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Directors Report of Crisil Ltd.

Dec 31, 2022

The Directors are pleased to present to you the 36th Annual Report of CRISIL Limited, along with the audited financial statements, for the year ended December 31, 2022.

Financial performance

A summary of the Company’s financial performance in 2022:

(B crore)

Particulars

Consolidated

Standalone

2022

2021

2022

2021

(restated*)

Total income

2,891.19

2,377.71

1,716.95

1,544.33

Profit before interest, depreciation, exceptional items and taxes

852.11

687.53

515.32

592.67

Finance cost

6.40

8.93

5.61

7.62

Deducting depreciation of

103.31

105.98

67.85

69.69

Exceptional Item

-

45.82

-

45.82

Profit before tax

742.40

618.44

441.86

561.18

Deducting taxes of

178.01

152.63

71.35

78.47

Profit after tax

564.39

465.81

370.51

482.71

Other comprehensive income

(43.22)

32.03

(22.31)

30.75

Total other comprehensive income

521.17

497.84

348.20

513.46

Appropriations

Final dividend

168.07***

160.52**

168.07***

160.52**

Interim dividend

182.62

174.74

182.62

174.74

*** Final dividend for 2022: B 23 per equity share of B 1 each

** Final dividend for 2021 (including special dividend of B 7): B 22 per equity share of B 1 each

* As per Ind AS 103 ''Business Combination’, the standalone financial information with respect to the prior period has been restated as business combination had occurred at the beginning of the preceding period.

The financial statements for year ended December 31, 2022 have been prepared in accordance with the Indian Accounting Standards (Ind AS), notified under Companies (Indian Accounting Standards) Rules, 2015, read with Section 133 of Companies Act, 2013, (the Act) and other relevant provisions of the Act.

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, required a change in the accounting policy hitherto in use. The 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, which are subject to limited review, and publishes consolidated and standalone audited financial results annually.

a) Consolidated operations

Revenue from the Company’s consolidated operations for 2022 was B 2,891.19 crore, 21.6% higher than B 2,377.71 crore in the previous financial year. Overall expenses were B 2,148.79 crore as against B 1,805.09 crore in the previous financial year. Profit before tax was B 742.40 crore as against B 618.44 crore in the previous financial year. Profit after tax was B 564.39 crore as against B 465.81 crore in the previous financial year.

Sharp movement in the US dollar versus the rupee and the British pound supported profitability in the year ended December 31,2022, which includes Rs 30.1 crore from revaluation of the subsidiary loan.

b) Standalone operations

Revenue from the Company’s standalone operations for 2022 was B 1,716.95 crore compared with B 1,544.33 crore in the previous financial year. Overall expenses were B 1,275.09 crore as against B 1,028.97 crore in the previous financial year. Profit before tax was B 441.86 crore as against B 561.18 crore in the previous financial year. Profit after tax was B 370.51 crore as against B 482.71 crore in the previous financial year.

A detailed analysis of the performance, consolidated as well as standalone, is included in the Management Discussion and Analysis Report, which forms part of the Annual Report.

Dividend

The Directors recommend for approval of the members at the Annual General Meeting to be held on April 18, 2023, payment of final dividend of B 23 per equity share of face value of B 1 each for the financial year under review. During the year, the Company paid three interim dividends — first interim dividend of B 7, second interim dividend of B 8 and third interim dividend of B 10 per equity share. Hence, total dividend will be B 48 per share in 2022 vis-a-vis B 46 per share in the previous financial year.

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

During the financial year, the Company issued and allotted 195,598 equity shares to eligible employees on exercise of options granted under the employee stock option plan of the Company. Hence, at the end of the year, CRISIL’s issued, subscribed and paid-up capital was 73,064,044 equity shares of B 1 each.

The trend in share capital during the year was:

Particulars

No. of shares

Cumulative outstanding

allotted

capital (no. of shares with

face value of D 1 each)

Capital at the beginning of the year, i.e., January 1,2022

-

72,868,446

Allotment of shares to employees on February 15, 2022

94,565

72,963,011

Allotment of shares to employees on April 21,2022

59,438

73,022,449

Allotment of shares to employees on July 21,2022

22,208

73,044,657

Allotment of shares to employees on October 21,2022

19,387

73,064,044

Capital at the end of the year, i.e., as at December 31,2022

-

73,064,044

Segment-wise results

The Company has identified two business segments, in line with the Indian Accounting Standard on Operating Segment (Ind AS-108), comprising: (i) Ratings services, and (ii) Research, Analytics and Solutions. The audited financial results of these segments are provided as part of the financial statements.

Review of operations Ratings services Highlights

• Announced 1,200 new bank loan ratings (BLRs), a 20% growth on-year

• Maintained leadership position in the corporate bond market, backed by preference for quality ratings among investors and issuers alike

• Sharp focus on analytical rigour, ensuring best-in-class quality of ratings

• Started disclosing the impact of environmental, social, and governance (ESG) factors on credit risk in rating rationales for large corporates

• Held several marquee events and published high quality opinion pieces that were well covered by media and appreciated by stakeholders

The rating industry witnessed higher growth in 2022 compared with the previous two years, especially backed by the BLR segment.

Wholesale bank credit saw healthy growth, driven by the micro, small and medium enterprises (MSME) and services segments, with credit offtake by large corporates also seen picking up from the second half of the year, supporting BLR growth.

Bank credit demand arose majorly because of rising working capital requirements, amid high input costs. The new and enhanced BLR quantum saw an on-year increase of over 23% in 2022 across credit rating agencies, while the number of companies with new BLR increased by over 9% across the industry.

The securitisation segment also witnessed healthy growth with rated quantum across industry seeing healthy jump, riding on economic recovery and steady collections.

The bond ratings segment, however, saw relatively modest growth during 2022. Corporate bond issuance was muted for most part of the year amid hardening interest rates, as large issuers preferred bank loans over bonds. Bond issuances, though, rebounded in the last quarter of 2022 after three sluggish quarters. Overall, 2022 saw a 13% on-year growth in the quantum of rated bonds.

In this milieu, CRISIL Ratings achieved revenue growth of 13% on-year for 2022.

Amid an evolving macro environment, we maintained our market-leading position in the corporate bond and BLR market, benefiting from the strong preference of investors and issuers alike for the best-in-class quality of our ratings as well as our active engagement with senior managements of investors and issuers.

Our wide geographical reach across the country continued to support strong origination of rating mandates. We published more than 1,200 new BLR during 2022.

On the analytical front, we have taken up various initiatives to closely monitor the impact on credit profiles of India Inc from emerging macroeconomic risks such as the extended geopolitical strife between Russia and Ukraine, input price shocks, and rising interest rates.

We continued to strengthen our early warning mechanism with the introduction of Corporate Credit Health Framework. We proactively identified vulnerable sectors and issuers to

can now offer tailored solutions to our clients by using all or a combination of capabilities across research, consulting, risk solutions, data and analytics, and training.

Research

Highlights

• Launched 38 new fixed income indices in 2022 to cater to the new benchmarking requirements of mutual funds, and another 21 for passive mutual fund launches

• Launched CRISIL AIF benchmarks for sub-categories

• Won large mandates - Association of Mutual Funds in India, Employees’ State Insurance Corporation, World Gold Council, National Pension System Trust

• Quantix, our data and analytics platform, developed new capabilities for non-financial data

• Enhanced the features in Alphatrax, our wealth tracking solution, in an effort to consistently improve and enrich customer experience

Release of updated CRISIL AIF benchmarks, including subcategories, has gained traction and acceptance among market participants. Traction for index-linked funds and AIF benchmarks continued throughout the year — with 16 live products and assets of 8,500 crore on CRISIL indices.

Our flagship Industry Research business continued its dominant position by adding depth to core sector coverage. A spike in momentum has been seen for SME Solutions offerings, credit research, and database-linked products.

Consulting

Highlights

• Increased share of business from international markets

• Successfully built a strong order book with several large mandate wins across sectors

• Maintained strong senior-level connect with policy makers, multilaterals and investors

We recorded strong traction in 2022, especially in urban infrastructure and transport sectors. We supported governments, multilateral institutions and investors in sectors such as roads, renewables and urban infrastructure, helping them finalise frameworks and roadmaps or achieve financial closures.

The business was able to garner significant wallet share in international geographies and maintained its leadership position with multilateral and bilateral agencies.

In the domestic market, we saw significant interest for our sustainability-related solutions.

Risk Solutions, Data & Analytics Highlights

• Consolidated our flagship position in credit assessment platform offerings through successful implementation of a new-age risk assessment model, ICON, in India, which is gaining traction

prioritise review of ratings that were vulnerable to external risks. These initiatives have helped us maintain the high quality of our ratings despite the external shocks.

In 2022, we started factoring ESG risk in our credit rating analysis for listed corporates that publish their ESG data. We also started disclosing these ESG factors in the rating rationales of such rated entities, covering over 100 companies during 2022.

On the regulatory front, the Securities and Exchange Board of India (SEBI) announced a series of enhanced disclosures by credit rating agencies in the interest of investors. SEBI and the RBI also brought in standardisation of scales of fixed deposit ratings, corporate credit ratings and of watch descriptors, besides standardisation of industry classification. Further, the regulators introduced changes to the guidelines relating to credit enhancement (CE) ratings.

SEBI also introduced certain requirements relating to firewall between credit rating agencies and their affiliates.

On the innovation front, we rated the first transaction in the Indian financial sector with co-lent loan receivables as the underlying asset.

We continue to drive thought leadership in the industry by regularly hosting web conferences on topical matters and engaging with industry associations through panel discussions and speaking assignments, or as knowledge partners at conferences. Our opinion pieces received extensive coverage in premier print and digital media.

We successfully hosted a seminar on the non-banking financial company (NBFC) sector titled ‘NBFCs: Gearing up for growth’ under our ‘Fin Insights’ umbrella. We presented our insights on topical themes such as overall NBFC sector outlook, developments in housing finance, vehicle finance trends and landscape for digital lending. The event included presentations by CRISIL Ratings’ experts as well as panel discussions involving several industry leaders on perspectives. The seminar was well attended and received positive feedback on its content and execution.

Other remarkable franchise activities that were well-received during the year included webinars on renewable energy, infrastructure investment trusts and real estate investment trusts, banking, road, cement, steel, natural gas, speciality chemicals, power and real estate.

GAC continued to drive surveillance support across S&P Ratings’ analytical practices and partnered on data and technology transformation programmes.

Research, Analytics and Solutions

Market Intelligence & Analytics (MI&A)

This year, we embarked upon consolidating our Research, Advisory, BIRS and other allied businesses under the CRISIL MI&A umbrella in a bid to leverage our diverse capabilities and present a unified offering to our customers.

The recent amalgamation of our two subsidiaries — CRISIL Risk and Infrastructure Solutions Ltd and Pragmatix Services Pvt Ltd — with CRISIL Ltd with effect from September 1, 2022, has further simplified our go-to-market strategy.

The consolidation lends us much-needed synergy to offer various solutions to our team members and clients alike. We

• Increased traction in regulatory solutions, especially in the asset classification and provisioning solution

• Solution integrated with data gaining good traction on credit monitoring and automation

• Continued focus on international markets with new client additions in the Middle East

The banking environment witnessed increased regulatory focus on digitalisation and automation, especially asset classification. With successful implementation of our regulatory solutions, we are well-positioned to assist institutions in this.

Our successful risk offerings — ICON and EWS - continue to help institutions automate credit processing and monitoring. The business had significant wins in both credit and regulatory spaces, with a good combination of foreign banks and new-age lending institutions. In the overseas markets, we had good wins in both regulatory and credit spaces in new geographies in the Middle East, with continued momentum and success in business analytics and digital enablement solutions.

Our SME Solutions business posted strong recovery during the year with the addition of high-value mandates from corporates. The business saw continued momentum in CREST, MFI, social sector, and B-school grading mandates.

International business CRISIL GR&RS Highlights

• 26 new logos added across verticals

• Won prestigious RiskTech100® award in model validation category

• Risk business closed several large deals from marquee clients

• Sustainability continued to gain traction

• Buy-side research segment accelerated growth with new logos and new areas

The division won several requests for proposal (RFPs) and added 26 new logos across verticals.

The risk business closed several large deals from marquee clients, thus setting a strong foundation for multi-year opportunities. Notable wins include a transformation project from a global bank for regulatory engagements.

Another key win is a project that will enable a global bank to address data inconsistency, incompleteness and inaccuracy.

The business also entered a new engagement with a European bank for assessing the creditworthiness of counterparties across corporate and financial institutions.

Sustainability-oriented solutions continued to gain traction. Regulators have advised banks that climate scenario models, frameworks and results should be subject to challenge and regular review by internal and/or external experts and independent functions. This will drive growth for our sustainability offerings.

GR&RS bagged a climate risk modelling project from an

existing client. GR&RS also won a mandate from the fixed-income team of a leading asset management firm to provide bespoke ESG research service. As part of the process, the team will conduct a comprehensive, bespoke assessment across potential investment opportunities to verify the credentials and avoid the risk of greenwashing.

On the back of strong relationships, newer workstreams emerged from existing sell-side research clients. The buy-side research segment saw growth accelerate, with new logos, and established a strong foothold in new areas.

Reflecting the diversity of our offerings, other wins were in the fields of credit risk assessment, financial crime compliance, client onboarding, operational risk, model development, model validation, data management and analytics.

CRISIL GBA Highlights

• Onboarded two new clients for Client Intelligence and strengthened pipeline for 2023

• Continued to integrate our distribution and relationship manager coverage across global banking clients to improve service quality

• Combined Coalition and Greenwich data sets in corporate and investment banking (CIB) to generate new insights for clients

• Rolled out Q2 Client Intelligence platform with positive feedback from CIB clients

• Extended outreach by presenting views to 100 executive committees at banks and meeting with heads of global markets, investment banking, and transaction banking divisions across large banks

• Referenced in over 250 articles across more than 50 global publications and in over 60 investor relations presentations made by leading global banks

In sync with our expansion initiatives, we have broadened our capabilities and reach to serve more regional client bases across the globe. With a focus on strengthening relationship management and deepening analytical expertise, GBA now services over 300 clients across the financial services space.

We have completed the design of the foundational components of our future digital platform, and are now in the process of implementing the components. There is sharper focus on data governance, security and standardisation to provide a solid base to improve scalability and robustness across all data and analytics processes, leading to enhanced client value and experience.

The business retained the coveted SSAE16 SOC2 Type II certification, which is a testimony of the stringent controls and measures deployed for data and IP protection.

Collaboration with S&P Global

The association with S&P Global helps blend local and global perspectives in shaping CRISIL’s strategy and governance systems. Representatives from S&P Global

bring value to the CRISIL Board through global insights on governance, risk and controls and experience in leading large businesses. CRISIL also gains opportunities to leverage the S&P Global brand through referrals and partnerships in the international market. Regular interface between the two management teams leads to knowledge sharing and cross-fertilisation of ideas. At the same time, commercial opportunities are pursued on an arm’s length basis following review and recommendations by the CRISIL Audit Committee comprising mainly Independent Directors. S&P’s largest collaboration with CRISIL has been in the financial services support to S&P Global Ratings and other teams that started almost two decades ago. It has been attested to by a majority vote from CRISIL’s minority (non-promoter) shareholders in 2014.

CRISIL Ratings and CRISIL MI&A

• CRISIL conducted a series of outreach activities with clients during the India visit of Paul Gruenwald, Global Chief Economist, S&P Global Ratings. These included:

- Economists’ roundtable in Mumbai, attended by leading Indian economists

- Client event in Mumbai for MI&A clients, attended by C-suite professionals

- Client event in Delhi for Ratings’ clients, attended by C-level leaders from issuers

• S&P Global Sustainablel and CRISIL conducted two episodes of ESG Knowledge Series:

- BRSR and the Future of Reporting in India: S&P scorecards are hosted and automated on the ICON platform, an automated credit risk assessment solution.

- A Green Turn towards Financing in India CRISIL GR&RS

• CRISIL GR&RS hosted a webinar titled, ‘ESG in Fixed Income: Navigating the Next Phase of Sustainability’, where global experts shared their insights on how to manage ESG integration hurdles in the corporate credit and municipal bond markets.

• Ongoing collaborations include a referral agreement between S&P Global, a joint go-to-market strategy, and development of risk and sustainability solutions. Support Trucost and S&P Global Sustainable1 for ESG assessments.

CRISIL GBA

Ongoing collaboration includes:

• A referral agreement with Market Intelligence, which represents several data and analytics products targeting community banks in the US

• Collaboration on product development on asset owner data sets

Human Resources Diversity and inclusion

CRISIL is committed to building an enabling environment that values the contributions of its employees and provides them opportunities to grow.

CRISIL has been unwavering in its commitment to the diversity, equity, and inclusion (DE&I) agenda and practises thoroughness and rigour through added structure and incorporated a wider dimension to this space. To give impetus to this agenda, CRISIL’s MD & CEO constituted a DE&I Task Force in 2022.

Other key initiatives during the year included workshops on building cultural awareness given our global workforce; continuous investment in women leadership, and development through the Women’s Leadership Development programme, speed mentoring sessions and other leadership programmes and structured to attract and retain candidates from the LGBTIQA community. We also celebrated Pride Day @CRISIL.

DE&I was also a key theme during our learning month in November and also a part of a mandatory course, which covered our policies and practices related to DE&I, equal opportunity, health and safety, and good labour practices.

Learning and development

People continue to be our biggest differentiator. We invest extensively in their training and professional development to equip them with the necessary skills, domain expertise, and latest technology in line with our business strategy.

Various interventions across target groups were launched through the year. At the leadership level, some of our marquee development programmes for future leaders included LEAD, which was aimed at developing future leaders at CXO and CXO-1 levels; and Manager of the Future, which was aimed at developing managerial effectiveness and empowering employees to lead teams effectively in a hybrid work environment.

LinkedIn Learning and online courses continued to equip employees with learning resources, and build technical, behavioural and creative skills. In line with our focus on learning through business-specific programmes for skill upgradation, we organised ‘Learning Day’, which included speaker sessions on topics pertinent to learning agility, leadership teams in a hybrid environment, and execution agility.

Talent management

Being a people-centric organisation, we place great impetus on managing and developing talent. Identification of high-potential (HiPo) employees through 9-box mapping, which is weaved in with our performance management, is leveraged across the organisation for leadership positions.

The senior leadership team, along with the HR-Talent COE, invests considerable time in the succession planning exercise for identifying potential successors for CXO, CXO-1 and CXO-2 positions, to build a robust succession pipeline, thereby enhancing the opportunities for career development, high potential (HiPo) retention and a better build-to-buy ratio.

The output of the talent and succession exercise forms a validated input for evolving development initiatives for leaders. Special focus is put on grooming these successors for higher levels / diversified roles and to enable their growth at CRISIL.

Directors

Members of the Company’s Board of Directors are eminent persons of proven competence and integrity. Besides global experience, strong financial acumen, strategic astuteness and leadership qualities, they have a significant degree of commitment to the Company. They devote adequate time to meetings and preparation. In terms of requirement of Listing Regulations, 2015, the Board has identified core skills, expertise and competencies of the Directors in the context of the Company’s business for effective functioning and how the current Board of Directors is fulfilling the required skills and competencies. This is detailed at length in the Corporate Governance Report.

The Board meets at regular intervals to discuss and decide on the Company/business policy and strategy, apart from other Board businesses. The Board exhibits strong operational oversight with regular business presentations at meetings. An annual planner of topics to be discussed at the Board meeting is pre-approved by the Directors. The Board/committee meetings are pre-scheduled and an annual calendar of the meetings is circulated to the Directors well in advance to help them plan their schedules and ensure meaningful participation. Only in the case of special and urgent business, should the need arise, is the Board’s approval taken by passing resolutions through circulation, as permitted by the law, which are confirmed in the subsequent Board meeting. The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board meetings and annual general meetings.

The agenda for the Board and committee meetings includes detailed notes on the items to be discussed to enable the Directors to take informed decisions. The Company follows a two-day schedule for its quarterly committee and Board meetings, which offers greater discussion time for Board matters.

In 2022, the Board met six times — on February 15, March 22, April 21, July 21, October 21 and December 13. The maximum interval between two meetings did not exceed 120 days.

The Company’s Nomination and Remuneration Policy formulated under Section 178(3) of the Companies Act, 2013, covers roles, responsibilities, criteria and procedures towards key aspects of Board governance, including the size and composition of the Board, criteria for directorship, terms and removal, succession planning, evaluation framework, and ongoing training and education of Board members. The policy lays down detailed guidelines for remuneration of the Board, Managing Director and employees, and covers fixed and variable components and long-term reward options, including employee stock option schemes. It includes the scope and terms of reference of the Nomination and Remuneration Committee. The policy is available at: https:// www.crisil.com/en/home/investors/corporate-governance. html. During the year, modifications were made to the policy to clarify and update its objectives.

Directorship changes Resignation

Ms Elizabeth Mann, Non-Executive Director, resigned as Director with effect from July 22, 2022, on account of her resignation from S&P Global Inc. Your Directors place on record their sincere appreciation for the strong support, advice and guidance provided by Ms Mann to the Company and its management during her tenure, which was immensely valuable to drive the growth and performance of the Company.

Appointment

Mr Yann Le Pallec was appointed as Additional Director (Non-Executive) with effect from October 3, 2022. Mr Le Pallec is Executive Managing Director and Head of Global Ratings Services for S&P Global Ratings, where he oversees a group of 2,200 analysts and support staff in 28 countries who cover more than one million outstanding ratings on entities and securities across a wide range of sectors, including governments, corporations, financial institutions and structured finance. Mr Le Pallec’s detailed profile can be accessed here: https://www.crisil.com/en/home/about-us/our-people/board-of-directors.html. The members of the Company, by way of a resolution passed through postal ballot dated December 5, 2022, approved the appointment of Mr Yann Le Pallec as a Non-Executive Director, liable to retire by rotation.

Reappointment

During the year, Mr Girish Paranjpe was due for retirement from his first term as Independent Director on October 16, 2022. The Board at its meeting held on July 21,2022, approved the reappointment of Mr Paranjpe as an Independent Director for a second term. The members of the Company, by way of a Special Resolution passed through postal ballot dated October 14, 2022, approved the reappointment of Mr Paranjpe for a second term, i.e. until October 16, 2027.

Retiring by rotation

In accordance with the Articles of Association of the Company and provisions of the Companies Act 2013, Mr John Berisford will retire by rotation at the ensuing Annual General Meeting of the Company. Mr Berisford, who is eligible for reappointment, has conveyed that he does not intend to seek reappointment and will retire on completion of his current term at the ensuing Annual General Meeting.

Your Directors place on record their sincere appreciation for Mr Berisford’s astute stewardship, constructive input and thoughtful guidance, as Chairman of the Board, and for helping set the strategy of the Company and chart its roadmap for the future.

Board independence

Our definition of ‘independence’ of Directors is derived from Regulation 16(b) of SEBI (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 independence of directors during the Board evaluation process and assessing veracity of disclosures, the following Non-Executive Directors are Independent:

a) Ms Vinita Bali

b) Mr Girish Paranjpe

c) Ms Shyamala Gopinath

d) Mr Amar Raj Bindra

In the opinion of the Board, the Independent Directors fulfil the conditions specified under the Companies Act, 2013, the Rules made thereunder and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. They are independent of the management and are persons of high integrity, expertise and experience. Further, in terms of Section 150 of the Companies Act, 2013, read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, Independent Directors of the Company have confirmed that they have registered themselves with the databank maintained by the Indian Institute of Corporate Affairs (IICA) and have passed the proficiency test, if applicable to them.

Committees of the Board

The Board has five committees:

• Audit Committee

• Corporate Social Responsibility Committee

• Risk Management 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, as part of this Annual Report.

Annual evaluation by the Board

During the year, the Company engaged an independent consultant to conduct this evaluation, to benefit from expertise, best practise and professional insights in this area. This exercise was carried out through a structured questionnaire prepared separately for the Board, Committees, Chairman and individual Directors as well as in-person interviews by the consultant. The Chairman’s performance evaluation was carried out by Independent Directors at a separate meeting.

The parameters assessed included various aspects of the Board’s functioning such as: effectiveness, information flow between Board members and management, quality and transparency of Board discussions, Board dynamics, Board composition and understanding of roles and responsibilities, succession and evaluation, and possession of required experience and expertise by Board members, among other matters.

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

Peer assessment of Directors, based on parameters such as participation and contribution to Board deliberations, keeping oneself abreast of organisational matters, trends, knowledge and understanding of relevant areas, among other matters, was reviewed by the Board for individual feedback.

During 2022, the Company actioned feedback emerging from the Board evaluation process conducted in 2021, relating to

operational improvements of the meeting process, matters of strategy and stakeholder interaction.

Compliance monitoring framework

The Company has a comprehensive framework for monitoring compliances with applicable laws and internal policies. Compliance reviews take place at multiple levels as follows:

• First line of defence: Business and corporate functions ensure implementation of laws at the primary level through checks and controls in their operational processes.

• Compliance Reporting tool: The compliances are further mapped into the Compliance Reporting tool and affirmed at regular frequency by the compliance owners, to generate compliance reports that are submitted to the Board on a quarterly basis.

• The compliance monitoring framework is periodically subject to audit by the internal auditors as per the internal audit plan.

• The Secretarial audit process ascertains adequacy of systems and processes for compliance, commensurate with the size and operations of the Company.

• The Stakeholders’ Relationship Committee of the Company reviews instances of policy violations and breaches on a quarterly basis.

Risk Management Policy and internal control adequacy

The Board has adopted policies and procedures for governance and for orderly and efficient conduct of its business, including adherence to the Company’s policies, safeguard of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and 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.

Significant audit observations and follow-up actions thereon are reported to the Audit Committee. For ensuring independence of the audits, internal auditors report directly to the Audit Committee. Both internal and statutory auditors have exclusive executive sessions with the Audit Committee periodically. In addition, during the year, management performed a review of key controls impacting financial reporting, at entity as well as operating levels, and submitted its report to the Audit Committee and the Board.

The Company has a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Mitigation plans for key risks identified by the businesses and functions are implemented and reviewed periodically. CRISIL has adopted a balanced approach to risk management with an endeavour to mitigate risks to an acceptable level within its tolerances and protecting CRISIL’s reputation and brand while supporting the achievement of operational and strategic goals. In addition to key strategic and operational risks, data security, cyber security, technology initiatives, regulatory, talent acquisition and business continuity were of primary focus during 2022. Macroeconomic conditions are likely to remain difficult with inflationary and wage pressures together with higher interest rates creating potentially recessionary

conditions in key global markets. Economic impact due to the uncertainty in global operating environment is being continuously monitored and appropriate measures are being taken. Several new age tools and advanced security controls are being deployed to enhance information and cyber security posture. Periodic awareness campaigns are conducted for all employees through emails, blogs, videos, online trainings and employee townhalls. CRISIL continues to accord top priority to manage employee attrition by formulating talent retention and recognition programmes, and by offering a competitive salary and growth path for key talent. Focused efforts to retain talent by increasing employee engagement have been initiated. The Company is also creating awareness about its overall employee value proposition. Business continuity drill routines have been completed as per the plan during the year.

Additionally, the Company continued monitoring top risks on its risk register, which are discussed in greater detail in the Management Discussion and Analysis Report.

Directors'' responsibility statement

The 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;

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

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

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

However, we endeavour to support the environment by adopting environment-friendly practices in our office premises and have rolled out a policy that aims at improving the environmental performance of CRISIL. Our efforts in this direction centre around making efficient use of natural

resources, elimination of waste and promoting recycling of resources.

Initiatives taken in the area of environment protection in 2022 are mentioned in the CRISIL ESG Report 2022 available at https:// www.crisil.com/en/home/investors/financial-information/ sustainability-report.html.

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, approve activities to be undertaken by the Company towards CSR.

The CSR policy of the Company is available at https://www. crisil.com/en/home/investors/corporate-governance.html and details about initiatives taken by the Company during the year under review have been appended as Annexure I to this report.

The Chief Financial Officer has certified that the funds disbursed for CSR have been used for the purpose and in the manner approved by the Board for financial year 2022.

Vigil mechanism

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

Significant developments

Scheme of amalgamation between CRISIL Limited (‘Transferee Company’) and its wholly owned subsidiary companies, CRISIL Risk and Infrastructure Solutions Limited and Pragmatix Services Private Limited (‘Transferor Companies’) in terms of Section 230 to 232 of the Companies Act, 2013

In order to rationalise the Company’s entity structure, to bring in operational synergies and benefits, and to achieve administrative efficiencies, the Board of Directors on December 13, 2021 approved the scheme of amalgamation for merger of its wholly owned subsidiaries CRISIL Risk and Infrastructure Solutions Limited and Pragmatix Services Private Limited into the Company under sections 230 to 232 of the Companies Act, 2013.

The Scheme was approved by the National Company Law Tribunal (NCLT) on August 8, 2022. The scheme of amalgamation was made effective September 1, 2022 upon filing of the certified copy of the NCLT order with the Registrar of Companies. Consequent to the amalgamation, the risk solutions, business intelligence and infrastructure consultancy businesses have been consolidated under CRISIL’s Market Intelligence and Analytics business.

Merger of Greenwich Associates LLC with CRISIL Irevna US LLC

Towards rationalising the Company’s subsidiary structure and generating operational and administrative efficiencies, two wholly owned US-based subsidiaries of CRISIL, namely, Greenwich Associates LLC and CRISIL Irevna US LLC, agreed to merge on October 21, 2022. The merger is currently in progress.

Subsidiaries

As at December 31, 2022, the Company had one Indian and 13 overseas wholly owned subsidiaries.

In accordance with Section 129(3) of the Companies Act, 2013, CRISIL has prepared a consolidated financial statement of the Company and all its subsidiaries, which is a part of the Annual Report. A statement containing salient features of the financial statements of the subsidiaries and highlights of performance of the subsidiaries are included in the Annual Report.

The Company has no associate companies within the purview 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 its standalone and consolidated financial statements has been uploaded on the website, www.crisil. com. Further, as per the fourth proviso of the said section, accounts of all subsidiaries as at December 31, 2022 have also been uploaded on www.crisil.com. Shareholders interested in obtaining a copy of the accounts of the subsidiaries may write to the Company Secretary at the Company’s registered office or email to investors@crisil. com.

The Company has also obtained a certificate from the statutory auditors, certifying that the Company is in compliance with FEMA Regulations with respect to downstream investments.

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 subsidiaries engaged in product delivery of CRISIL’s businesses and business development activities. The Company’s Global Analytical Centre has also been providing analytical support to S&P Global entities as part of a master services agreement, which was approved by a majority vote from CRISIL’s minority shareholders, without participation of S&P, through a resolution passed by postal ballot on December 15, 2014. Besides this, the Company pursues opportunities for development of risk and sustainability solutions for clients with S&P.

The Audit Committee pre-approves related party transactions as requested by the Company’s policy. The details of such 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 2022 were in the ordinary course of business and at an arm’s length. During the year, there were no related party transactions that were materially significant and that could have a potential conflict 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) are given in a prescribed Form AOC-2 as Annexure II.

As required under the 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 uploaded on

the Company’s website, https://www.crisil.com/en/home/ 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.

Auditor''s Report

M/s Walker Chandiok & Co LLP, (an affiliate of Grant Thornton network) is statutory auditor of the Company. Its report is a part of the Annual Report.

M/s Walker Chandiok & Co LLP is undergoing its second term of five years as statutory auditor of the Company, i.e. from the conclusion of the 35th Annual General Meeting held on April 22, 2022 until the conclusion of the 40th Annual General Meeting. Consequent to the amendments to Companies Act, 2013, ratification of appointment of the statutory auditor at every Annual General Meeting is no longer required.

Comments on Auditor''s Report

There are no qualifications, reservations or adverse remarks or disclaimers made by M/s Walker Chandiok & Co LLP, statutory auditors, in its audit report. The statutory auditor also did not report any incident of fraud to the Audit Committee of the Company in the year under review.

Secretarial audit report

The Board appointed M/s Makarand M. Joshi & Co., Practising Company Secretaries, to conduct the secretarial audit. The report is appended as Annexure III. There were no qualifications, reservations or adverse remarks or disclaimers made by M/s Makarand M. Joshi & Co., Practising Company Secretaries, in its secretarial audit report.

Also, CRISIL Ratings Limited, a material subsidiary of the Company, undertakes secretarial audit every year under Section 204 of the Companies Act, 2013. The secretarial audit of CRISIL Ratings Limited for financial year 2022 was carried out pursuant to Section 204 of the Companies Act, 2013. The secretarial audit was conducted by M/s MMJB & Associates LLP, Practising Company Secretaries. The report did not contain any qualification, reservation or adverse remark or disclaimer. The secretarial audit report of CRISIL Ratings Limited forms part of the Annual Report as per requirements of the Listing Regulations.

Management Discussion and Analysis Report

The Management 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 the Annual 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 SEBI. The Report on Corporate Governance as stipulated under

Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, is part of the Annual Report. A certificate from the auditors of the Company confirming compliance with the conditions of corporate governance, as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, is also published in the Annual Report.

Particulars of remuneration

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

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, names and other particulars of every employee covered under the said rule are available at the registered office of the Company during working hours for a period of 21 days before the Annual General Meeting and will be made available to any shareholder on request, and is also available on the Company’s website.

Employee Stock Option Schemes

The Company has three Employee Stock Option Schemes (ESOSs). Employee Stock Option Scheme - 2011 (ESOS 2011) was approved by shareholders vide a special resolution passed through postal ballot on February 4, 2011. Employee Stock Option Scheme - 2012 (ESOS 2012) was approved by shareholders vide a special resolution passed through postal ballot on April 10, 2012. Employee Stock Option Scheme - 2014 (ESOS 2014) was approved by shareholders vide a special resolution passed through postal ballot on April 3, 2014, and amended by a special resolution of shareholders at the 30th Annual General Meeting held on April 20, 2017.

In 2022, there were no material changes in the ESOSs of the Company. The schemes are in compliance with SEBI regulations. As per Regulation 14 of Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, read with Securities and Exchange Board of India circular no. CIR/CFD/POLICY CELL/2/2015 dated June 16, 2015. Details of the ESOSs are uploaded on the Company’s website, https://www.crisil.com/en/home/ investors/financial-information/annual-report.html.

The Company has received a certificate from M/s Makarand M. Joshi & Co., Practising Company Secretaries, that ESOS 2011, ESOS 2012 and ESOS 2014 have been implemented in accordance with SEBI regulations and resolutions passed by members in the general meetings. The certificate will be placed at the ensuing annual general meeting for inspection by members.

Annual Return

The complete Annual Return (Form MGT-7) is available on the Company’s website, https://www.crisil.com/en/home/ investors/financial-information/annual-report.html.

Financial year

The Company follows the calendar year as the financial year in terms of a special approval obtained from the Company Law Board in 2015.

CEO and CFO certifications

A certificate from Mr Amish Mehta, MD & CEO, and Mr Sanjay Chakravarti, 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 17, 2023.

Statutory disclosures

Directors state that there being no transactions with respect to the following items during the financial year under review, no disclosure or reporting is required with respect to:

1. Deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013, and the Companies (Acceptance of Deposits) Rules, 2014

2. Issue of equity shares with differential rights as to dividend, voting or otherwise

3. Receipt of any remuneration or commission by the Managing Director/Whole-time Director of the Company from any of its subsidiaries

4. Significant or material orders passed by the regulators or courts or tribunals, which impact the going concern status and the Company’s operations in future

5. Buyback of shares

6. Material changes and commitments affecting the financial position of the Company that have occurred between the end of the financial year to which the financial statements relate and the date of this report, unless otherwise stated in the report

7. Maintenance of cost records as per sub-section (1) of Section 148 of the Companies Act, 2013

8. Application or proceedings made under the Indian Bankruptcy Code, 2016

Acknowledgements

The Board of Directors wish to thank the employees of CRISIL for their exemplary dedication and excellence displayed in conducting all operations. 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 as well. The affiliation with S&P Global has been a source of great strength. The Board of Directors also wish to place on record its gratitude for the faith reposed in CRISIL by the shareholders, SEBI, the RBI, the Government of India, and the state governments. In conclusion, the role played by media in highlighting the good work done by CRISIL is deeply appreciated.

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

John L Berisford

Chairman

Jaipur, February 17, 2023 (DIN: 07554902)



Dec 31, 2018

Dear Member,

The Directors are pleased to present to you the 32nd Annual Report of CRISIL Limited, along with the audited financial statements, for the year ended December 31, 2018.

Financial performance

A summary of the Company’s financial performance in 2018:

(Rs crore)

Particulars

Consolidated

Standalone

2018

2017

2018

2017

Total income

1,821.90

1,683.84

1,270.86

1,224.59

Profit before interest, depreciation, exceptional

544.64

480.66

410.42

374.27

items and taxes

Finance cost

2.23

0.41

1.1 8

0.41

Deducting depreciation of

42.82

46.64

28.67

27.81

Profit before tax

499.59

433.61

380.57

346.05

Deducting taxes of

136.49

129.18

103.04

108.79

Profit after tax

363.10

304.43

277.53

237.26

Other comprehensive income

(94.63)

(77.42)

(99.51)

(85.17)

Total comprehensive income

268.47

227.01

178.02

152.09

Appropriations are:

Final dividend

*71.73

**64.20

*71.73

**64.20

Interim dividend

136.79

128.81

136.79

128.81

Corporate dividend tax

42.86

37.74

42.86

37.74

Special Economic Zone reinvestment reserve

1.50

3.00

1.50

3.00

General reserve

-

-

-

-

*Final dividend for 2017: Rs 10 per equity share of Re 1 each **Final dividend for 2016: Rs 9 per equity share of Re 1 each

The financial statements for the year ended December 31, 2018, have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, read with Section 133 of Companies Act, 2013, (the ‘Act’) and other relevant provisions of the Act. 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, which are subjected to limited review, and publishes consolidated and standalone audited financial results on an annual basis.

a) Consolidated operations

Consolidated total income for 2018 was Rs 1,821.90 crore, 8% higher than Rs 1,683.84 crore in the previous year. Overall expenses were Rs 1,322.31 crore as against Rs 1,250.23 crore in the previous year. Profit before tax was Rs 499.59 crore as against Rs 433.61 crore in the previous year. Profit after tax was Rs 363.10 crore as against Rs 304.43 crore in the previous year.

b) Standalone operations

Standalone total income for 2018 was Rs 1,270.86 crore, compared with Rs 1,224.59 crore in the previous year. Overall expenses were Rs 890.29 crore as against Rs 878.54 crore in the previous year. Profit before tax was Rs 380.57 crore as against Rs 346.05 crore in the previous year. Profit after tax was Rs 277.53 crore as against Rs 237.26 crore in the previous year.

A detailed analysis of the Company’s performance, consolidated and standalone, is included in the Management Discussion and Analysis Report, which is a part of the Annual Report.

Dividend

The Directors recommend for approval of the members at the Annual General Meeting to be held on April 17, 2019, payment of final dividend of Rs 11 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 and second interim dividends of Rs 6 each and third interim dividend of Rs 7 per equity share of face value of Re 1 each. The total dividend will be Rs 30 per share on a face value of Re 1 per share in 2018 as against a total dividend of Rs 28 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 410,854 equity shares to eligible employees on exercise of options granted under the Employee Stock Option Scheme of the Company. At the end of the year, CRISILs issued, subscribed and paid-up capital was 72,115,782 equity shares of Re 1 each.

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

Particulars

No of Shares allotted

Cumulative outstanding capital (no. of shares of face value Re 1 each)

Capital at the beginning of the year, i.e. as on January 1, 2018

-

71,704,928

Allotment of shares to employees on February 13, 2018 pursuant to exercise of options granted under Employee Stock Option Scheme, 2014

21,101

71,726,029

Allotment of shares to employees on April 17, 2018 pursuant to exercise of options granted under Employee Stock Option Scheme, 2012 and Employee Stock Option Scheme, 2014

80,920

71,806,949

Allotment of shares to employees on July 17, 2018 pursuant to exercise of options granted under Employee Stock Option Scheme, 2014

238,413

72,045,362

Allotment of shares to employees on October 16, 2018 pursuant to exercise of options granted under Employee Stock Option Scheme, 2014

70,420

72,115,782

Capital at the end of the year, i.e. as on December 31, 2018

-

72,115,782

Segment-wise results

The Company has identified three business segments in line with the Indian Accounting Standard on Operating Segment (Ind AS-108), which comprise: (i) Ratings, (ii) Research and (iii) Advisory. The audited financial results of these segments are provided as a part of financial statements.

Review of Operations

A. Ratings Highlights

- Announced 2,976 new bank loan ratings (BLRs) in 2018; total BLRs outstanding exceeded 11,000

- Conducted over 19,000 gradings and assessments in the MSME sector

- Assigned rating to India’s first toll-operate-transfer (TOT) road project; also rated the first transaction comprising pass through certificates (PTCs) backed by education loan receivables - the newest asset class to be securitised in India

- Successful onboarding of large corporate entities and launch of new products (Independent Credit Evaluation

- ICE) supported revenue growth; continued to maintain market share and retained the premier position in the corporate bond market despite intense competition

- Conducted a series of high-profile franchise activities during the year that were extensively covered by the media and well-appreciated by stakeholders

- Global Analytical Centre (GAC) continued to enhance partnership with S&P Global Ratings services on key surveillance and analytical domains.

- Launched CriSidEx, India’s first sentiment index for MSEs developed jointly by CRISIL and SIDBI

Business environment

A sharp drop in corporate bond issuances, amid rising yields and a temporary liquidity crunch following the default by a large non-bank outweighed signs of an improvement in investor sentiment during 2018, keeping the business environment at the world’s fastest-growing major economy muted. Even though capital market activities were subdued because of hardened yields, demand for bank credit grew driven by higher working capital requirements (necessitated by rise in commodity prices) and shift in demand from the capital market to bank loans (given slower interest rate transmission).

On the regulatory front, the Securities and Exchange Board of India (SEBI) announced a series of changes pertaining to enhancing disclosure requirements by credit rating agencies (CRAs) as well as issuers and measures to expand the debt capital market. These measures are expected to raise industry standards and broaden the domestic corporate bond market. CRISIL welcomes these initiatives as structurally positive. Enhanced disclosures by issuers will increase transparency and assist CRAs and debt market investors to closely monitor the performance of issuers and take timely decisions.

Further, the SME segment in India has witnessed massive digital transformation with the introduction of the Goods and Services Tax (GST) and other government-led digital initiatives. CRISIL remained well-equipped to address the changing customer requirements through its platform, smefirst.com, and various other digital offerings.

Operations

CRISIL Ratings maintained its market leadership in 2018 driven by new client acquisitions and healthy traction in new products. As many as 2,976 new BLRs and over 19,000 SME gradings and assessments were conducted in the year. Ratings have been assigned to more than 28,000 large and mid-size corporates till date and the performance of over 144,000 SMEs were assessed. Fewer issuances in the corporate bond market, primarily on account of hardened yields, remained a challenge. However, focus on high-growth segments and existing relationships helped us secure our bond market share. Further, we onboarded 150 new large corporate clients and gained positive revenue traction in stressed assets. Despite intense competition, we were able to maintain our market share in the BLR space, in terms of new quantum rated.

On the innovation front, CRISIL Ratings continues to be a torchbearer in the industry. In 2018, we assigned rating to India’s first TOT road project. We also rated PTCs backed by education loan receivables. In another first, we assigned credit opinion to capital protection available to alternate investment fund unitholders. We were also the first to rate the resolution plan of a stressed asset, develop a detailed criteria and methodology, in line with the latest RBI circular on ‘Resolution of Stressed Assets - Revised Framework.’ We received an encouraging response on the same.

CRISIL Ratings maintained its multifaceted approach towards stakeholder relationship management. In addition to consistent engagement with issuers, we expanded our structured platform to interact with investors in deepening the relationship and understanding their perspective on the credit environment. To strengthen our involvement with issuers and investors, we collaborated with their senior management, delivered sectoral presentations and leveraged the digital channel to share our thought leadership reports and periodical publications regularly.

We strengthened our market presence by hosting web conferences on trending topics and featuring on premier news channels. We also engaged with industry associations by participating in panel discussions, taking up speaking assignments, and being the knowledge partner at various conferences. We published the fourth edition of ‘CRISIL Inclusix’ report that weighs three service providers (banks, insurers and microfinance institutions) on four dimensions (branch, credit, deposit and insurance).

We also worked with regulators to put forth our opinions on rating standards and governance policies for the credit rating industry.

We organised the fifth edition of its Annual Bond Market seminar themed ‘Bonds of growth: Assessing the demand-supply matrix’. The highlights of the seminar were the keynote addresses by Shri Ajay Tyagi, Chairman, SEBI; Shri Subhash Chandra Garg, Secretary, Department of Economic Affairs, Ministry of Finance; and Shri HR Khan, Former Deputy Governor, RBI and Chairman of SEBI’s Corporate Bonds & Securitisation Advisory Committee. The dignitaries also launched The CRISIL Yearbook on the Indian Debt Market, 2018 at the seminar. Our analysis was well received by all stakeholders, including regulators and policy makers.

Further, CRISIL Ratings successfully hosted an investor discussion forum on the Non-Banking Finance Company (NBFC) sector themed as ‘Evolving landscape & key imperatives’. During the forums, CRISIL presented insights on the sector, recent market developments and asset liability maturity management. Additionally, CRISIL partnered with S&P Global Ratings to organise highly engaging forums for the investor community where opinions on the global economy, the credit quality of India Inc. and the investment outlook were discussed.

In order to deepen our engagement with the existing as well as prospective clients located in Tier 2 regions, we hosted the Ratings Regional Conclave, to present our views on relevant industry trends and have close discussions with clients. The franchise and outreach activities witnessed encouraging response from stakeholders comprising clients, investors and regulators.

CRISIL SME business also made considerable progress to sustain consistency in revenues and reduction of costs, post the National Small Industries Corporation (NSIC) subsidy withdrawal. Initial traction was witnessed in newly launched products for bulk originations through lenders such as CRISIL Credit Assessment Score (CCAS), Enhanced Due-Diligence (EDD) and i-Check. The institutional SME (ISME) business has been identified as one of the growth drivers for the SME business and exhibited robust growth in 2018 with addition of various new clients across industries and increased share of wallet from existing clients.

Further, in the near to medium term, smefirst.com, our digital portal for the SME sector, is expected to be one of the important growth contributors to the SME business. With enhanced focus on digital lending, smefirst.com will act as a one-stop solution for lenders, SMEs and corporates to meet their assessment requirements. The ISME business with its robust pipeline is expected to provide stability to the overall SME business. In continuation with last year’s trend of aligning offerings to market requirements, we also launched a new product, SME Compare, a peer comparison tool for SMEs, accessible on smefirst.com.

The year saw us launching CriSidEx, India’s first sentiment index for MSEs. This was launched by Honourable Finance Minister Arun Jaitley. This lead and lag indicator is jointly developed by CRISIL and SIDBI. We also launched WE-Check, a free digital verification and assessment service dedicated to women entrepreneurs, in association with NITI Aayog.

GAC continued to partner with S&P Global Ratings Services on key surveillance and optimisation initiatives in the data and analytical domains and enhanced its support to the risk and control functions. With increasing focus on automation and optimisation, GAC stepped up its efforts on the ongoing process improvement and automation by leveraging new age technologies. With continued focus on strengthening the first line of defence, GAC undertook several initiatives to strengthen the internal controls framework. GAC’s adoption of lean management tools, work standardisation and process re-engineering initiatives resulted in consistent support levels across diverse geographies and asset classes.

B. Research

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

- Made strong headway in Europe with the addition of clients in previously unchartered geographies - Austria, Belgium and South Africa

- Added new logos in the buy-side, regional sell-side and credit risk segments

- Continued efforts to develop and evolve automation and data analytics offerings to meet rapidly changing client needs

- Expanded our offering portfolio with the addition of Current Expected Credit Loss (CECL) modeling and Target Review of Internal Models (TRIM) support, while the productisation agenda continued to progress with the launch of several tools and automated solutions

Business environment

Regulatory headwinds continue to lash the banking and financial services space. New regulations in the form of Markets in Financial Instruments Directive II (MiFID II) had an impact on market conditions. While it triggered a decline in business from traditional bulge bracket banks, it has opened up diverse opportunities with regional banks in the US and in the buy-side space.

As firms continue to search for differentiation in the quality of research, demand for specialised research and consequently niche research providers, has increased. Amid these changes, demand from the buy-side continues to increase as firms look to bridge the gap within equity and fixed income, and commodities research. In the credit risk space, banks are looking for cost-effective risk assessment solutions with soaring demand for credit risk surveillance and monitoring solutions, adoption of analytics and automation and improvements within the credit risk workflow.

Clients are also taking a measured approach towards adoption of data analytics solutions. Analytics are being integrated into the buy-side investment process, supported by a shift towards ‘quantamental’ (a merger of computer and human based decision-making). In credit risk, there is an appetite for solutions such as the early warning system and front-to-back automation of processes such as credit risk of low default portfolios (LDP). Analytics in sell-side research is cleaving the big and small players, with the former stepping up investments in analytics-based offerings significantly.

Europe continued to be under the regulatory radar, especially with respect to model risk management guidelines as part of the TRIM and the biennial European Central Bank stress testing exercise. As such, market appetite for Risk & Analytics’ (R&A) stress testing, model validation and regulatory change management remained strong. Adoption of advanced automation and analytics solutions using Machine Learning (ML), Artificial Intelligence (AI) and Big Data are strategic investment areas for major banks. In response, the business has been working on repackaging our current service offerings as modular solutions powered by ML, AI and Big Data. In the US, dilution of the existing regulatory requirements adversely impacted demand for our modeling and stress testing services.

On the flip side, newer regulations such as CECL and Uncleared Margin Rules (UMR) are nearing their implementation deadline and market demand for process re-engineering and business transformation services has been increasing.

Operations

The Financial Research business continued to see good traction in the buy-side, regional sell-side, data analytics, credit risk and SPARC verticals, through addition of new logos in these segments. The highlight was the addition of one of the largest global banks for a bilateral credit risk engagement and the acquisition of one of the world’s largest professional services company as a client for high-end research services.

We also gained new clients for our research automation platform, SMART and expanded engagements with the existing clients. However, gains in these segments were offset, to an extent, by a decline in the traditional bulge bracket client segment which continues to weather adverse market conditions. Within data analytics, we scoped out projects for credit risk-related automation, completed natural language processing (NLP)-based buyside research assignments and provided alternative data related analytics assignments for the sell side. All three areas saw increased interest as measured by a pick-up in the number of discussions with banks and asset managers.

The Financial Research business steered many innovations in 2018, including: credit risk automation that covers the early warning system (a platform that automatically generates red flags against stressed constituents of a loan portfolio by combining data feeds from disparate internal and external sources), rating process automation for regulated funds, Tableau dashboards for real time reporting and analytics and automated surveillance for negative news; environmental, social and governance (ESG) research support to investment banks, asset managers and other sell-side and buy-side players for ESG investing; public finance automation (an end-to-end automated platform for customised scorecard generation and surveillance for US public finance entities), and automation of the MCG credit rating process through SMART allowing for advanced analytics and automated forecasting.

This has improved efficiency and analytical capabilities. The vertical won marquee global clients from the banking and affiliate industries during the year - including a premier global investment bank, one of the world’s largest professional service provider, a top global insurer and a leading exchange and clearing firm.

The R&A business witnessed good cross-selling and subsequent expansion of the range of services provided to some of our largest clients, as well as the addition of several new clients across the trading, risk and finance management functions. Some of the innovations driven by the R&A business include tools and utilities such as CECL modeling platform (an analytical suite of ready-to-use credit risk models and methodologies for CECL implementation); Alert classification and clearing tool to automate the process of classifying and clearing alerts generated by the anti-money laundering (AML) systems of banks; and Risk Data Aggregation (RDA) to enable aggregation of data across divisions and databases and to run analytics on the same. It also innovated in project / knowledge management (PM/KM) framework with the launch of Tactical tool to provide a real-time view of the project health through an interactive dashboard - RAG (Red-Amber-Green) reports across all accounts were published starting June.

The marquee client wins for R&A included a leading online broker, one of the largest clearing exchanges in the world, and a large global insurer. In continuation of our efforts to groom the workforce, GR&A facilitated a comprehensive and dynamic in-house training programme, imparting the latest relevant technical and soft skill training to ensure holistic development of our talent pool. In 2018, we also developed our franchise through hosting and participating in a series of conferences, round-tables, webinars with senior client stakeholders, and publishing market relevant thought leadership research articles across topical market themes such as Brexit, CECL, Recovery and Resolution Planning, UMR and multiple use-cases of emerging technologies like Machine Learning and Blockchain for the Financial Services industry. The thought leadership initiatives produced incisive output in the form of playbooks, whitepapers and supporting franchise activities.

B.2 India Research

Highlights

- Retained its dominant and premium position in the flagship Industry Research business with the launch of its advanced ‘Cutting Edge platform’ and topical new reports

- Witnessed healthy revenue growth in the Customised Research business on the back of significant traction in the automobiles, commodities and energy sectors

- With strong brand equity and relationship with investment banks, the business won mandates across sectors for providing the ‘Industry Chapter’ for Draft Red Herring Prospectus (DRHP) filings

- Continued to be the largest provider of fixed income indices in India; consolidated our position by launching 39 new debt and five new hybrid indices, taking the total to 91

- Received positive response our new product Quantix, a comprehensive and high-end data analytics tool with an extensive database of 50,000 companies

- Launched a state-of-the-art Learning Management System (LMS portal) to provide a complete e-learning solution and onboarded three large clients

Business environment

Volatility was the new normal in 2018. Most asset classes - equity and debt, primarily - oscillated between highs and lows through the year.

Volatility in the macroeconomic environment and increased competition proved favourable for the India Research business. The year also witnessed large-scale defaults, which underscored the need for enhanced prognosis and comprehensive analytical solutions.

An evolving business environment brought to the fore the need to upskill the talent pool amongst client companies.

Operations

Uncertainty in the macroeconomic environment and volatility in asset classes augured well for the India Research business. Upturn in the capital expenditure cycle, rise in commodity prices and increasing competition boosted demand for bespoke research. Mandates for the ‘Industry Chapter’ in DRHP filings brought in additional revenue.

In the backdrop of mounting defaults, banks and NBFCs have increased focus on risk mitigation and identifying early warning signals. Customers demand a comprehensive data solution (structured and unstructured data) that can be integrated into their workflow and help them with better analytics. Quantix, our new product, caters to this need with its advanced tool and analytics and comprehensive database of 50,000 companies.

In the Fixed Income Research business, we consolidated our strong position in the valuation space by winning mandates from general insurers and corporates. We continue to be the largest provider of fixed income indices in India and have launched 39 new debt and five new hybrid indices, taking the total to 91.

In mutual fund research, we enhanced our presence with corporate treasuries and exempted provident fund trusts, helping them review portfolio performance and monitor risks.

There is a constant need to upskill the talent pool at the NBFCs, small finance banks (SFBs) and other banks - especially in the public sector - given the large number of senior level retirements. Our Training business has been catering to these requirements through open house and customised programmes. We launched 48 unique open house programmes and an eLearning course that will enable a much larger user base to benefit from C RISI Lis expertise in credit and risk management.

CRISIL Centre for Economic Research (C-CER) launched the Macro Plus training programme this year. We conducted six such programmes, of which two were in collaboration with the fixed income team. The programmes not only saw massive participation by clients’ senior management teams, but also received encouraging response from them.

Further, we continued to focus on franchise and thought leadership activities by conducting distinctive research on contemporary issues. We released 36 high impact reports, 38 bylines, 29 press releases and also held marquee events including India Outlook 2018, Fourth Pension Conference, CNBC Mutual Fund Awards, AMFI Annual Summit and Trustee Seminar by SEBI.

Some of our prominent high impact research reports covered pertinent issues concerning stakeholders, clients, market participants and policymakers. Topics covered included -assessment of four years of the Modi government; evaluation of the impact of global risks - rising oil prices, monetary tightening and trade wars - on the Indian economy; impact of rains on farmers’ profitability and inflation;and understanding the trajectory of the rupee amid the turmoil.

The India Research team participated in over 40 leading industry conferences and panel discussions and hosted events and webinars on a variety of topics.

B.3. CRISIL Coalition Highlights

- Added six new clients, including regional players

- Extended outreach by presenting views to 200 Executive Committees at banks and meeting with the heads of Global Markets (GM), Investment Banking (IB) and Transaction Banking (TB) divisions across all large banks

- Deployed automation tools and re-engineered parts of operations to increase the operating leverage across offerings

- Referenced in 350 articles across 90 global publications and in 75 investor relations presentations made by leading global banks

Business environment

The main clients for CRISIL Coalition are global corporate and investment banks (CIBs). Global CIBs had a challenging year in 2018, with revenues remaining flat. This was mainly driven by declining revenues in Fixed Income and partially offset by growth of 5-10% in Transaction Banking revenues. The Coalition IB Index, which tracks performance of top 12 global investment banks, remained flat on account of steady performance across both global markets and investment banking divisions in 2018. The Coalition TB Index, which tracks the performance of top 12 largest global transaction banks, increased on account of better performance in cash management.

Operations

We embarked on several initiatives to enhance our market relevance and connect with customers. These initiatives included reaching out to prospective clients, including regional players. In 2018, CRISIL Coalition added six new logos to its impressive list of global corporate and investment banks. New and more granular Intellectual Property (IP) was developed to cater to newer clients such as the regional banks.

We reinforced our leadership with the top 15 banks by meeting most of the heads of CIB and all heads of GM/IB businesses, in addition to presenting to 200 Executive Committees at various banks. More than 90 publications globally carried our views and quoted these during the year. We were referenced by leading global banks in 75 investor relations presentations.

On the operations side, the focus has been on enhancing productivity through increased automation and digitisation. We developed and deployed an application for automated printing of client presentations, having undertaken efforts to digitise the research value chain. This will enable better data discovery in research and analytics. CRISIL Coalition obtained the coveted SSAE16 SOC2 Type II certification in 2018. The certificate attests and describes the operating effectiveness of controls designed and implemented to protect data and IP.

C. Advisory

C.1. CRISIL Infrastructure Advisory Highlights

- Strong order book on the back of a good year for new business despite slowdown on new government programmes

- Deeper presence and client relationships at the state level

- Increased share of business from international markets -Asia and Africa

- Hosted the second edition for CRISIL India Infrastructure Conclave along with publication of CRISIL India Infrastructure Yearbook and CRISIL InfraInvex - the country’s first investability index

Business environment

The infrastructure sector had a challenging year in India. As expected, the government shifted its focus from new flagship programmes to implementation and monitoring of the existing schemes such as Smart Cities mission, Atal Mission for Rejuvenation and Urban Transformation (AMRUT), Bharatmala, Ude Desh Ka Aam Nagrik (UDAN) and Saubhagya. This slowed down business momentum for Infrastructure Advisory, especially during the second half of the year.

Reeling under pressures of stressed balance sheets and a risk-averse financial sector, private investments in infrastructure development were few and far between - down to a decadal low of below 25%. The Indian government, on its part, continued to shore up infrastructure spending, with a higher budget allocation for the sector and supported the existing programmes.

A significant initiative during the year was the first successful monetisation transaction taken up by the National Highways Authority of India, where a few operational road stretches were offered to private bidders under the TOT model. A significant premium on asset valuation bodes well for the government, which can target monetisation of operational infrastructure assets as a resource mobilisation tool to shore up the infrastructure spending budgets without adversely impacting fiscal deficit, at the central and state levels.

Operations

Despite the slowdown, Infrastructure Advisory business managed to strengthen its order book, by winning several new assignments - including a couple of large-value multiyear implementation support and programme management mandates. Some of the prestigious ones included programme management for the Bharatmala Pariyojana, programme and design management for a smart city, electricity distribution improvement programme in Uttar Pradesh, transaction advisors for auction of major and minor minerals in Chhattisgarh and advisory support on city gas distribution.

We deepened our international presence by winning mandates in the emerging markets of Asia and Africa, including Indonesia, Vietnam, Tanzania, Ghana and Bangladesh. International mandates included support to the World Bank public private partnership (PPP) programme for urban local bodies in Tanzania, water supply improvement project in Indonesia and developing an international reference tool for infrastructure project preparation for the Global Infrastructure Hub.

CRISIL Infrastructure Advisory successfully hosted the second edition of CRISIL India Infrastructure Conclave, themed ‘Enabling private sector participation in the infrastructure build-out’. Regulators, policymakers and industry leaders from the infrastructure domain came together to discuss and identify viable models and strategic interventions to revive and scale private investment in infrastructure. Shri Suresh Prabhu, Minister of Commerce & Industry and Civil Aviation, GoI, was the keynote speaker and Shri Amitabh Kant, CEO NITI Aayog, was the guest of honour. Several dignitaries and speakers also participated. The event received good media coverage.

C.2. CRISIL Risk Solutions Highlights

- Our efforts in the international markets, especially in collaboration with S&P Global, have led to 37% of revenues coming from that geography

- Expanded our solutions with successful implementation of the Expected Credit Loss (ECL) model and building new scoring models

Business environment

The weak credit environment has made for a compelling pitch for our risk solution products including the risk assessment model (RAM), the early warning system and portfolio evaluation and monitoring. Despite demand with both public and private financial institutions, we are treading cautiously as implementation and timeline challenges exist.

In the overseas markets, we deepened our collaboration with S&P Global to leverage its client franchise and offer combined solutions, synching its risk scorecard with our technology platform.

We have worked, and are working, closely with banks in India for early warning systems and reporting requirements

Delayed decisioning at client end and increasing competition impacted conversions and price points during the year. The business continues to focus on product development and tapping clients in newer markets to serve the needs for risk management and mitigation.

Operations

We successfully launched and implemented our ECL offering under the new International Financial Reporting Standards regime to financial institutions in India and overseas.

Our product development efforts continue and we are hopeful of launching ICON (new-age RAM) in early 2019.

Our franchise initiatives included webinars on a variety of topics, including ‘Evolution of early warning system for lenders’, ‘Risk-based pricing: Framework and impact of IND-AS 109’ and ‘Transition to IFRS 9: Overcoming Practical Roadblocks’. We also participated in the AWS Summit in Mumbai and shared our views on ‘Data-Led Decisioning for Lenders’. We spoke at the Fintech Summit on ‘Effective credit assessment for small businesses using innovative methodologies’. We also conducted a knowledge-sharing session on early warning practices for the CRO forum in Colombo, Sri Lanka, which was appreciated by bankers.

C.3. Pragmatix Highlights

- Completed the Pragmatix acquisition, enhancing our traditional strengths in risk solutions and repositioning our business as a comprehensive advanced analytics solutions provider.

- Expanded our Middle East franchise significantly during the year; International revenues are now ~78% of total revenues.

- Continued to focus on improving and expanding our solution suite with new business solutions addressing needs in pricing, working capital and digital lending areas; all available on our common platform, Fulkrum.

Business environment

The demand for Business Intelligence (BI) and analytical solutions continues to be strong. Spend in these areas across all geographies is robust. We made significant gains with key customers across India and the Middle East. Our total revenue growth was over 50% during the 12 months ended December 31, 2018, and the environment continues to present significant growth opportunities for the business over the near future.

Operations

In 2018, the Pragmatix business saw good growth and continued to maintain excellence in execution and client satisfaction.

Pragmatix also remains focused on expanding the technology capabilities and increasing client footprint.

D. Franchise collaboration with S&P Global

In 2018, we deepened our outreach engagement with S&P Global across different geographies. Sustaining our annual joint flagship platform, India Credit Spotlight, we hosted seminars across Mumbai and Singapore on ‘Growth prospects amid macro risks’. The seminar was appreciated by investors and issuers alike.

As a part of our joint outreach initiatives, S&P Global and CRISIL hosted an exclusive investor briefing aimed at engaging with the investor community. The event had presentations on the global economic outlook by Dr Paul Gruenwald, Chief Economist, S&P Global Ratings and the Indian economic outlook by CRISILs Chief Economist Mr Dharmakirti Joshi.

Additionally, S&P Global and CRISIL Research jointly hosted the S&P-CRISIL Economist forum. Dr. Paul Gruenwald, Managing Director & Chief Economist, S&P Global Ratings presented on ‘Global growth, trade & the Belt Road Initiative (BRI)’.

Mr Dharmakirti Joshi, Chief economist, CRISIL, was also one of the eminent panellists at the Commodity Market Insights Forum organised by S&P Global Platts in Mumbai and Delhi.

Further, we organised two forums jointly with S&P Global Ratings exclusively for the investor community where key personnel from the mutual funds, insurance and wealth management institutions participated. We discussed opinions on the global economy, the credit quality of India Inc. and the investment outlook.

At the S&P Global - CRISIL Exclusive Briefing, Ms Beth Ann Bovino, US Chief Economist, S&P Global Ratings shared her views on ‘US economic outlook: Sailing on in the rough global seas.’ She also shared insights on the US business cycle, impact of trade wars, twin deficits in the US, the US Federal Reserve’s monetary policy under new leadership and long-term economic growth concerns.

E. Human Resources

The Human Resources team made good strides in 2018. At the closure of its financial year, CRISILs headcount was 3,796, including all wholly owned subsidiaries.

Highlights

Diversity and inclusion

- Diversity of the workforce has always been our strength. Spanning knowledge areas, age, gender, skills, experience and nationality, we have employees representing 32 nationalities.

- Women comprise about 36% of CRISILs workforce. Our programme ‘Winspiration’ continues to provide different interventions for our colleagues, encouraging and fostering their growth.

- Our programme on maternity benefits allows working mothers the flexibility to manage their children at their convenience.

- Our analyst certification programme continues to move from strength to strength. In 2018, we tied up with IIM Calcutta to introduce new perspectives and give an added edge to our analysts.

Employee engagement

Our annual engagement survey, ‘VIBE’, is now aligned with our parent company, S&P Global, allowing us to benchmark with global best practices.

To constantly improve employee experience, we launched ‘ECHO’, a programme aimed at connecting with new recruits and employees who have resigned through a neutral and independent firm with the aim of obtaining candid feedback, enabling us to make a tangible difference.

Millennials make up about 88% of our workforce. To empower employees to voice their opinions and collaborate with their colleagues, we introduced CRISBuzz, a new social collaboration platform. The mobile app-based platform makes optimal use of technology allowing employees to share and express on the go.

Employee health and well-being is another important area for us. Our annual health check programme was very well received among employees of all age groups.

CRISIL Conclave - our platform to create leadership development and instill innovative thinking, continued to provide an opportunity for employees to interact and learn from leaders from different walks of life .

The Reward & Recognition programme endeavoured to motivate employees with annual awards for excellence, quarterly rewards for service excellence and spot recognition programmes.

Our stock incentive programme was leveraged for rewarding and retaining our high-potential employees and senior leadership.

Fostering a positive work environment

To foster a positive work environment, free from harassment of any nature, we institutionalised the Prevention of Sexual Harassment (POSH) framework, through which we address complaints related to sexual harassment. Our policy guarantees discretion and non-retaliation to complainants. We follow a gender neutral approach in handling complaints and we are compliant with the law of the land that we operate in.

Talent development

CRISIL believes in lifelong learning for its employees and competency development is a key focus area for us. Our Learning and Organisation Development department is at the forefront to nurture a culture of learning. We launched a new learning management tool this year,’ YOUniverse’. Through this, we have been able to make learning more intuitive and interactive. Through mobile-based programmes, employees are now able to learn on the go.

We have also facilitated a programme on managerial effectiveness, through which managers are coached on specific situations to get the best from their teams and build strong working relationships.

Directors

Members of the Company’s Board of Directors are eminent persons of proven competence and integrity. Besides experience, strong financial acumen, strategic astuteness and leadership qualities, they have a significant degree of commitment to the Company and devote adequate time to the meetings and preparation.

The Board meets at regular intervals to discuss and decide on Company / business policy and strategy apart from other Board business. The Board exhibits strong operational oversight with regular presentations by business heads. An annual planner of topics to be discussed at the Board through its quarterly meetings is pre-discussed by the Directors. 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 help them plan their schedule and ensure meaningful participation in the meetings. Only in case of special and urgent business, if the need arises, the Board’s approval is taken by passing resolutions through circulation, as permitted by law, which are confirmed in the subsequent Board meeting. The Company has complied with secretarial standards issued by the Institute of Company Secretaries of India on Board meetings and Annual General Meetings.

The agenda for the Board and committee meetings includes detailed notes on the items to be discussed to enable the Directors to take an informed decision. For the past three years, the Company has moved to a two-day schedule for its quarterly committee and Board meetings, which allows for greater discussion time for Board matters.

The Board met six times in financial year 2018 - on February 13, April 17, June 22, July 17, October 16 and December 14. The maximum interval between two meetings did not exceed 120 days.

The Company’s Nomination & Remuneration Policy formulated under Section 178(3) of the Companies Act 2013, covers roles, responsibilities, criteria and procedures towards key aspects of Board governance including the size and composition, criteria for Directorship, terms and removal, succession planning, evaluation framework, and on-going training and education of Board members. The policy lays down detailed guidelines for remuneration of the Board, Managing Director and employees, covering fixed and variable components, and long-term reward options, including Employee Stock Option Schemes. The policy includes the scope and terms of reference of the Nomination & Remuneration Committee. The policy is available at https://crisil.com/en/home/investors/ corporate-governance.html.

Directorship changes

End of tenure of directorship

Dr. Nachiket Mor’s tenure as an Independent Director of the Company ended on July 23, 2018. Dr. Mor had taken office as a Non-Executive, Independent Director of CRISIL in July 2008 and demitted office after completion of 10 years. CRISILs Directors place on record their sincere appreciation for the strong support, advice and guidance provided by Dr. Mor to CRISIL and its management, which was immensely valuable to drive the Company’s growth and performance.

Appointment

Ms Arundhati Bhattacharya was appointed as Additional Director (Independent) with effect from October 16, 2018. The Company received a notice under Section 160 of the Companies Act, 2013, from a member signifying his intention to propose the candidature of Ms Bhattacharya to the office of Director.

Re-appointment

In accordance with the Articles of Association of the Company and the provisions of the Companies Act, 2013, Mr John Berisford retired by rotation and being eligible has sought reappointment.

Brief profiles of Ms Arundhati Bhattacharya and Mr John Berisford have been given in the Notice convening the Annual General Meeting.

Board independence

Our definition of ‘Independence’ of Directors is derived from Regulation 16(b) of SEBI (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 by the Directors during the Board evaluation process, the following Non-Executive Directors are Independent:

a) Mr M. Damodaran

b) Ms Vinita Bali

c) Mr Girish Paranjpe

d) Ms Arundhati Bhattacharya

Committees of the Board

The Board has five committees:

- 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.

Annual evaluation by the Board

During the year, the Board carried out an annual evaluation of its performance as well as 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 the Board, committees, Chairman and individual Directors. The Chairman’s performance evaluation was carried out by Independent Directors at a separate meeting. The questionnaire and evaluation process was reviewed in the context of amendments to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 brought about by the Kotak Committee recommendations, which require the Board to confirm fulfilment of the independence criteria by Independent Directors and their independence from management.

The questionnaire for Board evaluation is prepared taking into consideration various aspects of the Board’s functioning such as Board members’ understanding of their roles and responsibilities; Board meetings and the reporting process; time devoted by the Board to the Company’s long-term strategic issues; quality and transparency of Board discussions; quality, quantity and timeliness of the information flow 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 fiduciary duties by the Board.

Performance of the committees is evaluated on the basis of their effectiveness in carrying out their 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 that key improvement areas emerging through this exercise and action plans to address these are in progress.

During 2018, the Company actioned the feedback from the Board evaluation process conducted in 2017. Suggestions were incorporated by reshaping the Board meeting schedule to allow sufficient discussion time for strategic matters and categorisation of the meeting agenda for better time allocation. Certain strategic discussions brought to the fore were around long-term strategy of core businesses, technology, data-driven intellectual property generating products, regulatory changes, and operational strategy. Expert speaker sessions covering emerging and relevant themes were planned in parallel with the Board meetings. Succession planning at Board and Senior Management level was given extensive time and focus by the Nomination and Remuneration Committee as well as the Board.

Risk Management Policy, compliance framework and internal control adequacy

The Board has adopted policies and procedures for governance of orderly and efficient conduct of its business, including adherence to the Company’s policies, safeguarding its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and 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.

Significant audit observations and follow-up actions thereon are reported to the Audit Committee. To ensure independence of audits, internal auditors report directly to the Audit Committee. Both internal and statutory auditors have exclusive executive sessions with the Audit Committee regularly. In addition, during the year, management performed a review of key controls impacting financial reporting, at entity as well as operating levels and submitted its report to the Audit Committee and the Board.

The Company has a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Mitigation plans for key risks identified by the businesses and functions are implemented and reviewed consistently. These are discussed at the meetings of the Audit Committee and the Board. These have also been reported and discussed in detail in the Management Discussion and Analysis Report, annexed to the Annual Report.

The financial services industry continues to focus on cyber risk and information security and so does CRISIL. The management implemented several actions in 2018 to strengthen cyber security by enhancing intrusion detection systems, installing a next generation firewall and a new cybersecurity solution and upgraded data loss prevention systems. A cyber response strategy defining roles and responsibilities was outlined and focused cyber and phishing training was conducted during the year.

Initiatives such as secure printing, disablement of user’s general ability to upload data through the web by implementing a filtering solution and a tool for network advanced threat protection were implemented during 2017 and 2018 to enhance controls on information security.

An organisation-wide Business Continuity Project (BCP) was completed to align it with ISO 22301:2012 Societal Security -Business Continuity Management System (BCMS). This initiative intended to strengthen the resilience of the organisation across all businesses. BCMS enables an acceptable level of service during disaster; protects and supports employees, assets and business; reduces risk; and enables the Company to meet statutory, regulatory and contractual obligations. Business Impact Analyses (BIA) and Function Recovery Plans (FRP) were conducted across businesses and functions. BCP testing of key business units is scheduled in the current year.

The Company has a comprehensive framework for monitoring compliances with applicable laws. Functional teams operate as the first line of defence. Their procedures and actions are periodically subject to audit and test procedures monitoring adherence of the system. The Company introduced an additional IT-enabled tool to monitor compliances and augment a robust compliance assessment process. A quarterly certification on compliance with laws is provided by senior management to the Board.

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 with reference to financial statements were adequate and effective during financial year 2018.

Directors’ responsibility statement

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

Changes to key managerial personnel

During the year, Mr Amish Mehta transitioned from his role of Chief Financial Officer to a new role as Chief Operating Officer. The Board approved continuation of Mr Amish Mehta as Key Managerial Person of the Company in terms of Section 203 of the Companies Act, 2013. Mr Sanjay Chakravarti was appointed as Chief Financial Officer with effect from February 13, 2018.

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. The Company does not own any manufacturing facility and, hence, our processes are not energy-intensive. Hence, particulars relating to conservation of energy and technology absorption stipulated in the Companies (Accounts) Rules, 2014, are not applicable.

However, we endeavour to support the environment by adopting environment-friendly practices in our office premises and have rolled out a policy which aims at improving environmental performance of CRISIL. Our efforts in this direction centre around making efficient use of natural resources, elimination of waste and promoting recycling of resources.

Initiatives taken in the area of environment protection during 2018 are mentioned under Principle No. 6 in the Business Responsibility Report.

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, approve activities to be undertaken by the Company towards CSR, and monitor implementation of projects and activities undertaken by the Company towards CSR.

The CSR Policy of the Company is available at https://crisil.com/en/home/investors/corporate-governance. Further details about the initiatives taken by the Company on CSR during the year under review have been appended as Annexure I to the Annual Report.

Vigil mechanism

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

Subsidiaries

As on December 31, 2018, the Company had two Indian and seven overseas wholly owned subsidiaries. Pragmatix Services Private Limited became a wholly owned subsidiary of CRISIL w.e.f. January 24, 2018. In accordance with Section 129(3) of the Companies Act, 2013, CRISIL has prepared a consolidated financial statement of the Company and all its subsidiaries, which is a part of the Annual Report. A statement containing salient features of the financial statements of the subsidiaries is 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, www. crisil.com. Further, as per fourth proviso of the said section, audited accounts of all subsidiaries have also been placed on the website, www.crisil.com. Shareholders interested in obtaining a copy of the audited accounts of the subsidiaries may write to the Company Secretary at the Company’s registered office.

The Company has obtained a certificate from the statutory auditors certifying that the Company is in compliance with FEMA Regulations with respect to downstream investments.

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 subsidiaries engaged in product delivery of CRISIL businesses and business development activities. The Company has also been providing analytical support to S&P Global entities as a part of a Master Services Agreement, which was 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 2018 were in the ordinary course of business and at an arm’s length. During the year, there were no related party transactions which were materially significant and that could have a potential conflict 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), are given in prescribed Form AOC - 2 as Annexure II.

As required under the 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 Company’s website - https://www.crisil.com/en/home/ 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’ report

M/s. Walker Chandiok & Co LLP (an affiliate of Grant Thornton network) is the statutory auditor of the Company. Its report is a part of the Annual Report.

Shareholders of the Company have approved appointment of M/s. Walker Chandiok & Co LLP as the statutory auditor of the Company for five years, i.e. from the conclusion of the 30th Annual General Meeting held on April 20, 2017 until the conclusion of the 35th Annual General Meeting. Consequent to the amendments to Companies Act, 2013, ratification of appointment of the statutory auditor at every Annual General Meeting is no longer required.

Secretarial audit report

The Board has appointed Makarand M. Joshi & Co., Practising Company Secretaries, to conduct the secretarial audit and their report is appended as Annexure III.

Comments on auditors’ report

There are no qualifications, reservations or adverse remarks or disclaimers made by Walker Chandiok & Co LLP, statutory auditors, in their audit report and by M/s Makarand M. Joshi & Co., Practising Company Secretaries, in their secretarial audit report.

The statutory auditors did not report any incident of fraud to the Audit Committee of the Company in the year under review.

Management discussion and analysis report

Management 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 the Annual 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 SEBI. The Report on Corporate Governance as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, is a part of the Annual Report. A certificate from the auditors of the Company confirming compliance with the conditions of corporate governance as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, is also published in the Annual Report.

Particulars of remuneration

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) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, have been appended as Annexure IV to this Report.

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 every employee covered under the said rule are available at the registered office of the Company during working hours for a period of 21 days before the Annual General Meeting and will be made available to any shareholder on request.

Employee Stock Option Schemes

The Company has three Employee Stock Option Schemes. Employee Stock Option Scheme - 2011 (ESOS 2011) was approved by shareholders vide a special resolution passed through postal ballot on February 4, 2011. Employee Stock Option Scheme - 2012 (ESOS 2012) was approved by shareholders vide a special resolution passed through postal ballot on April 10, 2012. Employee Stock Option Scheme - 2014 (ESOS 2014) was approved by shareholders vide a special resolution passed through postal ballot on April 3, 2014 and amended by special resolution of shareholders at the 30th Annual General Meeting held on April 20, 2017.

During 2018, there were no material changes in the Employee Stock Option Schemes of the Company. The Schemes are in compliance with SEBI regulations. As per Regulation 14 of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, read with Securities and Exchange Board of India circular dated June 16, 2015, the details of the ESOS are uploaded on the Company’s website https://www.crisil.com/en/home/investors/financial-information/annual-report.html in term of Circular No CIR/ CFD/POLICY CELL/2/2015 dated June 16, 2015, issued by SEBI.

The Company has received a certificate from M/s. Walker Chandiok & Co LLP that ESOS 2011, ESOS 2012 and ESOS 2014 have been implemented in accordance with SEBI regulations and the resolution passed by members in their general meeting. The certificate will be placed at the ensuing Annual General Meeting for inspection by members.

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 V. The complete Annual Return is available on the Company’s website https://www.crisil.com/ en/home/investors/financial-information/annual-report.html

Financial year

The Company follows the calendar year as the financial year in terms of a special approval obtained from the Company Law Board in 2015.

CEO and CFO certification

Certificate from Ms Ashu Suyash, MD & CEO; and Mr Sanjay Chakravarti, 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 12, 2019.

Statutory disclosures

Directors state that there being no transactions with respect to the following items during the financial year under review, no disclosure or reporting is required with respect to the same:

1. Deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014

2. Issue of equity shares with differential rights as to dividend, voting or otherwise

3. Receipt of any remuneration or commission by the Managing Director/Whole-time Director of the Company from any of its subsidiaries

4. Significant or material orders passed by the regulators or courts or tribunals which impact the going concern status and the Company’s operations in future

5. Buyback of shares

6. Material changes and commitments, affecting the financial position of the Company that have occurred between the end of the financial year to which the financial statements relate and the date of this report unless otherwise stated in the report

7. The Company is not required to maintain cost records as per sub-section (1) of Section 148 of the Companies Act, 2013

Acknowledgements

The Board of Directors wishes to thank the employees of CRISIL for their exemplary dedication and excellence displayed in conducting all operations. 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 S&P Global 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, SEBI, the RBI, 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,

John L. Berisford

Chairman

Mumbai, February 12, 2019 (DIN: 07554902)


Dec 31, 2017

Directors’ Report

Dear Member,

The Directors are pleased to present to you the 31st Annual Report of CRISIL Limited, along with the audited financial statements, for the year ended December 31, 2017. The year marked the completion of three decades of CRISIL. It is a matter of pride to have been at the forefront of India''s financial services sector since executing India''s first corporate sector rating in 1988. Today, CRISIL has ratings on more than 25,000 large and mid-scale corporate and financial institutions in India and serves more than 90% of India''s banking industry by asset base through research services. Our Global Risk & Analytics business is a leading provider of research and analytics with deep domain expertise in Financial Research and Risk & Analytics and covers over 3,300 stocks and 3,400 credits globally. We provide research support to more than 75 global banks and 50 buy-side firms. Our Coalition business provides business intelligence and high end analytics to more than 20 corporate and investment banks, including the top 15 globally. We have a well diversified research team operating from offices across US, UK, Argentina, China, Poland and India.

2017 was a year to reflect and introspect on our achievements, our capabilities, and a milestone that marks our growth and evolution as an agile and innovative global analytics company. This Report provides you insights on our enhanced market relevance, global market footprint, new services, our collaborations, our focus on innovation and technology and overall excellence across our operations.

Financial performance

A summary of the Company''s financial performance in 2017:

(Rs. in crore)

Particulars

Consolidated

Standalone

2017

2016 |

2017

2016

Total income for the year was

1,683.84 1

,597.18

1,213.32 1

,173.93

Profit before interest, depreciation, exceptional items and taxes was

480.66

493.00

374.98

396.85

Finance cost

0.41

-

0.41

-

Deducting depreciation of

46.64

54.52

28.52

28.51

Profit before tax was

433.61

438.48

346.05

368.34

Deducting taxes of

129.18

144.15

108.79

128.05

Profit after tax was

304.43

294.33

237.26

240.29

Other comprehensive income

(77.42)

(24.71)

(85.17)

11.36

Total comprehensive income

227.01

269.62

152.09

251.65

Appropriations are:

Final Dividend

64.20*

71.21**

64.20*

71.21**

Interim Dividend

128.81

128.34

128.81

128.34

Corporate dividend tax

37.74

40.63

37.74

40.63

Special Economic Zone reinvestment reserve

3.00

-

3.00

-

General reserve

-

20.45

-

20.45

*Final dividend for the year 2016 Rs. 9 per equity share of Re 1 each. **Final dividend for the year 2015 Rs. 10 per equity share of Re 1 each.

The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 read with Section 133 of Companies Act, 2013, (the ''Act'') and other relevant provisions of the Act. The financial statements up to and for the year ended December 31, 2016, were prepared in accordance with the Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act (''Previous GAAP''). The 2017 financial statements are the first financial statements of the Company under Ind AS. In accordance with Ind AS 101, First-time Adoption of Indian Accounting Standards, the Company has presented a reconciliation from the previous presentation of financial statements of share holders total equity as at December 31, 2016, and January 1, 2016, and of the total comprehensive income for the year ended December 31, 2016, of the Company as a part of financial statements under Previous GAAP to Ind AS. 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 which 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 the Company for the year was Rs. 1,683.84 crore, 5% higher than Rs. 1,597.18 crore in the previous year. Overall operational expenses for the year were Rs. 1,250.23 crore, against Rs. 1,158.70 crore in the previous year. EBITDA for the year was Rs. 455.28 crore, against Rs. 443.33 crore, in the previous year. Profit after tax for the year was Rs. 304.43 crore, against Rs. 294.33 crore in the previous year.

b) Standalone operations

Revenue from the standalone operations of the Company for the year was Rs. 1,213.32 crore, 3% higher than Rs. 1,173.93 crore in the previous year. Overall operational expenses for the year were Rs. 867.27 crore, against Rs. 805.59 crore in the previous year. Profit after tax for the year was Rs. 237.26 crore, against Rs. 240.29 crore in the previous year.

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

Particulars

No. of shares allotted / (extinguished)

Cumulative outstanding capital (No. of shares of Face Value Re. 1 each)

Capital at the beginning of the year i.e. as on January 1, 2017

-

7,13,35,358

Allotment of shares to employees on April 20, 2017 pursuant to exercise of options granted under the Employee Stock Option Scheme, 2011, and the Employee Stock Option Scheme, 2012

21,750

7,13,57,108

Allotment of shares to employees on July 18, 2017 pursuant to exercise of options granted under the Employee Stock Option Scheme, 2012, and the Employee Stock Option Scheme, 2014

2,70,417

7,16,27,525

Allotment of shares to employees on October 17, 2017 pursuant to exercise of options granted under the Employee Stock Option Scheme, 2012, and the Employee Stock Option Scheme, 2014

77,403

7,17,04,928

Capital at the end of the year i.e. as on December 31, 2017

-

7,17,04,928

Segment-wise results

The Company has identified three business segments, in line with the Indian Accounting Standard on Operating Segment (Ind AS-108), which comprise: (i) Ratings, (ii) Research, and (iii) Advisory. The audited financial results of these segments are provided as a part of financial statements.

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 17, 2018, payment of Final Dividend of Rs. 10 per equity share of face value of Re. 1 each for the year under review. During the year, the Company paid three interim dividends, each of Rs. 6 per equity share of face value of Re. 1 each. The total dividend for the year shall be Rs. 28 per share on a face value of Re. 1 per share in 2017 as against a total dividend of Rs. 27 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 3,69,570 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 was 7,17,04,928 equity shares of Re. 1 each.

Review of Operations

A. Ratings Highlights

- Announced 2,982 new Bank Loan Ratings (BLRs) during the year, taking the total BLRs outstanding past 12,000

- Launched India''s first expected loss, or EL, rating scale for infrastructure projects and was the first to assign rating to a hybrid annuity model-based road project

- On-boarded large corporate entities into the portfolio and added several new marquee clients

- Cemented premier position in corporate bonds with year-on-year jump in market share

- Conducted 15,000 assessments in the MSME sector

- Conducted a series of high-profile franchise activities, which were covered extensively in media and were well-appreciated by stakeholders

- Enhanced engagement with S&P Global Ratings in surveillance and risk and regulatory support through Global Analytical Center

Business environment

India''s business environment for the credit rating business overall was positive in 2017 vis-a-vis 2016, mainly due to improving credit quality of corporate India, higher share of capital market borrowings due to falling interest rates and continued growth of the retail financing industry. However, the industry was impacted by weak investment climate, elevated level of non-performing assets in the banking sector, the implementation of the Goods and Services Tax (GST), and the transient effect of demonetization.

The capital market saw increased refinancing activity by non-banks and corporate. The corporate bond market witnessed ~14% volume growth year-on-year, most of it in the first two quarters. There were fewer issuances in the last two quarters. The dual rating requirement mandated by the Reserve Bank of India for companies issuing Rs. 1,000 crore or more of commercial paper kept activity buoyant in the third quarter.

Business environment picked up in the first and second quarters, given the waning effect of demonetization, reduced borrowing costs, and expectation of a near-normal monsoon. However, private investment and wholesale credit off take remained sluggish. Despite softer interest rates, wholesale credit growth remained muted through the year due to impaired balance sheets of banks and excess capacity in the industry. This, and the implementation of GST, led to postponement of corporate borrowings in 2017, and consequently, the BLR business witnessed a marginal decline.

While pressure on pricing and the transitory impact of GST implementation are likely to persist, we anticipate an uptick in the BLR business in 2018 on the back of increase in private investment and the Rs. 2.11 lakh crore recapitalization plan for public sector banks.

For CRISIL''s SME Ratings business, 2017 was a year of transformation because of withdrawal of subsidy under the Performance and Credit Rating Scheme. Initially, the focus shifted to maximizing revenue from non-subsidy products and increasing cost-efficiencies with improvement in productivity parameters, optimum utilization of resources, and higher automation. Then, in a major boost to digitization, the business initiated online sourcing of mandates through a digital platform, smefirst.com, which provides easy access to proprietary SME assessments and evaluations, and enables end-to-end digitization of the customer acquisition process.

Considerable emphasis was also laid on aligning business with market requirements, which resulted in the development and launch of new products such as Enhanced Due-Diligence (EDD) and i-Check. CRISIL also signed a memorandum of understanding with the Small Industries Development Bank of India to launch CriSidEx, India''s first sentiment index for MSEs.

In 2018, the focus would be on non-retail originations for new products such as CRISIL Credit Assessment Score (CCAS), EDD and i-Check. The smefirst.com platform is also expected to provide a fillip to revenue by enhancing reach across India, thereby providing MSMEs with all forms of credit assessments in an extremely convenient manner. Further, process automation will drive cost efficiencies.

The medium to long-term outlook for the MSME sector is positive given that it is a high-priority area for the government and it is also trying to facilitate greater flow of credit to the segment.

Operations

CRISIL Ratings maintained its market leadership in 2017, driven by strong performance in bond ratings and client acquisitions. There were 2,982 new BLRs and about 15,000 MSME assessments during the year. Ratings have been assigned on more than 25,000 large and mid-scale corporate to date, in addition to over 125,000 SME ratings and assessments.

We increased our bond market share by closing new deals with some marquee corporate groups and capitalizing on our relationship with existing clients. We also on-boarded 150 new large corporate clients, giving us newer avenues to grow our business.

In 2017, we were the first to assign an EL rating for infrastructure projects. The EL INFRA product witnessed modest interest as it is early days in terms of acceptance by both the market and regulators. CRISIL Ratings was the first to rate a credit-enhanced discom bond, and also rated India''s first road project based on the hybrid annuity model. Moreover, drawing from our deep understanding of credit cycle, we developed criteria and methodology for independent credit evaluation (ICE) of the sustainable portion of debt in stressed assets for banks and other financial institutions. Overall, we received promising responses for these innovations from the market.

We maintained our multi-pronged approach to stakeholder management. To strengthen our engagement with the issuer and investor community, we extensively engaged with their senior management, delivered sectoral presentations and leveraged the digital channel to share our thought leadership reports and periodical publications on a regular basis.

We strengthened our market presence by regularly hosting web conferences on topical matters, getting covered by premier news channels and engaged with industry associations through panel discussions and speaking assignments, or as knowledge partners at conferences.

We also extensively engaged and worked with regulators to put forth our opinions on rating standards and governance policies for the credit rating industry.

CRISIL Ratings successfully hosted an Investor Discussion Forum (IDF) under its ''Fin Insights'' umbrella on the nonbanking finance company (NBFC) sector. The IDF, titled ''NBFCs: Fortunes on the Uptrend'', saw us present our insights on the sector and its underlying asset-classes such as housing finance, vehicle finance and wholesale finance. We discussed the emerging trends and challenges, and shared our views on the sector''s growth trajectory and future expectations. The conference drew several eminent NBFC industry leaders and received positive feedback on content and execution.

CRISIL Ratings also organized a joint conference with S&P Global and CRISIL Research for the investor community - key personnel of mutual funds, insurance and wealth management institutions - wherein we discussed opinions on the global economy and the Indian banking sector. Furthermore, CRISIL Ratings partnered with S&P Global Ratings on joint meetings and pitches to clients. Additionally, jointly hosted the CRISIL-S&P Global Ratings annual seminar.

Other noteworthy franchise activities in 2017 included webinars on banking, renewable energy, roads sector and press releases on stressed assets, NPA resolution, municipal bonds and retailing.

We hosted the ''Ratings Regional Conclave'', to deepen our engagement with both prospective and existing clients in Tier- II geographies, providing us a platform to present our views on relevant industry trends and have close discussions with the clients.

CRISIL Global Analytical Center (GAC) partnered with S&P Global Ratings on key criteria implementation and optimization initiatives in the domains of data, public finance and EMEA structured finance, provided support to Platts, and launched new analytics products.

With the evolving global regulatory requirements, GAC continued its focus on strengthening its internal controls framework in collaboration with S&P Global Ratings'' control functions. GAC''s culture of continuous improvement has created ongoing efficiency gains for S&P Global Ratings through lean management tools, work standardization and process re-engineering. This results in more consistent support levels across diverse geographies and asset classes.

B. Research

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

Highlights

- Financial Research business added new logos on both sell-side and buy-side, while the focus on automation and technology remained key

- Launched our unique research automation platform, SMART

- Risk & Analytics reported strong business growth with diversification in existing accounts, acquisition of several key strategic clients, augmentation of portfolio of client offerings, and an encouraging market response for our services, designed to help clients satisfy various regulatory directives.

- Data Analytics segment witnessed growth, continuing to add new clients (including one of the biggest buy-side names in the market) and delivering analytical and innovative products and solutions to customers.

Business environment

Regulatory developments across the globe were a major driver for the banking industry in 2017. In response to persistent cost pressures and squeezed margins, banks are closely monitoring and transforming their front, middle, and back-office operations in order to realise cost-efficiencies and differentiate their services. The upcoming implementation of the Markets in Financial Instruments Directive II (MiFID II) regulations is expected to impact sell-side securities research. However, it also presents new opportunities in the buy-side space as traditional active AMs are reviewing their investment and research cost models due to tight market conditions, downward trend of research charges, and increasing cost of regulatory compliance. Global Model Risk Management guidelines have started to converge, with the US supervisors'' SR 11-7 guidelines serving as the benchmark. 2017 also witnessed continued regulatory scrutiny of banking institutions and fines for non-compliance with regulatory mandates, further exacerbating cost pressures.

Market appetite for GR&A''s stress testing, model validation, regulatory change management, and financial crime and compliance (FCC) analytics continues to be strong. Further, SPARC a subscription service platform for Credit Risk Assessments found widespread acceptance with a number of large and mid-size banks. In addition, the industry is increasingly adopting advanced automation and analytics solutions such as machine learning (ML), artificial intelligence (AI) and big data, and streamlining data analysis practice.

Within the Data Analytics space, there is growing demand for technologically entrenched solutions involving big data analytics, higher order automation, natural language generation, and application of machine learning as businesses look towards making processes more efficient and differentiated from traditional data mining.

Operations

In the Financial Research business, we managed to make inroads in regional and mid-tier bank segments in the US and the UK despite challenging business environment and uncertainties surrounding MiFID II implementation. Buy-side continues to be a growth vertical - we have added multiple new logos in this segment (including one of the biggest asset managers in the world), and have significantly increased our market outreach in various geographies.

The Risk & Analytics business has started to reap meaningful returns from investments made in previous years. 2017 was a year of substantial growth for our FCC analytics and change management offerings, specifically for FRTB and risk data aggregation guidelines. We have witnessed growth in existing clients, as well as rapid ramp-up of services provided to three new clients added during the year. We continue to focus on knowledge management and process optimization through various initiatives that have started to produce incisive outputs, allowing us to make our business processes more efficient and streamlined.

Our pursuit of an agenda focused on turning services into products continued in 2017, with a focus on modular solutions in FCC, developing tools and utilities pertaining to key regulations, and much progress in our work on the concept of a shared utility to provide data, risk models and analytics to the banking industry. Our data analytics products and offerings are continuously evolving to meet the rapidly changing market needs.

In addition, we launched our research automation platform, SMART (Simple Modular Analytics Research Toolkit) in New York this year. A proprietary platform that fully automates financial research tasks, SMART has gained a lot of interest in the market. We have also managed to complete several successful pilots and demos to our existing and prospective clients.

We continue to invest extensively in human capital, recognizing this as a key driver of our success, by grooming talent through a series of comprehensive, in-house training programmes, which are routinely reassessed to ensure continued relevance, given the rapidly evolving market landscape and changing client needs. We have continued to develop our franchise by participating in and sponsoring industry conferences, roundtable meetings of senior client stakeholders, hosting web-conferences, and publishing topical thought leadership research pieces across the spectrum of our strategic focus areas.

B.2. CRISIL Coalition Highlights

- Added 7 clients, including a few regional players

- Enhanced existing analytics, resulting in more complete relationships per client

- Increased revenues from four out of five clients

- Commercialized and scaled up services in transaction banking, and introduced new analytics for treasury and lending

- Coalition was referred to in 450 articles across 90 global publications and its analytics were referenced in 20 investor relations presentations across 15 leading banks

Business environment

CRISIL Coalition generates a majority of its business from the Corporate and Investment Banking (CIB) industry. For the CIB industry, 2017 was sombre and the outlook for 2018 is flat. The Coalition Index that tracks performance of the top 12 global investment banks continued with its trend of decline in revenues in FY2017, posting the lowest level since 2008. The decline was driven by poor performance in FICC, which was partially offset by improvement in IBD. The second half of 2017 was particularly weak across most FICC and equity products. Operating margin of these banks also deteriorated after two years of improvement. Consequently, return on equity declined 90 bps.

Most of global banks expect a similar environment to continue at least up to the second half of 2018 with no reduction in volatility. As result, we expect relatively flat to negative performance in the global markets. This would be partially compensated by moderate growth in banking. We also expect competition to intensify as European banks have completed their restructuring and became aggressive in 2017.

Operations

In the backdrop of a tight environment, CRISIL Coalition embarked on several initiatives to enhance its market relevance and connect with clients. These included reaching out to prospective clients, including regional players. In 2017, we added 7 more clients to our impressive list of global investment banks. We also enhanced our analytics portfolio to provide a comprehensive set to clients. We commercialized our services in transaction banking during the year and launched new analytics for treasury and lending. These services have received good traction with clients and are expected to contribute to growth in 2018.

CRISIL Coalition also extended its outreach to senior levels at banks and established deeper connects with heads of corporate and investment banks. More than 90 publications globally carried CRISIL Coalition''s views and quoted it during the year. CRISIL Coalition was also referenced by 15 leading banks in 20 investor relations presentations. We cleared a number of high-intensity client audits and underwent Phase 1 of the SSAE 18 Attestation, thereby confirming our high standards of controls. During the year, the business provided meaningful rotation opportunities to a number of employees, both within India and globally.

B.3. India Research Highlights

- Maintained our dominant and premium position in the flagship Industry Research business with coverage across 90 sectors

- Successfully launched our new product Quantix, a cross segment analytics tool to drive growth in the Research business.

- Entered the eLearning space with a bouquet of credit & risk management course modules

- Enhanced the Research delivery platform (Cutting Edge V2) a faster and more user friendly experience

- Launched the ULIP rankings which marks our potential to become industry benchmark in the insurance space

- Witnessed healthy revenue growth in the Customized Research business on the back of significant traction in the Automobiles, BFSI and Logistics sectors

- Largest provider of valuation of fixed-income securities to the Mutual Funds, insurance and banking industries, valuing over USD 1,573 billion of Indian debt securities.

Business environment

While pressure on profitability of banks has impacted their research spends, it has also created new opportunities for research in stressed asset segment. Further, NBFC segment is witnessing entry of many new players and robust business growth creating need for research. Apart from ongoing coverage on 90 sectors, we launched many special reports in areas such as agriculture, NBFCs, SMEs, and eight new reports focusing on niche sectors such as animal feeds, home electrical, mobile handsets, and paints.

The market witnessed an increasing demand for more dynamic, granular data / tools beyond traditional qualitative research. There is also a growing focus on investible indices and technology enabled solutions. In order to cater to such demands, in mid-2017, we successfully launched our new product Quantix - integrated data platform for Indian market. The product, positioned as a unique offering of data, tools and analytics, is being released in a modular fashion and has received positive response from the market.

Buoyant Initial Public Offering (IPO) market contributed significantly to the growth of the customized research. We were the agency of choice for Investment Banks and issuers in the IPO market for providing research content in the industry section of Draft Red Herring Prospectus (DRHP) in 2017.

Operations

CRISIL Research works with nearly 1000 Indian and global clients, including 90% of India''s banking industry by asset base, 15 of the top 25 Indian companies by market capitalization, and nearly all Indian mutual fund and life insurance companies

Addressing our increasing client needs, we have set up Analytical Quality Boards and Alpha labs, a special team created to drive innovation and new projects in the research business. They provide differentiated ahead of the curve analysis and frequent timely updates. These initiatives have been undertaken to funnel new product launches & improve existing offerings.

For the second consecutive year, the Customized Research witnessed healthy revenue growth on the back of significant traction in the core sectors - Automobiles, BFSI and Logistics sectors. We also forayed in the competitive benchmarking space and worked with some of the key clients in the industry.

In the fixed income part of our Funds & Fixed Income (F&FI) business, we consolidated our strong position in the valuation space further by winning mandates from general insurers and corporate. We are the largest provider of fixed-income indices in India and have consolidated our position by launching 11 new indices (2 in India and 9 in Sri Lanka) during the year.

In the mutual fund part of our F&FI business, we enhanced our presence with corporate treasuries and exempted provident fund trusts, helping them in portfolio performance review and risk monitoring. We have been mandated by Employees State Insurance Corporation to help in selection of fund managers, custodian and external concurrent auditor for its investment corpus.

The Executive Training business saw remarkable growth in open programmes with the introduction of specialized sector-focused trainings. In addition, the launch of eLearning courses will enable a much larger user base to benefit from CRISIL''s expertise in credit and risk management

The CRISIL Centre for Economic Research (C-CER) and the CRISIL Research businesses continued to focus on franchise and thought leadership activities by conducting distinctive research on contemporary issues. We published several landmark reports during the year, covering a wide spectrum of areas such third-year performance of the Modi government, India''s trade competitiveness, inflation growth trade off, volatility in pulses prices and farmers distress, impact of rains on the economy and performance of states. CCER participated in over 18 leading industry conferences and panel discussions, and hosted 4 events/webinars on a variety of topics.

We also released articles, press releases and reports on a wide range of sectors such as telecom, housing, wind power, cab aggregators, and impact assessment of the National Steel Policy and GST implementation on SME sectors. CRISIL Research was the knowledge partner for a series of events carried out by ASSOCHAM (The Associated Chambers of Commerce and Industry of India) and the Renewable Energy

Investment and Finance Forum (REIFF) 2017. CRISIL Research also organized a web conferences on the Launch of New NDBIB CRISIL Indices in the Sri Lankan Debt market, steel sector and trends, and MSME lending.

C. Advisory

C.1. CRISIL Infrastructure Advisory Highlights

- Deepened our presence in Urban Infrastructure/ Smart Cities segment with large multi-year program management mandates

- Highest ever new business booked during the year; strong order book

- Hosted the first ''CRISIL India Infrastructure Conclave'', which launched the inaugural edition of CRISIL India Infrastructure Yearbook and ''CRISIL InfraInvex'' - the country''s first invest ability index.

Business environment

Infrastructure sector remains one of the top-most priorities for the country, and it was heartening to see the government of India giving it the right impetus by launching new programmes and schemes like Bharatmala, Sagarmala, UDAN and Saubhagya. The Smart City mission also picked up momentum with a total of 90 cities being selected under the challenge mechanism till the end of the year. The roads sector showed appreciable progress with significant improvement in the risk profile of ongoing highway projects. The government of India continued to carry the burden, as private sector investments remain muted with the dual challenges of stressed balance sheet of developers and the banking sector hesitant to increase their exposure to the infrastructure sector.

Going forward, it is expected that the government will prioritise implementation of the ongoing programmes and schemes on ground. ''Competitive Co-operative federalism'' has been promoted by the government which will empower state and cities to have bigger role in decision making. Although the government seems focused on resolving the stressed assets and bad loans issue, the return of private sector to the infrastructure sector still seems a few quarters away.

Operations

The business started the year on a good note, with a couple of large multi-year programme management mandates in flagship programs of the government - deepening our foray in this defined strategic pursuit area. The momentum continued throughout the year, and the business had a record year in terms of new business booked. This enabled the business to build up a strong order book to deliver in the coming months. Some key wins in the urban reforms and municipal finance area - mainly in the area of implementation support for smart cities, and Value Capture Finance (VCF) potential assessment for 50 cities in India - helped the business in strengthening its leadership position in the area of urban infrastructure advisory. The business also pursued a strategic agenda of deeper relationships at the state government level, and was successful in making significant inroads in some of the target states like Maharashtra, Andhra Pradesh, Uttar Pradesh and West Bengal. The international business, although still muted, showed some improvement towards the later part of the year, with mandate wins in some of the target emerging markets like Indonesia, Tanzania and Namibia. The business reported a very robust growth in revenues and margins during this year.

An important strategic initiative this year was to increase franchise and thought leadership. The business successfully launched the inaugural edition of ''CRISIL India Infrastructure Yearbook'' - a one-of-its-kind annual publication that provides deep insights into the key infrastructure sectors in India. The business also launched ''CRISIL InfraInvex'' - the country''s first investability index for the infrastructure. These were launched by Shri Amitabh Kant, CEO NITI Aayog, at a high-profile ''CRISIL India Infrastructure Conclave'' in New Delhi in October. This conclave, hosted by the business, was attended by nearly 200 senior stakeholders, and received very good coverage in leading media. In addition, media visibility for the business had a sharp increase with several authored articles (including opinion page pieces) being published in leading business media.

C.2. CRISIL Risk Solutions

Highlights

- Continued momentum in risk advisory services, especially in non-banking space

- Expansion of footprint in South Asia, the Middle East and Africa

- Developed new offering on IFRS 9/ IndAS109, gaining good traction globally

Business environment

The business environment in India has been fairly stable over the last 12 months, with continued focus on easing stress in credit quality in the banking industry. Growth in lending has been principally contributed by NBFCs as banks continue to face stress, though going forward, the bank recapitalization plan proposed by the government could give banks the edge.

Momentum in internal credit rating platform & internal rating models continues, with small banks and NBFCs focusing on their underwriting quality. In spite of increasing awareness for credit monitoring and asset quality, institutions are adopting a cautious approach towards implementing EWS (automated monitoring product).

CRISIL Risk Solutions'' risk advisory service business has shown good momentum and continues to be an opportunity to show our deep domain expertise, especially in the credit domain and analytics. In the international market, we have seen good momentum for our new offering around Expected Credit Loss (ECL) computations catering to IFRS9 regulations. We expect traction to increase in markets including India for financial institutions, in view of the approaching deadline for compliance.

Operations

The business continued to focus on product initiatives and expanding risk advisory offerings for NBFCs. In the international market, growth was largely driven through internal credit rating platform. The year saw continued consolidation, with investments in products and efficiencies in implementation. The year witnessed significant improvement in customer satisfaction, with various customer-centric initiatives. The business took efforts to undertake outreach in the international market across South Asia, Middle East and Africa for developing a strong pipeline and increased collaboration with S&P Global. We organized webinars on Ind AS provisioning and its impact on the lending community, which was well received. In addition, thought leadership articles were published on IFRS 9.

CRISIL Risk Solutions expects to build on the current momentum on offerings, with increased analytical capabilities and by expanding its footprint in global markets in 2018.

D. Franchise collaboration with S&P Global

We deepened our engagement with S&P Global and its group companies through a variety of outreach initiatives across geographies.

We jointly hosted the annual flagship seminar India Credit Spotlight, on the theme ''Opportunities and risks in the face of reforms'', in Mumbai, Hong Kong and Singapore. The seminar was very well appreciated by investors and issuers alike.

In London, we partnered with S&P Global to organize a buy-side conference on ''MiFID II and the Changes in Research Consumption Practices'' and presented a research paper on Research Unbundling.

We also regularly participated in S&P Global webinars and shared our perspectives on a variety of topical themes.

Krishnan Sitaraman, Senior Director, Ratings, participated as a guest speaker in the webinar titled ''India Non-Bank Financial Companies - A sector whose time has arrived''. Additionally, Somasekhar Vemuri, Senior Director, Ratings, shared CRISIL views on the haircuts required for resolving non-performing assets in the banking sector during an S&P Ratings webinar on the Indian banking sector.

We hosted Economist Forums with S&P Global Asia-Pacific Chief Economist Paul Gruenwald on the rebalancing in China and its implications, and with S&P Global EMEA Chief Economist Jean-Michel Six on global trade barriers and Brexit. Additionally, CRISIL Ratings hosted a joint investor briefing with S&P Global to bolster our relationship with the investor community.

CRISIL''s Chief Economist Dharmakirti Joshi participated in several forums organized by S&P Global.

He was a panellist at the Global Economic Outlook morning briefing in New York, moderated the leadership panel on ''Financial reforms, next generation investing and keeping up with global competition'' at S&P BSE Indices'' annual thought leadership seminar, and was a panellist in the S&P Dow Jones thought leadership seminar titled ''Eyes on Asia: A brave new word'' in Hong Kong.

Additionally, CRISIL continued to provide outlook on the Indian economy, contributing an article, ''India to ride recent reforms to grow'' for an S&P Global publication. S&P Global Platts organized the 13th Annual Steel Markets Asia Conference in Mumbai, where Rahul Prithiani, Director, CRISIL Research, delivered a presentation on the latest trends in steel end-user buying patterns.

E. Human Resources

The Human Resources team made good strides in 2017. At the end of its financial year, CRISIL''s headcount was 3,904, including all wholly owned subsidiaries.

Highlights

We were able to benchmark CRISIL''s employee engagement levels globally (through the adoption of VIBE - S&P Global''s annual employee satisfaction survey), allowing us to share best practices. Adoption of technology enabled platform, has helped us engeged with employees. With a focus on improving employee benefits, a number of programmes were rolled out to be able to stay ahead of the market.

Our talent development programme was well implemented, with more than 300 employees undergoing diverse training modules. Leadership development, succession planning and other organizational development programmes progressed in line with CRISIL''s long-term strategy, with specific development focused modules for the leadership team. Our job rotation programme got a relook this year to encourage more participation from employees and facilitate their career aspirations. We imparted 6,538 person-days of diverse training to employees during the year, complementing our focus on continued learning.

Directors

The members of the Board of Directors of the Company are eminent persons of proven competence and integrity. Besides experience, strong financial acumen, strategic astuteness and leadership qualities, the Directors have a significant degree of commitment to the Company and devote adequate time for the meetings, preparation and attendance. Board members possess the education, expertise, skills and experience in various sectors and industries required to manage and guide the Company, thus bringing in diversity to Board perspectives. The brief profiles of Directors forming part of this Annual Report gives an insight into the arenas where the Directors have qualification and experience, thus enhancing the diversity of the Board.

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. The Policy includes the scope and terms of reference of the Nomination & Remuneration Committee and the roles, responsibilities, criteria and procedures towards key aspects of Board governance including the size and composition, criteria for Directorship, terms & removal, succession planning, evaluation framework and on-going training and education of Board members. The Policy lays down detailed guidelines for remuneration of the Board, Managing Director and employees, covering fixed and variable components and long term reward options, including employee stock option plans.

Directorship changes

Retirement and resignations

Mr. Douglas L. Peterson, Chairman, resigned from the Company with effect from October 17, 2017, owing to his other commitments in his role as Chief Executive Officer of S&P Global Inc. Your Directors place on record their sincere appreciation for Mr Peterson''s encouraging stewardship, constructive inputs and continuous guidance to the Company and the Board, that helped set the strategy of the Company and chart its roadmap for future growth.

Mr. H. N. Sinor''s tenure as an Independent Director of the Company ended on October 25, 2017. Mr. H. N. Sinor had taken office as a Non-Executive, Independent Director of CRISIL in October 2007 and demitted office after completion of 10 years. Your Directors place on record their sincere appreciation for the strong support, advice and guidance provided by Mr. Sinor to the Company and its Management, which was immensely valuable to drive the growth and performance of the Company.

Appointment

Mr. John L. Berisford, Non-Executive Director on the Board, was appointed as Chairman of the Board with effect from October 17, 2017.

Mr. Ewout Steenbergen was appointed as a director in casual vacancy caused by the cessation of directorship of Mr. Douglas L. Peterson and Mr. Girish Paranjpe was appointed as Additional Director (Independent) with effect from October 17, 2017. The Company has received notices under Section 160 of the Companies Act, 2013, from a member signifying his intention to propose the candidature of Mr. Ewout Steenbergen and Mr. Girish Paranjpe for the office of Directors.

Mr. Ravinder Singhania was appointed as alternate director to Mr. John L. Berisford with effect from October 18, 2017.

Re-appointment

In accordance with the Articles of Association of the Company and the provisions of the Companies Act, 2013, Ms. Martina Cheung retires by rotation and being eligible, seeks reappointment.

Brief profiles of Mr. Ewout Steenbergen, Mr. Girish Paranjpe and Ms. Martina Cheung have been given in the Notice convening the Annual General Meeting.

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) Dr. Nachiket Mor

b) Mr. M. Damodaran

c) Ms. Vinita Bali

d) Mr. Girish Paranjpe

Committees of the Board

There are currently five 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 exhibits strong operational oversight with regular presentations by business heads to the Board. An annual planner of topics to be discussed at the Board through its quarterly meetings is pre-discussed with the Board. 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 help them plan their schedule and to ensure meaningful participation in the meetings. Only in case of special and urgent business, if the need arises, 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 seven days before 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. Since the last two years, the Company has moved to a two-day schedule for its quarterly committee and Board meetings, which allows for greater discussion time for Board matters.

The Board met seven times in financial year 2017 viz., on February 11, April 20, June 23, June 28, July 18, September 29 and October 17. The maximum interval between any two meetings did not exceed 120 days.

Compliance with secretarial standards on Board and Annual General Meetings

The Company has complied with secretarial standards issued by the Institute of Company Secretaries of India on Board Meetings and Annual General Meetings.

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, Committees, Chairman and individual Directors. The performance evaluation of the Chairman was carried out by the Independent Directors at a separate meeting of the Independent Directors. The questionnaire and evaluation process was reviewed in the context of SEBI Guidance Note on Board evaluation dated January 5, 2017, and necessary alignment was made with the requirements.

The questionnaire for Board evaluation is prepared taking into consideration various aspects of the Board''s functioning such as understanding of Board members of their roles and responsibilities, Board meeting and reporting process, 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 flow 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 fiduciary duties by the Board.

Committee performance is evaluated on the basis of their effectiveness in carrying out their 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 key improvement areas emerging through this exercise and action plans to address these are in progress.

During 2017, the Company also auctioned the feedback from the Board evaluation process conducted in the previous year, i.e. 2016. Suggestions were incorporated in strengthening the Board review calendar plan for 2017 with thematic additions on technology road-map and business continuity review, increasing the focus on internal controls through additional Audit Committee meetings, discussion on key executive succession planning and improved Board scheduling and time management. Opportunities to increase awareness on industry trends and peers were provided to the Board through sessions by internal and external speakers, including some industry experts; these helped contextualizing the budgeting and strategy exercises of the Company. During the year, the Board competencies were diversified with the addition of a Director with technology background.

Risk Management Policy, Compliance framework and Internal Control Adequacy

The Board has adopted policies and procedures for ensuring orderly and efficient conduct of its business, including adherence to the Company''s policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and 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 the 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 controls impacting financial reporting, at entity as well as operating levels, and submitted its report to the Audit Committee and the Board.

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.

Information security has emerged as a major risk in recent times to the financial services industry. The Company continuously evaluates exposure from this perspective. During the year, we implemented actions to enhance security by enhancing intrusion detection systems, next generation firewall, a new cybersecurity solution, and upgraded data loss prevention systems, among many measures to manage and mitigate cyber risks. Additionally, an organization-wide Business Continuity Project was initiated to align the Company''s Business Continuity Programme to ISO 22301:2012 Societal security -- Business Continuity Management System (BCMS). This initiative intended strengthening the resilience of the organization. BCMS enables an acceptable level of service during disaster, protects & supports employees, asset and business, reduces risk and enables the Company to meet statutory, regulatory and contractual obligations.

The Company has a robust framework for monitoring compliance with applicable laws. Adequately empowered functional teams operate as the first line of defense. Their procedures and actions are routinely subject to audit and test procedures ensuring robustness of the system. During the year, the Company introduced an additional IT-enabled tool to monitor compliances and support the compliance assessment process. A quarterly certification on compliance with laws is provided by senior management to the Board.

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 with reference to financial statements were adequate and effective during financial year 2017.

Directors’ responsibility statement

Your Directors hereby confirm that:

i. i n 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.

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. As such, the Company does not own any manufacturing facility and hence our processes are not energy intensive. Hence particulars relating to conservation of energy and technology absorption stipulated in the Companies (Accounts) Rules, 2014, are not applicable.

However we endeavour to support the environment by adopting environment friendly practices in our office premises. CRISIL House, Mumbai, our corporate headquarters, is a Platinum-rated Green Building. During 2017, one more of our offices, CRISIL House, Gurgaon earned the IGBC Green Existing Buildings certification in the Gold category. These certifications recognize the efforts of the Company on waste segregation and recycling, usage of eco-friendly refrigerants for air conditioning requirements, reducing heat island effect in the design of the building and parking, using eco-friendly materials in gardening, housekeeping, rain water harvesting and other measures at water efficiency. CRISIL House was recently featured in the book ''Pathways to Green India: Innovative Ideas for Public Spaces, Vol II'', published by Earth Day Network, an international NGO, which operates in the sustainable environment space.

We have rolled out a policy which aims at improving environmental performance of CRISIL. The policy is our commitment to be environmentally responsible and encourages our employees and members of the wider community to work for the environment by setting and monitoring environmental objectives, making efficient use of natural resources, elimination of waste and promoting recycling of resources.

During 2017, we commenced an important initiative to convert wet garbage generated in CRISIL House into compost instead of giving it off for municipal collection. Organic manure thus generated from wet waste is being used for in-house garden landscaping requirement. Separate wet and dry garbage rooms have been created for storing garbage.

In addition, under the CRISIL RE employee volunteering program, CRISIL leverages its workforce as agents of change to drive environment conservation actions. Details of the outcomes from these initiatives during 2017 are given in the Corporate Social Responsibility Report published elsewhere in the Annual Report.

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, 2017, the Company had one Indian and seven overseas wholly owned subsidiaries. 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.

On November 15, 2017, CRISIL entered into a definitive agreement to acquire 100% of the equity shares of Pragmatix Services Private Limited (''Pragmatix''). Pragmatix is a data analytics company focused on delivering cutting-edge solutions in the ''data to intelligence'' lifecycle to the banking, financial services & insurance (BFSI) vertical. Its Big Data capabilities and advanced data models provide descriptive, prescriptive and predictive analytics delivered through its proprietary Enterprise Data Analytics Platform. In its short history post incorporation in 2010, Pragmatix has successfully built and deployed solutions across the risk, sales, and finance domains in India, Middle East and North America. The transaction was valued at a total consideration of Rs. 56 crore. Pragmatix will strengthen CRISIL''s position as an agile, innovative and global analytics company. It will enable CRISIL to leverage its technology platform and deep domain expertise to enhance its business intelligence, analytics and risk management offerings for financial sector clients in India and globally. As on December 31, 2017, Pragmatix was not a subsidiary of CRISIL, but it became a wholly owned subsidiary of the Company w.e.f. January 24, 2018.

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 office.

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

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 S&P Global 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 2017 were in the ordinary course of business and at an arm''s length. During the year, there were no related party transactions which were materially significant and that could have a potential conflict 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 the 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 https://www.crisil.com/en/home/ 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.

In June 2017, CRISIL has purchased 26,22,430 equity shares of CARE Ratings Limited (CARE) representing 8.9% of its equity share capital. CARE is a SEBI registered credit rating agency and is listed on BSE and NSE. The investment has been made pursuant to a bid process conducted by Canara Bank, subsequent to their request for quotation. This stake purchase is an investment in the excellent long-term prospects of the credit rating sector in the country. This investment in the equity of CARE has no special rights.

Auditors’ Report

M/s. Walker Chandiok & Co LLP (an affiliate of Grant Thornton network) are the Statutory Auditors of the Company. Their report is a part of the Annual Report.

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.

Comments on Auditors’ Report

There are no qualifications, reservations or adverse remarks or disclaimers made by Walker Chandiok & 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 the 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. A certificate from the auditors of the company confirming compliance with the conditions of corporate governance as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is also published elsewhere in this Annual Report.

Particulars of remuneration

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) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 have been appended as Annexure V to this Report.

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 every employee covered under the said rule 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 upon request.

The Nomination and Remuneration Committee of the Company has affirmed at its meeting held on February 13, 2018 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, and amended by special resolution of shareholders at the 30th Annual General Meeting held on April 20, 2017.

During 2017, there were no material changes in the Employee Stock Option Plans of the Company except the amendment made to ESOS 2014 as specified above. The Schemes are in compliance with the SEBI Regulations on ESOS. As per Regulation 14 of SEBI (Share Based Employee Benefits) Regulations, 2014 read with SEBI circular dated June 16, 2015 the details of the ESOS are uploaded on the Company''s website https://www.crisil.com/en/home/investors/financial-information/annual-report.html in terms of Circular No CIR/ CFD/POLICY CELL/2/2015 dated June 16, 2015 issued by Securities and Exchange Board of India.

The Company has received a certificate from M/s. Walker Chandiok & Co LLP that ESOS 2011, ESOS 2012 and ESOS 2014 have been implemented in accordance with the SEBI Regulations and the resolution passed by the members in their general meeting. The certificate would be placed at the ensuing Annual General Meeting for inspection by the members.

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 VI.

Financial year

The Company and all its subsidiary companies, in India and across the world, except Pragmatix Services Private Limited which has been recently acquired, follow the calendar year as the financial year in terms of a special approval obtained from the Company Law Board in 2015.

CEO and 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 13, 2018.

Statutory disclosures

Your Directors state that there being no transactions with respect to following items during the financial year under review, no disclosure or reporting is required in respect of the same:

1. Deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013, and the Companies (Acceptance of Deposits) Rules, 2014.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Receipt of any remuneration or commission by the Managing Director/Whole-time Director of your Company from any of its subsidiaries.

4. Significant or material orders passed by the regulators or courts or tribunals which impact the going concern status and the Company''s operation in future.

5. Buy back of shares.

6. Material changes and commitments, affecting the financial position of the Company that have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this report unless otherwise stated in the 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 S&P Global 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, 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

John L. Berisford

Chairman

Mumbai,

February 13, 2018 (DIN: 07554902)


Dec 31, 2016

Dear Member,

The Directors are pleased to present to you the 30th Annual Report of CRISIL Limited, along with the audited financial statements, for the year ended December 31, 2016.

Financial Performance

A summary of the Company''s financial performance in 2016:

(Rs. in crore)

Particulars

Consolidated

Standalone

2016

2015

2016

2015

Total income for the year was

1,601.88

1,423.16

1,178.79

1000.70

Profit before depreciation, exceptional item and taxes was

516.23

442.82

414.18

349.38

Deducting depreciation of

40.36

37.12

28.52

24.03

Profit before tax was

475.87

405.70

385.66

325.35

Deducting taxes of

149.53

120.55

130.01

103.35

Profit after tax was

326.34

285.15

255.65

222.00

The proposed appropriations are:

Dividend

192.54

163.77

192.54

163.77

Corporate dividend tax

39.20

33.60

39.20

33.60

General reserve

20.45

22.20

20.45

22.20

Balance carried forward is

74.15

65.58

3.46

2.43

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 133 of the Companies Act, 2013 read with Rule 7 of The Companies (Accounts) Rules, 2014. 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 which all 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. 1,601.88 crore, 12.56 % higher than Rs. 1,423.16 crore in the previous year. Overall operational expenses for the year were Rs. 1,126.01 crore, against Rs. 1,017.46 crore in the previous year. Operating Profit (EBITDA) improved to Rs. 461.52 crore, against Rs. 399.60 crore, in the previous year. Profit after Tax for the year was Rs. 326.34 crore, against Rs. 285.15 crore in the previous year.

b) Standalone operations

Revenue from the standalone operations of your Company for the year was Rs. 1,178.79 crore, 17.80% higher than Rs. 1,000.70 crore in the previous year. Overall operational expenses for the year were Rs. 793.13 crore, against Rs. 675.35 crore in the previous year. Operating Profit (EBITDA) improved to Rs. 364.98 crore, against Rs. 304.78 crore, in the previous year. Profit after Tax for the year was Rs. 255.65 crore, against Rs. 222.00 crore 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 20, 2017, payment of Final Dividend of Rs. 9 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 interim dividend of Rs. 5, second interim dividend of Rs. 6 and third interim dividend of Rs. 7 per equity share of face value of Re. 1 each. The total dividend for the year shall be Rs. 27 per share on a face value of Re. 1 per share in 2016 as against a total dividend of Rs. 23 per share (including a Special Dividend of Rs. 3 per share) on a face value of Re. 1 per share in the previous year.

Transfer to Reserves

The appropriations for the year are:

(Rupees in crore)

Particulars

Consolidated

Standalone

Year Ended December 31, 2016

Net Profit for the year

326.34

255.65

Balance of Reserve at the beginning of the year

131.87

131.87

Transfer to General Reserve

20.45

20.45

Adjustment on amalgamation

(11.17)

(11.17)

Balance of Reserve at the end of the year

141.15

141.15

Increase in Issued, Subscribed and Paid-up Equity Share Capital

During the year, the Company issued and allotted 1,26,255 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 was 7,13,35,358 equity shares of Re. 1 each.

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

(Rupees in crore)

Particulars

No. of shares allotted / (extinguished)

Cumulative outstanding capital (No. of shares of Face Value Re. 1 each)

Capital at the beginning of the year i.e. as at January 1, 2016

-

7,12,09,103

Allotment of shares to employees on exercise of options granted under the Employee Stock Option Scheme, 2011, and the Employee Stock Option Scheme, 2012

67, 575

7,12,76,678

Allotment of shares to employees on exercise of options granted under the Employee Stock Option Scheme, 2011, and the Employee Stock Option Scheme, 2012

58,680

7,13,35,358

Capital at the end of the year i.e. as at December 31, 2016

-

7,13,35,358

Review of Operations

A. Ratings

Highlights

- Announced 2,741 new Bank Loan Ratings (BLRs) during the year; total BLRs outstanding exceed 13,264

- Assigned over 18,000 SME ratings and assessments 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

- Global Analytical Center (GAC) continued to enhance its engagement with S&P Global Ratings in the areas of risk and regulatory support, and further expanded engagement with Platts with increased support in new products and analytics across additional commodity sectors.

Business environment

India''s economic and business environment remained subdued during 2016 due to weak investment climate and muted demand for working capital. On the back of a good monsoon and mild income boost from the Seventh Pay Commission and One Rank One Pension payouts, consumption picked up in the second quarter and it looked like a consumption-led recovery was on the cards for fiscal 2017. However, growth was mildly dented in the third quarter when government demonetized Rs 500 and Rs 1,000 bank notes. Assuming the time that would be taken for full remonetisation, we expect GDP growth to be ~6.9% in fiscal 2017. The immediate channel for deceleration would be a slowdown in consumption demand, leading to a delay in fresh investment plans of corporate. That, in turn, would defer recovery in India''s private investment cycle.

Credit growth of India''s banking sector remained muted at 9% year-on-year as of December 2016. While a good monsoon has improved growth in farm credit, weak corporate credit demand and risk aversion of public sector banks were drags. We expect banks to reduce their lending rates in the near-to-medium term given the abundant systemic liquidity. However, credit growth will remain insipid given subdued consumption and investment demand, and we estimate it at 7-9% for fiscal 2017.

The capital market witnessed an increase in activity in the third quarter of the year due to favourable liquidity and falling yields, which meant bonds were the preferred route to raise funds than bank loans. We believe yield on the 10-year benchmark government security would settle around ~6.8% by March-end fiscal 2017 versus 7.5% in fiscal 2016. Effective liquidity management, reduction in the policy rate by the Reserve Bank of India (RBI), lower inflation, and falling oil prices easing pressure on government borrowings will curb yields. The RBI has also announced measures that would develop and deepen the corporate bond market, enhance participation, facilitate greater liquidity, and improve communication. We believe the measures may take some time to be felt fully, but over the long term they will make a difference.

In 2016, CRISIL''s BLR business witnessed muted growth due to weak credit off take in the manufacturing sector and intensified competition. These factors adversely impacted average realization and volume. While pricing pressures are likely to continue, expected pick up in credit growth and increased risk weights for large unrated exposures could lead to an improved BLR market in 2017.

For CRISIL''s SME Ratings business, calendar year 2016 was a crucial year as consistent engagement with regulators and key decision makers helped in the reinstatement of subsidy support by the Government of India under the NSIC - PCRS (Performance & Credit Rating Scheme). The primary focus of CRISIL SME Ratings for 2016 was to ramp up business volume by increasing capacity, thereby maximizing subsidy share. CRISIL was able to achieve quick and timely ramp-up of manpower by June 2016. One major challenge was navigating low vintage and experience issues across the business development and operations teams. This was addressed through exhaustive training and people development initiatives. Several process realignment initiatives were also undertaken in 2016, which helped to improve key business drivers such as productivity, attrition and operations efficiency. Another challenge emerged in the form of revised regulatory guidelines around client sourcing and documentation, which coupled with pricing pressure posed severe market constraints. Despite the challenging business environment, the SME Ratings business witnessed strong growth in the second half of 2016 and ended the year at a high. However, the SME-business is likely to witness challenges in 2017 owing to significant reduction in the subsidy support under PCRS for 2017-18, which will adversely impact the flagship product - SME NSIC Ratings. To mitigate this, the business is coming up with ambitious technology driven projects to re-engineer business processes, operations and achieve cost optimization, besides instituting a new strategic products cell to sharpen existing products and develop new and relevant market offerings. The medium-to-long term outlook for the MSME sector remains positive, despite potentially adverse short-term effects due to demonetization and the implementation of the Goods and Services Tax regime.

Operations

CRISIL Ratings maintained its market leadership in 2016, backed by strong performance in bond ratings and SME ratings businesses. CRISIL announced 2,741 new BLRs and 18,000 SME ratings during the year. It has, to date, assigned more than 25,000 BLRs and over 110,000 SME ratings/assessments. This year, SME ratings/ assessments were focused on newer geographies such as the north-east. The business also added clients from hinterland in north and south India.

In 2016, we rated India''s first hybrid issuance in the insurance sector. This was first subordinated debt instrument in the Indian market by an insurance company. We also released the rating criteria for hybrid instruments issued by insurers, the first of its kind in India. We also rated the largest annuity-based road project in 2016. Further, CRISIL assigned a rating on India''s first Infrastructure Investment Trust (InvIT). All these innovations were well received by the market, and are seen as significant milestones in deepening the corporate bond market in India.

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

CRISIL Ratings also held the 4th edition of its annual bond market seminar, the theme of which was ''Corporate Bonds & India''s New Financial Order''. The highlight was a keynote address by Shri Jayant Sinha, former Minister of State for Finance, Government of India. Shri Sinha also launched The CRISIL Yearbook on the Indian Debt Market, 2015, at the event. In addition, we had a power-packed panel moderated by Smt Usha Thorat, former Deputy Governor of the RBI, on regulatory facilitation for India''s corporate bond market. The participants were from the RBI, the Pension Funds Regulatory Development Authority, SEBI and the Insurance Regulatory Development Authority. Our analysis was well received by all stakeholders including regulators and policy makers. We successfully hosted a discussion forum on the non-banking finance company (NBFC) sector under the ''Fin Insights'' umbrella, where we discussed trends and perspectives on key topics pertaining to NBFCs like housing finance, structured credit, real estate financing, SME financing, loan against property, etc. The seminar included a line-up of prominent NBFC industry leaders as panelists and received promising feedback on the content and execution of the event.

We have developed a structured and sustained platform named ''CRISIL Ratings Conclave'' for our senior management to deepen relationships with existing clients and create differentiation with prospective clients across various locations beyond metros. This is designed as a select forum to drive closer client conversations and engagements.

High-impact franchise activities during 2016 included seminars on the power sector and India Outlook for Fiscal 2017 jointly with CRISIL Research team, web conferences on the telecom, road and agrochemical sectors, apart from press releases on securitization, banking, etc. We were also the speaker and knowledge partner in various conferences and summits. These outreach efforts were well received from by key stakeholders including clients and investors.

GAC continued to work closely with S&P Global Ratings, growing in new areas of support such as risk management and regulatory support, including assistants on criteria validation, operational and documentation support for control functions, while increasing the level of integration with S&P Global Ratings teams globally. GAC also expanded support to previously under-served geographical segments including Latin America and Japan.

With the evolving global regulatory requirements, GAC continued its focus on strengthening its internal controls framework in collaboration with S&P Global Ratings'' control functions. GAC''s culture of continuous improvement has created ongoing efficiency gains for S&P Global Ratings through lean management tools, work standardization and process re-engineering.

GAC also initiated new support for S&P Global Ratings in the newly formed functions and extending support in Platts to their recently acquired businesses. .

B. Research

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

Highlights

-Financial Research built a strong base on the buy-side and credit business segment driven by new opportunities arising out of the changing regulatory environment

- Risk & Analytics reported another year of very strong business growth with both new and existing customers, and witnessed good traction with newer offerings launched to help banks meet various regulatory mandates

- Corporate Research added several new logos across core sectors

- Coalition had very strong results driven by the expansion of existing clients and the diversification of new clients, coupled with increased brand and media dominance.

- In Data Analytics, we made good progress in delivering analytical solutions and innovative products and solutions to our customers in the buy side and sell side

Business environment

Calendar 2016 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 revenue at the same level as in 2005. Banks are also transforming their front, middle and back-office activities to provide differentiated services, achieving cost efficiencies and increasing productivity. This is opening up a number of business opportunities for the Risk & Analytics business. Increasing regulatory changes continues to drive strong growth for CRISIL GR&A, especially in the Risk & Analytics vertical, and Coalition.

The Coalition IB Index tracked the performance of the top 12 global investment banks. The results for 2016 show that overall, the index performance is down 2% year-on-year. Equity revenue has decreased 12%, while those from investment banking (from merger & acquisition activity), and debt and equity markets, have decreased 8%. However, Fixed Income Currency and Commodities (FICC) revenue has increased 9%.

Index Revenue Trend

In Financial Research, we have added clients across new business segments on the buy side and in credit risk. The imminence of the Markets in Financial Instruments Directive II (MiFiD II) regulations, and increased cost pressure is stoking demand for our services on the buy side, especially from traditional managers and hedge funds. Our sell-side business witnessed demand from the Asia-Pacific region from existing clients. Our Credit Risk business gained from new opportunities related to risk management, deal screening and underwriting, and portfolio monitoring from global financial services clients.

The Risk & Analytics business continued to witness strong demand in the areas of stress testing, model validation, regulatory change management, and financial crime and compliance analytics. In addition to the now mature US regulations such as the Comprehensive Capital Analysis and Review (CCAR) and the Dodd-Frank Act Stress Testing (DFAST) newer regulations such as the Fundamental Review of the Trading Book (FRTB), International Financial Reporting

Standards 9 (IFRS 9), Current Expected Credit Loss Standard (CECL), and Interest Rate Risk in the Banking Book (IRRBB) are also gaining momentum. We are also experiencing substantial interest for our services by banks and financial institutions to provide support for risk data aggregation, and for up gradation of risk systems and processes.

In Corporate Research, our clients continued to face cost pressures and loss of business opportunities, while witnessing increased focus on innovative sales approaches to enable new business. We added several new logos during the year, in addition to reviving a few dormant clients, which helped maintain our revenues.

In Data Analytics, we added new logos for our services on both the buy and sell sides. As analytics becomes more mainstream, we see demand for support, training and consulting assignments on visualization, digital analytics and advanced analytics. There exist opportunities for integration of unstructured data into investment decision making, and analytics solutions for end clients to quickly validate and test assumptions and hypothesis.

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 in the area of changing regulations and its impact on asset managers, which received excellent response and reinforced our position as an industry leader. Our global research centers continue to scale up, with International Centers 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 of the previous years have started to yield results in newer areas such as financial crime and compliance analytics, FRTB and IFRS9/CECL. The past year witnessed expansion of our business across all geographies, successful conversion of some strategic prospects, and good progress on the productisation agenda. We are actively investing in our human capital and grooming in-house talent to make them industry ready through a planned series of comprehensive training programs in line with the evolving landscape of the financial services and risk industry.

We have also strengthened our core franchise via participation in industry conferences, hosting webinars on topical issues, and publishing incisive thought papers.

In Corporate Research, while we continued to add large corporations to our clientele, we also added several medium-size entities in our client portfolio - who are requesting analytics-driven research support that provide tangible results - to deal with the challenging business environment they are currently facing.

Coalition delivered strong results, driven by its core Competitor and Client Analytics, which continued to report solid growth. In 2016, 75% of Coalition''s existing corporate and investment bank clients significantly increased their investment in our services. In addition, Coalition diversified its client base by establishing new relationships with regional and national players as well as buy-side firms. This expansion is testimony to the trust and increasing reliance in Coalition''s high-quality analysis and insight across the financial services industry. Its media strategy added new publications covering corporate and investment bank analysis to reflect the growing collaboration between the two. The team has also delivered very good results, leading to an estimated media market share above 50%. In Data Analytics, we have invested in expanding our team and capabilities. We are focusing on training, and learning and development opportunities to enable up skilling.

B.2. India Research Highlights

- Maintained our dominant and premium position in the flagship Industry Research business

- Witnessed healthy revenue growth in the Customized Research business on the back of significant traction in the automobiles, energy and commodity sectors

- Remained the largest provider of fixed-income indices in India and consolidated our position by launching seven new indices during the year

- Significantly stepped up engagement with regulators and industry associations.

Business Environment & Operations

Despite sharp increase in banks'' non-performing assets and resultant pressure on profitability, which impacted research expenditure, subscription rates remained healthy, indicating the criticality and value of our research products and services. Apart from ongoing coverage on 86 sectors, we launched many special reports in areas such as on NBFCs, SMEs, agriculture and, for the first time, on railways given the strong investment focus of the government. After two years of slowdown, the Customized Research business witnessed healthy revenue growth on the back of significant traction in the automobiles, energy and commodity sectors. Continued high proportion of repeat business from Indian and global clients, and increase in average ticket size of mandates improved the performance.

In the Fixed Income Research business, we further consolidated our strong position in the valuation space by winning mandates from general insurers and corporate in 2016. We continued to be the largest provider of fixed-income indices in India and consolidated our position by launching seven new indices during the year. In the mutual fund research, we increased our presence with corporate treasuries and exempted provident fund trusts, helping them in portfolio performance review and risk monitoring.

The Executive Training business saw robust growth over the previous year. We launched our first multi-level certification programme on a customized basis. Increase in banks'' and regulators'' focus on enhancing credit and risk domains skills is likely to provide strong tailwinds, driving growth of the training business in the medium term.

Franchise

The CRISIL Centre for Economic Research (C-CER) and the CRISIL Research businesses continued to focus on franchise and thought leadership activities by conducting distinctive research on contemporary issues. We published several landmark reports during the year, covering a wide spectrum of areas such as the distress in the rural economy, impact of remittances and deficient rains, trade deficit with China, impact of GST, quality of India''s growth, impact of Brexit, the ''Make in India'' programme, and demonetization. C-CER and CRISIL Research speakers participated in over 27 leading industry conferences and panel discussions, and hosted 11 events/ webinars on a variety of topics. CRISIL Research participated as a knowledge partner and presented a report on the pension sector at ASSOCHAM''s National Conference on Social Security and The Role of Equity Market.

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 Government of India''s flagship programmes such as Smart Cities Mission, Power for All/ Ujwal Discom Assurance Yojana (UDAY), Roads and Indian Railways, and infrastructure financing

- Deepened our value offerings by supporting implementation of large infrastructure programmes through large, multiyear programme management mandates

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

Business environment

India''s infrastructure sector is at the threshold of significant transformation. The government has launched several new programmes and policy initiatives that have the potential to provide inclusive infrastructure to citizenry. The investment climate has, however, not yet picked up, and infrastructure financing continues to remain a key challenge. The private sector, which was expected to play a key role in infrastructure development, remains wary of investments. The global economic situation has also not improved, amid continued concerns over recovery.

The government has launched quite a few large and visionary programmes, and has committed to take up the lion''s share of investments. However, full-scale implementation is yet to be seen. How quickly the government is able to roll out various reforms and implement them remains the key.

The business is also involved closely with infrastructure development in emerging markets in Africa and South / southeast Asia. During the year, the business environment and infrastructure development in these international markets was muted.

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 emerging markets as well. This helped the business to build a robust order book that is significantly larger than before. Revenue growth was steady during the year.

Our focus on government and multilateral agencies as clients continued, as we supported several flagship programmes of the government. During the year, the business was successful in deepening its foray into large multi-year implementation support mandates with government programmes - an important defined strategic pursuit area.

We worked closely with the Ministry of Power in preparing the roadmap for ''24x7 Power for All by 2019'' for 15 states and union territories, and are now supporting one of the state governments in monitoring and implementation of UDAY and Power for All schemes. We deepened our involvement in the downstream gas sector, as well as renewable energy sector by winning a few prestigious mandates during the year, including review and evaluation of the National Solar Mission.

We expanded our involvement in the Smart Cities Mission by supporting a few more cities in the second round of proposals, and are proud of the fact that barring one, all the cities we supported in the proposals round have been selected by the Ministry of Urban Development to be developed as Smart Cities. We also won a large implementation support mandate in one of the cities.

The roads sector saw a lot of action during the year, and CRISIL Infrastructure Advisory is involved with the National Highways Authority of India on some prestigious projects, including the proposed monetization of operational projects under the toll-operate-transfer model. We also worked on a first-of-its-kind mandate for the Indian Railways to set up a development fund to draw private and foreign capital to the sector.

The international business for CRISIL Infrastructure Advisory was relatively muted during the year, given the sluggishness in the emerging markets we targeted. However, the business won a few prestigious mandates in Africa and successfully tapped and deepened involvement in the Mekong region of south-east Asia with large mandates in Vietnam, Laos and Cambodia.

C.2. CRISIL Risk Solutions (CRS) Highlights

- Continued to consolidate the business, while stabilizing products for efficiencies

- Saw good traction for the business from non-banking clients in India

- Continued expansion of footprint in south Asia, the Middle East and other new geographies by increasing collaboration with S&P Global

Business environment

The business environment in India has improved significantly with favourable policies on financial inclusion and easing stress on credit quality in the banking industry. With increased focus on strengthening credit risk management and monitoring, demand from banks for our Early Warning System (EWS) and Credit Processing System (CPS) remains strong. Momentum in CRS''s rating solution continues in India with small banks and NBFCs showing keen interest in moving to a system-based solution for internal ratings. CRS''s non-product service business is also showing good momentum and would be a key growth driver in the next couple of years. We recently executed our first mandate in the risk services space for a leading NBFC in India. In the international market, especially the Middle East, momentum is building around the need for a credit monitoring tool. Though there is good traction in the market, conversions are key to growth next year.

Operations

The year saw consolidation with continued investments in our products for building sustainable business and ensuring efficiencies in implementation. Process, people and products remain the key imperatives for the business.

The second half of the year witnessed increased traction in the NBFC space for adopting improved risk practices, leveraging on our strong risk and credit expertise. We expect the momentum to continue next year as well. CRS took efforts to build outreach in the international market for developing a strong pipeline.

We continued to build our franchise through webinars and knowledge-sharing sessions in India and abroad. CRS conducted seminars in Dubai and Kuwait, focusing on increased credit monitoring by an early warning framework, implementation challenges and industry best practices. CRS also organized a web conference discussing practical, real world challenges related to effective credit assessment of MSMEs and alternative approaches to overcome difficulties.

CRS expects to build on its current momentum, expanding footprints in the non-banking space and global markets in 2017.

D. Collaboration with S&P Global

In 2016, we deepened our engagement with S&P Global for outreach initiatives in different geographies. We collaborated with S&P Global on a seminar under the annual flagship platform, India Credit Spotlight. The theme for the seminar was ''India and China: Fighting the Growth War on Different Battlegrounds''. The event was appreciated by investors and issuers alike. As part of our joint outreach initiatives, we organized a lecture by Paul Sheared, Executive Vice President and Global Chief Economist, S&P Global, on his visit to Mumbai. The lecture was organized in collaboration with the Asia Society chapter in India. We also organised a breakfast meeting for S&P Global Asia-Pacific Chief Economist Paul Gruenwald on Chinese rebalancing and its implications. CRISIL''s Chief

Economist Dharmakirti Joshi participated as a panelist in the Global Economic Outlook Conference in New York and also in a webinar on the same topic. He also moderated the leadership panel (on innovation, exploration and India''s growth trajectory) at S&P Dow Jones Indices'' annual thought leadership seminar, ''Is India''s Tomorrow Here Today,'' held in Mumbai.

C-CER continued to provide outlook on the Indian economy to S&P Global and contributed an article on prospects for the Indian economy along with an article on India''s policy focus on the manufacturing sector to a Platt''s publication. CRISIL Research hosted a webinar titled ''Steel - Is it the inflection point or a mirage?'' with participation from a senior sector specialist from Platts. Further, CRISIL''s expert participated in a panel discussion titled ''Is there a global solution to anti-dumping issues?'' at Platts'' Steel Conference held in Mumbai. CRISIL also presented on the Indian sugar industry''s financial position and outlook at Kingsman Asia Sugar Conference held in Delhi.

Risk Solutions business continued to engage with S&P Global Market Intelligence to promote its offerings in the areas of credit risk assessment for banks and financial institutions across emerging markets.

CRISIL Research started collaborating with S&P Global for cross-selling its products through the S&P Global Market Intelligence platform.

E. Human Resources

CRISIL''s Human Resources agenda made significant advancements in calendar 2016. At the closure of its financial year, CRISIL''s headcount was 3,972 including in all wholly owned subsidiaries.

Highlights

Employee engagement level moved upward significantly over the last year benchmarks. Empowerment and ownership of middle management helped immensely in talent engagement and retention. Diverse talent programmes were implemented flawlessly and with due spirit that will help us in long run.

We invested heavily in newer technologies, which would not only provide superior experience but also more control to the employees.

Leadership development, succession planning and other organizational development interventions got a relook in line with CRISIL''s long-term strategy. Specific development focused interventions were implemented for the leadership team. A structured job evaluation and career management framework was implemented to facilitate career planning and job rotation. We imparted 2,044 man-days of diverse training to employees during the year.

With a focus on improving employee benefits, a number of programs were rolled out to be able to stay ahead of the market.

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 and (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 the 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.

Directorship changes

Mr. Yann Le Pallec resigned as Director of the Company on July 19, 2016. Your Directors place on record their sincere appreciation of his valuable support and guidance to the Board and the Company during his tenure as a Director, especially recognising his engagement with and contributions to the Risk Solutions and Advisory businesses of CRISIL, as a director of our subsidiary, CRISIL Risk and Infrastructure Solutions Limited.

Mr. John Francis Callahan Jr. resigned as Director of the Company on July 19, 2016. Your Directors place on record their sincere appreciation of his valuable support, strategic insights and guidance provided to the Board and the Company during his tenure as a Director, especially, his involvement and constructive inputs during the CRISIL Strategy exercise.

The Board of Directors appointed Ms. Martina L. Cheung and Mr. John L. Berisford as Additional Directors of the Company with effect from July 19, 2016. Ms. Cheung and Mr. Berisford hold office as Additional Directors until the ensuing Annual General Meeting, and are eligible for appointment as Directors as provided under Article 129 of the Articles of Association of the Company. The Company has received notices under Section 160 of the Companies Act, 2013 from a member signifying her intention to propose the candidature of Ms. Martina Cheung and Mr. John L. Berisford for the office of Directors. A brief profile of Ms. Martina Cheung and Mr. John L. Berisford 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 Peterson retires by rotation and being eligible, seeks reappointment.

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) Dr. Nachiket Mor

c) Mr. M. Damodaran

d) Ms. Vinita Bali

Committees of the Board

There are currently five 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 prescheduled and a tentative annual calendar of the Board and Committee Meetings is circulated to the Directors well in advance to help them 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 seven days before 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 2016 viz., on February 9, April 19, July 19 and October 14. 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, Committees, Chairman and individual Directors. The performance evaluation of the Chairman was also carried out by the Independent Directors at a separate meeting of the Independent Directors. The questionnaire and evaluation process was reviewed in the context of SEBI Guidance Note on Board evaluation dated January 5, 2017 and necessary alignment was made with the requirements.

The questionnaire for Board evaluation was prepared taking into consideration various aspects of the Board''s functioning such as Board structure, understanding of Board members of their roles and responsibilities, Board meeting and reporting process, 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 flow 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 fiduciary duties by the Board.

Committee performance was evaluated on the basis of their effectiveness in carrying out their 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 key improvement areas emerging through this exercise and action plans to address these are in progress.

During 2016, the Company also auctioned the feedback from the Board evaluation process conducted in the previous year, i.e. 2015. Suggestions were incorporated in strengthening the Board review calendar plan for 2016 with thematic additions on people matters & succession planning as well as increased frequency of review of regulatory developments and strategy. Special sessions were conducted throughout the year, for the senior management and Board members, by internal and external speakers, including some industry leaders. Perspective on markets, economy, corporate governance trends and public policy shared during these sessions, helped contextualizing the budgeting and strategy exercises of the Company. Attending

Board meetings allowed increased interaction between the senior management and the Board.

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 to the Audit Committee. Both Internal and Statutory Auditors have exclusive executive sessions with the Audit Committee on a regular basis. In addition, the Management performs a review of key controls impacting financial reporting, 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 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 with reference to Financial Statements were adequate and effective during financial year 2016.

Directors’ Responsibility Statement

Your Directors hereby confirm that:

i. i n 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. t hey 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, affecting the financial position of the Company that have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this 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. As such, the Company does not own any manufacturing facility and hence our processes are not energy intensive. Hence particulars relating to conservation of energy and technology absorption stipulated in the Companies (Accounts) Rules, 2014 are not applicable.

However, CRISIL is supportive of the cause of environment protection and has taken measures to reduce its carbon footprint. Some of these measures are as follows:

a) We organize workplaces such that maximum day light is used in work areas, reducing artificial illumination

b) Motion sensors are used for automatic switching on/off of lights to conserve energy

c) The air-conditioning equipment is operated through a building monitoring system, which ensures that the units are switched on or off based on occupancy

d) Recycled water through sewerage treatment is used for gardening purposes

e) We have initiated a project for converting wet waste into compost for horticultural use

We have rolled out a policy which aims at improving environmental performance of CRISIL. The policy is our commitment to be environmentally responsible and encouraging our employees and members of the wider community to work for the environment by setting and monitoring environmental objectives, making efficient use of natural resources, eliminating waste and promoting recycling of resources.

In addition, under the CRISIL Re. employee volunteering program, CRISIL leverages its workforce as agents of change to drive environment conservations actions. These include tree plantation initiatives, green cover maintenance activities, installations of solar-powered lamps for renewable electricity to disadvantaged communities and waste management solutions for the urban poor. Details of the outcomes from these initiatives during 2016 are given in the Corporate Social Responsibility Report published elsewhere in the Annual Report.

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, 2016, the Company had one Indian and seven overseas wholly owned subsidiaries. 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 office.

The Company has obtained a certificate from the Statutory Auditors certifying that the Company is in compliance with the FEMA Regulations with respect to 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, as reported in the previous year''s Directors'' Report.

A Scheme of Amalgamation filed with the Hon''ble High Court of Bombay was duly approved by the High Court and the said Scheme became effective on October 25, 2016, with April 1, 2016 as the appointed date. Being wholly owned subsidiaries of the Company, the entire paid-up 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 has been cancelled and the companies stand dissolved without winding up and as a result, these three have ceased to be subsidiaries of the Company.

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 S&P Global 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 2016 were in the ordinary course of business and at an arm''s length. During the year, there were no related party transactions which were materially significant and that could have a potential conflict 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 28th 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.

In view of the mandatory requirement for rotation of auditors upon completion of 10 years of association with a company, in terms of Section 139 of the Companies Act, 2013, S. R. Batliboi & Co. LLP will retire as Company''s Auditors at the conclusion of the ensuing 30th Annual General Meeting. It is proposed to appoint M/s. Walker Chandiok & Co LLP as the new Statutory Auditors of the Company. M/s. Walker Chandiok & Co LLP (an affiliate of Grant Thornton India LLP) are proposed to be appointed for a period of 5 continuous years i.e. from the conclusion of 30th Annual General Meeting till the conclusion of 35th Annual General Meeting of the Company. M/s. Walker Chandiok & Co LLP, have informed the Company that their appointment, if made, would be within the limits prescribed under Section 141 of the Companies Act, 2013. M/s. Walker Chandiok & Co LLP have confirmed that they have subjected themselves to the peer review process of the Institute of Chartered Accountants of India (ICAI) and hold valid certificates issued by the Peer Review Board of the ICAI. M/s. Walker Chandiok & Co LLP, have also furnished a declaration in terms of Section 141 that they are eligible to be appointed as auditors and that they have not incurred any disqualification under the Company Act 2013. A brief profile of the Auditors is provided in the Notice of the Annual General Meeting.

The Board recommends appointment of M/s. Walker Chandiok & Co LLP as Statutory Auditors of the Company from the conclusion of 30th Annual General Meeting up to the conclusion of 35th Annual General Meeting of the Company, subject to ratification at every Annual General Meeting.

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. A Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is also published elsewhere in this Annual Report.

Particulars of Remuneration

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.

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 every employee covered under the said rule 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 upon request.

The Nomination and Remuneration Committee of the Company has affirmed at its meeting held on February 10, 2017 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. In terms of the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014, approval of shareholders is sought for modification of Employee Stock Option Scheme - 2014 with the objective of utilizing the stock option pool more effectively by revising the exercise price. Accordingly, a special resolution has been included in the Notice of 30th Annual General Meeting accompanying this report.

During 2016, there were no material changes in the Employee Stock Option Schemes (ESOS) of the Company and the Schemes are in compliance with the SEBI Regulations on ESOS. As per Regulation 14 of SEBI (Share Based Employee Benefits) Regulations, 2014 read with SEBI circular dated June 16, 2015 the details of the ESOS are uploaded on the Company''s website http://www.crisil.com/pdf/investors/Detail-of-ESOS-31st-Dec-2016.pdf in terms of Circular No CIR/CFD/POLICY CELL/2/2015 dated June 16, 2015 issued by Securities and Exchange Board of India.

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 VI.

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 Company and all its subsidiary companies, in India and across the world, follow the calendar year as the financial year in terms of a special approval obtained from the Company Law Board in 2015.

CEO and 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 11, 2017.

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 S&P Global 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 Limited

Douglas L. Peterson

Chairman

Mumbai, February 11, 2017 (DIN: 05102955)


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


Dec 31, 2010

The Directors are pleased to present the 24th Annual report of CRISIL Limited, along with the audited accounts for the year ended December 31, 2010.

PERFORMANCE

A summary of the Companys financial performance in 2010 is given below:

(Rupees Lakh)

Year ended Year ended December 31, 2010 December 31, 2009

Total income for the year was 60,233.44 46,445.36

Profit before depreciation and taxes was 26,918.21 20,422.09

Deducting depreciation of 2,020.85 1,387.93

Profit before tax was 24,897.36 19,034.16

Deducting taxes of 5,321.90 4,000.44

Profit after tax was 19,575.46 15,033.72

The proposed appropriations are:

Dividend 14,417.96 7,225.00

Corporate Dividend Tax 2,387.67 1,227.89

General Reserve 1,957.54 1,503.37

Balance carried forward is 23,553.37 22,741.09

DIVIDEND

The Directors recommend, for approval of the members at the Annual General Meeting to be held on April 15, 2011, payment of final dividend of Rs. 25 per share for the year under review. During the year, the Company paid first, second and third interim dividends of Rs. 25 per share each. The Company also paid a special dividend of Rs. 100 per share. The total dividend for the year works out to Rs. 200 per share as against rs.100 per share in 2009.

BUYBACK OF EQUITY SHARES

The Board of Directors, at its meeting held on September 9, 2010, approved the buyback of equity shares of the Company for a total consideration not exceeding Rs. 80 crore and at a price not exceeding Rs. 6500 per equity share of Rs.10 each from the open market through the stock exchanges. The Company received shareholders approval through postal ballot for the buyback on October 18, 2010 and issued a public announcement on October 20, 2010.

The buyback commenced on November 3, 2010 and closed on November 10, 2010. The Company bought back 128,156 equity shares at an average price of Rs. 6199.87 per equity share.

The paid-up equity share capital of the Company (pre and post buyback of shares) is as follows:- share capital of the company (Pre and Post Buyback)

Sr no. Particulars No.of shares Share capital (rupees)

1. Paid up Equity Share Capital (Pre Buyback) 72,25,000 7,22,50,000

2. Total Equity Shares bought back 1,28,156 12,81,560

3. Paid up Equity Share Capital (Post Buyback) 70,96,844 7,09,68,440

REVIEW OF OPERATIONS

a. RATINGS

Highlights

- Over 5500 bank loan ratings (BLR) outstanding, the largest number of BLR in India; 2434 new ratings assigned during the year

- crossed milestone of 17,500 small and medium enterprises (SME) ratings; 7800 new SME ratings assigned in 2010

- Launched CRISIL Real Estate Star (CREST) Rating, a first-of-its-kind service for retail investors in the real estate sector

- Expanded operations at Global Analytical Centre (GAC) to support Standard & Poors (S&P)

Business environment

The business environment remained steady for Ratings for the better part of 2010, except for the last quarter of the year, when liquidity constraints led to a sharp increase in interest rates and impacted fresh debt issuances. Indias corporate bond market was active during the year, with interest rates at the short and long-term ends remaining attractive, and the investment climate turning positive. Issuances of commercial paper (CP) gathered momentum, with volumes growing by 50 per cent over the previous year. There were also bond issuances from entities rated A and BBB by CRISIL, a positive trend for indias corporate bond market. Bank loan ratings maintained steady growth. the number of SME ratings continued to grow rapidly, backed by increasing acceptance by banks.

S&Ps demand for support from GAC continued to grow steadily in line with S&Ps focus on deeper analysis, and quicker response to market, and on improving data accuracy and enhancing support for its products.

The bond markets are expected to remain subdued in the initial period of 2011 as liquidity conditions are expected to remain tight with the monetary policy focusing on controlling inflationary pressures. However, the long term prospects remain strong with substantial demand for funds from infrastructure companies and the need for the financial sector to tap the bond market for funding the Indian economys growth. CP issuances are also expected to increase, driven by the introduction of base rates in the banking sector. the BLR market is likely to remain steady in 2011, as banks become increasingly compliant with Basel II requirements. The demand for SME ratings is expected to remain robust in 2011.

GACs operations are expected to maintain their growth momentum in 2011, fuelled by recovery in the global credit markets and S&Ps continuing focus on extending its leadership in the global financial information, data and, analytics businesses.

Operations

CRISIL ratings maintained its market leadership in 2010, backed by a steady performance in BLRs and strong growth in SME ratings. During the year, CRISIL assigned 2434 new BLRs and 7800 SME ratings. To manage the increasing volume of business, processes and work flows were upgraded to maintain quality of output and timeliness of delivery. Analytical teams received additional training to keep them abreast of global and local developments. These measures have ensured that CRISIL is current on all its ratings and rating publications, despite significantly increased volumes.

In 2010, CRISIL Ratings assigned Indias first-ever ratings for securitisation of toll-road receivables, and multiple-asset securitisation of microfinance institution (MFI) loans. These set the trend for a number of similar transactions.

CRISIL Real Estate Star (CREST) Ratings, a first-of-its-kind service for Indias fast-growing real estate sector, provides a city-specific all-round assessment of real estate projects, and helps buyers benchmark and identify quality projects within a city. The product has received an encouraging response from all stakeholders–developers, buyers, investors, and bankers. CRISIL has already evaluated 29 projects across 10 cities.

CRISIL continued to conduct regular outreach programmes for the benefit of investors and market participants. Around 150 seminars, including the CRISIL Leadership series for BLR customers, and MSME CEO conferences for SMEs, were conducted across the country; these seminars helped extend crisiLs reach to more than 8500 companies and bankers across the country.

CRISIL also published Indias first-ever comprehensive report on the performance of all outstanding structured finance transactions. CRISIL Ratings commentaries, including those on the introduction of base rate, floating savings rate, capital provision for real estate assets, capital infusion by Government of India (Gol) in public sector banks, impact of 3G license on telecom companies, and Gois fertiliser policy changes, received extensive media coverage.

GAC continued to be an active partner in S&Ps initiatives to adapt to the evolving regulatory environment, and penetrated the commercial fixed income data and analytics segment. With the revival of the global economy, the demand for S&Ps ratings and McGraw-Hill Financials data/information services is expected to grow. This will translate into increasing requirements for GAC support. GAC is well positioned to strengthen its relationship with S&P, and maintain its growth trajectory.

B. RESEARCH

B.1. GLOBAL RESEARCH & ANALYTICS

B.1.a. IREVNA

Highlights

- Expanded geographic presence with sales offce in Sydney and research centre in China

- Ranked # 1 firm in the world in financial services research, risk management and actuarial services, corporate fnance support and financial services analytics by the Black Book of Outsourcing - a Datamonitor company.

Business environment

The slowdown in the global financial markets in 2008-09 had a positive impact on the global analytics and research industry, with customers looking increasingly to research providers such as Irevna as a strategic means of restructuring their businesses. Demand for Irevnas services remained buoyant through 2010, driving robust growth in business volumes. Investments in new services such as actuarial and risk analytics, and in expanding Irevnas global footprint, have yielded positive results.

The demand for knowledge services is expected to remain buoyant, as global players look for ways to grow their revenues and become more efficient. The Irevna-Pipal Research combine is the leader in this market, and has a proven track record of helping clients increase their revenues, provide deeper and faster analysis to the market, and improve returns on investment (ROI). This will help us beneft from the growing demand for our services.

Operations

Irevna continued to lead the global knowledge services industry, adding 22 new clients in 2010, significantly growing all client accounts, and firmly establishing actuarial and risk analytics as growth verticals. Irevnas international research centres in Buenos Aires (Argentina) and Wroclaw (Poland), together with those in Mumbai and Chennai, facilitate round-the-clock servicing of client requirements, bridging talent gaps, and providing multi-lingual capabilities. Irevnas new research centre in China will help enhance these capabilities, particularly in the Mandarin language, and extend the reach of its services further.

B.2. INDIA RESEARCH

Highlights

- Released 65 CRISIL Independent Equity Research (IER) reports during 2010, providing investors with high-quality research on listed Indian companies. Received a mandate from the National Stock Exchange to provide company reports on entities listed on the exchange

- Received a prestigious mandate from Employees Provident Fund Organisation (EPFO) to assist in selecting, and monitoring the performance of fund managers

- Launched the new, enhanced website, www.crisilresearch.com, to deliver near-real-time industry research to customers

Business Environment

The favourable domestic economic environment and increasing investments in 2010 revived demand for CRISIL Researchs offerings. A number of companies that were raising funds approached CRISIL Research for valuation reports and sector studies to aid in their decision-making. Opportunities in the wealth management space also increased because of a shift in the industrys business model, from products to value-based advice.

Operations

CRISIL Research continued to build on its powerful value proposition of providing macro and micro integrated research. It also intensifed efforts to reach out to the corporate sector with industry studies and customised research offerings. The revamped website www.crisilresearch.com gives customers near-real-time access to research. the website enables clients to track and forecast the performance of 50 industries, using CRISIL Research data and analysis, and the clients own assumptions about key variables.

Market participants, including listed companies, drove strong demand for CRISILs Independent Equity Research (IER): On a cumulative basis 81 reports have been published, including 20 sponsored by the National Stock Exchange Investor Protection Fund Trust (NSE IPFT). CRISIL also received a mandate from NSE IPFT to provide company reports on the entities listed on the exchange. Investors can access the equity research and company reports sponsored by NSE IPFT at www.crisil.com and www.nse- india.com.

CRISIL FundServices has been re-appointed by EPFO, to assist in selecting fund managers and monitoring their performance, for a three-year period. CRISIL FundServices also worked closely with the Indian mutual fund industry to help it transition to revised valuation norms for money market instruments.

C. ADVISORY

CRISIL carries out its infrastructure advisory and risk solutions businesses through its subsidiary, CRISIL Risk and infrastructure solutions Limited (CRIS).

C.1. CRISIL INFRASTRUCTURE ADVISORY BUSINESS

Highlights

- Assisted the Ministry of Rural Development, Government of India (GoI), in a unique and innovative public-private-partnership project to provide urban services in rural areas (PURA); the pilot project promises to be the first of many such endeavours

- Helped the Ministry of Non-Conventional Energy, GoI, design the framework for exchange of renewable energy purchase obligations, and a platform for trading in renewable energy certificates

- Received a renewed mandate from the World Bank to conduct training programmes in enhancing the regulatory reform capabilities of member regulators of the East Asia Pacific Infrastructure regulators forum (EAPIRF)

Business environment

Activity levels in the urban and energy sector-the two key areas for CRISs advisory business showed contrasting trends in 2010. The energy sector saw significant investments in conventional energy projects by the public and private sectors, strong policy and regulatory initiatives in the renewable energy sector, and downstream activity to deploy natural gas available in the country. The urban sector, however, witnessed a slowdown in investments and activity in 2010, particularly in the second half, as the first phase of Jawaharlal Nehru National Urban Renewal Mission (JNNURM) reached maturity.

The outlook for 2011 suggests continued activity in the energy sector, and a revival of deferred projects in the urban sector. State governments are also expected to undertake infrastructure development projects.

Operations

Revenues in the infrastructure advisory business were constrained by the slowdown in urban sector projects investments, although an investment revival in the energy sector mitigated the impact of the slowdown. To broad-base revenue, CRISs advisory business has set up a team to exclusively pursue opportunities in the transport and logistics sector. the business will also focus on growing its presence in the mineral and social infrastructure sectors.

The strong domain expertise that CRIS brings to the table is likely to help it beneft from the renewed developer and private equity interest in conventional energy projects. CRISs growing credentials in renewable energy, transportation and logistics, and oil, gas, and minerals will add to our range of operations in the private sector.

CRISIL international operations remain strongly focused on Africa, backed by a slew of assignments in Namibia, Mozambique and South Africa. The World Banks renewal of the mandate to CRIS to assist the East Asia Pacific Infrastructure Regulators Forum (EAPIRF) to enhance the regulatory reform capabilities of member regulators, is a strong testimonial to criss credentials as an enabler of regulatory efficiency.

CRIS made significant progress in 2010 in streamlining operations with respect to staffing, and improving the quality of its deliverables and collection processes. CRIS expects to carry this momentum forward into 2011, and benefit from improvements in knowledge management to better harness our capabilities and experience.

C.2. CRISIL RISK SOLUTIONS (CRS)

Highlights

- Won key accounts in the public and private banking sector - portfolio of customers now includes 9 of indias top 10 banks

- entered the global arena, winning two prestigious mandates including a reputed multilateral development institution in South East Asia

- Developed a loan origination system to enable automation of a banks credit appraisal process as an important module in its internal rating platform

Business environment

Over the past five years, most banks have invested considerable resources in their processes, especially those pertaining to credit risk, as part of their initiative to comply with Basel II. Most banks and financial institutions have now developed strong practices with regard to credit risk, and the Standardised Approaches of Basel II, and have, therefore, begun to shift their focus to strengthening other processes, such as those that relate to Advanced Approaches.

CRS believes that banks and financial institutions will, over the medium term, continue to invest in systems and processes, and move from a compliance-based approach in risk management to a best- practices-based approach. CRSs services are, therefore, likely to be in increasing demand.

Operations

CRS remained focused on both consulting and software solutions, and concluded multiple assignments in both.

CRS added vital enhancements to all its products such as Risk Assessment Model (RAM), Capital Assessment Model (CAM), CRISIL Operational Risk Evaluator (CORE) and Credit Capital (CC). CRS aims to expand its product coverage and increase its product usability. Various enhancements have helped strengthen the product positioning as a comprehensive end-to-end solution encompassing both risk measurement as well as associated process management.

Intensified business development initiatives in countries such as Mauritius, Sri Lanka and Bangladesh, have also begun to yield results. The business successfully renewed its ISO9001:2008 certification.

D. COLLABORATION WITH S&P

The various business verticals of CRISIL and S&P collaborated extensively.

Key initiatives included a joint seminar by CRISIL Ratings and S&P on The New Normal: The changing face of Financial Markets. More than 100 invitees, including media and investors, attended the event.

CRISIL and S&P jointly released the Standard & Poors Indices Vs Active (SPIVA) report for Indias mutual funds industry. this report, a bi-annual publication, compares the performance of indices and active funds.

CRISIL Infrastructure Advisory collaborated with S&P to co-sponsor the World Bank-Singapore- infrastructure finance summit. this summit was organised by the world Bank, the singapore Ministry of finance and the Monetary Authority of Singapore in association with the financial times and the world Bank-AseAn infrastructure finance network.

Additionally, CRISIL Risk Solutions worked closely with S&P to market its products and services in several geographies, including the Middle East and Asia Pacifc.

As part of the collaborative efforts, C-CER published 11 reports/articles on Asia-Pacifc economies for S&P.

E. CRISIL CENTRE FOR ECONOMIC RESEARCH (C-CER)

C–CER continued to focus on research on macro economics in India and the Asia Pacific, consistently building crisiLs franchise in the Indian media and positioning the company as the foremost analytics- based voice on the economy in the region.

C-CER published two special reports during the year–Skilling India: The Billion People Challenge, and India: Raising the Growth Bar. It also introduced two new products—CRISIL EcoMonitor and South Asia economic outlook. c-cer continues to work with the Egyptian institute of Directors (EloD), and Hawakmah, the Institute for Corporate Governance (a subsidiary of the Dubai International Financial Centre) for creation of an Environmental, Social & Governance (ESG) Index in their respective regions.

F. HUMAN RESOURCES

crisiLs Human resources team continued to focus on attracting, retaining, and growing talent. in 2010, 1083 employees were hired, up from 579 hired in 2009. the total headcount in CRISIL increased to 2805 as on December 31, 2010 from 2164 a year previously.

Highlights of CRISILs talent Attraction Initiatives

- strengthened the senior management team

- Maintained strong presence on campuses—42 business schools were visited during the year and job offers were extended to 186 students

- Increased the number of seats on offer at the CRISIL Certified Analyst Programme (CCAP), which entered its fourth year, with 47 interns from the programme joining during the year.

- Inducted all 17 interns from the frst batch of the Irevna Certified Analyst Programme (ICAP)

Retaining talent

CRISIL followed a structured approach towards people development, by understanding the functional and behavioural competencies required for each role, and then devising a comprehensive training plan to address gaps in skill sets.

More than 1100 training sessions were conducted organisation-wide, during the year, aggregating 77,752 man-hours of training. These trainings ranged from technical subjects to functional and behavioural skill-building programmes. to increase employee engagement, the rewards and recognition programme, crisiL AWARDS Celebrating Winning Performances was revamped, expanding the scope of the awards, increasing the transparency of the process, and providing greater visibility to award winners.

CRISILs brand-building and thought leadership initiative, the CRISIL Young Thought Leader (CYTL) competition, received 153 responses from students of 62 business colleges and graduate schools.

During the year, 93 employees received remuneration of Rs. 2.4 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 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 CRISILs registered offce.

G. SUBSIDIARIES

CRISIL has been granted an exemption by the Ministry of Corporate Affairs from attaching individual annual reports of its subsidiary companies to its annual report. 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.

H. ACQUISITION OF PIPAL RESEARCH

CRISIL signed agreements on September 22, 2010 for the acquisition of the assets of Pipal Research corporation (PRC) including 100% of the share capital of Pipal research Analytics and information Services India Private Limited. After completion of all conditions precedent, the transaction was completed with effect from December 3, 2010.

I. JOINT VENTURE - INDIA INDEX SERVICES AND PRODUCTS LIMITED

India Index Services and Products Limited (IISL), CRISILs 49:51 joint venture with National Stock Exchange of India Limited (NSE), provides a variety of indices and index-related services and products to the capital markets. IISL has a licensing and marketing agreement with S&P, the worlds leading provider of investible equity indices.

II CRISIL issued licenses to various clients such as Insurance Companies, Asset Management Companies, etc. within India for facilitating the launch of Index Funds, Exchange Traded Funds and issuance of debentures that carry returns linked to the S&P CNX Nifty Index. IISL also concluded licensing agreements for issuance of structured products linked to the S&P CNX Nifty Index outside India.

J. DIRECtORS

In accordance with the articles of association of the Company and the provisions of the Companies Act, 1957, Mr. BV Bhargava and Dr. Nachiket Mor retire by rotation and being eligible, offer themselves for reappointment.

K. AUDITORS

The Statutory Auditors, M/s. SR Batliboi & Co, Chartered Accountants, hold offce up to the ensuing Annual General Meeting and the Board recommends their reappointment.

L. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management 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 presented in a separate section forming part of the Annual report.

M. CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements 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 attached to this report.

N. OTHERS

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

The particulars regarding foreign exchange earnings and expenditure appear at Item No. 8 and 9 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.

N.2. 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, 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 the end of the financial year and of the Profit or loss of the company for that period.

(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 on a going concern basis.

Employees Stock Option Scheme

The shareholders of the Company by postal ballot on February 4, 2011 approved the Employees Stock option scheme for employees and whole-time Directors of CRISIL and its subsidiaries.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 affliation with Standard and Poors 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.

On behalf of the Board of Directors,

Deven Sharma Mumbai, February 14, 2011 Chairman


Dec 31, 2009

The Directors are pleased to present the 23rd Annual Report of CRISIL Limited, along with the audited accounts for the year ended December 31, 2009.

Performance

A summary of the Company’s financial performance in 2009 is given below:

(Rs. in Lakh)

Year Ended Year Ended December 31, 2009 December 31, 2008

Total Income for the year was 46,445.36 40,389.03

Profit before depreciation and taxes was 20,422.09 18,696.71

Deducting depreciation of 1,387.93 1,184.38

Profit before tax was 19,034.16 17,512.33

Deducting taxes of 4,000.44 3,774.52

Profit after tax was 15,033.72 13,737.81 The proposed appropriations are:

Dividend 7,225.00 5,057.50

Corporate Dividend Tax 1,227.89 859.52

General Reserve 1,503.37 1,373.78

Balance carried forward is 22,741.09 17,663.64

Dividend

The Directors recommend, for approval of the members at the Annual General Meeting to be held on April 16, 2010, payment of final dividend of 250 per cent (Rs. 25 per share) for the year under review. During the year, the Company paid first, second and third interim dividends of 250 per cent each. The total dividend for the year works out to 1000 per cent (Rs.1 00 per share) as against 700 per cent (Rs.70 per share) in 2008.

Review of Operations

A. RATINGS

Highlights

- Assigned over 7400 new ratings in 2009 including 2268 Bank Loan Ratings (BLRs), and 5178 Small and Medium Enterprise (SME) Ratings

- Launched a first-of-its-kind publication, India’s Top 50 Microfinance Institutions, profiling the leading microfinance institutions in India

- Assigned India’s first-ever rating for securitisation of microfinance receivables

- Introduced CreditAlerts to provide insights to market participants on trends in specific sectors

- Extended operations at Global Analytical Centre (GAC) to 24/6 to provide real-time support to Standard & Poor’s (S&P) during US market hours; operations at GAC have grown considerably during the year

Business Environment

The business environment for ratings continued to remain positive in 2009. The corporate bond market revived marginally on account of a slowdown in overseas funding and limited opportunities for raising equity. BLRs continued to show robust growth in the year. With an increasing acceptance from bankers, SME ratings also grew rapidly.

GAC continues to provide a range of analytical and data services to S&P. GAC’s trend of increasing collaborations with S&P across businesses, has continued in 2009 despite the global economic slowdown.

The environment is expected to remain buoyant in 2010 as well with corporates likely to resume some of their deferred capital expenditure programmes. Infrastructure companies are also expected to turn to the bond markets for funds. The BLR market is likely to remain strong in 2010, as banks strive to become Basel II compliant. The demand for SME ratings is, likewise, expected to remain robust in 2010.

GAC’s operations are expected to continue the growth momentum in 2010 as well with the recovery in global credit markets fuelling the need for additional support.

Operations

CRISIL Ratings maintained its market leadership in 2009 backed by a strong growth in BLRs (2268 ratings assigned as against 845 in 2008) and SME ratings (5178 ratings assigned as against 2518 ratings assigned in 2008). CRISIL’s BLR teams were ramped up substantially. The business development and delivery processes were augmented during the year to keep pace with the sharp increase in BLR volumes. Strong quality control measures have been set in place; this includes following a focused, process- driven approach, use of quality checklists, and training for analytical teams. While revenues from structured finance and financial sector issuances were subdued for most of 2009, these were made up for by a spurt of corporate sector bond issuances in the year.

During the year, CRISIL Ratings assigned India’s frst–ever rating for securitisation of microfinance receivables. It also launched a unique publication, India’s Top 50 Microfinance Institutions. The inaugural edition of the publication, profiling key players in the microfinance space, was released by M r. Umesh Chandra Sarangi, Chairman, National Bank for Agriculture and Rural Development (NABARD), the regulator for microfinance institutions (MFIs) in India. The publication draws heavily on CRISIL’s deep understanding of the sector, and has been launched as part of CRISIL’s Financial Awareness Initiative for the Indian market. The publication has been appreciated by regulators, practitioners, lenders and donors.

CRISIL conducted regular outreach programmes for the benefit of investors and market participants. Its commentaries, such as those on bank asset quality, retail asset quality, outlook for banking and insurance sector, and the credit quality of corporate India, received extensive media coverage. Commentaries on the outlook for corporate India and non–banking finance companies also found mention in the international media.

The CRISIL-CNBC Emerging India Awards 2009, received over 300,000 nominations from SMEs all over the country. CRISIL also evaluated more than 162 nominations for the CNBC-Awaaz- CRISIL-CREDAI Real Estate Awards 2009, a major event in the real estate sector.

CRISIL Ratings has enhanced the transparency in its rating processes by strengthening its methodologies. It has intensified surveillance of rated credits, and revamped its structured finance rationales to provide more information and decision-making tools to investors. It has also introduced CreditAlerts to highlight trends in specific sectors, and the likely implications of these trends on the credit quality of companies in that sector. CreditAlerts are shared extensively with investors and the media, and are also available on the CRISIL website.

GAC, with its proven expertise in managing complex assignments, initiated several new projects during the year, supporting S&P’s focus on deeper, sharper, and quicker analyses. GAC launched night shift operations (six days a week) to provide real-time support to S&P during US market hours. GAC has improved its operating effciencies through process re-engineering and automation. With the global economy now showing signs of revival, the demand for GAC’s high-end, in-depth analytics, is expected to increase over the near term. GAC is well positioned to strengthen its relationship with S&P, and maintain its growth trajectory.

B. RESEARCH

B.1. IREVNA

Highlights

- Maintained leadership in high-end financial research and analytics outsourcing, despite the global recession

- Acquired new clients, and expanded service offerings, in addition to growing key accounts

- Widened its global business development footprint

Business Environment

The turmoil in the global financial markets impacted Irevna’s business for most of the year. Most financial services firms (Irevna’s major client base) were restructuring their businesses, reducing headcount and focusing on surviving the crisis, constraining growth for outsourcing. However, the last quarter of 2009 saw a remarkable recovery in demand for Irevna’s services as the global financial markets showed first signs of revival. This upturn is expected to gather momentum in 2010.

2010 promises to be a year of growth for Irevna. Its investments in seeding new services and expanding geographical reach will enable Irevna to capture a large portion of growth in demand in the near term. In the medium term, a shortage of talent in client markets is expected to emerge as a key growth driver for Irevna’s business.

Operations

Irevna continues to be the global leader in offshore equity, credit and derivatives research services for fnancial institutions. Despite the unfavorable circumstances in the global financial sector, Irevna has grown its key accounts, acquired several new strategic clients, expanded service offerings and client segments, added clients in new verticals, and widened its global business development footprint.

Irevna has continued to invest in its business and people. It expanded the size of its business development team, and of its footprint to include continental Europe. The delivery centre in Wroclaw, Poland, established in 2009, has begun servicing client needs. The Buenos Aires centre continues to service clients in the Western Hemisphere, and is growing well. The delivery centre in Mumbai has also been expanded, and now services all verticals. Irevna’s clients in Europe, the Americas, Asia and Australia can now leverage the delivery centres in Chennai, Mumbai, Buenos Aires and Wroclaw for round-the-clock services, six days a week. Irevna has also launched a concerted effort to improve operational efficiencies and enhance customer interactions and experience. These efforts have been successful and have led to growth in business.

B.2. CRISIL RESEARCH

Highlights

- Introduced CRISIL Independent Equity Research (CRISIL IER), a unique initiative, providing investors with top-quality, independent research on listed Indian companies

- Mandate secured from the Pension Fund Regulatory Development Authority (PFRDA) of India to assist in framing the regulatory framework for the New Pension Scheme

- Launched research reports on real estate, infrastructure and logistics, and outlook on industrial capital expenditure (capex)

Business Environment

The global meltdown in the financial markets in 2008 continued to present market challenges for CRISIL Research in 2009. Cost containment was an area of focus for corporate India, directly impacting the market for traditional research products. However, CRISIL Research responded by communicating and delivering customised value propositions that helped retain customers and attract new clients.

The uncertain market conditions have had a direct impact on the CRISIL Equities and FundServices business. However, improving sentiment in the second half of 2009 brought in opportunities especially for IPO grading services of CRISIL Equities.

The business environment is expected to improve in 2010, backed by growth in the Indian economy. CRISIL Research is positioned to serve market requirements through both standard and customised offerings.

Operations

A landmark event in 2009 was the launch of a pioneering concept in India, the Independent Equity Research (IER), in September 2009. M r. C. B. Bhave, Chairman, Securities and Exchange Board of India (SEBI), officiated as chief guest at the launch of IER. Through its high quality and independent research, CRISIL IER provides gradings on fundamentals and fair valuations for listed companies. Through IER reports, CRISIL seeks to bridge the paucity of good-quality, unbiased research on listed Indian companies, especially for mid- and small-cap companies. Grading reports were released for 13 companies at the launch, presenting an array of gradings, and a mix of large-, mid-, and small-cap companies. Reports on more companies have been released, subsequently, and have received encouraging response from stakeholders.

CRISIL Research has continued to build on its unique value proposition of macro and micro integrated research. In 2009, CRISIL Research intensified efforts to track and respond to customer feedback, and to release special reports of topical interest. The transition of research delivery from a physical mode to an online format continued through 2009, to enhance customer experience. Key products – Industry Information Service and Industry Risk Service – have continued to do well, as refected in fresh subscriptions and renewals that they have received from customers. The research series, titled Mid-size and Emerging Segment Company Report (MESCOR), launched in late 2008, appealed to financial sector clients with its timeliness and relevance. Four new research reports – Indian Infrastructure, City Real(i)ty, Indian Logistics Industry, and Outlook on Industrial Capex — were also released during the year, and elicited an enthusiastic response from the market.

A focused approach to customised research, combining macro and micro perspectives has helped the business receive repeat assignments from clients, and to establish new high-value relationships.

A number of companies have sought to raise funds through public offerings in the second half of the year, driven by revival in the Indian equity markets. This has helped the IPO gradings business gain momentum.

CRISIL FundServices secured a prestigious mandate from the Pension Fund Regulatory and Development Authority (PFRDA) through competitive bidding, to assist PFRDA in framing regulations for the New Pension Scheme. The business also continues to assist the Employees’ Provident Fund Organisation (EPFO), India’s largest provident fund, in the performance evaluation of fund managers. CRISIL FundServices also won a number of assignments in the fixed income valuation space.

CRISIL FundServices continues to work closely with market regulator SEBI and Association of Mutual Funds in India (AMFI) in several initiatives including finalising the approach to value fixed income securities.

CRISIL Research continues to reach out to corporates, banks and other financial sector entities, through a combination of knowledge-sharing platforms, tele-investor meets, webinars, one-on-one meetings, and presentations at industry forum. CRISIL Research has sought to enhance its franchise through the year, through commentaries and interviews in the media, and speaking engagements at prominent seminars and conferences. Two flagship events – the CNBC-Tv18-CRISIL Mutual Fund Awards, and the annual Post-Budget India Outlook 2008 seminar – continue to attract attention and media coverage.

C. ADVISORY

CRISIL’s infrastructure advisory and risk solutions businesses are housed under a subsidiary - CRISIL Risk and Infrastructure Solutions Limited (CRIS). A review of these two businesses is given below to provide a consolidated view of all CRISIL businesses.

C.1. CRISIL INFRASTRUCTURE ADVISORY BUSINESS

Highlights

- Expanded its international footprint to South Africa, Mozambique, Georgia, Bangladesh and East Asia-Pacific

- Won a large project relating to renewable energy in South Africa

- Worked with the Ministry of Home Affairs, Government of India, on a Public Private Partnership (PPP) model to develop housing for India’s paramilitary forces

Business Environment

In the first quarter of 2009, the continued impact of the global financial crisis, and the general elections, resulted in a slowdown in government-initiated infrastructure projects. In subsequent quarters, however, there was a significant turnaround, with governments and donor agencies announcing project decisions at their former pace, although private sector activities revived only in the last quarter. Pricing pressures continued in 2009, with players adopting aggressive pricing strategies at competitive bids.

The outlook for 2010 suggests steady improvement in investor activity. The government’s emphasis on infrastructure and its ability to trigger private investments are expected to contribute to growth in 2010. Continued government support in the infrastructure space is expected to catalyse growth of international business opportunities.

Operations

The infrastructure business has performed well under the challenging business environment in 2009. Key growth areas, including the investor-focused business, and the international practice, have performed well. The international footprint has expanded to include South Africa, Mozambique, Georgia, Bangladesh and East Asia-Pacifc. The business obtained two new projects in Mauritius, and a large, renewable energy project in

South Africa. The international business maintained stable revenues through 2009, consolidating on the growth achieved in 2008.

The investor-focused business, where clients include infrastructure developers and investors, made significant progress in 2009. It developed strong relationships with private equity investors and infrastructure developers. It also helped two energy developers acquire projects, by providing independent valuation and commercial due diligence services. The business expanded its client base among power utilities and electricity regulators. It is working on landmark projects, such as introducing competition in power distribution in Mumbai, and in setting renewable energy purchase targets for power utilities in India.

The advisory business increased its presence in the Public Private Partnership (PPP) projects segment, by working on enabling frameworks for PPPs, and in developing pilot projects in sectors such as water and sanitation. It was invited to design a long-term solution in infrastructure financing through the ‘take out fnance’ route announced by the Government of India. CRISIL Infrastructure Advisory is working with the Ministry of Home Affairs in developing a PPP model for housing for paramilitary forces in the country.

The business remains focused on increasing the ticket size of its assignments. More than 50 per cent of new businesses obtained in 2009 have been large assignments. It also continued to showcase its expertise through speaking engagements at seminars and workshops through the year.

C.2. CRISIL RISK SOLUTIONS (CRS)

Highlights

- Executed a prestigious mandate to set up an enterprise risk framework for a multilateral infrastructure finance company in Africa

- Developed the CRISIL Retail Scoring Solution (CRESS) software for hosting retail scorecards and related functionalities, and to develop proprietary risk-control maps for banking processes

Business Environment

With most banks becoming increasingly compliant with the Basel II framework, they are now focused on strengthening their risk systems, and moving towards advanced approaches in Basel II. Over the medium term, CRS expects banks and financial institutions to move from a compliance-based approach in risk management to a best-practices-based approach. Risk management systems will increasingly aid in business decisions and performance management.

Operations

CRS undertook many diverse and challenging assignments in the consulting and solutions space in 2009. CRS products and consulting services are being increasingly viewed together, as a comprehensive end-to-end solution in risk management.

CRS’s suite of proprietary software products, Basel II Capital Assessment Model (CAM) and Risk Assessment Model (RAM) software, continue to be the leading products in their segments. In the area of operational risk, CRS developed a powerful value proposition around its CRISIL Operational Risk Evaluator (CORE) software. The business remains focused on setting up robust processes, and successfully renewed its ISO9001:2008 certification.

Among key mandates awarded to CRS in 2009, were implementation of an Integrated Risk Management System for a leading bank in India, creation of a market risk module of CAM software for a foreign bank operating in India, and review of risk practices and implementation of internal risk rating systems for a leading financial institution.

In the consulting space, CRS concluded a prestigious mandate to set up an enterprise risk framework for a multilateral infrastructure finance company in Africa. CRS also worked closely with S&P to jointly complete risk-related assignments in the Asia-Pacific region.

CRS’s business development initiatives include sale of new products and services to domestic clients in India, and marketing CRS offerings in countries such as Sri Lanka, Bangladesh and Mauritius. CRS also conducted outreach activities such as workshops and seminars on improvement of risk management practices, including a successful workshop in Mauritius.

D. COLLABORATION WITH STANDARD & POOR’S

CRISIL and its group companies continued its strong collaboration with S&P. Key collaborative initiatives during the year included a successful seminar, ‘Unlocking the potential of India’s credit markets’, held jointly with S&P and the National Stock Exchange (NSE).

CRISIL Infrastructure Advisory collaborated with S&P in its infrastructure initiatives. It was part of an expert panel at a seminar hosted by S&P on ‘Developing public sector finance as a new asset class’ at the 42nd annual meeting of Asian Development Bank at Bali, Indonesia, in May 2009. As part of this collaboration, it also contributed a thought leadership article and case studies to S&P’s publication, Building Asia’s Infrastructure, Building Asia’s Public Finance that were released at the seminar.

CRISIL and S&P held several investor events, including the Mid-Year Market Outlook road shows in India and Singapore. CRS worked with S&P Risk Solutions in delivering solutions to clients in the Asia-Pacific region. S&P and CRISIL also conducted a joint study based on the S&P ESG India Index, exploring the link between corporate governance and company performance. CRISIL presented a paper on the study, at the ‘Capital Markets Forum: Responsible Investment in India’, an event organised by the NSE.

CRISIL’s market development and communications team continued to support S&P’s activities in South and Southeast Asia. Key initiatives included media and investor outreach programmes in the region, and included a range of activities to further strengthen S&P’s thought leadership in several domains.

E. THE CENTRE FOR ECONOMIC RESEARCH, CRISIL (C-CER)

C–CER’s activities in 2009 revolved around three key themes – India Macroeconomics, S&P Asia-Pacific Macroeconomics and Projects. Through the year, C-CER actively positioned CRISIL in the Indian and international media, as the foremost analytics-based voice on the Indian economy.

C-CER guided the quarterly updates on scoring and ranking of emerging economies on the ‘investability’ of their local currency bond markets under International Finance Corporation’s (IFC’s) GEMLOC-II assignment – a project managed by CRISIL Infrastructure Advisory. C-CER also assisted CRISIL Infrastructure Advisory in conducting the training for East Asia-Pacific Infrastructure Regulators Forum (EAPIRF) held in vietnam.

C-CER also advised the Egyptian Institute of Directors (EIoD) and Corporate Governance Institute (Hawakmah) of Dubai International Financial Centre (DIFC) for creation of the ESG Index. In addition, C-CER participated in a Confederation of Indian Industry (CII) initiative to assess companies on their corporate social responsibility performance, as a prelude to an awards presentation.

F. HUMAN RESOURCES

The Human Resources team maintained its focus on attracting, retaining and growing the desired talent at CRISIL.

In 2009, 579 employees were hired as against 754 in 2008. On a consolidated basis, the total headcount across the CRISIL group of companies increased to 2164 as on December 31, 2009, up from 1956 in 2008.

Responding to the need to provide real-time services to global clients in the off-shoring business, CRISIL introduced night shift operations during 2009.

The flagship batch of the CRISIL Certified Analyst Programme (CCAP) completed the two-year programme. This momentous occasion in CRISIL history was marked by a convocation ceremony, presided over by M r. N. vaghul (then Chairman of ICICI Bank Ltd.). All interns who successfully completed the programme were offered placements with CRISIL. To further augment the talent pool, CRISIL has successfully launched the third batch of CCAP Programme.

The Irevna Certified Analyst Program (ICAP) was launched in association with the Institute for Financial Management and Research (IFMR) in 2009. The programme will benefit graduate employees working with Irevna, and will help widen and tailor their skill-sets to the needs of the off-shoring business. The first batch of 17 analysts is currently undergoing the 15-month programme.

CRISIL’s brand building and thought leadership initiative, the CRISIL Young Thought Leader (CYTL) competition has continued to elicit a positive response.

Employee Engagement

CRISIL remains committed to enhancing employee engagement, through structured communications, rewards and competency enhancement agendas.

The communications plan launched in 2008 ensured a robust dialogue with employees, and enabled the sharing of organisation-wide developments, initiatives and updates. It also provides employees with opportunities to interact with senior management through various fora. These include the MD & CEO’s quarterly townhalls, business-specific quarterly townhalls by the respective business leaders, HR interactions with new recruits, and the MD & CEO’s regular interactions with a cross-section of employees across groups.

The structured rewards and recognition programme continues to acknowledge and applaud excellence in performance. The MD & CEO’s annual awards to honour outstanding contributions celebrated the spirit of excellence best demonstrated by individuals during the year. Long service awards were introduced to recognise the contributions of employees completing 10-, 15-, and 20-year tenures with CRISIL. The programme was further supplemented by introducing the global Standard & Poor’s Acknowledging and Celebrating Excellence (ACE) awards to provide CRISIL employees with a global platform recognising superior performances.

The training and development team has followed a structured approach towards people development by understanding the desired competencies, and following them with customised interventions. Business specific trainings programs and interventions have helped create a strong edifice of building a learning organisation. Leadership capability was enhanced through initiatives such as intensive training and coaching sessions. Over 1155 training programmes, and more than 72,395 man hours of training were conducted. These training sessions ranged from technical subjects to functional and behavioral skill- building programmes. A learning centre was set up to monitor the progress and reach of these trainings.

During the year, 80 employees received remuneration of Rs. 2.4 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 excluding this annexure. Any shareholder interested in obtaining a copy of the annexure may write to the Company Secretary at CRISIL’s registered office.

G. INFORMATION TECHNOLOGY (IT)

CRISIL businesses have acquired the cutting edge in technology, and used IT to gain more insight into how customers use their products, to obtain real-time feedback from customers, generate operational dashboards and tracking metrics, scale up business operations through web-based tools, and to provide research products to customers.

Operational efficiency was enhanced by partnering with IT companies to provide solutions to various business divisions. Through rationalisation of service providers, significant cost savings were achieved during the year.

During 2009, the IT group also managed several revenue-based projects for the Risk, Funds and Advisory businesses.

H. FACILITIES

During the year, CRISIL consolidated all its operations in Mumbai. The operations, spread across more than ten different locations in the city, shifted to a single building at CRISIL House, Hiranandani, Powai. CRISIL House is a 210,000 square-feet aesthetically designed, environment-friendly building, with the latest equipment to ensure comfortable and efficient operations for employees. As part of CRISIL’s Corporate Social Responsibility agenda, CRISIL has designed the new premises as a ‘green building’.

I. SUBSIDIARIES

CRISIL has been granted an exemption by the Ministry of Corporate Affairs from attaching individual annual reports of its subsidiary companies to its annual report. 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.

J. JOINT VENTURE - INDIA INDEX SERVICES AND PRODUCTS LIMITED

India Index Services and Products Limited (IISL), CRISIL’s 49:51 joint venture with National Stock Exchange of India Limited (NSEIL), provides a variety of indices and index-related services and products to the capital markets. IISL has a marketing and licensing agreement with Standard & Poor’s (S&P), the world’s leading provider of investible equity indices.

CRISL had a total income of Rs. 14.42 crores and net profit after tax of Rs. 7.86 crore for the year ended March 31, 2009. It declared a dividend of 50 per cent.

In 2009, IISL issued licenses to clients within India for issuing debentures whose returns are based on the S&P CNX Nifty Index. IISL also concluded licensing agreements for issue of structured products based on the S&P CNX Nifty Index outside India. In addition, IISL continues to enter into data sales agreements with global and Indian clients.

In 2009, Barclays Global Investors, N.A., and Nomura Asset Management Company launched Exchange-Traded Funds (ETFs) based on the S&P CNX Nifty Index in USA and Japan, respectively. These ETFs provide investors in these countries opportunities to gain exposure to the Indian markets.

K. DIRECTORS

The Board appointed M r. Deven Sharma as Chairman of the Board of Directors with effect from October 29, 2009. The Board of Directors appointed Mr. Deven Sharma as an Additional Director with effect from October 29, 2009. He holds the office upto the date of the ensuing Annual General Meeting. Mr. Deven Sharma is the President of Standard & Poor’s, a division of The McGraw-Hill Companies. Mr. Deven Sharma’s appointment will help cement a closer and more direct association of CRISIL with Standard & Poor’s.

Mr. Ravinder Singhania was appointed as the alternate director to Mr. Deven Sharma.

Mr. R. Ravimohan resigned as Chairman of the Board and Director of the Company with effect from August 6, 2009 after serving the Company over the last 15 years.

The Directors place on record their sincere appreciation of the significant contributions made by Mr. R. Ravimohan as Managing Director and CEO and subsequently, as Chairman of CRISIL Ltd.

In accordance with the Articles of Association of the Company and the provisions of the Companies Act, 1956, Ms. Rama Bijapurkar and Mr. H. N. Sinor retire by rotation and being eligible, offer themselves for reappointment.

L. AUDITORS

The Statutory Auditors, M/s. S. R. Batliboi & Co., Chartered Accountants, will retire at the ensuing Annual General Meeting and request that their reappointment be considered.

M. OTHERS

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

The particulars regarding foreign exchange earnings and expenditure appear at Item No. 8 and 9 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.

M.2. 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, 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 the end of the financial year and of the profit or loss of the Company for that period.

(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 on a going concern basis.

Acknowledgements

The Board of Directors wish to thank the employees of CRISIL for their exemplary dedication and the excellence they have displayed in conducting the operations of CRISIL. They also wish to place on record their sincere appreciation of the faith reposed in the professional integrity of CRISIL by customers and investors who have patronised their services. They acknowledge the splendid support provided by market intermediaries. The affiliation with Standard & Poor’s has been a source of redoubtable strength. The Board of Directors also wish to place on record their 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 various state governments. The role played by the media in highlighting the good work done by CRISIL is deeply appreciated.

On behalf of the Board of Directors,

Deven Sharma Place: Mumbai Chairman

Date: February 18, 2010

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