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Notes to Accounts of Crisil Ltd.

Dec 31, 2016

1. Terms/ rights attached to equity shares

The company has only one class of equity shares having par value of Re.1/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

I n the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

As per records of the Company, including its register of shareholders/ members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

2. Shares reserved for issue under options

For details of shares reserved for issue under the employee stock option scheme (ESOS) of the Company ( Refer note 37).

3. The tax year of the Company being the year ending March 31, 2017, the tax expense for the year is the aggregate of the provision made for the three months ended March 31, 2017 and the provision for the nine months up to December 31, 2016. The tax provision for nine months has been arrived at using the effective tax rate for the period April 1, 2016 to March 31, 2017.

4. The Company has a process of identification of ''suppliers'' registered under the “The Micro, Small and Medium Enterprises Development (''MSMED'') Act, 2006” by obtaining confirmations from suppliers. There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small, Medium Enterprises Development Act, 2006 to whom any amount was payable on account of principal amount or interest, accordingly no additional disclosures have been made.

5. Operating Lease

The Company has taken certain office premises on non-cancellable operating lease basis. Some of these agreements have a price escalation clause. Details as regards payments and future commitments are as under :

6. Gratuity and other post-employment benefit plans

In accordance with the Payment of Gratuity Act, 1972 CRISIL provides for gratuity, a defined benefit retirement plan covering eligible employees (completed continuous services of five years or more) of the Company. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment at fifteen days salary of an amount based on the respective employee''s salary and tenure of employment with the Group.

The following tables summarize the components of net benefit expense recognized in the Statement of Profit and Loss and the funded status and amounts recognized in the Balance Sheet for the respective plans.

Statement of Profit and Loss:

Net employee benefit expense (recognized in Personnel expenses)

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Broad category of plan assets as per percentage of total plan assets of the gratuity

7. Profit on sale of current investments are net of reduction in carrying value of current investment.

8.. The Company, in accordance with its risk management policies and procedures, has a hedge programme in place to mitigate foreign exchange (forex) related risk. Accounting for revenue hedge is done as per principles “Guidance Note on Accounting for Derivative Contracts” issued by the Institute of Chartered Accountants of India (ICAI). Recognition and Measurement wherein mark to market on forward contracts entered to hedge highly probable future transactions are routed through hedging reserve account. The counter party is generally a bank. These contracts are for a period between one day and one year.

Foreign currency risk is identified based on forecasted revenue in foreign currency. The management regularly monitors foreign currency risk based on periodic reports giving details on hedged/ unhedged positions, mark-to-market open contracts and available cash position. The use of derivative for hedging purpose is governed by Risk management policy of the Company. Hedge limits are governed by Risk Management Policy and are reviewed periodically.

Derivatives contracts are entered to hedge the foreign currency risk of firm commitment or highly probable forecast transactions. Derivative financial instruments, which qualify for cash flow hedge accounting, are fair valued at the balance sheet date and the resultant gain / loss is credited / debited to the Hedging Reserve Account included in the Reserves and Surplus. This gain / loss would be recorded in the Statement of Profit and Loss when the underlying transactions affect earnings. Any profit or loss arising on the cancellation or renewal of derivative contracts is recognized as income or as expense for the year. Derivative contracts are structured in a way that they bear an opposite an offsetting impact with respect to foreign currency movement of underlying transactions. Derivative contracts are fair valued based on mark to market position sent by respective counterparty banks with whom such contracts are entered into.

9. In accordance with provisions of the Companies Act, 2013 and pursuant to the public announcement for buy back made by the Company, during the previous year, the Company bought back and extinguished shares as under:

10. Employee Stock Option Scheme (“ESOS”)

The Company has formulated an ESOS based on which employees are granted options to acquire the equity shares of the Company that vests in a graded manner. The options are granted at the closing market price prevailing on the stock exchange, immediately prior to the date of grant. Details of the ESOS granted are as under :

The company had three schemes under which options have been granted in the past.

Under ESOS 2011 and ESOS 2012 option vest over three years at each of the anniversaries. All options are exercisable within three years from the date of vesting and are settled in equity on exercise.

Under ESOS 2014 options vest over five years starting from third anniversary of the grant. Options are exercisable within two years from the date of vesting and are settled in equity on exercise.

Volatility: Volatility is a measure of the amount by which a price has fluctuated or is expected to fluctuate during the period. The measure of volatility is used in the Black Scholes option-pricing model is the annualized standard deviation of the continuously compounded rates of return on the stock over a period of time. We have considered the daily historical volatility of the Company''s stock price on NSE over the expected life of each vest.

Risk free rate: The risk-free rate being considered for the calculation is the interest rate applicable for a maturity equal to the expected life of the options based on the zero-coupon yield curve for Government Securities.

Expected life of the options: Expected Life of the options is the period for which the Company expects the options to be live. The minimum life of a stock option is the minimum period before which the options cannot be exercised and the maximum life of the option is the maximum period after which the options cannot be exercised. We have calculated expected life as the average of the minimum and maximum life of the options.

Dividend yield: Expected dividend yield has been calculated as an total of Interim and final dividend declared in last year preceding date of Grant.

There were no modification made to the share based payment arrangement during the period.

The Company uses intrinsic value method to record compensation cost arising on account of grant made under ESOS . The Company has not recorded any compensation cost as the grant has been given at 100% of the closing market price immediately prior to the date of grant on the stock exchange which recorded highest trading volume.

Had the Company recorded the compensation cost on the basis of Fair Valuation method instead of intrinsic value method, employee compensation cost would have been higher by Rs. 239,837,183 (P.Y. Rs. 360,854,250) and EPS would have been as under:

There are no cash settled plans implemented by the company and hence there is no further liability booked in the books. The estimates of future cash inflow that may be received upon exercise of options.

11. Amalgamation

12. Nature of business

Pipal Research Analytics and Information Services India Private Limited (Pipal) is engaged in providing low risk IT Enabled Services in the area of corporate research. Coalition Development Systems (India) Private Limited (Coalition India) and Mercator info-Services India Private Limited (Mercator) is engaged in the business of providing Researched Data Processing Services. The Company held 100% voting power of Pipal Research Analytics and Information Services India Private Limited, Coalition Development Systems (India) Private Limited and Mercator info-Services India Private Limited.

13. Pipal Research Analytics and Information Services India Private Limited, Mercator Info-Services India Private Limited and Coalition Development Systems (India) Private Limited (together transferor) have been amalgamated with the Company with effect from April 1, 2016 (''appointed date'') in terms of the scheme of amalgamation (''the scheme'') approved vide order dated September 8, 2016, by the Hon''ble Bombay High Court. Pursuant thereto all assets and liabilities of transferor have been transferred to and vested in the Company retrospectively with effect from April 1,2016.

Pursuant to the scheme coming into effect, all the equity shares held by the Company in Pipal Research Analytics and Information Services India Private Limited, Mercator Info-Services India Private Limited and Coalition Development Systems (India) Private Limited stand automatically cancelled.

14. The amalgamation has been accounted for under the ''pooling of interest'' method as prescribed under Accounting Standard - 14 (AS-14) notified under section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014. Accordingly the assets, liabilities and reserves of Pipal Research Analytics and Information Services India Private Limited, Mercator Info-Services India Private Limited and Coalition Development Systems (India) Private Limited have been accounted at their carrying values.

The difference between the carrying value of investments in the books of the Company and the amount of the share capital of Pipal Research Analytics and Information Services India Private Limited, Coalition Development Systems (India) Private Limited and Mercator info-Services India Private Limited have been adjusted in Capital Reserve / General Reserve.

Accordingly the amalgamation has resulted in transfer of assets, liabilities and reserves in accordance with the terms of the scheme at the following summarized values :

15. Corporate Social Responsibility (CSR) expenses for the year ending 2016 includes Rs. 60,410,823 (P.Y. Rs. 41,402,075) includes spend on various CSR schemes as prescribed under Section 135 of the Companies Act, 2013. The CSR amount based on limits prescribed under the Companies Act, 2013 for the year was Rs. 61,860,000 (P.Y. Rs. 58,258,000). Key CSR activities were “education and women empowerment - financial capability building” and “conservation of environment”.

16. Personnel expenses to the extent of Rs.4,728,115 (P.Y. Rs. Nil) is considered for capitalization as Intangible assets.

17. CRISIL Standalone financial figures for the year ended December 31, 2015 do not include the figures of erstwhile Pipal Research Analytics and Information Services India Private Limited, Coalition Development Systems (India) Private Limited and Mercator Info-Services India Private Limited which is amalgamated with the Company with effect from April 1, 2016. Consequently, the figures for the year ended December 31, 2016 are not comparable with previous period ended December 31, 2015.

18. Previous Year Comparatives

Previous year''s figures have been regrouped where necessary to conform to current year''s classification.


Dec 31, 2015

(a) Terms/ rights attached to equity shares

The company has only one class of equity shares having par value of Re.1/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

As per records of the Company, including its register of shareholders/ members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

(b) Shares reserved for issue under options

For details of shares reserved for issue under the employee stock option scheme (ESOS) plan of the Company (Refer note 37).

1. The tax year of the Company being the year ending March 31, 2016, the tax expense for the year is the aggregate of the provision made for the three months ended March 31, 2015 and the provision for the nine months up to December 31, 2015. The tax provision for nine months has been arrived at using the effective tax rate for the period April 1, 2015 to March 31, 2016.

2. The Company has a process of identification of 'suppliers' registered under the "The Micro, Small and Medium Enterprises Development ('MSMED') Act, 2006" by obtaining confirmations from suppliers. There are no Micro, Small and Medium Enterprises, as defend in the Micro, Small, Medium Enterprises Development Act, 2006 to whom any amount was payable on account of principal amount or interest, accordingly no additional disclosures have been made.

3. SEGMENT REPORTING

Business Segments:

The Company has two major business segment : Ratings and Research. A description of the types of products and services provided by each reportable segment is as follows:

Rating services includes credit ratings for corporate, banks, bank loans, small and medium enterprises (SME), credit analysis services, grading services and global analytical services

Research segments includes global research and analytical services, industry reports, customized research assignments, subscription to data services, independent equity research (IER), IPO grading and training.

Notes to Segmental Results :

*Assets and liabilities used interchangeably between business segments has been classified as unallowable. The Company believes that it is currently not practicable to allocate all assets and liabilities since a meaningful segregation of the available data is not feasible.

The Company recovered certain common expenses from subsidiaries based on management estimates and disclosed as Recoveries in Notes to the Statement of Profit and Loss.

4. GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS

In accordance with the Payment of Gratuity Act, 1972 CRISIL provides for gratuity, a defend benefit retirement plan covering eligible employees of the Company. The Gratuity Plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and tenure of employment with the Group.

The following tables summaries the components of net benefit expense recognized in the Statement of Proof and Loss and the funded status and amounts recognized in the Balance Sheet for the respective plans.

5. The Company has a hedge programmed in place to mitigate foreign exchange (force) related risk. Accounting for revenue hedge is done as per principles of AS 30 "Financial Instruments : Recognition and Measurement wherein mark to market on forward contracts entered to hedge highly probable future transactions are routed through hedge reserve account. Details of currency hedge and forward contract value are as under :

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Broad category of plan assets as per percentage of total plan assets of the gratuity

* At the end of 3rd, 4th & 5th year in equal tranches

**Weighted average price of options as per Black -Schools Option Pricing model at the grant date.

The company had three schemes under which options have been granted in the past. Under ESOP 2011 and ESOP 2012 option vest over three years at each of the anniversaries. under ESOP 2014 options vest over fve years starting from third anniversary of the grant. All options are exercisable within two years from the date of vesting and are settled in equity on exercise.

We have used Black-Scholes option pricing model for the purpose estimating fair value of the options granted during the year.

Volatility: volatility is a measure of the amount by which a price has fluctuated or is expected to fluctuate during the period. The measure of volatility is used in the Black Scholes option-pricing model is the annualized standard deviation of the continuously compounded rates of return on the stock over a period of time. We have considered the daily historical volatility of the Company's stock price on NSE over the expected life of each vest.

Risk free rate: The risk-free rate being considered for the calculation is the interest rate applicable for a maturity equal to the expected life of the options based on the zero-coupon yield curve for Government Securities.

Expected life of the options: Expected Life of the options is the period for which the Company expects the options to be live. The minimum life of a stock option is the minimum period before which the options cannot be exercised and the maximum life of the option is the maximum period after which the options cannot be exercised. We have calculated expected life as the average of the minimum and maximum life of the options.

Dividend yield: Expected dividend yield has been calculated as an average of dividend yields for the Financial years 2014, 2013 and 2012. The dividend yield for the year is derived by dividing the dividend per share by the average price per share of the respective period.

There were no modification made to the share based payment arrangement during the period.

The Company uses intrinsic value method to record compensation cost arising on account of grant made under ESOS. The Company has not recorded any compensation cost as the grant has been given at 100% of the closing market price immediately prior to the date of grant on the stock exchange which recorded highest trading volume.

6. The Board of Directors, at their meeting held on October 17, 2015 , have approved the Scheme of Amalgamation for amalgamating three wholly-owned Indian subsidiaries of the Company – Pipal Research Analytics and Information Services India Private Limited, Mercator Info-Services India Private Limited and Coalition Development Systems (India) Private Limited with the Company, pursuant to section 391-394 of the Companies Act 1956 and the corresponding sections of the Companies Act 2013, subject to the necessary approvals and sanction by the Hon'ble Bombay High Court. The Appointed Date of the said amalgamation is proposed to be 1st April 2016 .

7. Other expenses for the year ending 2015 include Rs. 41,402,075 (P.Y. Rs. 2,930,265) spent towards various schemes of Corporate Social Responsibility (CSR) as prescribed under Section 135 of the Companies Act, 2013. The areas for CSR activities are "empowerment of rural women" and "conservation of environment". During the year funds were allocated and utilized for these activities.

8. PREVIOUS YEAR COMPARATIVES

Previous year's figures have been regrouped where necessary to conform to current year's classification.


Dec 31, 2014

1. Nature of operations

CRISIL Limited (''the Company'') is a global analytical company providing ratings and research services. CRISIL is India''s leading ratings agency and also the foremost provider of high-end research to the world''s largest banks and leading corporations. CRISIL delivers analysis, opinions, and solutions that make markets function better.

1.1 Basis of preparation of Financial Statement

The financial statements have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP) under the historical cost convention on an accrual basis in compliance with all material aspect of the Accounting Standards notified under the Companies Act, 1956 read with General Circular 8/2014 dated 4 April 2014, issued by the Ministry of Corporate Affairs, in respect of Section 133 of the Companies Act, 2013. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

Rupees

Year ended Year ended Particulars December 31, 2014 December 31, 2013

2. Details of contingent liabilities are as under :

1. Bank Guarantee in the normal course of business 132,585,300 8,264,685

2. Disputed Income, Service & Sales Tax Demand:

(i) Pending before Appellate authorities in respect of which the Company is in appeal 83,570,108 69,882,397

(ii) Decided in Company''s favour by Appellate Authorities and Department is in 35,179,640 23,506,360 further appeal

3. Estimated amount of contracts (net of advances) remaining to be executed on 10,497,267 21,119,281 capital account and not provided for

Management believes that the ultimate outcome of above matters will not have a material adverse impact on its financial position, results of operations and cash flows.

Total 261,832,315 122,772,723

4. The tax year of the Company being the year ending March 31,2015, the provision for tax for the year is the aggregate of the provision made for the three months ended March 31,2014 and the provision for the nine months upto December 31,2014. The tax provision for nine months has been arrived at using the effective tax rate for the period April 1,2014 to March 31,2015.

5. The Company has a process of identification of ''suppliers'' registered under the "The Micro, Small and Medium Enterprises Development (''MSMED'') Act, 2006" by obtaining confirmations from suppliers. There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small, Medium Enterprises Development Act, 2006 to whom any amount was payable on account of principal amount or interest, accordingly no additional disclosures have been made.

6. Payment and earnings in foreign currency

a) Value of imports calculated on C.I.F basis for capital goods is Rs. Nil (P.Y. Nil)

7. Segment reporting

Business segments :

The Company has two major business segment: Ratings and Research. A description of the types of products and services provided by each reportable segment is as follows:

- Rating services includes credit ratings for corporates, banks, bank loans, small and medium enterprises (SME), credit analysis services, grading services and global analytical services

- Research segments includes global research and analytical services, industry reports, customised research assignments, subscription to data services, independent equity research (IER), IPO gradings and training.

8. Gratuity and other post-employment benefit plans

In accordance with the Payment of Gratuity Act, 1972 CRISIL provides for gratuity, a defined benefit retirement plan covering eligible employees of the Company. The Gratuity Plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and tenure of employment with the Group.

The following tables summarise the components of net benefit expense recognised in the Statement of Profit and Loss and the funded status and amounts recognised in the Balance Sheet for the respective plans.

9. Previous year comparatives

Previous year''s figures have been regrouped where necessary to conform to current year''s classification.


Dec 31, 2012

1. Nature of operations

CRISIL Limited (''the Company'') is a global analytical Company providing ratings and research services. CRISIL is India''s leading ratings agency and also the foremost provider of high-end research to the world''s largest banks and leading corporations. With sustainable competitive advantage arising from our strong brand, unmatched credibility, market leadership across businesses, and large customer base, CRISIL delivers analysis, opinions, and solutions that make markets function better.

1.1 Basis of preparation of financial statement

The financial statements have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP) under the historical cost convention on an accrual basis in compliance with all material aspect of the Accounting Standards (AS) Notified by Companies Accounting Standard Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year except for the change in Accounting Policy explained in Point No 2.1.

(a) Terms/ rights attached to equity shares

The company has only one class of equity shares having par value of Re.1 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

As per records of the Company, including its register of shareholders/ members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

2. The tax year of the Company being the year ending March 31, 2013, the provision for tax for the year is the aggre- gate of the provision made for the three months ended March 31, 2012 and the provision for the nine months upto December 31, 2012. The tax provision for nine months has been arrived at using the effective tax rate for the period April 1, 2012 to March 31, 2013.

3. The Company has the process of identification of suppliers'' registered under the "The Micro, Small and Medium Enterprises Development (''MSMED'') Act, 2006" by obtaining confirmations from suppliers. There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small, Medium Enterprises Development Act, 2006 to whom the company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made.

4. Segment reporting Business segments:

The Company has two major business segment: Ratings and Research. A description of the types of products and services provided by each reportable segment is as follows:

Rating services includes credit ratings for corporates, banks, small and medium enterprises (SME), training in the credit rating field, credit analysis services, grading services and global analytical services

Research segments includes high end equity research, industry reports, customised research assignments , subscription to data services and IPO gradings

Notes to segmental results:

*Assets and liabilities used interchangeably between segments have been classified as unallocable. The Company believes that it is currently not practical to allocate these assets and liabilities since a meaningful segregation of the available data is not feasible.

The Company recovered certain common expenses from subsidiaries based on management estimates and disclosed as recoveries in Notes to the Statement of Profit and Loss.

5. Gratuity and other post-employment benefit plans

In accordance with the Payment of Gratuity Act, 1972 CRISIL provides for gratuity, a defined benefit retirement plan covering eligible employees of the Company. The Gratuity plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and tenure of employment with the Group.

The following tables summarise the components of net benefit expense recognised in the Statement of Profit and Loss and the funded status and amounts recognised in the Balance Sheet for the respective plans.

6. In accordance with Sec 77A, 77AA and 77B of the Companies Act, 1956 and pursuant to the public announcement for buy back made by the Company, the Company initiated a buy back from the open market through stock exchang- es. Details of the buy back are as under:

In the previous year, the buy back of shares was completed on December 30, 2011 but the actual extinguishment in the records of depositories happened on January,4, 2012. The Company had given the impact of the buy back of shares in the previous year''s financial statement. Out of the above Rs.6,795,885 was paid out in the current year.

7. Employee stock option scheme ("ESOS")

The Company has formulated an ESOS based on which employees are granted options to acquire the equity shares of the Company that vests in a graded manner. The options are granted at the closing market price prevailing on the stock exchange, immediately prior to the date of grant. Details of the ESOS scheme are as under:

The Company uses intrinsic value method to record compensation cost arising on account of grant made under ESOS . The Company has not recorded any compensation cost as the grant has been given at the market price.

Had the company recorded the compensation cost on the basis of Fair Valuation method instead of intrinsic value method, employee compensation cost would have been higher by Rs.66,032,202 and EPS would have been as under:

8. In all cash transaction, CRISIL Limited and its subsidiary acquired 100% stake in Coalition Development Limited along with its subsidiaries on 4th July, 2012.

9. In the current year, there was a one time impact of Rs. 7.30 crore in rating revenue pertaining to previous year on ac- count of certain price renegotiations with retrospective effect.

10. The Company has revised its estimate of recording upfront initial rating fees from 94% to 96% . However, the impact of the revision in estimate is not material .

11. Previous year comparatives

Previous year''s figures have been regrouped where necessary to conform to current year''s classification.


Dec 31, 2009

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