ICRA Limited An Associate of Moodys Investor Services Credit Rating and Access to Institutional Credit June 2013 ICRA Limited

An Associate of Moodys Investor Services 1. Credit Rating Overview 2. Applications of Credit Rating 3. Role of Credit Rating Agencies 4. ICRA Overview Agenda June 2013

ICRA Limited An Associate of Moodys Investor Services qA symbolic indicator of the current opinion of the relative capability of the issuer to service its debt obligation in a timely manner, with specific reference to the instrument being rated qMeasures probability of default qBased on quantitative and qualitative analysis qTypical rating criteria includes economy risk, sector risk, enterprise risk (example market position, operation efficiencies, project risk, financial risk and management risk) qRating is not an audit. Credit Rating Overview

June 2013 ICRA Limited An Associate of Moodys Investor Services qSimple, objective indicator of risk qRisk premium assessment for pricing of issues qPortfolio monitoring and secondary selling qRelated risk assessments qCredit research report qAccess to information better than that of most lenders qAccess to top management strategy and intent qCompliance with regulatory requirements Credit Ratings… for investors Credit ratings help in making an informed lending decision and can be used to supplement the internal assessment process

June 2013 ICRA Limited An Associate of Moodys Investor Services For Debt Issuers qWider access to capital – domestic and global qMore stable access to capital qReduced borrowing costs qEfficient net issuances qFinancial flexibility For Financial intermediaries qPlanning, pricing & placement of securities qMonitoring of portfolio on behalf of clients Rating benefits for regulators qScreening issues qEnhancing market transparency Credit Rating.. an enabler Credit ratings help in creating a more efficient market for debt instruments Credit ratings aid in accessing funds at lower costs Credit ratings facilitate the monitoring process

June 2013 ICRA Limited An Associate of Moodys Investor Services qCapital adequacy requirement qBasel 2 compliance qInternal process validation / Supplement qInstrument pricing Banks qPortfolio analysis qCommercial Paper / Debentures qAccess different sources for raising debt (banks, institutional funding etc ) qInterest rates qPerformance analysis vis-à-vis competition Mutual Funds Corporates / Issuers Illustrations Applications of Credit Rating

June 2013 ICRA Limited An Associate of Moodys Investor Services qProvide stable and easily accessible ratings qEnhance market confidence through due diligence and analytical rigor qEnable secondary market development qReduce Uncertainty and Information asymmetry qTimely and periodic updating of changes in credit quality qQuantification of Risk qCreate Wider investment opportunity qConsolidate fragmented credit decision making qImprove disclosure practices Credit Ratings and CRAs are often used as a catalyst for the development of sound fixed capital and financial markets, but should not be construed as a substitute for regulation or regulatory compliance Role of Credit Rating Agencies

June 2013 ICRA Limited An Associate of Moodys Investor Services Group ICRA

June 2013 ICRA Limited An Associate of Moodys Investor Services qICRA commenced rating services in 1991 qServices Offered Credit Ratings Grading Services qCovers all major Sectors Manufacturing companies covering the entire gamut of Indian industry Oil & Gas, Power, Telecom, Textiles, Steel, Cement, Pharmaceuticals, Paper, Fertilizer, Auto and auto ancillaries, Chemicals, Sugar, Tea, Paper, Hotel, Construction, Real Estate, Gems & Jewellery etc. Financial sector covering banks, financial institutions, Insurance, NBFC, primary dealers, housing finance companies, brokerage houses etc Project Finance including infrastructure Structured finance including asset backed securities (Auto, CV), Mortgage backed securities (Housing loans - fixed and floating rate), Collateralised debt obligation, Partial guarantee, Future flow transaction etc qICRA covers companies in various sectors such as entire manufacturing, financial, project finance including infrastructure and structured finance. ICRA Overview

June 2013 ICRA Limited An Associate of Moodys Investor Services qAssociate of Moodys Investor Services, a leading source for credit ratings, research and risk analysis in the world qIndependent and unbiased opinion qEstablished relationships with a large network of corporates and financial institutions qAccess to top management of industry stakeholders qIn-depth sectoral knowledge qOver two decades of experience having witnessed multiple business cycles qSector specific research and analysis. ICRA Advantage

Ratings Corporate Debt RatingsFinancial Sector RatingsBank Loan RatingsIssuer RatingsCorp. Governance RatingsProject Finance RatingsSME Ratings Grading Real Estate GradingConstruction GradingIPO GradingEquity ResearchSolar Power GradingManagement Institute GradingGrading of Engineering Institutes Rating and Grading Services 11

June 2013 ICRA Limited An Associate of Moodys Investor Services Thank you