Research, the twin focus of new analytics solutions and strengthening our relationship with existing client accounts helped drive new business

- Coalition continued its tradition of product innovation, and has entered the Transaction Banking and Security Services industries to complete its offering to Corporate & Investment Banks

Business environment

2015 was another year of subdued growth for the global economy. As a result, the size of the investment banking industry has reached its lowest level since the global financial crisis of 2008-09 with fixed income products at the same level as in 2005. Banks are also actively transforming their front, middle and back-office activities to provide differentiated services, achieving cost efficiencies and increasing productivity: This has resulted in a large portion of the derivatives business being shifted to captives and other cheaper (cost-friendly) off shoring entities. On the brighter side, increasing regulatory changes have opened up newer opportunities for CRISIL GR&A, especially in the Risk & Analytics vertical as well as Coalition. The Coalition Index, which tracks the performance of the top 10 global investment banks, is expected to decrease by 2%. It is a telling barometer of the performance of the global investment banking industry. In 2015, Fixed Income Currency and Commodities (FICC) revenues declined by 6% (following a 4% decrease in 2014). Revenues from equity products provided some relative relief with an increase of 12% (following a decrease of 5% in 2014), while investment banking revenues from mergers & acquisitions, and debt and equity markets decreased by 4% (following a growth of 11% in 2014).

In Financial Research, we have added clients across business segments of buy-side, sell-side and credit risk. The majority of the incremental business has come from new areas and/or clients. There was excellent demand for our services from buy-side, especially from traditional managers, insurance companies and hedge funds. Our sell-side business witnessed increasing demand from our existing clients on change mandates driven by a tougher regulatory environment. Our Credit Risk business gained from new opportunities related to risk management from financial institutions due to increased regulatory oversight globally.

The Risk & Analytics vertical continued to see good demand from banks in areas such as stress testing, model validation and regulatory change initiatives. new regulations such as the Fundamental Review of the Trading Book (FRTB) as well as increased demand for our services with banks and financial institutions in the areas of operational risk, credit risk, market risk, compliance analytics and risk infrastructure support have been growth drivers. Specific opportunities such as the US DFAST/CCAR requirements continue to drive banks to make investments in risk modeling and model validation.

In Corporate Research, we were faced with a challenging business environment. Due to shrinking client budgets and restricted spend, making inroads into new client accounts was a challenge. This necessitated increased on-ground presence with frequent outreach across regions – showcasing our CI (Competitive Intelligence) and DA (Data Analytics) capabilities. Further, we have shifted our focus from supporting Strategy and Marketing functions, where client spends are discretionary, to core functions of clients such as Operations and Sales. With this objective in mind, we have launched multiple new services, where we expect to see traction in coming years.

Operations

In Financial Research, we embarked on several initiatives to accelerate growth, maximize value to clients, increase sales effectiveness, optimize costs, and fortify our brand globally – all of which has enhanced our competitiveness. We have significantly increased our market presence, which buoyed growth in a tough business environment. We also undertook several thought leadership initiatives targeting traditional active asset managers, insurance companies, hedge funds, investment banks and regulators across continents, which received excellent response and reinforced our position as an industry leader. Our global research centers continue to scale up, with Poland benefiting from regulation-driven-change mandates, and China building on its growth momentum due to increased demand for Asia research support.

In Risk & Analytics, investments in previous years have put us on an ideal footing to capitalize on the new requirements coming up in areas such as compliance analytics, counterparty credit risk and IFRS9 modeling etc. In the past year, we have been able to expand our business in all geographies including Poland and Argentina with several key new project additions or expansion of existing client teams. We continue to invest in our human capital with several training and other learning & development initiatives to keep up pace with the ever-changing global regulatory requirements and client mandates.

In Corporate Research, we introduced new analytics solutions and ensured consistent outreach that helped us win multiple mandates from both existing and new clients. Analytics has recorded strong pick-up in the areas of customer, marketing, operations - HR in particular and sales analytics, and we are accordingly ramping-up team strength to meet the increased demand.

In 2015, Coalition added several clients among the top 25 global corporate and investment banks and is now working with all of the top 15 investment banks and more than 20 corporate & investment banks. Coalition delivered a strong performance, driven by its core Competitor and Client Analytics, which reported solid growth. newer analytics such as Cost/Operating Margin and RWA/Exposure have performed well. Clients are increasingly looking at comprehensive return on equity analysis of their performance across Revenue, Cost and Capital. Coalition has also launched its first analysis of the Transaction Banking and Security Services industries to offer a comprehensive view for Corporate and Investment Banks. Its media strategy has delivered very good results, leading to an estimated media market share of over 40%.

B.2. India Research Highlights

- Maintained its dominant and premium position in its flagship Industry Research business Introduced our pioneering Security Level Valuations to insurance companies and won mandates

- Our assessments of coal block bidding and potential impact of GST shaped thinking on the issues. We sensitized the industry on importance of better investment planning amid new provident fund investment reforms.

- Stepped up engagement with regulators and industry associations significantly.

Business environment

The depressed investment cycle and weak banking sector performance, on the back of poor credit growth, high nPAs and squeezed profitability, impacted research budgets. Consequently, the growth of the Industry Research business remained modest. The Customized Research business was impacted due to decline in private sector investments for the third year in a row. CRISIL Research maintained its high quality independent research and won repeat business from existing and large global clients.

Economic revival is expected in the latter half of 2016 and CRISIL Research is well positioned to assist banking, financial services and corporate through its proprietary research and training products.

The assets under management of mutual funds grew 23% over last year and the Research business was at the forefront, providing qualitative research on investments. Changing market dynamics open up new opportunities with corporate treasuries, exempt trusts and offshore investors and these will be our focus for 2016. The business will also focus on building new products around investment research and investment risk management.

Therefore, we will continue to focus on enhancing our existing offerings, launching new products with more granular and action-oriented research, and increasing our client engagement initiatives, keeping a sharp tab on our franchise activities that showcase our differentiated positioning in the market.

Operations

During the year CRISIL Research launched many new, enhanced products. The new version of 'Ratings Analytics' (CRISIL's unique web-based platform providing information on ratings) was launched with enhanced features and received positive customer response. We also rolled out new products focused on corporate clients in Automobiles and Logistics sectors. With continued rising interest in SME lending, we have increased our focus on this space by enhancing our offerings.

We increased outreach and traction in the offshore category for valuations and customized indices. Continued focus on increasing outreach with corporate (treasuries and exempted trusts) helped gather considerable momentum in the same.

CRISIL Research released a co-branded report with Financial Intermediaries Association of India on distribution industry titled 'Indian Financial Distribution Industry at the Cusp - Vision 2020'. We also released a report on the provident funds sector titled 'Whither Safety net When India Ages'. Driving its thought leadership agenda further, CRISIL Research was a knowledge partner at many industry events including ASSOCHAM (Associated Chambers of Commerce and Industry) conferences on provident funds where we released reports titled 'Provident Funds in Equity: Emulating Global Trends' and 'Giving Provident Funds the Equity Boost'; the Economic Times Pension and Retirement Beneft Summit where we released a White Paper on retirement industry.

We were also chosen to represent and become members of various sub committees under the Securities and Exchange Board of India (SEBI) and Pension Fund Regulatory and Development Authority (PFRDA).

We conducted more than 100 open programmers in 2015, compared with 80 in 2014 for the Executive Training business. By launching more programmers per month with new focus areas across locations, the total number of training days increased from 455 days in 2014 to 675 in 2015.

The CRISIL Centre for Economic Research (C-CER) continued to focus on conducting distinctive research on macroeconomic issues and published several landmark reports during the year. There were seven special reports in its series Economy Insight covering contemporary macroeconomic issues such as the pension challenge, impact of deficient rains and farm stress, inflation dynamics, external trade, rupee volatility, India's ability to face global shocks, consumption and investment dynamics and direct benefit transfer scheme of the government.

C-CER published a study on the need for pension reforms in India. The report envisaged that India's aged population would treble to 300 million by 2050 and fiscal drag on the central government on providing for this segment could increase by 120 basis points times to 3.4% of GDP, while leaving large segment of the retired population financially insecure if corrective steps are not taken now. The emphasis on social security and adequate pension resonated in the Union Budget presented in Parliament in February 2015.

CRISIL released 'Modified Expectations', a report evaluating the economy-related performance of the narendra Modi-led government as it completed one year in office. The report integrated the views of Research and Ratings with a macroeconomic assessment to come out with a 360-degree view of the economy. The report received excellent response from media, clients and other stakeholders C-CER released 'Angsty farms', a report evaluating the impact of rising weather-related shocks on India's agriculture, which remains highly vulnerable. The report received very good response from various stakeholders. We also hosted a successful webinar and a twitter chat on the report.

These reports helped build CRISIL Research's franchise among investors and policymakers, reaffirming its position as a thought leader in the macro economy and policy space.

C. INFRASTRUCTURE ADVISORY AND RISK SOLUTIONS

CRISIL conducts its infrastructure advisory and risk solutions business through its subsidiary, CRISIL Risk and Infrastructure Solutions Limited (CRIS).

C.1. CRISIL Infrastructure Advisory Highlights

- Supported the Indian government on some of their flagship programmers such as Smart Cities Mission, Power for All, Urbanization, and Indian Railways

- Successfully built a strong order book with several large mandate wins

- Deepened penetration in select international markets in Africa and Southeast Asia

Business environment

India's infrastructure sector faces several challenges. Even though several new infrastructure programmers and policy initiatives have been launched by the government, the investment climate has not yet picked up. Infrastructure financing remains a key challenge, and the government is working on a few structural changes in regards to funding of infrastructure development. The private sector, which was expected to play a key role in infrastructure development, is still extremely wary of investments in the sector. Meanwhile, the government has been working to create a more conducive business environment and has been undertaking various reforms for sustainable economic growth. Outside India, Africa and Southeast Asia have begun to show positive progress.

It is expected that the Government of India will take up the lion's share of infrastructure investments over the next couple of years. The government has launched quite a few large and visionary programmers, and the focus is likely to shift to their implementation and sustainability. This has created several hotspot opportunities in the infrastructure advisory space, and the business is looking at supporting the Indian government on several of these programmers. The key is how quickly the government is able to rollout various reforms and implement them on the ground.

In the international markets, Africa continues to show progress, albeit at a very slow pace. The business is involved closely with infrastructure development in key African markets, especially east Africa. Some emerging markets in south-east Asia and the SAARC countries show promise in the near future.

Operations

CRISIL Infrastructure Advisory started the year slowly but picked up momentum in the second half of the year. We won several large and prestigious mandates in India and in the international markets as well. This has helped the business to build up a robust order book, which is significantly larger than previous years. We have maintained steady revenue growth with improved margins.

Our focus on government, and multilateral agencies as clients has paid off. The infrastructure advisory business is proud to support several flagship programmers of the Indian government, viz., Smart Cities Mission, Power for All, Urbanization, national Solar Mission, northeast regional development, and funding of Railways' investments.

We worked closely with the Ministry of Power in preparing the roadmap for 24 x 7 Power for All by 2019 for 11 states and union territories. CRISIL Infrastructure Advisory was the frst consultant appointed for this programmed. In the energy sector, we also supported Ministry of Petroleum & natural Gas (MoPNG) and Directorate General of Hydrocarbons (DGH) in preparing the hydrocarbon vision document for the northeast. Another prestigious mandate with the Petroleum Planning and Analysis Cell involved preparing a comprehensive master plan for increasing and scaling up the coverage of LPG usage in the country.

CRISIL Infrastructure Advisory won an important mandate with the World Bank to support the Ministry of Rural Development in rolling out the Shyama Prasad Mukherjee Rurban Mission. On the Smart Cities Mission programmed, the business won mandates with five cities in Maharashtra, to assist them in preparing proposals for the Smart Cities Challenge. The business has also got the mandate from World Bank on proposing a Railways Development Fund to support the investment plan of Indian Railways. The business is also supporting the karnataka government on its state highways improvement programmed.

CRISIL Infrastructure Advisory had a higher share of international business in the year, as compared to the previous year. The business won several large mandates in Africa and Southeast Asia, including an Urban Water Supply and Sanitation management project, energy improvement programs in Africa, and a Regional infrastructure development fund project in a leading south-east Asian country.

C.2. CRISIL Risk Solutions (CRS) Highlights

- Focused on consolidation through investments in products.

- Witnessed good traction for model development and credit risk management services with several mandates from banking and non-banking clients.

- Continued to expand footprint in South-Asia, Middle- East and other new geographies.

Business environment

The business environment continued to witness improved traction during the year in India. With increasing focus on strengthening credit risk management and monitoring, demand from banks for both our Early Warning System (EWS) and Credit Processing System (CPS) continues. Momentum in CRS's rating solution and models business continued in India and other emerging markets. The overall business pipeline and visibility for 2016 is good.

Operations

2015 was a year of consolidation with investments in various products. These investments made to strengthen the product base are expected to play a key role in the expansion and growth of the business and significantly contribute to revenues over the next 3 years.

The new channels of business through partnerships began to yield good results with significant mandate wins in the Middle East and Sri Lanka. These partnerships and plans for increased collaboration within MHFI should help growth and deepen business penetration in the international markets.

Apart from new products, investments are being planned to upgrade our old stack of products to newer technology platforms and also develop mobile-based applications for them. We anticipate faster proliferation of mobile-based applications in financial services and have, therefore, taken measures to enter this space early. Also, there were several process initiatives undertaken during the year to standardize the implementation of projects to improve quality, and reduce implementation costs and timelines.

The business development team continued to build CRS's franchise. We were knowledge partners for the Small Business Banking network workshop in Goa in January where the Deputy Governor of the Reserve Bank of India was the chief guest. We spoke at several banking forums such as the ASSOCHAM conference on SME financing, and a financial services round table. We organized a webinar on effective credit monitoring and undertook a training session on effective credit risk management for the senior management of a leading government financing entity. We will continue to invest time and money in building our franchise in the coming years.

CRS expects to maintain its growth momentum in 2016 and anticipates revenue to be driven by newer products. The investments made in products and structure should provide much needed impetus to drive the business growth in India and international markets.

D. COLLABORATION WITH S&P

In 2015, we deepened our engagement with Standard & Poor's for outreach initiatives in different geographies. An S&P - CRISIL joint seminar, 'India – Grinding up amidst challenges', was organized for investors in Hong Kong and Singapore. The discussions at the seminar revolved around India's macro-economic overview and outlook, the road ahead for India's sovereign rating, views on the credit quality of Indian companies and the outlook for key sectors. We also collaborated with S&P this year on their flagship event 'India through the lens of global financial markets' in Mumbai. The speakers made presentations on major credit trends and outlook for India Inc. from a global perspective, and the event was appreciated by investors and issuers alike.

As part of our joint outreach initiatives, we also organized a breakfast meeting for S&P Asia-Pacific Chief Economist Paul Grunewald and S&P US Chief Economist Beth Ann Bovino to exchange notes on the Indian and global economy. CRISIL Chief Economist Dharmakirti Joshi participated as a panelist in the Global Economic Outlook Conference in New York sponsored by the McGraw Hill Financial Global Institute. He was also the keynote speaker at S&P Dow Jones Indices' annual thought leadership seminar 'India: Truly emerging' held in Mumbai.

S&P hosted our special report 'Modified Expectations' on the S&P Global Credit Portal. In addition, C-CER continued to provide an outlook on the Indian economy to S&P and contributed two articles on India in S&P's bi-annual publication 'Global Economic Outlook'. CRISIL and S&P jointly hosted the post–budget webinar.

Following their success in the Middle East, S&P Capital IQ and CRISIL Risk Solutions continue to collaborate successfully in other regions to expand their global footprint. In 2015, they also tasted our first joint success in kazakhstan. The two companies commenced their relationship in 2011-12 with one project in Saudi Arabia; it has since progressed to over eight projects over the last three years across six countries. In 2015, they are currently delivering two key projects in kuwait and kazakhstan that, we believe, will provide the required impetus in these new markets for future growth. The success in the Middle East needs to be translated in other regions and the focus of 2016 will be to create synergies on products and markets to create value globally.

E. HUMAN RESOURCES

CRISIL's Human Resources team successfully ran its talent acquisition, retention and development agendas during the year. As on December 31, 2015, CRISIL's headcount was 3,753 including all its wholly owned subsidiaries.

Highlights

- CRISIL's senior management team was strengthened through hiring of leaders in strategic roles. CRISIL also continued to strengthen its campus programmed, which has been a key source of talent.

- Business HR partners helped drive employee engagement and people agenda across businesses and regions. key areas involved assimilation of new talent, performance management process, rewards and recognition and employee connect. The team was also instrumental in driving and executing various employee engagement and fun activities through the year.

- This year, the function focused hugely on training need identification. CRISIL conducted 116 training programmers throughout the year, covering 2,041 man- days.

- We had a rigor in implementation performance management by early closure of individual goals, higher objectivity in goal setting, mid-year review and leadership surveys.

SEGMENT-WISE RESULTS

The Company has identified three business segments in line with the Accounting Standard on Segment Reporting (AS- 17), which comprise: (i) Ratings, (ii) Research, (iii) Advisory. The audited financial results of these segments are provided as a part of financial statements.

DIRECTORS

The members of the Board of Directors of the Company are eminent persons of proven competence and integrity. Besides having financial literacy, experience, leadership qualities and the ability to think strategically, the Directors have a significant degree of commitment to the Company and devote adequate time for the meetings, preparation and attendance. Board members possess education, expertise, skills and experience in various sectors and industries required to manage and guide the Company.

The Policy of the Company on Directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of section 178, is appended as Annexure I to this Report.

CEO SUCCESSION AND DIRECTORSHIP CHANGES

During the year, Ms. Roopa kudva took early retirement as the Managing Director & Chief Executive Officer of the Company on April 30, 2015. Your Directors place on record their sincere appreciation of the valuable contribution made by her to CRISIL.

Ms. Ashu Suyash took over as the Managing Director & Chief Executive Officer of CRISIL. The Board approved her appointment as Additional Director and Managing Director & Chief Executive Officer with effect from june 1, 2015. The appointment of Ms. Ashu Suyash as director liable to retire by rotation and the terms and conditions of appointment were put up to the shareholders for their approval by way of postal ballot, results of which were announced on June 15, 2015. The shareholders approved the said resolution.

Mr. neeraj Sahai resigned as Director of the Company on October 17, 2015. Your Directors place on record their sincere appreciation of the valuable contribution made by him to CRISIL.

The Board of Directors appointed Mr. John Francis Callahan Jr. as an Additional Director of the Company with effect from October 18, 2015. Mr. john Callahan holds office as Additional Director until the ensuing Annual General Meeting, and is eligible for appointment as Director as provided under Article 129 of the Articles of Association of the Company. The Company has received notice under Section 160 of the Companies Act, 2013 from a member signifying her intention to propose the candidature of Mr. john Callahan for the offce of Director. A brief profile of Mr. john Callahan has been given in the notice convening the Annual General Meeting.

In accordance with the Articles of Association of the Company and the provisions of the Companies Act, 2013, Mr. Yann Le Palled retires by rotation and being eligible, seeks re- appointment.

BOARD INDEPENDENCE

Our definition of 'Independence' of Directors is derived from Regulation 16(b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 149(6) of the Companies Act, 2013. Based on the confirmation / disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are Independent :

a) Mr. H. N. Sinor

b) Mr. M. Damodaran

c) Dr. nachiket Mor

d) Ms. Vinita Bali

COMMITTEES OF THE BOARD

There are currently fve Committees of the Board, as under:

- Audit Committee

- Corporate Social Responsibility Committee

- Investment Committee

- Nomination and Remuneration Committee

- Stakeholders' Relationship Committee

Details of all the Committees, along with their charters, composition and meetings held during the year, are provided in the Report on Corporate Governance, a part of this Annual Report.

NUMBER OF MEETINGS OF THE BOARD

The Board meets at regular intervals to discuss and decide on Company / business policy and strategy, apart from other Board business. The Board / Committee Meetings are pre-scheduled and a tentative annual calendar of the Board and Committee Meetings is circulated to the Directors well in advance to facilitate them to plan their schedule and to ensure meaningful participation in the meetings. However, in case of a special and urgent business need, the Board's approval is taken by passing resolutions through circulation, as permitted by law, which are confirmed in the subsequent Board meeting.

The notice of Board meeting is given well in advance to all the Directors. Usually, meetings of the Board are held in Mumbai. The Agenda of the Board / Committee meetings is circulated at least a week prior to the date of the meeting. The Agenda for the Board and Committee meetings includes detailed notes on the items to be discussed at the meeting to enable the Directors to take an informed decision.

The Board met fve times in financial year 2015 viz., on February 14, April 17, April 28, july 17 and October 17. The maximum interval between any two meetings did not exceed 120 days.

ANNUAL EVALUATION BY THE BOARD

During the year, the Board has carried out the annual evaluation of its own performance as well as the evaluation of the working of its Committees and individual Directors, including Chairman of the Board. This exercise was carried out through a structured questionnaire prepared separately for Board, Committee and individual Directors.

The questionnaire for Board evaluation was prepared taking into consideration various aspects of the Board's functioning such as understanding of Board members of their roles and responsibilities, time devoted by the Board to Company's long-term strategic issues, quality and transparency of Board discussions, quality, quantity and timeliness of the information fow between Board members and management, Board's effectiveness in disseminating information to shareholders and in representing shareholder interests, Board information on industry trends and regulatory developments and discharge of fduciary duties by the Board.

Committee performance was evaluated on the basis of their effectiveness in carrying out respective mandates.

Peer assessment of Directors, based on parameters such as participation and contribution to Board deliberations, ability to guide the Company in key matters and, knowledge and understanding of relevant areas were received by the Board for individual feedback.

The Board acknowledged certain key improvement areas emerging through this exercise and action plans to address these are in progress. The performance evaluation of the Chairman was carried out by the Independent Directors at a separate meeting of the Independent Directors.

CHANGES TO KEY MANAGERIAL PERSONNEL

During the year, Ms. Roopa kudva took early retirement as a Managing Director & Chief Executive Officer of the Company on April 30, 2015. Ms. Ashu Suyash took over as the Managing Director & Chief Executive Officer of CRISIL with effect from June 1, 2015.

Mr. neelabja Chakrabarty resigned as the Company Secretary on February 27, 2015 and Ms. Minal Bhosale was appointed as the Company Secretary with effect from June 1, 2015.

RISK MANAgEMENT POLICY AND INTERNAL CONTROL ADEQUACY

The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures. The Company's internal control systems are commensurate with the nature of its business and the size and complexity of its operations. These are routinely tested and certified by Statutory as well as Internal Auditors. Significant audit observations and follow up actions thereon are reported to the Audit Committee. For ensuring independence of audits, the Internal Auditors report directly to the Audit Committee. Both Internal and Statutory Auditors have exclusive executive sessions with the Audit Committee on a regular basis. In addition, during the year, the Management performed a review of key financial controls, at entity as well as operating levels.

The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives which has been enhanced during this year. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Audit Committee and the Board of Directors of the Company. These have also been reported and discussed in detail in the Management's Discussion and Analysis Report, annexed to this report.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the Internal, Statutory and Secretarial Auditors and external consultants and the reviews performed by Management and the relevant Board committees, including the Audit Committee, the Board is of the opinion that the Company's internal financial controls were adequate and effective during the financial year 2015.

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors hereby confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

ii. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for that period;

iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. they have prepared the annual accounts on a going concern basis;

v. they have laid down internal financial controls for the Company and such internal financial controls are adequate and operating effectively; and

vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars regarding foreign exchange earnings and outgo appear as separate items in the notes to the Accounts. Since the Company does not own any manufacturing facility, the other particulars relating to conservation of energy and technology absorption stipulated in the Companies (Accounts) Rules, 2014 are not applicable.

However, in order to protect and conserve precious natural resources, following design aspects have been factored while designing CRISIL's office building in Mumbai.

a) Maximum day light in the office area to avoid artificial illumination.

b) Optimum usage of Air-conditioning.

c) Roof Top covering by adequate natural landscaping which acts as a thermal insulation to minimize the air- condition load on the foor beneath.

d) Usage of recycled water through sewerage treatment for fishing and gardening purpose.

The daily steps taken to reduce energy consumption are as follows.

a) Operating the air-conditioning equipment through the Building Monitoring system (BMS) which ensures that the A.C. units are switched on based on occupancy only.

b) In order to save energy and cost of recycling water, the key valve system has been set up for waterless sanitation systems.

Similar design aspects have been factored for Gurgaon offce also. The Pune SEZ (Hinjewadi) offce, which is of about 42,500 sq. ft., is designed with LED lighting. This gives higher savings in energy consumption as compared with the CFL lighting.

CORPORATE SOCIAL RESPONSIBILITY

The Company has constituted a Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of the Companies Act, 2013. The role of the Committee is to review the CSR Policy, indicate activities to be undertaken by the Company towards CSR and formulate a transparent monitoring mechanism to ensure implementation of projects and activities undertaken by the Company towards CSR.

The CSR Policy of the Company and further details about the initiatives taken by the Company on Corporate Social Responsibility during the year under review have been appended as Annexure II to this Report.

VIGIL MECHANISM

The Company has established a vigil mechanism for Directors and employees to report their genuine concerns, details of which have been given in the Corporate Governance Report annexed to this Report.

SUBSIDIARY COMPANIES

As on December 31, 2015, the Company had four Indian and seven overseas wholly owned subsidiaries. There has been no change in the number of subsidiaries or in the nature of business of the subsidiaries, during the year under review. In accordance with Section 129(3) of the Companies Act, 2013, the Company has prepared a consolidated financial statement of the Company and all its subsidiary companies, which is forming part of the Annual Report. A statement containing salient features of the financial statements of the subsidiary companies is also included in the Annual Report.

The Company has no associate companies within the meaning of Section 2(6) of the Companies Act, 2013.

In accordance with third proviso of Section 136(1) of the Companies Act, 2013, the Annual Report of the Company, containing therein its standalone and the consolidated financial statements has been placed on the website of the Company, www.crisil.com. Further, as per fourth proviso of the said section, audited annual accounts of each of the subsidiary companies have also been placed on the website of the Company, www.crisil.com. Shareholders interested in obtaining a copy of the audited annual accounts of the subsidiary companies may write to the Company Secretary at the Company's registered offce.

The Company has obtained a certificate from the Statutory Auditors certifying that the Company is in compliance with the FEMA regulations with respect to the downstream investments made in its subsidiary companies as operating during the year.

MERGER OF WHOLLY OWNED SUBSIDIARIES WITH THE COMPANY

In order to improve operating efficiencies, the Board of Directors of the Company in their meeting held on October 17, 2015, after considering the recommendations of the Audit Committee, approved the amalgamation of its three wholly owned subsidiary companies viz., Pipal Research Analytics and Information Services India Private Limited, Coalition Development Systems (India) Private Limited and Mercator Info-Services India Private Limited, with the Company through a Scheme of Amalgamation (Scheme) under Section 391/394 of the Companies Act, 1956 subject to necessary approvals of the Stock Exchanges and sanction of the Hon'ble High Court of judicature at Mumbai.

The Company has received, in terms of Clause 24(f) of the erstwhile Listing Agreement, observation letters, dated December 31, 2015 from nSE (national Stock Exchange of India Limited) and December 30, 2015 from BSE (BSE Limited), the Stock Exchanges where the equity shares of the Company are listed, to the draft Scheme of Amalgamation conveying their no Objection for filing the Scheme with the Hon'ble High Court.

The petition seeking sanction of the proposed Scheme by Hon'ble High Court has already been fled and will come up for hearing in due course in 2016.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1)

A significant quantum of related party transactions undertaken by the Company is with its subsidiary companies engaged in product delivery of CRISIL businesses and business development activities. The Company has also been providing analytical support to McGraw Hill Financial Inc. (MHFI) entities as a part of a Master Services Agreement, which transaction has been approved by the shareholders though a resolution passed by postal ballot on December 15, 2014.

The Audit Committee pre-approves all related party transactions. The details of the related party transactions undertaken during a particular quarter are placed at the meeting of the Audit Committee held in the succeeding quarter.

All contracts / arrangements / transactions with related parties that were executed in 2015 were in the ordinary course of business and at an arms' length. During the year, there were no related party transactions which were materially significant and that could have a potential confect with the interests of the Company at large. All related party transactions are mentioned in the notes to the accounts. The particulars of material contracts or arrangements with related parties referred to in Section 188(1), is given in prescribed Form AOC - 2 as Annexure III.

As required under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated a Related Party Transactions Policy, which has been put up on the website of the Company at http://www. crisil.com/investors/corporate-governance.html.The Company has developed an operating procedures manual for identification and monitoring of related party transactions.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

Details of loans, guarantees and investments covered under the provisions of section 186 of the Companies Act, 2013 are provided in the notes to Financial Statements.

AUDITORS' APPOINTMENT

At the last Annual General Meeting of the Company, the Statutory Auditors, S. R. Batliboi & Co. LLP, Chartered Accountants, were appointed for a term of two years until the conclusion of the 30th Annual General Meeting, subject to ratification by the shareholders at the intermittent 29th Annual General Meeting.

The Company has received letter from them to the effect that their appointment, if ratified, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified from appointment.

The Board recommends ratification of their appointment from the conclusion of this Annual General Meeting up to the conclusion of next Annual General Meeting of the Company.

SECRETARIAL AUDIT REPORT

The Board of Directors of the Company has appointed Dr. k. R. Chandratre, Practicing Company Secretary to conduct the Secretarial Audit and his Report on Company's Secretarial Audit is appended to this Report as Annexure Iv.

COMMENTS ON AUDITORS' REPORT

There are no qualifications, reservations or adverse remarks or disclaimers made by S. R. Batliboi & Co. LLP, Statutory Auditors, in their report and by Dr. k. R. Chandratre, Company Secretary in Practice, in his secretarial audit report.

The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review.

MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT

The Management's Discussion and Analysis Report for the year under review, as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, is annexed to this report.

CORPORATE GOVERNANCE

The Company is committed to maintaining the highest standards of Corporate Governance and adhering to the Corporate Governance requirements as set out by Securities and Exchange Board of India. The Report on Corporate Governance as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Annual Report. The Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforementioned Listing Regulations is also published elsewhere in this Annual Report.

PARTICULARS OF REMUNERATION

During the year, 78 employees received remuneration of Rs. 6 million or more per annum. In accordance with the provisions of Section 197(12) of the Companies Act, 2013 and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees are available at the Registered Office of the Company during working hours for a period of 21 days before the Annual General Meeting and shall be made available to any shareholder on request. Such details are also available on your Company's website, http://www.crisil.com/investor/financial-reports.html.

Disclosures with respect to the remuneration of Directors and Employees as required under Section 197(12) of Companies Act, 2013 read with Rule 5(1) Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 have been appended as Annexure v to this Report.

The nomination and Remuneration Committee of the Company has affirmed at its meeting held on February 9, 2016 that the remuneration is as per the remuneration policy of the Company.

EMPLOYEE STOCK OPTION SCHEMES

The Company has three employee stock option schemes. The Employee Stock Option Scheme - 2011 (ESOS 2011) was approved by the shareholders vide a special resolution passed through postal ballot on February 4, 2011. The Employee Stock Option Scheme - 2012 (ESOS 2012) was approved by the shareholders vide a special resolution passed through postal ballot on April 10, 2012. The Employee Stock Option Scheme - 2014 (ESOS 2014) was approved by the shareholders vide a special resolution passed through postal ballot on April 3, 2014.

The summary information on ESOS 2011, ESOS 2012 and ESOS 2014 is provided as Annexure vI to this Report.

EXTRACT OF ANNUAL RETURN

The Extract of Annual Return as provided under Section 92(3) of the Companies Act, 2013 and as prescribed in Form no. MGT-9 of the rules prescribed under Chapter VII relating to Management and Administration under the Companies Act, 2013 is appended as Annexure vII.

DEPOSITS

The Company has not accepted any public deposits and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

LITIGATIONS

During the year under review, there were no significant or material orders passed by any regulatory / statutory authorities or courts / tribunals against the Company impacting its going concern status and operations in future.

FINANCIAL YEAR

The applications made by CRISIL and all its Indian subsidiary companies for seeking exemption from applicability of section 2(41) of the Act were approved by the Hon'ble Company Law Board during the year and accordingly, the Company and all its subsidiary companies, in India and across the world, would follow the calendar year as the financial year.

CEO & CFO CERTIFICATION

Certificate from Ms. Ashu Suyash, Managing Director & CEO and Mr. Amish Mehta, Chief Financial Officer, pursuant to provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, for the year under review was placed before the Board of Directors of the Company at its meeting held on February 9, 2016.

ACKNOWLEDGEMENTS

The Board of Directors wishes to thank the employees of CRISIL for their exemplary dedication and the excellence they have displayed in conducting the operations of CRISIL. The Board also wishes to place on record its sincere appreciation of the faith reposed in the professional integrity of CRISIL by customers and investors who have patronized its services. The Board acknowledges the splendid support provided by market intermediaries. The affiliation with Standard and Poor's has been a source of great strength. The Board of Directors also wishes to place on record its gratitude for the faith reposed in CRISIL by the Shareholders, Securities and Exchange Board of India, the Reserve Bank of India, the Government of India, and the state governments. The role played by the media in highlighting the good work done by CRISIL is deeply appreciated.

For and on behalf of the Board of Directors of CRISIL Ltd.



Douglas L. Peterson

Chairman

Mumbai, February 9, 2016 (DIN: 05102955)


Dec 31, 2014

Dear Member,

The Directors are pleased to present to you the 28th Annual Report of CRISIL Limited, along with the audited accounts, for the year ended December 31, 2014.

Financial performance

A summary of the Company''s financial performance in 2014:

Rupees in crore

Consolidated Standalone Particulars 2014 2013 2014 2013

Total income for the year was 1,277.07 1,147.28 935.41 832.18

Profit before depreciation, exceptional item 412.17 397.19 331.31 312.57 and taxes was

Deducting depreciation of 36.12 37.92 23.92 23.22

Profit before exceptional item was 376.05 359.27 307.39 289.35

Exceptional item - 65.89 - 99.36

Profit before tax was 376.05 425.16 307.39 388.71

Deducting taxes of 107.62 127.33 91.88 107.52

Profit after tax was 268.43 297.83 215.51 281.19

The proposed appropriations are:

Dividend 142.48 134.15 142.48 134.15

Corporate dividend tax 27.21 23.15 27.21 23.02

General reserve 21.55 28.12 21.55 28.12

Balance carried forward is 77.19 112.41 24.27 95.90

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211 (3C) of the Companies Act, 1956 (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of Rule 7 of The Companies (Accounts) Rules, 2014) and the relevant provisions of the Companies Act, 1956 / Companies Act, 2013, as applicable and guidelines issued by the Securities and Exchange Board of India ("SEBI"). Accounting policies have been consistently applied except where a newly issued accounting standard, if initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. Management evaluates all recently issued or revised accounting standards on an ongoing basis. The Company discloses standalone audited financial results on a quarterly and an annual basis, consolidated un-audited financial results on a quarterly basis and consolidated audited financial results on an annual basis.

a) Consolidated operations

Revenue from the consolidated operations of your Company for the year was Rs. 1,277.07 crore, 11% higher than Rs. 1,147.28 crore in the previous year. Overall operational expenses for the year was Rs. 901.01 crore, against Rs. 788.01 crore in the previous year. Operating Profit (EBITDA) was Rs. 412.17 crore, against Rs. 397.19 crore in the previous year. Profit after Tax (excluding exceptional item) for the year at Rs. 268.43 crore, 21% of revenue, was higher by 6% over Rs. 254.27 crore, 22% of revenue, in the previous year.

b) Standalone operations

Revenue from the standalone operations of your Company for the year was Rs. 935.41 crore, 12% higher than Rs. 832.18 crore in the previous year. Overall operational expenses for the year was Rs. 628.02 crore, against Rs. 542.84 crore in the previous year. Operating Profit (EBITDA) was Rs. 331.31 crore, against Rs. 312.57 crore in the previous year. Profit after Tax (excluding exceptional item) for the year at Rs. 215.51 crore, 23% of revenue, was higher by 6% over Rs. 204.17 crore, 25% of revenue, in the previous year.

A detailed analysis on the Company''s performance, both consolidated and standalone, is included in the "Management''s Discussion and Analysis" Report, which forms part of this Annual Report.

Voluntary disclosures under Companies Act, 2013

The provisions with respect to preparation of financial statements and Board''s Report under the Companies Act, 2013 are applicable for companies whose financial year had commenced on or after April 1, 2014. Since our financial year commenced on January 1,2014, the provisions with respect to preparation of financial statements and the contents of Board''s Report are not applicable to us for the year under review. We have, however, voluntarily made certain additional disclosures prescribed under the new Act in the Board''s Report.

Dividend

The Directors recommend for approval of the members at the Annual General Meeting to be held on April 17, 2015, payment of final dividend of Rs. 6 and a special dividend of Rs. 4 per equity share of face value of Re. 1 each for the year under review. During the year, the Company paid three interim dividends, first two interim dividends of Rs. 3 each and the third interim dividend of Rs. 4 per equity share of face value of Re. 1 each. The total dividend for the year works out to Rs. 20 per share on a face value of Re. 1 per share in 2014 (including a special dividend of Rs. 4 per share) as against Rs. 19 per share (including a special dividend of Rs. 6 per share) on a face value of Re. 1 per share in the previous year.

Increase in issued, subscribed and paid-up equity share capital

During the year, the Company issued and allotted 4,06,607 equity shares of the Company to eligible employees on exercise of options granted under Employee Stock Option Scheme - 2011 and 2,97,558 equity shares of the Company to eligible employees on exercise of options granted under Employee Stock Option Scheme - 2012. Consequently, the issued, subscribed and paid-up capital of the Company increased from 7,06,52,890 equity shares of Re. 1 each to 7,13,57,055 equity shares of Re. 1 each.

Review of operations - 2014

A. Ratings

Highlights

- Announced 3,245 new bank loan ratings (BLRs); total BLRs outstanding exceed 12,800

- Assigned 14,798 SME ratings during the year

- Introduced the CRISIL Analytical Excellence framework, based on four pillars, to establish a common understanding of what constitutes analytical excellence at CRISIL

- Provided enhanced support through Global Analytical Centre (GAC) to Standard & Poor''s Ratings Services and commenced support for Platts, another McGraw-Hill Financial business unit

Business environment

The Indian economy and business environment remained largely subdued during 2014, especially in the first half, owing to slowing demand and expectations of GDP growing at 5.5% for 2014-15 with limited investment by Indian corporates. Credit growth of the Indian banking sector has been low and is projected to be less than 10% for the financial year 2014-15.

The bond market witnessed moderate growth on account of sizeable issuances by large corporates and financial institutions to refinance their high-cost debt. However, the new Companies Act was introduced with stringent guidelines with respect to debt issuances, resulting in fewer companies approaching the bond market. The securitisation market also witnessed a slowdown for the second year running with continued regulatory uncertainty. While the RBI has not lowered interest rates, bond market yields have come down due to abundant liquidity, and we expect the bond market to see increased issuances in 2015.

In 2014, CRISIL''s BLR ratings witnessed strong growth. This was despite a challenging business environment due to weak credit off-take and increased competitive pressures impacting realisation adversely. While pricing pressures are likely to continue, expectation of a pick-up in investments in 2015 could result in an improvement in the BLR market.

SME ratings showed healthy volume growth in the backdrop of a challenging business environment and high interest rates. Enhanced awareness about the benefits of ratings, banks'' growing acceptance of CRISIL''s SME ratings, and CRISIL''s intensive outreach initiatives and expansion into new markets are expected to drive demand in 2015.

Operations

CRISIL Ratings maintained its market leadership in 2014 backed by strong performance in its bond ratings, bank loan ratings and SME ratings businesses. CRISIL announced 3,245 new BLRs and 14,798 SME ratings during the year. It has, to date, assigned more than 12,800 BLRs and over 75,800 SME ratings/assessments. This year, SME ratings/ assessments were focused on newer geographies like the North-East region. The SME business added new clients from the interiors of North and South India.

CRISIL Ratings also introduced the CRISIL Analytical Excellence framework. The framework is based on four pillars - Proprietary Tools & Frameworks, Multiple Levels of Transparency, Robust Processes, and Highest Level of Analytical Rigour - and establishes a common understanding of what constitutes analytical excellence, how CRISIL strives to achieve it, and how it enables us to stand apart in the market.

In 2014, CRISIL Ratings rated various innovative instruments in the corporate bond market, such as BASEL III Tier I Bonds and Infra Bonds. We also introduced Fund Management Capability Ratings for the mutual fund industry. In addition, CRISIL rated India''s maiden Commercial Mortgage Backed Securitisation (CMBS) transaction for a leading developer. This rating reflects CRISIL''s commitment to supporting innovation in the Indian bond market. Structures like CMBS provide a fine balance between the developers'' requirement for diversified funding and investors'' need for higher safety. All the above innovations were well received by the market, and are seen as significant milestones in the deepening of the corporate bond market in India.

CRISIL Ratings continued to conduct regular investor and market outreach programmes aimed at providing insights on credit issues. These initiatives included opinion pieces, bankers'' meetings, investor discussion forums and seminars which helped CRISIL reach out to relevant stakeholders, such as issuers and investors, across the country.

GAC continues to work closely with Standard & Poor''s Ratings Services, growing in new areas such as risk management, while increasing the level of integration with S&P teams across the corporate, infrastructure, financial services, public finance, and structured finance domains globally. GAC has steadily increased its value-addition to S&P, moving up the curve in terms of analytical and content support, and assisting S&P in implementing key projects. GAC''s culture of continuous improvement creates ongoing efficiency gains for S&P through automation, work standardisation and process reengineering.

GAC has also expanded its support to the larger McGraw-Hill Financial universe. In 2014, GAC began supporting Platts, a leading global provider of energy, petrochemicals, metals and agriculture information, and a premier source of benchmark price assessments for those commodity markets.

B. Research

B.1. Global Research & Analytics (GR&A)

(Includes Financial Research / Risk and Analytics (Irevna), Corporate Research and Coalition)

Highlights

- Innovations and new work-stream additions to our Risk & Analytics vertical in response to regulatory changes seen gaining traction with clients

- I n Corporate Research, a combination of product-based strategy and extensive market outreach generated growth momentum

- Coalition continued its tradition of product innovation, and now serves all the top 15 investment banks in the world

- CRISIL GR&A and Coalition collaborated to organise thought leadership seminars in London and New York titled ''Investment Banking: The Road Ahead''

Business environment

In 2014, the global economy witnessed another year of subdued growth. As a result, banks focused on re- assessing front, middle and back-office activities to provide differentiated services, achieve cost efficiency and increase productivity. This, coupled with increasing regulatory changes, opened up new opportunities for CRISIL GR&A, especially in the Risk & Analytics vertical. The Coalition Index that tracks the performance of the top 10 global investment banks is expected to be flat in 2014 after decreasing 4% in 2013. It is a telling barometer of the performance of the global investment banking industry. In 2014, Fixed Income Currency and Commodities - or FICC - revenues declined by 4% (following a 19% decrease in 2013). Similarly, revenues from equity products decreased 5% (following a strong growth of 24% in 2013), while investment banking revenues from mergers & acquisitions, and debt and equity markets surged by 11% (following a growth of 13% in 2013).

In Financial Research, we have added clients on both the buy and sell sides. A majority of the incremental business has come from new areas and new clients. There was excellent demand for our services from the buy-side, especially private equity and fixed-income research clients. We also saw positive traction from regional and mid-sized banks that were keen to partner high-end and bespoke service providers like us in order to sharpen their focus on offering differentiated services.

The Risk & Analytics vertical saw good demand as banks continued to face pressure from new regulations such as on fundamental review of trading book, data aggregation and reporting. US regulators, as part of the Comprehensive Capital Analysis and Review - or CCAR - exercise, focused on the qualitative aspect of submissions such as data integrity, model appropriateness and documentation.

In Europe, comprehensive stress testing returned after three years. This more-stringent regulatory regime has led to a global shortage of good quality risk-management talent, especially those with risk-modelling expertise.

In Corporate Research, an extensive market outreach plan coupled with a focus on productisation provided growth momentum during the year. With a balanced mix of introductory meetings and rigorous follow-ups, we have cemented relationships with existing clients, initiated fresh engagements, entered new geographies and gained traction for our products.

Global investment banks are increasingly making strategic choices on their business. This is creating business opportunities for Coalition. In the current uncertain and challenging environment, investment banks turn more than ever to Coalition to assess which product/region/client type to grow or exit and how to optimise scarce resources (capital and balance sheet). As a result, its Client Analytics and recently launched Return on Equity (RoE) Analytics are showing strong growth.

Operations

In Financial Research, we embarked on several initiatives to accelerate growth, maximise value to clients, increase sales effectiveness, optimise costs, and fortify our brand globally - all of which has enhanced our competitiveness. We have significantly increased our market presence and customer engagement, which buoyed growth in a tough business environment. We also undertook several thought leadership initiatives for hedge funds, private equity firms, investment bankers and regulators across continents which received excellent response and reinforced our position as an industry leader. Our global research centres continue to scale up, with China continuing its growth momentum and Argentina expanding its client roster and also moving to a larger facility to accommodate future expansion. Investments made in the past two years to add new work-streams in Risk & Analytics to cater to new regulatory requirements have begun paying off. We have quickly achieved scale in model development, model validation and stress-testing support and have added many clients in these areas.

We also hosted and sponsored multiple thought leadership events and summits, and made presentations at premier risk conferences such as the GARP Annual Summit and Risk Americas. This year, our annual regulator''s roundtable titled ''Conversation with the US Regulators'' was held in New York. Senior regulators from the US Federal Reserve and about 50 risk practitioners participated. CRISIL GR&A and Coalition collaborated to organise thought leadership seminars, titled ''Investment Banking: The Road Ahead'' in London and New York. These seminars brought the best of both teams'' expertise and analysis to our clients and were landmark global events for CRISIL.

In Corporate Research, our investments and efforts, including a new data analytics offering, are expected to deliver results in 2015. We kept focus through the year on skills development and quality initiatives.

In 2014, Coalition added several clients among the top 25 global investment banks and is now working with all of the top 15 investment banks. Coalition delivered a strong performance, driven by its core Competitor and Client Analytics, which reported solid growth, and the recently launched Cost /Operating Margins Analytics. Coalition continued its tradition of product innovation, and launched Balance Sheet/Leverage Ratio Analysis to complete its suite of RWA Analytics, as well as a new Cost/Operating Margin Analytics to complete its Revenue Analytics offerings. Coalition is now able to offer a comprehensive RoE analysis of investment banks by combining its Revenue, Cost and RWA Analytics. Its media strategy in each region has delivered very good result with more than 350 articles quoting Coalition and a resulting media market share estimated at more than 40%. Together with two conferences organised in London and New York in partnership with the GR&A business, this strategy has led to significant improvement in Coalition''s reach among current and prospective clients.

B.2. India research Highlights

- Released three new fixed-income indices including the Inflation-Indexed Government Securities (IIGS) Index, the first of its kind in India

- I ntroduced bond valuations for individual debt securities and now provides daily valuations for 4,000 securities, affirming our position as a key player in India''s capital markets

- Got a mandate from the Employees'' Provident Fund Organisation for the third time in a row to help it select and monitor the performance of fund managers

- Continued to focus on deepening coverage of niche sectors where research is not available easily; launched special one-time reports on three new sectors - NBFC, agriculture and iron ore

Business environment

The business environment remained subdued in the first half of 2014, but we have seen some green shoots emerging in the second half.

The Industry Research business grew at a steady pace despite significant profitability pressure on our banking-sector clients who constitute a major portion of our revenues. The Funds & Fixed Income business also continued to grow at a healthy rate due to increased sophistication and adoption of better practices like daily security-wise pricing for debt securities by market participants such as mutual funds and insurance companies.

However, the continuing slowdown in the economy and corporate investment cycle impacted the growth of Customised Research and Equity Research businesses as fewer projects were being commissioned and fund-raising activities declined.

Going forward, we believe that as the business environment improves, the profitability of the banking, financial services and insurance - or BFSI - segment will also improve, leading to greater demand for research and training support and a pick-up in the investment cycle will increase the demand for customised research.

Therefore, we will continue to focus on enhancing our existing offerings, launching new products, sharpening our communication about value proposition and increasing our client engagement initiatives. We will also increase our franchise activities to showcase differentiated offerings in the market place.

Operations

During the year, CRISIL Research continued its efforts to expand its client base and leverage its analytical capabilities to serve clients better.

Our flagship industry research product, www.crisilresearch. com, which provides near-real-time update on industry and economy, continued to be extensively used by clients. Since its launch in 2009, this online platform has increasingly synchronised with the internal processes of clients - as underscored by the 60%-plus increase in the average number of hits it has received per month, over the last one year.

We continued to expand our coverage of industries, and included niche and emerging sectors on which research is not easily available. We expanded our coverage to 86 sectors in 2014 from 70 earlier, and launched special one-time reports on the NBFC, agriculture and iron-ore sectors. The agriculture- sector report received excellent feedback from clients owing to the depth of its coverage.

In the Customised Research space, we continued to receive repeat business from existing clients, signalling the superior quality of our work. This was accompanied by an increase in the number of mandates received from multinationals looking to invest in India.

In the Capital Markets space, we launched three new indices, including the Inflation-Indexed Government Securities, or IIGS, Index. We also leveraged our domain expertise and analytical capabilities to increase penetration in mutual funds, corporate treasuries, provident funds and banks. Additionally, and for the third straight time, the Employees'' Provident Fund Organisation gave us the mandate to select and monitor the performance of its fund managers.

We also added 20 new modules to our Executive Training programme. The modules were based on a wide range of financial topics including capital markets. They will help broaden our product offerings and approach a more diversified set of clients.

The CRISIL Centre for Economic Research (C-CER) continued to focus on conducting distinctive research on macroeconomic issues and published several landmark reports during the year. There were seven special reports in its series ''Economy Insight'' covering contemporary macroeconomic issues such as the implications of interest rate cuts, employment, food wastage and inflation, goods and services tax, trade competitiveness, and growth possibilities in the short and medium run.

C-CER''s report ''Of growth and missed opportunity - What 5% / 6.5% / 9% GDP growth will mean for India in the next 5 years'' analysed growth possibilities and their ramifications for business and economy over the medium term. It also evaluated the implications of each of these growth outcomes for employment and poverty reduction.

C-CER also published two reports on employment, ''Hire & Lower: Slowdown compounds India''s job-creation challenge'' and ''What can a pro-jobs policy do for India" These reports assessed the challenge of generating jobs for India''s burgeoning young population and how to address it.

These reports helped build CRISIL''s franchise among media and policymakers and reaffirmed its position as a thought leader in the macro-economy and policy space.

C. infrastructure Advisory and Risk Solutions

CRISIL conducts its infrastructure advisory and risk solutions business through its subsidiary, CRISIL Risk and Infrastructure Solutions Limited (CRIS).

C.1. CRISIL Infrastructure Advisory Highlights

- Enhanced our engagement with government and multilateral agencies, both at the Centre and state, to align with the new government''s breakthrough agenda

- Won several marquee assignments in the urban infrastructure sector

- Deepened our focus on international business and investing in developing key markets in Africa

Business environment

The business environment in India was extremely challenging during the first half of calendar 2014 due to the general elections and adverse investment climate. With a new stable government at the Centre, things have improved significantly in the second half. Outside India, the economic situation in Indonesia, one of our key markets, was impacted through the year due to the prolonged Presidential elections. Africa showed positive progress, although the pace of infrastructure development remains extremely slow.

Various policy initiatives identified by the new government in the infrastructure sector look promising. The positive impact of the initiatives is likely to translate into investments and an improvement in the overall economic climate by the second half of 2015. The private sector is expected to play a major role in infrastructure development, and the new government is likely to address major challenges in financing frameworks and bottlenecks, to provide a renewed impetus to public-private-partnership (PPP).

Operations

Despite a challenging business environment through 2014, the business won several large and prestigious mandates, and has built up a significantly larger, more robust order book. The focus on increasing the size of orders continued, due to which the year saw a sharp increase in the average bid and mandate size. On the revenue side, there was modest growth over the previous year.

Focus on the eminence and outreach agenda was sharper during the year, both in India and Africa. We were nominated as a member of the Expert Group for the proposed ''Shyama Prasad Mukherji Rurban Mission'' in the Ministry of Rural Development. We were the knowledge partners of the Africa Public-Private-Partnerships (PPP): Investment and Development Summit in Ghana, and our team participated in the event as key speakers. We were special invitees at the Rajasthan Chief Minister''s workshop on creating an urban transformation blueprint for the state.

In addition, the business won prestigious assignments from multilateral agencies and governments. We are working on a large mandate with the Asian Development Bank (ADB) on the City Cluster Development Project in Bangalore. Another significant project with the ADB is to develop a Bond Guarantee Fund for India. We were deeply involved with the private sector in advising them on the recent City Gas Distribution (CGD) bids announced by Petroleum and Natural Gas Regulatory Board (PNGRB). We provided key inputs to the Ministry of Coal for the new coal block auction process.

The business has also built up a healthy order book to sustain growth during 2015.

C.2. CRISIL Risk Solutions (CRS)

Highlights

- Expanded our product suite beyond the traditional regulatory risk products are working to create two new products to help banks manage their loan lifecycle management - Early Warning Systems (EWS) and Credit Processing Systems (CPS)

- Obtained two large-ticket mandates for EWS, one from a leading private sector bank, and the other from one of the largest public sector banks in India

- Expanded our coverage to newer geographies in Africa and the Middle-East

Business environment

The business environment for the CRISIL Risk Solutions (CRS) business in India improved compared with last year. Portfolio management was in sharp focus as the banking sector witnessed further deterioration in asset quality. Consequently, there was demand for both, our Early Warning System (EWS) and Credit Processing System (CPS) services from banks in India. Our credit rating and credit processing systems were sought in the Middle-East and North Africa (MENA) region. It''s heartening to note that large banks in India and South Asia are looking to invest in integrated risk management solutions.

Operations

It was a year of growth for CRISIL Risk Solutions (CRS). The recovery was driven by investments in new products and new geographies. The new products have started to contribute significantly to the revenues in 2014. The revenue mix was geographically distributed across India, MENA, and South and South-East Asia.

Focused efforts were made towards creating new channels of business. We forged teaming agreements with two vendors in MENA and aspire to increase our share in these markets in the coming years. There were multiple transaction-level partnerships with systems integrators and product vendors alike, which enabled access to new opportunities.

Our EWS product drew interest from a cross-section of banks. The release of a Framework for Revitalising Distressed Assets in the Economy by the Reserve Bank of India in February 2014 provided an impetus for the same, and came as an affirmation of our investment in EWS. We received three EWS implementation mandates in 2014 - from the largest public and private sector banks in India and from a commercial bank in Nigeria. We also received mandates to implement CPS at two of the top three private sector banks in India and from the aforementioned bank in Nigeria. The demand for our flagship product RAM/ CRE has been steady, and we continue leveraging S&P Capital IQ to win mandates for CRE implementation in the MENA region.

Apart from new products, investments were made to upgrade our old stack of products to newer technology platforms and to develop mobile apps. We anticipate faster proliferation of mobile applications in financial services and have, therefore, taken measures to enter this space early. There were several process initiatives undertaken to standardise project implementation, improve quality and reduce implementation costs and timelines.

The business development team continued to build CRS''s franchise in India and abroad. We participated in multiple banking seminars conducted by CAFRAL on resolving stressed assets in banking books. We spoke at multiple banking forums conducted by SBBN in Turkey, FIBAC, ASSOCHAM and Infrastructure Financing. We will continue to invest time and money in building our franchise in the coming years.

CRS expects to maintain its growth momentum in 2015 and anticipates revenue to be driven by newer products. The business has been realigned to synchronise with changing product dynamics, and will continue to invest in new products. At the same time, we will look to expand our operations to new markets and customer segments to hasten growth.

D. Collaboration with S&P

In 2014, we deepened our engagement with Standard & Poor''s for outreach initiatives in different geographies. An S&P- CRISIL joint seminar, ''India - The Way Ahead'', was organised for investors in Hong Kong and Singapore. The discussions at the seminar revolved around the macro-economic overview and outlook for India, the road ahead for India''s sovereign rating, views on the credit quality of Indian companies and the outlook for key sectors. We also held an S&P-CRISIL roundtable in Mumbai, on ''Trends and Developments in Asia Pacific and Indian Insurance Industry''. The speakers'' presentations covered recent global and regional regulatory developments and their implications for insurers in India and the Asia-Pacific, credit trends in the Asia-Pacific insurance sector, an overview of the Indian general insurance industry and enterprise risk management trends.

As part of our joint outreach initiatives, we also organised a breakfast meeting for S&P Asia-Pacific Chief Economist Paul Gruenwald with senior Indian economists to exchange notes on the Indian and global economy.

S&P hosted our special report ''Of growth and missed opportunity'' on the S&P Global Credit Portal. In addition, C-CER continued to provide an outlook on the Indian economy to S&P and contributed two articles on India in S&P''s bi-annual publication - Global Economic Outlook.

The collaboration between S&P Capital IQ and CRISIL Risk Solutions to increase market outreach in the risk solutions arena continue to progress well in the Middle-East and Africa, with plans to expand our footprint in other regions. Synergies on products and methodologies are being explored for jointly creating value to customers globally.

E. Human Resources

CRISIL''s Human Resources team successfully ran its talent acquisition, retention and development agendas during the year. As on December 31, 2014 CRISIL''s headcount stood at 3,313.

Highlights

- CRISIL''s senior management team was strengthened through hiring of leaders in various domains, including business development.

- CRISIL''s Business Leadership Programme, designed in association with the University of Michigan''s Ross School of Business, focused on developing skills critical for enabling strategic thinking capabilities and strategic talent development. The programme was attended by 47 senior leaders of the organisation.

- Talent development and coaching programmes were further strengthened to make the process robust. Young leaders identified through ''The Young Leaders Development Programme'' launched last year were assigned mentors and projects. This group has gone through varied assignments aimed at providing necessary exposure to face future challenges.

- Global offices continued to build the CRISIL GR&A brand through partnership with premier universities, sponsorship of events, job fairs and others. CRISIL is looking at hiring from premier campuses internationally.

- The focus on employee development through training modules that were created in-house continued. More than 160 training programmes were conducted during the year, over 86% of them through in-house trainers and business leaders. The programmes added up to over 23,350 man- hours / 3,590 man-days of training.

- To strengthen the Performance Management Process and to link it to development goals, 360-degree leadership polls were conducted for all team managers and detailed analysis and feedback provided to them. This initiative has sharpened the feedback process and brought out clear development goals for the leaders.

Number of meetings of the Board

The Board meets at regular intervals to discuss and decide on Company / business policy and strategy apart from other Board business. The Board / Committee Meetings are pre- scheduled and a tentative annual calendar of the Board and Committee Meetings is circulated to the Directors in advance to facilitate them to plan their schedule and to ensure meaningful participation in the meetings. However, in case of a special and urgent business need, the Board''s approval is taken by passing resolutions through circulation, as permitted by law, which are confirmed in the subsequent Board meeting.

The notice of Board meeting is given well in advance to all the Directors. Usually, meetings of the Board are held in Mumbai. The Agenda of the Board / Committee meetings is circulated at least a week prior to the date of the meeting. The Agenda for the Board and Committee meetings includes detailed notes on the items to be discussed at the meeting to enable the Directors to take an informed decision.

The Board met four times in financial year 2014 viz., on February 14, April 17, July 18 and October 17. The maximum interval between any two meetings did not exceed 120 days.

Committees of the Board

During the year, in accordance with the Companies Act, 2013, the Board re-constituted some of its Committees and also formed a Corporate Social Responsibility Committee. There are currently five Committees of the Board, as follows:

- Audit Committee

- Corporate Social Responsibility Committee

- Investment Committee

- Nomination and Remuneration Committee

- Stakeholders'' Relationship Committee

Details of all the Committees along with their charters, composition and meetings held during the year, are provided in the "Report on Corporate Governance", a part of this Annual Report.

CEO succession

The Nomination and Remuneration Committee of the CRISIL Board of Directors is overseeing the search for a successor to Ms. Roopa Kudva, MD & CEO. Ms. Kudva has informed the Board of Directors of her intent to leave CRISIL after ensuring a smooth succession.

The Nomination and Remuneration Committee has engaged an executive search firm to conduct the search. All interested candidates, internal and external, will be assessed and evaluated objectively by the Committee.

Directors'' responsibility statement

Your Directors hereby confirm that:

i. In the preparation of the annual accounts for financial year ended December 31, 2014, the applicable accounting standards have been followed.

ii. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at December 31, 2014 and of the profit of the Company for the year ended on that date.

iii. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. The Directors have prepared the annual accounts for financial year ended December 31, 2014 on a ''going concern'' basis.

Board independence

Our definition of ''Independence'' of Directors is derived from Clause 49 of the Listing Agreement with Stock Exchanges and Section 149(6) of the Companies Act, 2013. Based on the confirmation / disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are Independent in terms of Clause 49 of the Listing Agreement and Section 149(6) of the Companies Act, 2013 :-

a) Mr. H. N. Sinor

b) Mr. M. Damodaran

c) Dr. Nachiket Mor

d) Ms. Vinita Bali

Company''s policy on Directors'' appointment and remuneration

The Policy of the Company on Directors'' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of section 178, is appended as Annexure I to this Report.

Comments on auditors'' report

There are no qualifications, reservations or adverse remarks or disclaimers made by S. R. Batliboi & Co. LLP, Statutory Auditors, in their report and by Dr. K. R. Chandratre, Company Secretary in Practice, in his secretarial audit report.

The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review.

Particulars of contracts or arrangements with related parties referred to in Section 188(1)

The particulars of contracts or arrangements with related parties referred to in Section 188(1), as prescribed in Form AOC - 2 of the rules prescribed under Chapter IX relating to Accounts of Companies under the Companies Act, 2013, is appended as Annexure II.

Transfer to reserves

The appropriations for the year are:

Rupees in crore

Consolidated Standalone

Year Ended December 31, 2014

Net Profit for the year 268.43 215.51

Balance of Reserve at the 91.82 91.82 beginning of the year

Transfer to General Reserve 21.55 21.55

Balance of Reserve at the 113.37 113.37 end of the year

Material changes and commitments affecting the financial position of the Company

There have been no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

Particulars regarding conservation of energy, technology absorption, and foreign exchange earnings and outgo

The particulars regarding foreign exchange earnings and outgo appear as separate items in the notes to the Accounts. Since the Company does not own any manufacturing facility, the other particulars relating to conservation of energy and technology absorption stipulated in the Companies (Accounts) Rules, 2014 are not applicable.

Risk management policy and internal adequacy

The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Audit Committee and the Board of Directors of the Company.

The Company''s internal control systems are commensurate with the nature of its business and the size and complexity of its operations. These are routinely tested and certified by Statutory as well as Internal Auditors. Significant audit observations and follow up actions thereon are reported to the Audit Committee.

Corporate Social Responsibility

The Company has constituted a Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of the Companies Act, 2013. The CSR Committee was constituted by the Board of Directors of the Company at its meeting held on February 14, 2014. The CSR Policy of the Company and the details about the development of CSR Policy and initiatives taken by the Company on Corporate Social Responsibility during the year as per annexure attached to the Companies (Corporate Social Responsibility Policy) Rules, 2014 have been appended as Annexure III to this Report.

Vigil mechanism

The Company has established a vigil mechanism for Directors and employees to report their genuine concerns, details of which have been given in the Corporate Governance Report annexed to this Report.

Annual evaluation by the Board

The evaluation framework for assessing the performance of Directors comprises of the following key areas:

i. Attendance of Board Meetings and Board Committee Meetings

ii. Quality of contribution to Board deliberations

iii. Strategic perspectives or inputs regarding future growth of Company and its performance

iv. Providing perspectives and feedback going beyond information provided by the management

v. Commitment to shareholder and other stakeholder interests

The evaluation involves Self-Evaluation by the Board Member and subsequently assessment by the Board of Directors. A member of the Board will not participate in the discussion of his / her evaluation.

Subsidiary Companies

As on December 31, 2014, the Company had four Indian and seven overseas wholly owned subsidiaries. There has been no change in the number of subsidiaries or in the nature of business of the subsidiaries, during the year under review. In accordance with Section 129(3) of the Companies Act, 2013, the Company has prepared a consolidated financial statement of the Company and all its subsidiary companies, which is forming part of the Annual Report. A statement containing salient features of the financial statements of the subsidiary companies is also included in the Annual Report.

In accordance with third proviso of Section 136(1) of the Companies Act, 2013, the Annual Report of the Company, containing therein its standalone and the consolidated financial statements has been placed on the website of the Company, www.crisil.com. Further, as per fourth proviso of the said section, audited annual accounts of each of the subsidiary companies have also been placed on the website of the Company, www.crisil.com. Shareholders interested in obtaining a copy of the audited annual accounts of the subsidiary companies may write to the Company Secretary at the Company''s registered office.

Directors and key managerial personnel

Mr. David Pearce resigned as Director of the Company on October 17, 2014. Your Directors place on record their sincere appreciation of the valuable contribution made by him to CRISIL.

During the year, Mr. Ravinder Singhania ceased to be Alternate Director to Mr. Douglas L. Peterson, Mr. Yann Le Pallec and Mr. David Pearce with effect from July 18, 2014. He was appointed as Alternate Director to Mr. Douglas L. Peterson under Companies Act, 2013 with effect from the same date.

The Board of Directors appointed Mr. Neeraj Sahai as an Additional Director of the Company with effect from October 17, 2014. Mr. Neeraj Sahai holds office as Additional Director until the ensuing Annual General Meeting, and is eligible for appointment as Director as provided under Article 129 of the Articles of Association of the Company. The Company has received notice under Section 160 of the Companies Act, 2013 from a member signifying her intention to propose the candidature of Mr. Neeraj Sahai for the office of Director. A brief profile of Mr. Neeraj Sahai has been given in the Notice convening the Annual General Meeting.

In accordance with the Articles of Association of the Company and the provisions of the Companies Act, 2013, Mr. Douglas L. Peterson retires by rotation and being eligible, seeks re-appointment.

During the year, Mr. Dinesh Sharma resigned as the Chief Financial Officer of the Company on May 21,2014. Mr. Amish Mehta has been appointed as the Chief Financial Officer of the Company with effect from October 3, 2014. Further, Ms. Roopa Kudva is the Managing Director & Chief Executive Officer of the Company and, Mr. Neelabja Chakrabarty is the Company Secretary.

Auditors'' appointment

The Statutory Auditors, S. R. Batliboi & Co. LLP, Chartered Accountants, hold office up to the ensuing Annual General Meeting and being eligible, offer themselves for re- appointment. The Board recommends their re-appointment for a term of two consecutive years from the conclusion of this Twenty Eighth Annual General Meeting up to the conclusion of Thirtieth Annual General Meeting of the Company in the calendar year 2017, subject to ratification of their appointment in the intermittent Annual General Meeting to be held in calendar year 2016. The Company has received letter from them to the effect that their appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified from appointment.

Secretarial audit report

The Board of Directors of the Company has appointed Dr. K. R. Chandratre, Practising Company Secretary, to conduct the Secretarial Audit and his Report on Company''s Secretarial Audit is appended to this Report as Annexure IV.

Management''s Discussion and Analysis Report

The Management''s Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is annexed to this report.

Corporate Governance

The Company is committed to maintaining the highest standards of Corporate Governance and adhering to the Corporate Governance requirements as set out by Securities and Exchange Board of India. The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under Clause 49 is also published elsewhere in this Annual Report.

Particulars of remuneration

During the year, 65 employees received remuneration of Rs. 6 million or more per annum. In accordance with the provisions of Section 197(12) of the Companies Act, 2013 and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees are set out in the annexure to the Directors'' Report. In terms of the provisions of Section 136(1) of the Companies Act, 2013, the Directors'' Report is being sent to the shareholders without this annexure. Shareholders interested in obtaining a copy of the annexure may write to the Company Secretary at the Company''s registered office.

The Nomination and Remuneration Committee of the Company has affirmed at its meeting held on February 14, 2015 that the remuneration is as per the remuneration policy of the Company.

Employee Stock Option Schemes

The Company has three employee stock option schemes. The Employee Stock Option Scheme - 2011 (ESOS 2011) was approved by the shareholders vide a special resolution passed through postal ballot on February 4, 2011. The Employee Stock Option Scheme - 2012 (ESOS 2012) was approved by the shareholders vide a special resolution passed through postal ballot on April 10, 2012. The Employee Stock Option Scheme - 2014 (ESOS 2014) was approved by the shareholders vide a special resolution passed through postal ballot on April 3, 2014.

The details of options granted under ESOS 2014 and the summary information on ESOS 2011, ESOS 2012 and ESOS 2014 are provided as Annexure V to this Report.

Deposits

The Company has not accepted any public deposits and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

Financial year

Section 2(41) of the Companies Act, 2013 has defined "financial year" as the period ending March 31 for all companies and bodies corporate. However, if a company which is a holding company or a subsidiary of a company incorporated outside India and is required to follow a different financial year for consolidation of its accounts outside India, it can make an application to National Company Law Tribunal (NCLT) or Company Law Board (till NCLT is formed) to have a different financial year.

CRISIL is a subsidiary of McGraw Hill Financial Inc. (MHFI) which follows calendar year as its financial year. CRISIL had changed its financial year from March 31 to December 31 in the year 2005 so as to have a uniform accounting year with MHFI. The above referred section mandates that the companies / bodies corporate should align its financial year within two years from the date of notification of the section, that is on or before March 31, 2016. As CRISIL intends to continue to follow calendar year as its accounting / financial year, the Company will make an application to Company Law Board to seek necessary exemption from applicability of section 2(41) of the Act.

CEO & CFO certification

Certificate from Ms. Roopa Kudva, Managing Director & CEO and Mr. Amish Mehta, Chief Financial Officer, pursuant to provisions of Clause 49(V) of the Listing Agreement, for the year under review was placed before the Board of Directors of the Company at its meeting held on February 14, 2015.

A copy of the certificate on the financial statements for the financial year ended December 31, 2014 is annexed along with this Report.

Acknowledgements

The Board of Directors wishes to thank the employees of CRISIL for their exemplary dedication and the excellence they have displayed in conducting the operations of CRISIL. The Board also wishes to place on record its sincere appreciation of the faith reposed in the professional integrity of CRISIL by customers and investors who have patronised its services. The Board acknowledges the splendid support provided by market intermediaries. The affiliation with Standard and Poor''s has been a source of great strength. The Board of Directors also wishes to place on record its gratitude for the faith reposed in CRISIL by the Securities and Exchange Board of India, the Reserve Bank of India, the Government of India, and the state governments. The role played by the media in highlighting the good work done by CRISIL is deeply appreciated.

For and on behalf of the Board of Directors of CRISIL Limited

Douglas L. Peterson

Chairman

Mumbai, February 14, 2015


Dec 31, 2013

The Directors are pleased to present to you the 27th Annual Report of CRISIL Limited, along with the audited accounts, For the year ended December 31, 2013.

PERFORMANCE

A summary of the Company''s Financial performance in 2013:

(Rupees in crore)

Particulars Standalone Consolidated 2013 2012 2013 2012

Total income For the year was 832.18 759.25 1,147.28 998.10

Profit before depreciation and taxes was 312.57 294.21 397.19 348.01

Deducting depreciation of 23.22 23.92 37.92 34.32

Profit before exceptional item 289.35 270.29 359.27 313.69

Exceptional item 99.36 - 65.89 -

Profit before tax was 388.71 270.29 425.16 313.69

Deducting taxes of 107.52 77.42 127.33 93.29

Profit after tax was 281.19 192.87 297.83 220.40

The proposed appropriations are:

Dividend 134.15 112.32 134.15 112.32

Corporate dividend tax 23.02 18.22 23.15 18.34

General reserve 28.12 19.29 28.12 19.29

Balance carried Forward is 95.90 43.04 112.42 70.45

DIVIDEND

The Directors recommend For approval of the members at the Annual General Meeting to be held on April 17, 2014, payment of Final Dividend of Rs. 4 and a Special Dividend of Rs. 6 per equity share of Face value of Re. 1 each For the year under review. During the year, the Company paid three interim dividends of Rs. 3 each per equity share of Face value of Re. 1 each. The total dividend For the year works out to Rs. 19 per share on a Face value of Re. 1 per share in 2013 (including a Special Dividend of Rs. 6 per share) as against Rs. 16 per share (including a Special Dividend of Rs. 3 per share) on a Face value of Re. 1 per share in the previous year.

VOLUNTARY OPEN offer BY MCGRAW HILL FINANCIAL, INC.

During the year, McGraw Hill Financial, Inc. ("MHFI"), through its subsidiary McGraw-Hill Asian Holdings (Singapore) Pte Limited, announced a Voluntary Open offer to the shareholders of CRISIL Limited under Regulation 6 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 to acquire up to 15,670,372 equity shares, representing 22.23% of the total equity shares outstanding in CRISIL Limited, at a price of Rs. 1,210 per share.

The offer was made by McGraw-Hill Asian Holdings (Singapore) Pte Limited ("the acquirer") along with S&P India LLC, Standard & Poor''s International LLC and McGraw Hill Financial, Inc., in their capacity as "Persons acting in Concert" with the acquirer.

The tender period under the offer was From July 24, 2013 to August 6, 2013. The total number of shares tendered under the offer was 10,623,059 representing 15.07% of the share capital of the Company. Consequently, the shareholding of MHFI increased From 52.77% to 67.84% of the share capital of the Company.

INCREASE IN ISSUED, SUBSCRIBED AND PAID- UP EQUITY SHARE CAPITAL

During the year, the Company issued and allotted 402,080 equity shares of the Company to eligible employees on exercise of options granted under Employee Stock Option Scheme - 2011 and 15,070 equity shares of the Company to eligible employees on exercise of options granted under Employee Stock Option Scheme - 2012. Consequently, the issued, subscribed and paid-up capital of the Company increased From 70,235,740 equity shares of Re. 1 each to 70,652,890 equity shares of Re. 1 each.

SALE of SHAREHOLDING IN INDIA INDEX SERVICES AND PRODUCTS LIMITED

During the year, CRISIL sold its equity shareholding in India Index Services and Products Limited (IISL), CRISIL''s joint venture with the National Stock Exchange of India Limited. CRISIL sold 637,000 equity shares of IISL of Face value Rs. 10 each, representing 49% of the total equity share capital of IISL, to NSE Strategic Investment Corporation Limited For a total consideration of Rs. 100 crore.

REVIEW of OPERATIONS - 2013 A. RATINGS

Highlights

Announced 3,106 new bank loan ratings (BLRs); total BLRs outstanding exceed 12,100

Assigned 12,857 SME ratings during the year

Increased support to Standard & Poor''s through Global Analytical Centre (GAC), adding more groups and more complex analytical requirements on a larger scale

Business Environment

The Indian economy and business environment remained subdued during 2013 owing to slowing demand, high inflation and tight liquidity, made worse in the second half by a volatile rupee and high interest rates. All this meant a weak investment climate - with large projects getting deferred - and subdued debt markets.

Bond market issuances saw a trend reversal - the volume dropped 13% in the First half of this year compared with a 39% growth seen in the year ending March 31, 2013, primarily due to a decrease in issuances From the regular issuers. But in a sign of structural strengthening of the bond market, the number of issuers accessing the bond market increased, led by private sector players.

The securitisation market sagged in 2013 because lack of clarity on taxation issues curbed investor appetite For structured paper.

BLRs, however, continued to show healthy growth, with numerous small corporate opting For ratings despite the sluggish environment. The BLR market is expected to remain buoyant due to the growing trend among small companies, of getting their loans rated.

The bond market could rebound in the latter half of 2014 if expectations of a stable domestic business environment, higher growth and lower interest rates materialise. Measures taken by policymakers and regulators to develop the bond

CRISIL Ratings instituted several innovations aimed at development of the corporate bond market in 2013. We rated India''s First: Basel Ill-compliant Tier-ii bond : Inflation-indexed debenture Infrastructure debt fund - NBFC market and the improving macroeconomic environment are expected to strengthen the market''s long-term prospects.

SME ratings showed healthy growth during the year despite the challenging business environment. Enhanced awareness about the benefits of ratings, banks'' growing acceptance of CRISIL''s SME ratings, and CRISIL''s intensive outreach initiatives and expansion into new markets are expected to drive demand in 2014.

Operations

CRISIL Ratings maintained its market leadership in 2013 backed by strong performance in its bond ratings, bank loan ratings and SME ratings businesses. CRISIL announced 3,106 new BLRs and 12,857 SME ratings during the year. It has till date assigned more than 15,600 BLRs and 60,000 SME ratings/assessments. CRISIL Real Estate Star (CREST) Ratings has been well accepted in the real estate sector

CRISIL announced 3,106 new BLRs and 12,857 SMG ratings during the year. It has till date assigned more than 15,600 BLRs and 60,000 SMG ratings/assessments. and witnessed significant demand this year, with leading developers across cities choosing to get their projects rated by CRISIL.

In 2013, CRISIL Ratings rated various innovative instruments in the corporate bond market, such as India''s First Basel III- compliant Tier-II bond, the First inflation-indexed debenture, the First 50-year rupee bond and the First infrastructure debt Fund through the NBFC route. These innovations were well received by the market and are seen as significant milestones in the deepening of the corporate bond market in India.

CRISIL Ratings continued to conduct regular outreach programmes aimed at providing insights on credit issues to investors and market participants. These included opinion pieces, bankers'' meetings, investor discussion Forums and seminars which helped CRISIL reach out to relevant stakeholders including issuers and investors across the country.

GAC continues to be closely integrated with Standard & Poor''s Ratings Services, extending the scope of its support into areas such as risk and rating operations, deepening the engagement in structured Finance ratings, and broadening the scope of support in Europe and the Asia-Pacific.

B. RESEARCH

B.1. Global Research & Analytics (GR&A)

[Includes Financial Research / Risk & Analytics (Irevna), Corporate Research and Coalition]

Highlights

Added large and marquee clients including a number of buy-side and private equity Firms, global Financial institutions and corporate

Investments in the Risk & Analytics vertical and a product-based go-to-market strategy in Corporate Research are providing impetus to new client addition Coalition grew strongly by adding new global investment banks as clients and successfully launching new products

Business Environment

In 2013, the global economic environment remained subdued despite an improvement over 2012. The European economy remained weak with no near-term signs of recovery, while the US economy was on a recovery path. In 2013, the global banking industry remained stressed with lower profitability despite recovery in trading volumes in certain asset classes. Banks are Focusing on improving cost-to-income ratios of their businesses, which led to stretched decision cycles, tough pricing negotiations and tight client budgets.

The Coalition Index that tracks the performance of top 10 global investment banks For 2013 was down 4% after growing 10% in 2012. It is a strong barometer of the performance of the global investment banking industry. The Coalition Index 2013 total revenues of USD 153 billion continue to be Far behind the year 2009 number of USD 223 billion. In 2013, Fixed Income Currency and Commodities (FICC) revenues declined by 19% (grew by 20% in 2012) as the European Central Bank canned Long Term Refinancing Operations (LTRO) and institutional activity decreased. In contrast, 2013 revenues From equity products surged by 24% after a 6% decline witnessed in 2012. Equity as an asset class returned the best results since 2010. In 2013, Investment Banking revenues From mergers and acquisition, debt capital markets and equity capital markets grew by 13% after a modest growth of 1% in the previous year.

In the Financial Research vertical, we witnessed several client additions on the buy-side. We also continued to pursue a number of mid-tier and regional banks across the globe. Addition of mid-tier banks to the client roster in 2012 augmented role additions in 2013.

The continued Focus and introduction of new service offerings in the Risk & Analytics vertical, has resulted in a number of clients engaging with us For our services to help mitigate the challenges they are Facing due to rapid regulatory changes. Building on the First-mover advantage in the global markets and derivatives space, we have quickly achieved scale in new work streams such as model validation and stress-testing support.

During the year, a revised go-to-market strategy provided growth momentum in the Corporate Research vertical. A mid- year launch of web-based products using CRISIL''s proprietary Frameworks resulted in positive client responses and additions to the client base.

In 2013, Coalition delivered a strong performance driven by its core Competitor and Client Analytics, which reported solid growth, and the recently launched RWA (Risk Weighted Assets) Analytics, which enjoyed a strong start. A comprehensive media strategy in each region has delivered results, leading to significant improvement in our reach among prospective clients. Coalition added new clients among the top 20 global investment banks and renewed its exclusive relationship with a leading consulting Firm.

Operations

Investments made in 2012 towards new approaches - sales team, work streams and go-to-market strategies - began showing results in 2013. This has led to an expansion of our existing customer base, addition of clients in newer work streams and strengthening of relationships with existing clients. We also took a number of steps to manage costs through pruning of database costs, reduction in IT and infrastructure costs by consolidating research centers and tighter control of headcount.

In the Risk & Analytics vertical, we built scale of operations in model validation and stress-testing by hiring number of subject experts, developing robust training modules and putting in place strong process and quality measures. These steps have resulted in positive client Feedback and opened new avenues of engagement.

In Corporate Research, we took steps to productise the institutional knowledge built over the years by serving global Fortune 500 companies in the areas of Key Account Management and Competitive Intelligence. We launched two new products in the market - COMPASS, a key account management product, and CI 360, a competitive intelligence tool. Both products are built on strong analytical Frameworks that provide actionable insights to clients. The Feedback From clients on these has been very positive.

Coalition continued its tradition of new product innovation and launched Risk Weighted Assets (RWA) product that witnessed a strong start. Coalition continued to grow its existing suite of analytics products by adding a number of new clients.

Our global research centers continue to scale up. The China research centre grew rapidly in 2013. We have expanded our client roster in Argentina and moved into a larger Facility to accommodate growth plans.

This year also saw a series of high-impact thought-leadership initiatives on topical issues, that shape decision-making by our customers. Our global web conferences on critical topics saw active participation of Fund managers, research analysts, academicians and the media across the Americas, Europe and Asia. We hosted a roundtable conference on risk analytics and published a comprehensive report on risk and procurement analytics at the NASSCOM Big Data and Analytics Summit 2013. We have also initiated a relationship with a leading industry education body to produce research.

Our global research centers continue to scale up. The China research centre greuj rapidly in 2013. We have expanded our client roster in Argentina and moved into a larger Facility to accommodate growth plans.

B.2. India Research

Highlights

Launched ''Research Plus'' to Further enhance our leading, near-real-time web platform offering economy, industry and company research

Rolled out security-level valuations For the debt securities owned by mutual Funds Launched ''CRISIL-AMFI Mutual Fund Performance Indices'' jointly with the Association of Mutual Funds in India across Five categories

Business Environment

The business environment remained challenging, with the lowest GDP growth in a decade and a virtual halt in investments. This has impacted demand For research in India, which is seen as a discretionary expense. To counter this, we continued to Focus on enhancing our current offerings, launching relevant new products, sharpening our value proposition and increasing client engagement which will support growth in coming years. An expected improvement in the economic outlook in 2014 and a possible revival in the investment cycle augur well, too.

The slowdown in equity Fundraising and capital market activities impacted demand For equity research and IPO grading, while a sharp slowdown in corporate investment cycle impacted demand For customised research. On the other hand, industry research and Funds and Fixed-income research displayed steady growth.

Operations

CRISIL Research continued to proactively launch products that address the evolving market dynamics.

As part of our ongoing efforts to enhance the utility of our Flagship industry research product, we have added new premium content to our near-real-time web platform www.crisilresearch.com, offering economy, industry and company research. The new module, called Research Plus, offers additional Features, including sector-wise ratings data and important industry news with CRISIL Research''s commentary and sector-wise Financial aggregates.

We Focused on building capabilities in project viability studies. Our high-quality research and customer orientation is reflected in the repeat business that we have won From clients.

As a mark of our commitment to providing solutions that make markets Function better, we successfully rolled out security-level valuations For the debt securities owned by mutual Funds. Independent security-level valuations From CRISIL Research will ensure uniformity in prices used by mutual Funds For valuation of debt securities.

In addition, CRISIL Research and the Association of Mutual Funds in India (AMFI) jointly launched the CRISIL-AMFI Mutual Fund Performance Indices across Five categories to represent the performance of various mutual Fund categories and enable comparison with benchmarks across timeframes and market cycles.

The CRISIL Centre For Economic Research (C-CER) continued to Focus on research on the macroeconomic situation in India, consistently building CRISIL''s Franchise in Indian and global media, and positioning the company as the Foremost analytics- based commentator on the economy. C-CER published a number of high impact thought leadership articles covering a range of contemporary macroeconomic issues like Food security, GDP and standard of living across states which received wide recognition From market participants and the media.

C. INFRASTRUCTURE ADVISORY AND RISK SOLUTIONS

CRISIL conducts its infrastructure advisory and risk solutions business through its subsidiary, CRISIL Risk and Infrastructure Solutions Limited (CRIS).

C.1. CRISIL Infrastructure Advisory Business Highlights

Continued Focus on international business and working with multilateral agencies resulted in execution of a number of high-profile assignments Worked with central and state government departments in Formulating, advising and implementing plan and policies in the areas of urban development, coal, Food and power

Business environment

The economic environment in India continued to be challenging during the year, particularly For the infrastructure sector. Several projects were stuck, or made little progress, owing to lack of policy and regulation clarity, while the milieu impacted the viability of some others. The stress in the Financial sector compounded the challenges.

We won large and prestigious mandates in Indonesia, Laos and Vietnam in Southeast Rsia, and Tanzania, Malawi and Namibia in Africa.

The investments of USD 1 trillion envisaged in infrastructure in India during the 12th Five Year Plan period present a sizeable opportunity over a medium term. However, we expect a muted First halF in 2014, given the general elections. Investments in the infrastructure sector are likely to pick up only in the second half of the year as clarity emerges on key policies.

Operations

There was sharper Focus on Africa and Southeast Asia, which got a boost From long-term multilateral spending programmes this year. We won large and prestigious mandates in Indonesia, Laos and Vietnam in Southeast Asia, and Tanzania, Malawi and Namibia in Africa.

We saw a significant increase in the average ticket size of business won during the year Following better Focus and cherry-picking of mandates.

The business has also built up a healthy order book to sustain growth during 2014.

C.2. CRISIL Risk Solutions (CRS)

Highlights

Saw much success in new markets such as Egypt, Kuwait and Philippines

Launched a First-of-its-kind early warning solution, ''BRECON'', aimed at solving the critical issue of early detection of non-performing assets in the banking sector

Business environment

The overall business environment led to slower decision- making amongst potential clients, but there was increasing traction in the latter part of the year with banks expressing a need to implement risk management systems and Framework. CRS products and services across the risk spectrum are, therefore, likely to be in increasing demand, especially For improving the credit quality and assessment processes.

Operations

CRS maintained its Focus on both consulting and software solutions, and won 22 mandates in 2013.

CRS offerings enable banks to comply with regulatory risk requirements. CRS moved a step ahead by assisting banks in moving beyond compliance through its enhanced product suite of credit processing systems For loan life cycle management and a unique early warning system which proactively assists banks in identifying potentially delinquent accounts.

These products will help banks augment their best practices in credit risk management and have been developed by leveraging on CRISIL''s pedigree in credit risk assessment.

CRS reached out to newer markets across EMEA and Southeast Asia, got new mandates and built a strong pipeline For Future growth.

There were multiple Franchise initiatives undertaken during the year. CRS conducted a knowledge-sharing seminar on operational risk in Singapore which 46 banks attended. CRS was the lead speaker on Early Warning System in the Small Business Banking Network Seminar at Dubai which was attended by more than 60 banks. CRS also continued with its engagements with the Reserve Bank of India through presentations and training on risk management.

D. COLLABORATION WITH STANDARD & POOR''S

In 2013, CRISIL jointly organised a seminar with Standard & Poor''s titled ''The global economic outlook and its impact on the Indian capital markets''. The keynote address titled ''Global Economic Outlook'' was delivered by Paul Sheard, S&P''s Chief Global Economist. S&P''s Asia-Pacific Chief Economist Paul Gruenwald participated in a panel discussion titled ''How are Asian economic and sovereign trends shaping the Indian capital markets''. Ramraj Pai, President, CRISIL

CRS reached out to newer markets across GMGR and Southeast Rsia, got new mandates and built a strong pipeline For future growth.

Ratings, and Dharmakirti Joshi, Chief Economist, CRISIL, made presentations on the outlook For India''s debt markets and economy, respectively.

In addition, C-CER continued to provide an outlook on the Indian economy to S&P.

The collaboration between S&P Risk Solutions (now Capital IQ) and CRISIL Risk Solutions, which was initiated last year to jointly reach out to global markets, progressed well in 2013. We saw increased traction in newer geographies such as Saudi Arabia, Egypt and the UAE with large-ticket mandates From these regions this year. Leveraging on our synergies, we plan to expand our global Footprint with increased traction and business From both EMEA and Southeast Asia in 2014.

E. CONTINUING THE THOUGHT LEADERSHIP TRADITION

In 2013, we launched the CRISIL Inclusix, released the ''State of The Nation'' report and hosted the 2nd Annual bond market seminar that significantly enhanced the thought leadership position of CRISIL.

CRISIL Inclusix

In June, CRISIL launched Inclusix, an index that comprehensively measures Financial inclusion in India at the national, regional and district levels. It was launched by Honorable Finance Minister of India, Shri P. Chidambaram and Shri Rajiv Takru, Secretary, Department of Financial Services, Ministry of Finance at an event attended by leading representatives of the government and industry. The analytical excellence behind the index''s development and its usefulness in measuring and Furthering the cause of Financial inclusion in the country was well appreciated.

The State of The Nation report

In September, CRISIL released the ''State of The Nation'' report, a top-down-meets-bottom-up analysis using data From 2,481 CRISIL rated investment-grade companies across 70 sectors. The report was well appreciated For its incisive take on what was ''good'', ''bad'' and ''ugly'' about the Indian economy, and received widespread media coverage. Its timing - coming as it did in the middle of the raging national debate on stagnating growth - helped create a major impact.

Annual bond market seminar

CRISIL organised the 2nd Annual seminar on expanding India''s corporate bond market in November with the theme ''Financing India''s Future''. It was attended by around 300 senior executives and government Functionaries. The distinguished speakers included Shri U. K. Sinha, Chairman, Securities and Exchange Board of India (SEBI),

Dr. Arvind Mayaram and Dr. K. P. Krishnan, Secretary and Additional Secretary, respectively, the Department of Economic AFFairs, Ministry of Finance, Government of India and Shri R. K. Nair, Member (Finance), Insurance Regulatory Development Authority. Several corporate leaders also participated in two high-powered panel discussions organised at the event. CRISIL''s observations on the bond market and the way Forward resonated well with stakeholders and policymakers. We also released ''The CRISIL Yearbook On The Indian Debt Market 2013''.

F. HUMAN RESOURCES

Highlights

The CRISIL Young Leaders Development Programme was launched For mid-management employees. It aims to develop leaders through structured interventions, stretch assignments and mentoring.

Global ofFices continued to build the CRISIL GR&A brand through partnership with premier universities, sponsorship of events and job Fairs.

The Focus continued on employee development through in-house training modules. With over 97% of the programmes being delivered by in-house trainers and business leaders, it aggregated to over 23,298 man-hours or 3,883 Mondays, with over 693 training programmes conducted in the year.

Our talent development programme was strengthened with the Formation of a Talent Council, whose mandate is to draw up people strategies and ensure the leadership pipeline across the organisation stays robust. The Council reviewed progress made by individuals under different programmes twice during the year.

G. SUBSIDIARIES

As on December 31, 2013, the Company had Four Indian and seven overseas wholly owned subsidiaries. The Ministry of Corporate Affairs, Government of India, has granted a general exemption under Section 212 (8) of the Companies Act, 1956 From the requirement of attaching detailed Financial statements of each subsidiary. The Board of Directors has passed a resolution on October 18, 2013 For not attaching individual annual reports of its subsidiary companies to its Annual Report. In compliance with the exemption granted, a statement containing brief Financial details of these companies is included in the Annual Report. Annual accounts of subsidiary companies and related information will be made available to shareholders who seek such information.

H. DIRECTORS

CRISIL has made changes in its Board of Directors in January 2014 in view of the upcoming regulations which specify a maximum tenure of 10 years For independent directors. Even though this provision is applicable on a prospective basis and only once the new regulations come into Force, the Board of Directors of CRISIL Felt it would be important to Follow the spirit of the provision to maintain the highest standards of corporate governance. Accordingly, two independent directors, Mr. B.V. Bhargava and Ms. Rama Bijapurkar, who have spent more than 10 years on the Board of Directors of CRISIL, had stepped down.

Mr. B.V. Bhargava resigned as Director of the Company on January 13, 2014. Your Directors wish to place on record their sincere appreciation of the valuable contribution made by him to CRISIL.

Ms. Rama Bijapurkar resigned as a Director of the Company on January 13, 2014. Your Directors wish to place on record their sincere appreciation of the valuable contribution made by her to CRISIL.

The Board of Directors appointed Mr. M. Damodaran and Ms. Vinita Bali as Additional Directors of the Company with effect From January 14, 2014 and February 14, 2014 respectively. Mr. M. Damodaran and Ms. Vinita Bali hold ofFice as Additional Directors until the next Annual General meeting.

In accordance with the Articles of Association of the Company and the provisions of the Companies Act, 1956, Dr. Nachiket Mor, Mr. Douglas L. Peterson and Mr. Yann Le Pallec retire by rotation and being eligible, seek re-appointment.

I. AUDITORS

During the year under review, as per the internal policy of the statutory auditors, M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, wherein they rotate the partners For each of their clients aFter every 3-5 years, Mr. Jayesh Gandhi had replaced Mr. Shrawan Jalan as partner For reviewing the accounts of CRISIL.

M/s S. R. Batliboi & Co. LLP, Chartered Accountants, hold office up to the ensuing Annual General Meeting and being eligible, offer themselves For re-appointment.

The Board recommends their re-appointment.

J. MANAGEMENT''S DISCUSSION AND ANALYSIS REPORT

The Management''s Discussion and Analysis Report For the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is annexed to this report.

K. CORPORATE GOVERNANCE

The Company is committed to maintaining the highest standards of corporate governance and adhering to the corporate governance requirements as set out by SEBI. The report on corporate governance as stipulated under Clause 49 of the Listing Agreement Forms part of the Annual Report. The certificate From the auditors of the Company confirming compliance with the conditions of corporate governance as stipulated under Clause 49 is annexed to this report.

L. OTHERS L.1 Particulars Regarding Conservation of Energy, Technology Absorption, and Foreign Exchange Earnings and Expenditure Particulars regarding Foreign exchange earnings and expenditure appear as separate items in the notes to the Accounts. Since the Company does not own any manufacturing Facility, the other particulars relating to conservation of energy and technology absorption stipulated in the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are not applicable.

L.2. Particulars of Employees

During the year, 36 employees received remuneration of Rs. 6 million or more per annum. In accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 and the rules Framed there under, the names and other particulars of employees are set out in the annexure to the Directors'' Report. In terms of the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Directors'' Report is being sent to the shareholders without this annexure. Shareholders interested in obtaining a copy of the annexure may write to the Company Secretary at CRISIL''s registered office.

L.3. Directors'' Responsibility Statement as Required under the Provisions Contained in Section 217(2AA) of the Companies Act, 1956 Your Directors hereby confirm that:

(i) In the preparation of the annual accounts For Financial year ended December 31, 2013, the applicable accounting standards have been Followed.

(ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and Fair view of the state of affairs of the Company as on December 31, 2013 and of the profit of the Company For the year ended on that date.

(iii) The Directors have taken proper and sufficient care For the maintenance of adequate accounting records in accordance with the provisions of this Act For safeguarding the assets of the Company and For preventing and detecting Fraud and other irregularities.

(iv) The Directors have prepared the annual accounts For Financial year ended December 31, 2013 on a ''going concern'' basis.

Employee Stock Option Schemes

The Company has two employee stock option schemes. The Employee Stock Option Scheme - 2011 (ESOS 2011) was approved by the shareholders vide a special resolution passed through postal ballot on February 4, 2011. The Employee Stock Option Scheme - 2012 (ESOS 2012) was approved by the shareholders vide a special resolution passed through postal ballot on April 10, 2012.

Summary Information on ESOS 2011 and ESOS 2012 of the Company is provided as Annexure to this Report. The information is being provided in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended.

Acknowledgements

The Board of Directors wishes to thank the employees of CRISIL For their exemplary dedication and the excellence they have displayed in conducting the operations of CRISIL. The Board also wishes to place on record its sincere appreciation of the Faith reposed in the professional integrity of CRISIL by customers and investors who have patronised its services. The Board acknowledges the splendid support provided by market intermediaries. The affiliation with Standard & Poor''s has been a source of great strength. The Board of Directors also wishes to place on record its gratitude For the Faith reposed in CRISIL by the Securities and Exchange Board of India, the Reserve Bank of India, the Insurance Regulatory Development Authority, the Government of India, and the state governments. The role played by the media in highlighting the good work done by CRISIL is deeply appreciated.

For and on behalf of the

Board of Directors of CRISIL Limited

H. N. Sinor

Director*

Mumbai, February 14, 2014


Dec 31, 2012

Dear Member,

The Directors are pleased to present to you the 26th Annual Report of CRISIL Limited, along with the audited accounts for the year ended December 31, 2012.

PERFORMANCE

A summary of the Company''s financial performance in 2012:

Rupees in crore

Standalone Consolidated Particulars 2012 2011 2012 2011

Total income for the year was 759.25 682.17 998.10 849.78

Profit before depreciation and taxes was 294.21 269.15 348.01 305.23

Deducting depreciation of 23.92 21.68 34.32 29.83

Profit before tax was 270.29 247.47 313.69 275.40

Deducting taxes of 77.42 60.96 93.29 68.98

Profit after tax was 192.87 186.51 220.40 206.42

The proposed appropriations are:

Dividend 112.32 77.82 112.32 77.82

Corporate Dividend Tax 18.22 12.56 18.34 12.65

General Reserve 19.29 18.65 19.29 18.65

Balance carried forward is 43.04 77.48 70.45 97.29

DIVIDEND

The Directors recommend, for approval of the members at the Annual General Meeting to be held on April 18, 2013, payment of final dividend of Rs. 4 per share for the year under review. During the year, the Company paid three interim dividends of Rs. 3 per share each on face value of Re. 1 per equity share. In addition, the Company paid a Special Silver Jubilee Dividend of Rs. 3 per share on a face value of Re. 1 per share in 2012. The total dividend for the year works out to Rs. 16 per share on a face value of Re. 1 per share in 2012 as against Rs. 11 per share on a face value of Re. 1 per share in the previous year.

acquisition of coalition, uk-based analytics firm

On June 1, 2012, CRISIL entered into an agreement to buy, subject to statutory approvals, 100% of the equity shares of Coalition Development Limited, along with its subsidiaries (Coalition). Coalition, which has its headquarters in London, provides high-end analytics, mainly to leading global investment banks. Formed in 2002, Coalition is a dynamic high-growth company, firmly established as a premium brand. The transaction was completed on July 4, 2012, and Coalition has been consolidated with CRISIL with effect from this date.

Coalition deploys unique proprietary frameworks and algorithms to provide analytics on market size and dynamics, revenue opportunities and human capital. Coalition''s analytics provide a clear, actionable picture of the markets and are used by boards, strategy teams and top managements at leading financial services institutions.

INCREASE IN ISSUED, SUBSCRIBED AND PAID-UP EQUITY SHARE CAPITAL

During the year, the Company issued and allotted 1,77,300 equity shares of the Company to eligible employees on exercise of options granted under Employee Stock Option Scheme 2011. Consequently, the issued, subscribed and paid-up capital of the Company increased from 7,00,58,440 equity shares of Re. 1 each to 7,02,35,740 equity shares of Re. 1 each.

REVIEW OF OPERATIONS - 2012

A. RATINGS

Highlights

Announced 3,600 new bank loan ratings (BLRs); tally of BLRs outstanding exceeds 11,500

Assigned more than 10,000 small and medium enterprise (SME) ratings during the year Launched annual series of seminars for the bond market Increased support through Global Analytical Centre (GAC) to new business groups and meeting more complex requirements of analytics for S&P Ratings

Business Environment

The domestic environment remained challenging during 2012 with slowing demand, high inflation and interest rates, and tight liquidity. The global macroeconomic conditions deteriorated, with recession in the Eurozone, and slackening in the uS economy. These factors resulted in a weak investment climate, and subdued debt markets in India. The corporate bond market had very few new issuers. The securitisation market, however, revived in the second half of 2012, with issuers and investors getting accustomed to the new guidelines issued by the Reserve Bank of India. Bank Loan Ratings (BLRs) showed healthy growth over the previous year, with numerous small corporates opting for ratings, despite a sluggish overall business environment. The BLR market is expected to remain buoyant on the back of the growing trend among small companies to get their loans rated.

The bond market may remain sluggish in the first half of 2013, on account of slowdown in the global business environment and persistently high inflation. However, reform measures by the government to spur domestic growth, and expected revival in investments in the second half of 2013 may strengthen the long-term prospects for the bond market.

The demand for SME ratings was steady during the year. Enhanced awareness about the benefits of ratings, the banks'' growing acceptance of CRISIL''s SME ratings, and CRISIL''s intensive outreach initiatives and expansion into new markets and territories are expected to continue spurring demand for SME ratings in 2013, despite the challenging business environment.

Operations

CRISIL Ratings maintained its market leadership in 2012, backed by strong performance in the BLR and SME ratings businesses. CRISIL announced 3,600 new BLRs and 10,000 SME ratings during the year. CRISIL has assigned more than 11,500 BLRs and 46,000 SME ratings / assessments so far. CRISIL Real Estate Star Ratings (CREST), launched in 2010, has been well accepted in the real estate sector and witnessed significant demand this year, with leading developers across cities choosing to get their projects graded by CRISIL.

In 2012, CRISIL Ratings launched the annual series of seminars on the bond market. The inaugural seminar ''Expanding India''s Corporate Bond Market'' was hosted in 2012. The keynote address at the seminar was made by Dr. Subir Gokarn, Deputy Governor, Reserve Bank of India. We presented investors and regulators with a compendium showcasing 507 CRISIL A-rated companies. CRISIL Ratings released ''Industry Insights'' for 22 key industries covering more than 5,000 clients, showcasing the depth of our analytics and breadth of our client base.

Our article on the importance of liquidity back-up for commercial paper was well received by investors and even prompted mutual funds to revise their internal policies on liquidity. Our article on the importance of evaluating credit rating agencies received positive feedback from market participants and influencers. CRISIL Ratings published quarterly updates on its rating portfolio, and on the corporate credit quality and default rates.

CRISIL Ratings has continued to conduct regular outreach programmes to provide value to investors and market participants. A large number of events, including leadership conclaves, bankers'' meetings, investor discussion forums and seminars were conducted, which helped CRISIL to reach around 15,000 stakeholders, including companies and bankers across the country.

CRISIL Ratings organised a series of discussion forums during the year to increase awareness on the developing market trends and the impact on the capital markets. These discussion forums covered capital market entities, the telecom sector, gold loan, non-banking finance companies (NBFCs), and loan restructuring by banks. The forums saw excellent market participation and received extensive media coverage. We also engaged proactively with regulators in providing opinion on key sectoral and economic trends, and participated in several regulatory committees and forums.

GAC further consolidated its relationship with S&P Ratings, and extended support to business groups across geographies and higher-end analytical tasks.

B. RESEARCH

B.1. GLOBAL RESEARCH & ANALYTICS (GR&A)

(INCLuDES IREVNA, PIPAL RESEARCH AND COALITION)

Highlights

Acquired Coalition, a leading u.K.-based analytics firm in July 2012

Added large new clients, including several global and regional financial institutions, and Fortune 500 companies

Published a comprehensive report, ''Big Data - The Next Big Thing'' in association with NASSCOM

Received NASSCOM''s NExT award, for the second year in a row, for our talent management practices

Strengthened our position as a global analytical company by rebranding of Irevna and Pipal Research as CRISIL Global Research & Analytics

Business Environment

uncertainty in the global economic environment, driven by the European sovereign and debt crisis, and significant regulatory upheavals in the banking industry have affected the business environment.

The global banking industry remained in a phase of reduced profitability. Banks have undertaken massive restructuring of their operations, rationalising staff headcount, and winding down business segments. In particular, the investment banking industry witnessed low trading volumes and deal flows that impacted their business adversely. Regulatory changes, in addition, have forced banks to set up infrastructure to meet new requirements and reporting standards.

Though the corporate segment (manufacturing and non-financial services) turned in improved performance across the globe, this was largely driven by the proactive cost-cutting and cash conservation initiatives, and postponement of decisions on projects.

While the changes in the banking industry presented CRISIL GR&A with a challenging business environment, we believe that these structural changes in the global banking industry are positive for the GR&A business. These changes are compelling banks to restructure quickly and fully, and seek the support of high-end research and analytics firms like us. In the short term, however, the restructuring will marginally impact the performance of analytics companies. The new environment is also opening up newer opportunities - to provide solutions for meeting regulatory requirements and stress testing.

We have significantly stepped up efforts to provide services and support to clients, in areas such as stress testing, validation of price models, and risk analytics, which are becoming very critical for the global banks.

The global business environment is expected to recover in 2013, backed by policy interventions in the developed economies. Regulatory and compliance requirements for banks and financial institutions in U.S.A. and Europe are also expected to drive demand for the services of research and analytics firms.

Operations

CRISIL acquired Coalition, a U.K.-based firm providing high-end analytics, mainly to leading global investment banks. This marks our entry into proprietary research outside India. Coalition complements our offerings to the financial institutions - while we offer research and analytics services in trading and risk management to banks, Coalition works with the same financial institutions'' top management and strategy teams.

We have consolidated our leadership position in the research and analytics space, adding numerous new clients in 2012, including banks and Fortune 500 companies. Our high-end research has enabled clients to improve their rankings, increase research coverage, enter new markets, get better business insights, and deliver path-breaking research. Our regulatory and risk management practice has helped clients comply with regulations.

We won special recognition at the NASSCOM Exemplary Talent (NExT) Awards for the second year in a row in ''The Talent Magnets'' category, in recognition of our compelling and differentiated employee value proposition.

The rebranding of Irevna and Pipal Research to CRISIL GR&A has strengthened our position as a global analytics provider. The new positioning leverages on the strong CRISIL brand, and has received positive reception from stakeholders, including customers, employees and industry bodies.

Our franchise-building initiatives gained momentum during the year. We published ''Big Data - The Next Big Thing'', the most comprehensive study on the subject in India, jointly with NASSCOM. We actively participated in several global conferences and seminars, in addition to hosting roundtables in London and San Francisco that were attended by chief risk officers, risk practitioners and regulators.

Our global business model has continued to scale up well to support demand from clients. Our research centres in Hangzhou (China), and Buenos Aires (Argentina) and our quantitative research centres in Wroclaw (Poland) have grown significantly.

B.2. INDIA RESEARCH

Highlights

Commenced valuation of market-linked debentures (MLDs) for the first time in India and covered more than 10 issuers. These valuations are available on the CRISIL website Launched India''s first SME Fundamental Grading service for enterprises proposing to raise equity capital through SME exchanges

Released two special reports: covering 16 less- known sectors that are in a phase of strong growth and offer significant scope for lenders and investors; and on 68 SME clusters across 30 sectors

Prepared research reports on 1,442 companies listed and traded on the National Stock Exchange of India Limited (NSE); these reports are available to investors free-of-cost on the NSE website

Launched, together with Sri Lanka''s NDB Investment Bank, a group of four indices for Sri Lanka''s government securities market, to help investors benchmark investments and allocate assets better

Business Environment

The business environment remained challenging during the year with lower GDP growth and slowdown in investments. High inflation and interest rates, together with growing uncertainty, have proved to be a setback to the domestic capital markets. Volatility in the equity markets affected CRISIL Research''s Independent Equity Research (IER) and Initial Public Offering (IPO) grading businesses. In Customised Research, however, the flow of mandates has been positive, with corporates valuing our independent research inputs highly. The outlook for the business will be guided by the successful implementation of key domestic reforms. India''s adverse economic and political environment, the deepening Eurozone crisis, and slowdown in the u.S. remain key risks.

Operations

CRISIL Research continued to build on its powerful value proposition - of timely and relevant research. The revamped subscription-based web platform (www. crisilresearch.com) provides near-real-time access to research, and continues to attract growing usage by clients.

CRISIL Research continues to proactively launch products that address evolving market dynamics and customer requirements. During the year, the Industry Research business expanded coverage by adding more sectors through two special reports - the first report was on 16 less-known, high-growth sectors, and the second was on 68 SME clusters in 30 sectors. In addition, CRISIL Research, in association with Kotak Wealth Management, launched the second edition of the ''Top of the Pyramid'' report, which highlights insightful features about the spending, investing and income patterns of India''s Ultra High Networth Households.

The Equity Research segment completed another year of preparing research reports on 1,442 companies listed and traded on NSE. It also launched India''s first SME Fundamental Grading service for enterprises proposing to raise equity capital through the SME exchanges. Through a tie-up with NSE, IPOs of all SMEs proposing to be listed on EMERGE (NSE''s SME platform) will have CRISIL SME Fundamental Grading. CRISIL Research will also release IER reports on these SMEs.

The Funds and Fixed Income Research segment commenced valuation of market-linked debentures (MLDs), making CRISIL the first rating agency in the country to provide these valuations. During the year, valuations (available on the CRISIL website) have been released for more than 10 issuers.

In addition, having completed the prestigious assignment of selecting fund managers to manage the Employee Provident Fund Organisation (EPFO) corpus, CRISIL Research continues to assist EPFO in evaluating the performance of its fund managers.

The CRISIL Centre for Economic Research (C-CER) continued to focus on research on the macroeconomic situation in India and the Asia Pacific, consistently building CRISIL''s franchise in Indian and foreign media, and positioning the Company as the foremost analytics- based commentator on the economy in the region.

C-CER published 10 special reports in its series, Economy Insight, covering contemporary macroeconomic issues such as inflation, exchange rate, role of the private sector in the economy, and impact of the Eurozone crisis on India''s growth. A report analysing rural consumption patterns in India, titled ''Sustaining the rural consumption boom'', received extensive coverage in the national and regional print media and drew the attention of policymakers. During the year, C-CER also released a new indicator of core inflation for India - CRISIL Core Inflation Indicator.

C. INFRASTRUCTURE ADVISORY AND RISK SOLuTIONS

CRISIL conducts its infrastructure advisory and risk solutions business through its subsidiary, CRISIL Risk and Infrastructure Solutions Limited (CRIS).

C.1. CRISIL INFRASTRUCTURE ADVISORY BUSINESS Highlights

Assisted the Ministry of Coal, Government of India, in formulating a methodology to fix the floor and reserve prices for coal block auctions under captive mining Helped Indonesia Infrastructure Guarantee Fund (IIGF) as the Financial and Transaction Advisory Consultant for Puruk Cahu Bangkuang Coal Rail Project in Indonesia

Advised Asian Development Bank (ADB) in preparing a strategic framework for a slum-free New Delhi

Acted as advisors to the Central Electricity Supply Utility of Odisha on smart grid solutions for energy management and energy efficiency

Business Environment

The sluggishness of the Indian economy continued, and the energy sector in India was adversely impacted due to delays in key policy actions. This, compounded with the Eurozone crisis, and the attendant general risk aversion have continued to impact the India business of CRISIL Infrastructure Advisory. However, the international business has remained stable on the back of long- term multilateral spending programmes. The business won large and prestigious mandates in Indonesia and Vietnam in South-East Asia, and Tanzania and Ethiopia in Africa.

The investments of USD 1 trillion envisaged in infrastructure in India during the 12th Five Year Plan period present a sizeable opportunity over a medium term. 2013, however is likely to remain challenging as clarity on policies will emerge over time and investments could pick up in the sector only in the later half.

Operations

The business won significant mandates from government and urban local bodies. The advisory business had a challenging year in the energy and natural resources verticals. Our focus on the international business - especially in South-East Asia and Africa - has helped maintain growth during the year.

C.2. CRISIL RISK SOLUTIONS (CRS)

Highlights

Diversified client base with a third of revenues coming from non-banking segment, and a third each from the overseas market and risk consulting, respectively

Extended flagship internal rating solution Risk Assessment Model (RAM) to cover the entire credit process in financial institutions

Successfully entered markets in Europe, the Middle East and Africa (EMEA) and South East Asia in collaboration with S&P Risk Solutions.

Business Environment

Steady investments in risk management systems and framework enhancements globally are likely to continue over the medium term across segments in the financial sector like banks and NBFCs. CRS products and services across the risk spectrum are, therefore, likely to be in increasing demand.

Operations

CRS maintained its focus on both consulting and software solutions, and won and executed 32 mandates in 2012.

CRS offerings are geared to cover Basel III requirements in all areas of risk (credit, market, liquidity, operational and ICAAP). In 2012, the focus was to add modules and features to keep products in line with global practices. During the year, we added new modules to the RAM / credit risk evaluator, developed and implemented a comprehensive loan origination system; developed, and began implementing a system to help banks meet reporting requirements for automated data flow and enhanced features of the existing product suite. CRS has also:

Enhanced operational risk system (CORE) with advanced statistical techniques for banks looking to move to the AMA approach

Strengthened credit risk capital computation system (CAM Retail) with advanced techniques to pool retail assets

Improved the market risk capital computation system (CAM Market) to cover multiple instruments and all approaches in estimating value at risk (VaR)

The business continues to maintain internal process standards at ISO 9001:2008 certification levels.

CRS partnered with S&P Risk Solutions to bid for, and win, projects in the EMEA and South East Asia. The partnership won its first assignment in July in the U.A.E., and has since won one assignment each in Saudi Arabia and Malaysia. There are multiple assignments in the pipeline for 2013.

Multiple franchise initiatives were undertaken during the year: these included co-sponsoring an operational risk seminar in Dubai, participating in a global risk conference in New York, serving as knowledge partner in CGD Innovative Products & Services Conclave 2012, making a presentation at Platts Commodity Week in Mumbai, showcasing our operational risk offerings to the RBI DBOD team, and participating in an SME event organised by the Small Business Banking Network in Dubai.

D. COLLABORATION WITH S&P

CRISIL and S&P jointly released the Standard & Poor''s Indices Versus Active (SPIVA) reports for the Indian mutual funds industry. This report, a bi-annual publication, compares the performance of indices and active mutual funds.

CRS partnered with S&P Risk Solutions to bid for, and win, projects in Europe, the Middle East and Africa (EMEA), and South East Asia. The partnership won the first assignment in July in the U.A.E., and has since won one deal each in Saudi Arabia and Malaysia.

CRISIL was involved with S&P in rebalancing and maintaining the S&P ESG (Environment, Social and Corporate Governance) India Index. The 50-stock Index, developed by a consortium of Standard & Poor''s, CRISIL and KLD Research and Analytics, is a financial tool for investors who look beyond financial criteria, to integrate the social, environmental and governance conduct of firms into their investment decisions. The universe for S&P ESG India Index includes the top 500 Indian companies as per market capitalisation and listed on the National Stock Exchange of India Limited. In addition to this, CRISIL also worked with S&P to develop a new ESG methodology for creating / launching of global S&P ESG indices.

As part of the collaborative efforts, C-CER published 4 reports / articles on Asia-Pacific economies for S&P and we also brought out 4 issues of the South Asia Economic Outlook to provide an overview of and insights on the South Asian economies in the region, along with the key initiatives of Standard & Poor''s in the region.

E. HUMAN RESOURCES

During 2012, CRISIL''s Human Resources team strengthened its talent acquisition, retention and development agenda. CRISIL''s headcount increased to 3,450 as on December 31, 2012, from 3,207 a year ago.

Highlights

Augmented the senior management team

Introduced two new talent augmentation programmes: CRISIL Certified Internship Programme, which involves having promising graduates intern with CRISIL for six months, as they decide on whether to pursue higher studies or consider long-term career options; and the Graduate Trainee Programme, which involves hiring high- calibre graduates from premier colleges. Trainees are led through an intensive programme to help them understand concepts in Finance

Attracting and Developing Talent Team HR:

Focused on the key goal for the year - to attain excellence in quality of interface and communication. Workshops on ''Conducting High-Impact Meetings'' were custom-designed for the businesses, with inputs from business leaders. The workshops, conducted by the leadership teams, including the Managing Director and CEO and members of the Executive Committee, involved case studies and role play simulations

Persisted with policy on employee development through training modules prepared in-house. More than 85 per cent of the training programmes this year were facilitated by in-house trainers and business leaders. More than 300 training programmes were conducted, aggregating to more than 6,000 man days

F. SUBSIDIARIES

During the year, consequent to the acquisition of Coalition and its subsidiaries, Coalition Development Limited, U.K., Coalition Development Singapore Pte. Limited, Coalition Development Systems (India) Private Limited and Mercator Info-Services India Private Limited became the wholly owned subsidiaries of the Company. As on December 31, 2012, the Company had four Indian and seven overseas wholly owned subsidiaries.

The Ministry of Corporate Affairs, Government of India, has granted a general exemption under Section 212 (8) of the Companies Act, 1956, from the requirement to attach detailed financial statements of each subsidiary. The Board of Directors has passed a resolution on October 17, 2012, for not attaching individual annual reports of its subsidiary companies to its Annual Report. In compliance with the exemption granted, a statement containing brief financial details of these companies is included in the Annual Report. The annual accounts of the subsidiary companies and the related information will be made available to shareholders who seek such information.

G. JOINT VENTURE-INDIA INDEX SERVICES AND PRODUCTS LIMITED

India Index Services and Products Limited (IISL), CRISIL''s 49:51 joint venture with the National Stock Exchange of India Limited, provides a variety of indices and index-related services and products to capital markets.

In 2012, IISL licensed indices to various asset managers in India including insurance companies and asset management companies, to facilitate the launch of index funds, exchange-traded funds and insurance products and the issue of debentures with returns linked to the CNX Nifty Index. IISL also concluded licensing agreements for the issue of structured products linked to the CNX Nifty Index outside India. In response to market requirements, IISL also launched a few strategy indices during the year

- CNX Nifty Dividend Index, CNX Alpha Index, CNX High Beta Index and CNX Low Volatility Index.

H. DIRECTORS

In accordance with the Articles of Association of the Company and the provisions of the Companies Act, 1956, Mr. B. V. Bhargava and Mr. H. N. Sinor retire by rotation and being eligible, seek re-appointment.

I. AUDITORS

The Statutory Auditors, S. R. Batliboi & Co, Chartered Accountants, hold office up to the ensuing Annual General Meeting and being eligible, offer themself for re-appointment. The Board recommends their re-appointment.

J. MANAGEMENT''S DISCUSSION AND ANALYSIS REPORT

The Management''s Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is annexed to this report.

K. CORPORATE GOVERNANCE

The Company is committed to maintaining the highest standards of corporate governance and adhering to the corporate governance requirements as set out by SEBI. The report on corporate governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The certificate from the auditors of the Company confirming compliance with the conditions of corporate governance as stipulated under Clause 49 is annexed to this report.

L. OTHERS

L.1 PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, AND FOREIGN EXCHANGE EARNINGS AND EXPENDITURE

The particulars regarding foreign exchange earnings and expenditure appear as separate items in the notes to the Accounts. Since the Company does not own any manufacturing facility, the other particulars relating to conservation of energy and technology absorption stipulated in the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are not applicable.

L.2. PARTICULARS OF EMPLOYEES

During the year, 33 employees received remuneration of Rs. 6 million or more per annum. In accordance with the provisions of Section 217(2A) of the Companies Act, 1956 and the rules framed thereunder, the names and other particulars of employees are set out in the annexure to the Director''s Report. In terms of the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Directors'' Report is being sent to the shareholders without this annexure. Shareholders interested in obtaining a copy of the annexure may write to the Company Secretary at CRISIL''s registered office.

L.3. DIRECTORS'' RESPONSIBILITY STATEMENT AS REQUIRED UNDER THE PROVISIONS CONTAINED IN SECTION 217(2AA) OF THE COMPANIES ACT, 1956

Your Directors hereby confirm that:

(i) In the preparation of the annual accounts for financial year 2012, the applicable accounting standards have been followed.

(ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at December 31, 2012 and of the profit of the Company for the year ended on that date.

(iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(iv) The Directors have prepared the annual accounts for financial year 2012 on a ''going concern'' basis.

Employee Stock Option Schemes

The Company has two employee stock option schemes. The Employee Stock Option Scheme 2011 (ESOS 2011) was approved by the shareholders vide a special resolution passed through postal ballot on February 4, 2011. The Employee Stock Option Scheme 2012 (ESOS 2012) was approved by the shareholders vide a special resolution passed through postal ballot on April 10, 2012.

Summary Information on ESOS 2011 and ESOS 2012 of the Company is provided as Annexure to this Report. The information is being provided in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended.

Acknowledgements

The Board of Directors wishes to thank the employees of CRISIL for their exemplary dedication and the excellence they have displayed in conducting the operations of CRISIL. The Board also wishes to place on record its sincere appreciation of the faith reposed in the professional integrity of CRISIL by customers and investors who have patronised its services. The Board acknowledges the splendid support provided by market intermediaries. The affiliation with Standard and Poor''s has been a source of great strength. The Board of Directors also wishes to place on record its gratitude for the faith reposed in CRISIL by the Securities and Exchange Board of India, the Reserve Bank of India, the Government of India, and the state governments. The role played by the media in highlighting the good work done by CRISIL is deeply appreciated.

For and on behalf of the

Board of Directors of CRISIL Limited

Douglas Peterson Chairman

Mumbai, February 14, 2013

 
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