Balance Sheet CRISIL LIMITED. Rupees. Schedule December 31, 2007 December 31, 2006 SOURCES OF FUNDS

Transcription

1 SOURCES OF FUNDS Balance Sheet As at As at Schedule December 31, 2007 December 31, 2006 SHAREHOLDERS FUNDS Share Capital A 72,250,000 67,554,400 Reserves and Surplus B 2,609,850,703 1,562,236,077 2,682,100,703 1,629,790,477 DEFERRED TAX LIABILITY (Net) (Refer Note 6 - Schedule P) - 30,200,000 TOTAL 2,682,100,703 1,659,990,477 APPLICATION OF FUNDS FIXED ASSETS C Gross Block 950,956, ,455,710 Less: Accumulated Depreciation/Amortization 525,444, ,619,386 Net Block 425,512, ,836,324 Capital Work-In-Progress (including Capital Advances) 80,385, , ,897, ,750,442 INVESTMENTS D 1,863,750,605 1,328,250,535 DEFERRED TAX ASSETS (Net) (Refer Note 6 - Schedule P) 29,705,346 - CURRENT ASSETS, LOANS AND ADVANCES Sundry Debtors E 678,241, ,140,715 Cash and Bank Balances F 179,248,631 94,491,638 Loans and Advances G 440,932,292 97,016,992 Other Current Assets H 2,848, ,421 1,301,270, ,176,766 Less: CURRENT LIABILITIES AND PROVISIONS Current Liabilities I 669,849, ,202,514 Provisions J 348,673, ,984,752 1,018,523, ,187,266 NET CURRENT ASSETS 282,747,476 (81,010,500) TOTAL 2,682,100,703 1,659,990,477 Significant Accounting Policies and Notes to the Accounts P The schedules referred to above and notes to accounts form an integral part of the Accounts. As per our report of even date. For and on behalf of the Board of Directors of CRISIL Limited B.V. Bhargava For S.R. BATLIBOI & CO. Chairman H. N. Sinor Chartered Accountants Rama Bijapurkar Roopa Kudva Thomas Schiller per Viren H. Mehta Managing Director & CEO R.Ravimohan Directors Partner Michael Petit Membership No.: Shrikant Dev David Pearce Company Secretary Ravinder Singhania Mumbai, February 18, 2008 Mumbai, February 18, 2008

2 21st ANNUAL REPORT 2007 Profit and Loss Account Schedule December 31, 2007 December 31, 2006 INCOME Income from Operations K 2,553,227,620 1,467,458,443 Other Income L 155,572, ,071,678 TOTAL 2,708,800,207 1,568,530,121 EXPENDITURE Staff Expenses M 1,010,458, ,020,841 Establishment Expenses N 277,810, ,707,941 Other Expenses O 372,407, ,241,926 Depreciation/Amortization C 133,387,378 65,500,664 1,794,064,657 1,029,471,372 Profit Before Tax 914,735, ,058,749 TAX EXPENSE (Refer Note 5 - Schedule P) Income Tax 224,000, ,900,000 Fringe Benefit Tax 11,450,000 7,290,000 Wealth Tax 500, ,000 Deferred Tax (32,215,000) (4,400,000) Income Tax of earlier years 4,292, ,027, ,290,000 Profit After Tax Continuing Operation 701,269, ,514,868 Discontinued Operation (Refer Note 3 - Schedule P) 5,438,094 53,253, ,707, ,768,749 Balance brought forward from previous year 455,830, ,982,436 Profit Available for Appropriation 1,162,538, ,751,185 Appropriations : Proposed Dividend 180,625, ,331,600 Corporate Dividend Tax 33,706,767 14,211,757 Transfer to General Reserve 70,670,758 37,376,875 Balance carried to Balance Sheet 877,536, ,830,953 1,162,538, ,751,185 Earnings Per Share () - Nominal value of Rs.10 (Refer Note 17 - Schedule P) Including Discontinued Operations : Basic Diluted Excluding Discontinued Operations : Basic Diluted Significant Accounting Policies and Notes to the Accounts P The schedules referred to above and notes to accounts form an integral part of the Accounts. As per our report of even date. For and on behalf of the Board of Directors of CRISIL Limited B.V. Bhargava For S.R. BATLIBOI & CO. Chairman H. N. Sinor Chartered Accountants Rama Bijapurkar Roopa Kudva Thomas Schiller per Viren H. Mehta Managing Director & CEO R.Ravimohan Directors Partner Michael Petit Membership No.: Shrikant Dev David Pearce Company Secretary Ravinder Singhania Mumbai, February 18, 2008 Mumbai, February 18, 2008

3 Cash Flow Statement December 31, 2007 December 31, 2006 A. Cash Flow from Operating Activities : Profit before tax 914,735, ,058,749 Adjustments for : Depreciation/Amortisation 133,387,378 65,500,664 Provision for leave encashment 61,659,177 8,682,535 Provision for gratuity 6,929,545 1,324,143 (Profit)/loss on sale of fixed assets (44,919,917) (20,018,639) (Profit)/loss on sale of current investments (2,304,789) (14,084,102) (Increase)/ decrease in accrued income (2,404,371) - Provision for bad debts 17,275,193 - Interest on deposits and loans (15,532,052) (5,945,263) Dividend income (66,857,719) (51,041,500) Rental income (3,793,548) (7,200,000) Operating Profit before Working Capital changes 998,174, ,276,587 Movements in Working Capital - (Increase)/ Decrease in sundry debtors (217,877,390) (96,396,841) - (Increase)/ Decrease in sundry deposits (232,020,960) (24,398,873) - (Increase)/ Decrease in loans (7,211,984) 1,357,975 - (Increase)/ Decrease in advances (17,773,410) (5,171,559) - Increase/ (Decrease) in sundry creditors 152,144,520 76,668,052 - Increase/ (Decrease) in fee received in advance 110,461,387 44,573,656 - Increase/ (Decrease) in other liabilities 10,469,874 11,781,518 Cash generated from Operations 796,366, ,690,515 - Taxes paid (268,824,790) (155,861,148) Net Cash generated from Operating Activities - (A) 527,541, ,829,367 B. Cash Flow from Investing Activities : Purchase of fixed assets (215,559,084) (92,521,113) Proceeds from sale of fixed assets 58,264,093 69,594,017 Investment In Gas Strategies Group Limited - (14,706,752) Investment In CRISIL Risk and Infrastructure Solutions Limited - (9,999,900) Investment in Irevna Limited, UK - (424,547,435) Sale proceeds from investments in India Index Services and Products Limited - 201,500

4 21st ANNUAL REPORT 2007 B. Cash Flow from Investing Activities : (Contd.) December 31, 2007 December 31, 2006 Investment in CRISIL Credit Information Services Limited (500,000) - Investments in mutual funds(net) (700,000,000) (500,000,000) Sale proceeds from investments in mutual funds 152,304, ,012,601 Investment in fixed deposits (net) 5,269,044 (7,226,549) Purchase consideration for transfer of Advisory Business to CRISIL Risk and 96,241,235 - Infrastructure Solutions Limited, a wholly-owned subsidiary Interest on deposits and loans 15,798,402 5,732,028 Dividend income 66,857,719 51,041,500 Rental income 3,793,548 7,200,000 Net Cash generated from / (used in) Investing Activities - (B) (517,530,254) (331,220,103) C. Cash Flow from Financing Activities : Increase in share capital 4,695,600 1,724,400 Increase in securities premium 188,880,510 70,939,103 Dividend and dividend tax paid (118,552,905) (76,760,216) Loan given to CRISIL Risk and Infrastructure Solutions Limited (120,500,000) - Loan repaid by CRISIL Risk and Infrastructure Solutions Limited 48,300,000 - Net Cash generated from / (used in) Financing Activities - (C) 2,823,205 (4,096,713) Net Increase/(decrease) in Cash and Cash Equivalents (A+B+C) 12,834,645 33,512,551 Cash and Cash Equivalents - Opening Balance 76,098,665 42,586,114 Add : Adjustments on account of Amalgamation of Subsidiaries 77,158,590 - Cash and Cash Equivalents - Closing balance 166,091,900 76,098,665 Net Increase/(decrease) in Cash and Cash Equivalents 12,834,645 33,512,551 Components of Cash and Cash Equivalents as at Cash on Hand 214,824 82,929 With Banks on Current Account 165,877,076 76,015, ,091,900 76,098,665 Note : Assets and Liabilities acquired as a result of Amalgamation of Subsidiaries with the Company have been excluded from the current year Cash Flow Statement as the transaction is non-cash in nature. Significant Accounting Policies and Notes to the Accounts Schedule P The schedules referred to above and notes to accounts form an integral part of the Accounts. As per our report of even date. For and on behalf of the Board of Directors of CRISIL Limited B.V. Bhargava For S.R. BATLIBOI & CO. Chairman H. N. Sinor Chartered Accountants Rama Bijapurkar Roopa Kudva Thomas Schiller per Viren H. Mehta Managing Director & CEO R.Ravimohan Directors Partner Michael Petit Membership No.: Shrikant Dev David Pearce Company Secretary Ravinder Singhania Mumbai, February 18, 2008 Mumbai, February 18, 2008

5 Schedules Annexed to and forming part of the Accounts December 31, 2007 December 31, 2006 Schedule A Share Capital Authorised Capital: 10,000,000 (P.Y. 10,000,000) Equity Shares of Rs.10 each 100,000, ,000,000 Issued, Subscribed and Paid Up: 7,225,000 (P.Y. 6,755,440) Equity Shares of Rs. 10 each fully paid up 72,250,000 67,554,400 (Refer Note 15 - Schedule P) [Of the above, 600,000 (P.Y. 600,000) Equity Shares are held by Standard & Poor's International LLC, USA and 3,120,948 (P.Y. 3,120,948) Equity Shares are held by S&P India, LLC (a wholly-owned subsidiary of The McGraw-Hill Companies, Inc., The Ultimate Holding Company)] Note : Number of unexercised stock options in force at the end of the year - Nil (P.Y. 475,560) Total 72,250,000 67,554,400 Schedule B Reserves and Surplus Securities Premium Account Balance as per last Balance Sheet 286,009, ,070,458 Add: Additions during the year towards issue of shares under Employee Stock Option Plan 188,880,510 70,939,103 (Refer Note 15 - Schedule P) 474,890, ,009,561 General Reserve Balance as per last Balance Sheet 820,395, ,018,688 Add : Transferred from Profit and Loss Account 70,670,758 37,376, ,066, ,395,563 Capital Reserve Balance as per last Balance Sheet - - Add : Capital Reserve arising on Amalgamation of a Subsidiaries 122,232,111 - (Refer Note 2 - Schedule P) 122,232,111 - Profit and Loss Account Profit and Loss Account balance 877,536, ,830,953 Less : Adjustments on account of transitional provision of (47,039,044) - Accounting Standard 15 (Revised) on employment benefits (Refer Note Schedule P) Add : Addition on account of Amalgamation of Subsidiaries (Refer Note 2 - Schedule P) 291,165,234-1,121,662, ,830,953 Total 2,609,850,703 1,562,236,077

6 21st ANNUAL REPORT 2007 Schedule C Fixed Assets Gross Block at Cost Accumulated Depreciation/Amortization Net Block As on Additions Amalgamation Deductions / As on Upto For the Amalgamation Deductions / Upto As on As on Jan 1, 2007 (Note 2 below) Adjustments Dec 31, 2007 Jan 1, 2007 year (Note 2 below) Adjustments Dec 31, 2007 Dec 31, 2007 Dec 31, 2006 Intangibles Goodwill 8,959, ,959,000 3,098,647 5,860, ,959,000-5,860,353 Trademarks 65,430, ,430,000 56,360,690 9,069, ,430,000-9,069,310 Copyrights 1,729, ,729,500 1,488, , ,729, ,600 Fixed Assets Buildings (Refer Note 1) 292,014, ,405, ,609,665 76,931,812 28,804,557-12,525,056 93,211, ,398, ,083,151 Furniture and Fixtures 99,124,718 17,487,279 6,388,712 17,609, ,390,813 60,970,832 2,054, ,483 7,340,266 56,566,626 48,824,187 38,153,886 Office Equipments 80,354,328 19,167,476 5,615,425 5,520,750 99,616,479 42,211,680 11,335, ,813 2,453,116 51,669,920 47,946,559 38,142,648 Computers 242,737,677 44,332,617 39,940,362 23,036, ,974, ,635,042 53,012,933 14,274,229 17,176, ,745,218 86,229,110 75,102,635 Vehicles 48,105,524 10,701,153 1,627,230 17,178,370 43,255,537 17,921,783 19,508, ,918 11,459,496 26,631,243 16,624,294 30,183,741 Leasehold Improvements - 43,991, ,991,229-3,501, ,501,467 40,489,762 - Total 838,455, ,679,754 53,571,729 76,750, ,956, ,619, ,387,378 16,392,443 50,954, ,444, ,512, ,836,324 Previous Year 844,135,430 91,606,995-97,286, ,455, ,830,059 65,500,664-47,711, ,619, ,836,324 Note: 1. Buildings include Rs.Nil (P.Y. - Rs.500,550) in respect of shares held in Co-operative Societies and Rs. Nil (P.Y. - Rs.120,000,000) in respect of Nil shares (P.Y. 5,000 shares) of CRISIL Properties Limited (wholly owned subsidiary, which was amalgamated with CRISIL Limited with effect from April 1, 2007) Note: 2. Represents adjustment on account of Amalgamation of Subsidiaries (Refer Note 2 -Schedule P)

7 December 31, 2007 December 31, 2006 Schedule D Investments A. Long Term (Unquoted - At Cost) Investment in subsidiaries 49,999,900 (P.Y. 49,999,900) Equity Shares of CRISIL Risk and 49,999,900 49,999,900 Infrastructure Solutions Limited of Re. 1 each, fully paid up 400,000 (P.Y. 400,000) Equity Shares of Gas Strategies Group Limited 161,854, ,854,376 of 1 each, fully paid up 8,000,000 (P.Y. 8,000,000) Equity Shares of Irevna Limited, UK, 695,383, ,383,859 of each, fully paid up 50,000 (P.Y. Nil) Equity Shares of CRISIL Credit Information Services Limited of 500,000 - Rs.10 each, fully paid up Nil (P.Y. 25,000) Equity Shares of CRISIL Research and Information - 2,500,000 Services Limited of Rs.100 each, fully paid up (Refer Note 2 - Schedule P) Nil (P.Y. 249,993) Equity Shares of Global Data Services of India Limited of - 2,499,930 Rs.10 each, fully paid up (Refer Note 2 - Schedule P) Nil (P.Y. 50,005) Equity Shares of Irevna Research Services Limited of - 10,000,000 Rs.10 each, fully paid up (Refer Note 2 - Schedule P) Other Investments 637,000 (P.Y. 637,000) Equity Shares of India Index Services and 6,369,970 6,369,970 Products Limited of Rs.10 each, fully paid up 3,600,000 (P.Y. 3,600,000) Equity Shares of National Commodity and 36,000,000 36,000,000 Derivative Exchange Limited of Rs.10 each, fully paid up 300,000 (P.Y. 300,000) Equity Shares of Caribbean Information and 13,642,500 13,642,500 Credit Rating Agency of US$1 each, fully paid up Total Long Term (At Cost) - {A} 963,750, ,250,535 B. Current Investments (At Cost Or Market Value, whichever is lower) * Investments In Mutual Funds 28,758 units (P.Y. 29,613) of Tata Liquid Fund 50,000,000 50,000,000 (Purchased 28,758 units and sold 29,613 units during the current year) 8,116,159 units (P.Y. 4,353,542) of HSBC Cash Fund Growth Fund 100,000,000 50,000,000 (Purchased 8,116,159 units and sold 4,353,542 units during the current year) 2,867,742 units (P.Y. 2,867,742) of DSP Merrill Lynch Liquidity Fund Growth Fund 50,000,000 50,000,000 3,666,442 units (P.Y.3,778,577) of LIC MF Liquid Fund Growth Plan 50,000,000 50,000,000 (Purchased 3,666,442 units and sold 3,778,577 units during the current year) 5,000,000 (P.Y. 5,000,000) units of HDFC FMP 50,000,000 50,000,000

8 21st ANNUAL REPORT 2007 December 31, 2007 December 31, 2006 Schedule D (Contd.) 82,019 units (P.Y. 42,753) of UTI Liquid Cash Plan Growth Fund 100,000,000 50,000,000 (Purchased 39,266 units during the current year) 5,000,000 (P.Y. 5,000,000) units of Prudential ICICI FMP 50,000,000 50,000,000 5,385,179 (P.Y. Nil) units of Reliance Liquid Fund 100,000, Treasury Plan - Institutional Option - Growth 5,000,000 (P.Y. Nil) units of ABN Amro Fixed Term Plan - Series 8:Yearly Plan B 50,000,000-6,413,591 (P.Y. Nil) units of Kotak Liquid Institutional Premium Plan 100,000,000-3,088,422 (P.Y. Nil) units of Sundaram BNP Paribas Money Fund - Institutional Plan 50,000,000-4,105,731 (P.Y. Nil) units of ING Liquid Fund 50,000,000-3,912,149 (P.Y. Nil) units of Principal Mutual Fund 50,000,000-3,167,363 (P.Y. Nil) units of HDFC Liquid Fund - Premium Plan Growth 50,000,000 - Total Investments in Mutual Funds {B} 900,000, ,000,000 Total Investments {A} + {B} 1,863,750,605 1,328,250,535 *Aggregate market value of Company s investment in Mutual Funds 940,971, ,637,760 Schedule E Sundry Debtors Debts outstanding for a period exceeding six months - Considered good 29,777,988 49,875,330 - Considered doubtful 5,661,447 - Other debts - Considered good 648,463, ,265,385 - Considered doubtful - - Less : Provision for Doubtful Debts (5,661,447) - Total 678,241, ,140,715 Schedule F Cash and Bank Balances Cash on Hand 214,824 82,929 Balances with Scheduled Banks On Current Accounts 165,877,076 76,015,736 On Deposit Accounts (Refer Note Schedule P) 11,909,703 17,178,747 On Unpaid Dividend Accounts 1,247,028 1,214,226 Deposit includes Fixed Deposits with Banks Rs.11,841,231 (P.Y. Rs. 17,178,747) marked as lien for Guarantees issued by Banks on behalf of the Company. Total 179,248,631 94,491,638

9 December 31, 2007 December 31, 2006 Schedule G Loans and Advances Unsecured, Considered Good Loans to Staff 16,712,474 7,069,862 Advance Recoverable In Cash or Kind for Value to be Received 33,168,083 11,211,603 Advance Tax Paid (Net Of Tax Provision) 1,048,289 - Sundry Deposits 317,803,446 78,735,527 Loan to CRISIL Risk and Infrastructure Solutions Limited (Refer Note 14 - Schedule P) 72,200,000 - Total 440,932,292 97,016,992 There are no dues outstanding from Directors as on December 31, 2007 and during the year ended December 31, Schedule H Other Current Assets Interest Accrued on Fixed Deposits with Banks 444, ,421 Accrued Revenue 2,404,371 - Total 2,848, ,421 Schedule I Current Liabilities Sundry Creditors (Refer Note 7 - Schedule P) 334,651, ,898,004 Fees received in advance 287,648, ,147,668 Unclaimed Dividend (to be credited to Investor Education & Protection Fund, when due) 1,247,028 1,214,225 Other Liabilities 46,302,651 33,942,617 Total 669,849, ,202,514 Schedule J Provisions Proposed Dividend 180,625, ,331,600 Corporate Dividend Tax thereon 30,697,219 14,211,757 Provision for Tax (Net of Advance Tax) - 9,645,960 Provision for Leave Encashment 121,110,356 22,319,535 Provision for Gratuity 16,241,281 5,475,900 Total 348,673, ,984,752

10 21st ANNUAL REPORT 2007 December 31, 2007 December 31, 2006 Schedule K Income from Operations Income from Rating Services 1,300,783, ,505,064 Income from Advisory Services 87,688, ,319,735 Income from Research Services 1,164,755, ,633,644 Total 2,553,227,620 1,467,458,443 Schedule L Other Income Interest on Deposits and Loans [TDS - Rs.2,423,692 (P.Y. Rs.1,295,072)] 15,532,052 5,945,263 Profit on sale of Fixed Assets (Net) 46,286,865 20,018,639 Dividend Income - Subsidiaries 59,422,219 45,004,500 Dividend Income - Other Investments (Trade) 7,435,500 6,037,000 Profit on Sale of Current Investments 2,304,789 14,084,102 Rental Income 3,793,548 7,200,000 Miscellaneous Income 20,797,614 2,782,174 Total 155,572, ,071,678 Schedule M Staff Expenses Salaries and Bonus 931,256, ,458,722 Contribution to Provident and Other Funds 40,361,472 19,893,045 Staff Training and Welfare Expenses 63,307,156 26,669,074 Less : Recoveries from Subsidiaries towards Overhead Allocated (24,466,737) - Total 1,010,458, ,020,841 Schedule N Establishment Expenses Repairs and Maintenance - Buildings 27,432,119 29,722,054 Repairs and Maintenance - Others 39,114,247 29,279,104 Electricity 28,223,125 16,647,320 Communication Expenses 46,567,264 27,644,446 Insurance 1,714,191 1,152,193 Rent 137,339,906 54,565,375 Rates and Taxes 2,990,055 1,697,449 Less : Recoveries from Subsidiaries towards Overhead Allocated (5,569,976) - Total 277,810, ,707,941

11 December 31, 2007 December 31, 2006 Schedule O Other Expenses Printing and Stationery 19,984,911 20,167,286 Conveyance and Travelling 139,941,971 57,877,298 Books and Periodicals 15,913,070 5,015,891 Vehicle Expenses 1,422,860 1,658,530 Remuneration to Non-whole time Directors (Refer Note 8 - Schedule P) 9,200,000 11,330,000 Business Promotion and Advertisement 8,515,798 9,690,385 Foreign Exchange Loss (Net) 50,187,045 1,804,173 Professional Fees 81,466, ,525,112 Software Purchase & Maintenance Expenses 24,476,649 25,737,999 Provision for Bad Debts 17,275,193 - Bad Debts written off (Net) - 15,344,451 Auditors Remuneration (Refer Note 11 - Schedule P) 2,170, ,011 Recruitment Expenses 9,198,234 2,387,694 Seminars and Conferences 3,192,568 2,584,940 Interest Paid - 45,407 Miscellaneous Expenses 1,551,399 3,211,749 Less : Recoveries from Subsidiaries towards Overhead Allocated (12,089,244) - Total 372,407, ,241,926 Schedule P Significant Accounting Policies And Notes to the Accounts 1.1 Basis of Preparation The financial statements have been prepared to comply in all material respects with the Notified accounting standard by Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956 ('the Act'). The financial statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and except for the changes in accounting policy and estimates discussed more fully below, are consistent with those used in the previous year Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting year end. Although these estimates are based upon management s best knowledge of current events and actions, actual results could differ from these estimates. 1.2 Changes in Accounting Policies Depreciation/Amortization In the current year, the Company changed (with retrospective effect) its method of providing depreciation on fixed assets and intangible assets, details of which are as under :

12 21st ANNUAL REPORT 2007 i) Depreciation on Fixed Assets was changed from Written Down Value Method ( WDV ) at rates prescribed in Schedule XIV of the Act, to Straight Line Method (SLM) based on estimated useful life of the assets. The Company revised the estimated useful life of certain assets in the current year. ii) Depreciation on Trademark and Copyrights was changed from 25% Written Down Value ( WDV ) method to 25% on Straight Line Method (SLM) based on estimated useful life. Had the Company continued to use the earlier method of providing depreciation, the Profit after tax for the current year would have been higher by Rs. 26,705,879 and the net block of fixed assets would have been higher by Rs.40,457,323. iii) Goodwill was amortized at 5% on Straight Line Method ( SLM ) based on estimated useful life. During the current year, the Company revised the estimated useful life of Goodwill and fully amortized the balance in Goodwill. Had the company continued to use the earlier method of amortizing Goodwill, the Profit after tax for the current year would have been higher by Rs.3,572,725 and the net block of fixed assets would have been higher by Rs.5,412,399. Leasehold Improvements In the current year, the Company changed its method of expensing lease improvement costs in the period in which they were incurred to amortising such costs over the primary lease period. Had the Company continued to use the earlier method of accounting for leasehold improvements, the Profit after tax for the current year would have been lower by Rs.26,727,292 and the net block of fixed assets would have been lower by Rs.40,489, Revenue recognition In the current year, the Company has changed revenue recognition policy for initial rating fees. Uptill now, initial rating fee were recorded upfront 100%, when the rating was awarded. However in the current year, management has estimated that 94% of initial rating fee is to be recognised upfront on the date the rating is awarded and balance 6% is recorded equally over 11 months subsequent from the month of awarding rating to commensurate with the efforts involved in assigning and monitoring such ratings. Had the Company continued to use the earlier basis of accounting for initial rating fees, the rating income for the year would have been higher by Rs.11,794,526 and the profit after tax by Rs.7,785, Adoption of Accounting Standard (AS)15 Employee Benefits (Revised) Till December 31, 2006, the Company was providing for gratuity and leave encashment based on actuarial valuation as per AS 15 issued by the Institute Of Chartered Accountants Of India ('ICAI'). In the current year, the Company has adopted the AS 15 (Revised) which is mandatory from accounting period commencing on or after December 7, Further in accordance with the transitional provision in the standard for leave encashment, Rs.47,039,044 (net of deferred tax asset Rs. 23,866,961) has been adjusted to the opening balance in the Profit and Loss Account. In respect of provision for gratuity under transitional provision, no adjustments have been made as the amount is not material. 1.3 Fixed Assets Fixed assets are stated at cost, less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. 1.4 Depreciation Depreciation is provided using the Straight Line Method as per the useful lives of the assets estimated by the management, or at the rates prescribed under schedule XIV of the Act whichever is higher

13 Assets Rates (SLM) Schedule XIV Rates (SLM) Buildings 5.00% 1.63% Furniture and Fixtures 10.00% 6.33% Office Equipments 10.00% 4.75% Computers 33.33% 16.21% Vehicles 33.33% 9.50% Leasehold Improvements are amortized over the balance primary period of lease. Fixed assets having original cost of less than Rs. 5,000 individually, are depreciated fully in the year / period of purchase. 1.5 Impairment The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life. 1.6 Intangibles In the current year Goodwill,Trademark and Copyrights have been fully amortized. 1.7 Operating Leases Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognized as an expense in the Profit and Loss Account on a straight-line basis over the lease term. 1.8 Investments Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments 1.9 Revenue Recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Income from Operations Income from Operations comprises of income from initial rating and surveillance services, credit assessments, special assignments, advisory services and subscriptions to information products. Initial rating fees are deemed to accrue at 94% on the date the rating is awarded and the balance 6% is recorded equally over 11 months subsequent to the month in which the rating was awarded. Surveillance fee and subscription to information products are accounted on a time proportion basis. Fees received for credit assessments, advisory services and special assignments are fully recognised as income in the year in which such assessments/assignments are carried out or milestones achieved. Interest Income Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

14 21st ANNUAL REPORT 2007 Dividend Income Revenue is recognised when the shareholders right to receive payment is established by the balance sheet date Retirement and other employee benefits Retirement benefits in the form of Provident Fund is a defined contribution scheme and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due. Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation made at the end of each financial year. Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based on actuarial valuation. Actuarial gains/losses are immediately taken to profit and loss account and are not deferred Foreign Currency Transactions Initial Recognition Foreign currency transactions are recorded in reporting currency by applying to the foreign currency amounts, the average exchange rates for the month prior to the month in which the transaction takes place. Conversion Foreign currency monetary items are reported using the closing rates. Non monetary items which are carried in terms of historical costs denominated in a foreign currency are reported using the exchange rate at the date of transaction. Exchange Difference Exchange differences, arising on settlement of monetary items or on reporting company's monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expense in the year in which they arise Taxes On Income Tax expense comprises of current, deferred, and fringe benefit tax. Current income tax and fringe benefit tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act of Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. At each balance sheet date, the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain that sufficient future taxable income will be available against which such deferred tax assets can be realised. The carrying amount of Deferred Tax Assets are reviewed at each Balance Sheet date. The Company writes down the carrying amount of a Deferred Tax Asset to the extent it is no longer reasonably or virtually certain, as the case may be, that sufficient future taxable income will be available against which Deferred Tax Asset can be realised. Any such write down is reversed to the extent that it becomes reasonably or virtually certain, as the case may be, that sufficient future taxable income will be available.

15 1.13 Employee Stock Option Scheme ( ESOS ) The Company has formulated an Employees Stock Option Scheme. The Scheme provides that employees are granted options to acquire the equity shares of the Company that vests in a graded manner. The options may be exercised within a specified period. The options are granted at the closing market price prevailing on the stock exchange, immediately prior to the date of grant Segment Reporting Policies Identification of segments: The Company s operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate. Inter segment transfers: The Company generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties at current market prices. Allocation of common costs: Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs. Unallocated items: The Corporate and Other Segment includes general corporate income and expense items which are not allocated to any business segment Earnings Per Share Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares Provisions, Contingent Liabilities and Contingent Assets Provisions are recognised, in terms of AS 29-Provisions, Contingent Liabilities and Contingent Assets issued by ICAI, where there is a present, legal or statutory obligation as a result of past events, where it is probable that there will be outflow of resources to settle the obligation and when a reliable estimate of the amount of the obligation can be made. Contingent liabilities are recognised only when there is a possible obligation arising from past events due to occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or where any present obligation cannot be measured in terms of future outflow or resources or where a reliable estimate of the obligation cannot be made. Obligations are assessed on an on-going basis and only those having a largely probable outflow of resources are provided for. Contingent assets are not recognised in the financial statements Cash and Cash Equivalents Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

16 21st ANNUAL REPORT Amalgamation Pursuant to the Scheme of Amalgamation sanctioned by the High Court of Judicature at Bombay and High Court of Judicature at Madras vide their orders dated July 27, 2007 and July 9, 2007 respectively, CRISIL Research and Information Services Limited, Global Data Services of India Limited, CRISIL Properties Limited and Irevna Research Services Limited have been amalgamated with CRISIL Limited effect from April 1, All the subsidiaries amalgamated as aforesaid were wholly owned by the Company and hence no shares were exchanged to effect the amalgamation of the companies as aforesaid. The amalgamation has been accounted as per the 'pooling of interests' method prescribed by AS 14-Accounting for Amalgamation issued by the ICAI. Following assets, liabilities and reserves were amalgamated with Company's assets, liabilities and reserves : Particulars CRISIL Research Global Data Irevna Research CRISIL Total and Information Services Of India Services Limited Properties Services Limited Limited Limited Fixed Assets ( Net ) 426,122-36,753,164-37,179,286 Deferred Tax Asset 3,622, , ,823,385 Current Assets, Loans and Advances: Sundry Debtors ,815, ,815,934 Cash and Bank Balances 6,766,475 5,480,865 64,876,489 34,761 77,158,590 Loans and Advances 4,717, ,050 35,245, ,677 40,772,710 Other Current Assets 45, , ,222 Total 11,529,549 6,054, ,938, , ,930,456 Current Liabilities and Provisions: Current Liabilities 2,618, ,385 39,083,124-42,051,323 Provisions 8,678, ,793 10,889,653-20,076,093 Total 11,297, ,178 49,972,777-62,127,416 Net Current Assets 232,088 5,197, ,965, , ,803,040 Profit and Loss Account 1,781,219 2,897, ,486, ,165,234 Capital Reserve ,232, ,232,111 3 Transfer of Advisory Business to CRISIL Risk and Infrastructure Solutions Limited Pursuant to Board of Director's and shareholder's approval dated April 27, 2007, the Company transferred its Advisory business to CRISIL Risk and Infrastructure Solutions Limited, wholly owned subsidiary, for a consideration of Rs. 96,241,233 with effect from April 1, All assets and liabilities of the said business including employees were transferred at book value to CRISIL Risk and Infrastructure Solutions Limited. Following assets and liabilities relating to the aforesaid business were transferred at book value as on April 1, 2007: Particulars Fixed Assets (Net) 13,818,494 Current Assets Loan and Advances 129,083,375 Total Assets (A) 142,901,869 Current Liabilities 20,512,978 Provisions 26,147,658 Total Liabilities (B) 46,660,636 Net Asset (A) - (B) 96,241,233

17 4 Details of Contingent liabilities are as under : Dec 31, 2007 Dec 31, Bank Guarantee in the normal course of business 11,841,231 27,244, Disputed Income Tax Demand: (i) Pending before Appellate authorities in respect of which the Company is in appeal 35,732,889 31,095,869 (ii) Decided in Company's favour by Appellate Authorities and 12,369,953 17,369,953 Department is in further appeal 3. Estimated amount of contracts ( net of advances ) 117,996,153 6,946,812 remaining to be executed on capital account and not provided for Total 177,940,226 82,657,476 5 Income Tax The tax year of the Company being the year ending March 31, 2008, The provision for tax for the year is the aggregate of the provision made for the three months ended March 31, 2007 and the provision for the nine months upto December 31, The tax provision has been arrived at using the effective tax rate for the period April 1, 2007 to March 31, 2008, the ultimate tax liability of which will be determined for the period April 1, 2007 to March 31, Components of Deferred Tax Assets and Liabilities are: Dec 31, 2007 Dec 31, 2006 Deferred Tax Liability Depreciation / Amortisation (30,504,541) (39,500,000) Deferred Tax Asset Provision for Leave Encashment * 45,614,168 7,500,000 Provision for Gratuity 3,116,612 1,800,000 Provision for Bonus and Commission 7,128,630 - Provision for Bad Debts 1,844,991 - Deferment of Rating fees 2,505,486-60,209,887 9,300,000 Net Deferred Tax Asset / (Liabilities) 29,705,346 (30,200,000) * Includes opening reserve adjustment of Rs. 23,866,961 and effect of amalgamation of subsidiaries of Rs. 3,823,385 7 The Company has no amounts due to any Micro / Small / Medium enterprise as defined under Section 7 (1) (a) / 7 (1) (b) or 7 (1) of Micro, Small & Medium Enterprises Development Act, 2006 as on December 31, 2007.

18 21st ANNUAL REPORT Managerial Remuneration: Dec 31, 2007 Dec 31, 2006 Whole time Directors: Salary 10,041,356 10,359,924 Commission 6,450,000 5,950,000 Contribution to Provident Fund 524, ,508 Perquisites 1,708,052 1,535,977 Total 18,723,471 18,453,409 Non - Whole time Directors: Fees paid 1,280,000 1,020,000 Commission 7,920,000 10,310,000 Total 9,200,000 11,330,000 Note: As the future liability for gratuity and leave encashment is provided on an actuarial basis for the Company as a whole, the amount pertaining to Directors is not ascertainable and, therefore, not included above. Computation of net profit in accordance with Section 349 of the Companies Act, 1956, for calculation of commission payable to Directors: Dec 31, 2007 Dec 31, 2006 Profit before tax as per Profit and Loss Account 914,735, ,058, Remuneration to Whole-time Directors 18,723,471 18,453, Remuneration to Non Whole-time Directors 9,200,000 11,330, Provision for Doubtful Debts 5,661, (Profit)/Loss on Sale of Fixed Assets (46,286,865) (20,018,639) 5. Capital Surplus on Sale of Assets 38,103,140 27,692,697 Net Profit under Section ,136, ,516,216 Managerial Remuneration Payable to whole-time director upto 8% of the Net Profit 18,723,471 18,453,409 (as computed above) Rs.75,210,939 (P.Y. Rs.46,121,297), restricted to : Commission Payable to non whole-time directors upto 3% of the Net Profit 7,920,000 10,310,000 (as computed above) Rs. 28,204,102 (P.Y. Rs.17,295,486), restricted to : The Company depreciates fixed assets based on estimated useful life that are lower than the rates prescribed in Schedule XIV of the Act. Accordingly no adjustments is made on account of depreciation in computation of profit as per section 349 of the Act. The Company has obtained approval from Department of Company Affairs for increase in commission payable to non whole-time directors.

19 9 Earnings in foreign currency (on accrual basis): Dec 31, 2007 Dec 31, 2006 Rendering of Rating, Advisory and Research Services 1,455,982, ,327,454 Dividend from Subsidiaries 59,422, Expenditure in foreign currency (on accrual basis): Dec 31, 2007 Dec 31, 2006 Foreign travel 52,077,917 13,527,432 Professional fees 2,256,551 6,071,976 Other Expenses 9,750,363 5,628,240 Total 64,084,831 25,227, Auditors' Remuneration includes : Dec 31, 2007 Dec 31, 2006 Audit fees 1,600, ,000 Tax Matters 562, ,000 Other matters - 328,150 Out of Pocket Expenses 8,030 32,861 Total 2,170, , Amount remitted during the year in foreign currency, on account of dividends: Dec 31, 2007 Dec 31, 2006 Number of shareholders 1 1 Number of equity shares of Rs. 10 each held by them on which dividend was paid 600, ,000 Year end to which dividend related Dec 31, 2006 Dec 31, 2005 Amount remitted () 9,000,000 6,000, Sundry Debtors includes amount receivable from the following Subsidiaries : As on As on Dec 31, 2007 Dec 31, 2006 Gas Strategies Group Limited - 1,144,239 Irevna LLC, U.S. 149,883,711 - Irevna Limited, U.K. 339,860,529 1,476,090 Total 489,744,240 2,620,329

20 21st ANNUAL REPORT Loans and Advances in the nature of loans given to companies under same management: As on As on Dec 31, 2007 Dec 31, 2006 CRISIL Risk and Infrastructure Solutions Limited 72,200,000 - Maximum Amount Outstanding During the year 110,500,000 22,046, At the fourteenth Annual General Meeting held on August 2, 2001 and at the Extra Ordinary General Meeting Held On September 13, 2004, the shareholders approved the Employee Stock Option Plan (ESOP) for the employees and Whole-time Directors of the Company and its subsidiaries. During the current year, the Company has issued 469,560 shares in pursuant to the ESOP Scheme (Previous Year 172,440). 16 Segment Reporting Business Segments: The Company is India's leading Rating and Research service provider. CRISIL Ratings is full service rating agency that offers a comprehensive range of rating services. CRISIL Research comprises of analysing the Indian and Global environment with an objective of facilitating the client to make a well informed economic decision. CRISIL's equity research provides high-end customised equity research and analytics and knowledge process outsourcing to the world's leading financial institution, investment banks, private equity firms and consulting companies, helping them to achieve sustainable competitive advantage the most reliable opinions on risk by combining its understanding of risk and the science of building risk frameworks, with a contextual understanding of business. The Company has two major business segment: Ratings and Research. A description of the types of products and services provided by each reportable segment is as follows: Rating services includes credit ratings for corporates, banks, small and medium enterprises ( SME ), training in the credit rating field, credit analysis services and grading services Research segments provides high end equity research, industry reports, customised research assignments, subscription to data services and IPO gradings The Advisory segment comprising infrastructure advisory and risk management practice has been transferred to a wholly owned subsidiary with effect from April 1, Segment Reporting for the Year ended December 31, 2007 Business segments Particulars Ratings Advisory Research Total Operating Revenue 1,300,783,882 87,688,472 1,164,755,266 2,553,227,620 Segment Results 548,700,515 8,871, ,395, ,967,393 Add / (Less) Unallocables: 1. Unallocable Income Over Unallocable Expenditure 121,155, Depreciation (133,387,378) Profit Before Tax 914,735,550 Non-cash expenses other than depreciation and amortisation 18,198,549 3,354,249 21,852,654 43,405,452

21 Revenue by Geographic Segments Country Total India 1,097,245,348 United Kingdom 819,930,135 United States Of America 579,500,030 Others 56,552,107 Total 2,553,227,620 Segment Reporting for the Year ended December 31, 2006 Business segments Particulars Ratings Advisory Research Total Operating Revenue 905,505, ,319, ,633,644 1,467,458,443 Segment Results 384,941,378 84,132,643 46,604, ,678,746 Add / ( Less ) Unallocables : 1. Unallocable Income Over Unallocable Expenditure 88,880, Depreciation (65,500,664) Profit Before Tax 539,058,749 Non-cash expenses other than depreciation and amortisation 6,091,721 2,868,053 1,046,904 10,006,678 Revenue by Geographic Segments Country Total India 1,116,130,989 United Kingdom 71,907,716 United States Of America 229,391,236 Others 50,028,502 Total 1,467,458,443 Notes to Segmental Results : Fixed Assets used in the Company's business or Liabilities contracted have not been identified to any of the reportable segments, as the Fixed assets and services are used interchangeably between segments. The Company believes that it is currently not practical to provide segment disclosure relating to total assets and liabilities since a meaningful segregation of the available data is not feasible. The Company recovered certain common expenses from subsidiaries based on management estimates and the same form a part of the segment results and disclosed as Recoveries in Schedules to the Profit and Loss Account.

22 21st ANNUAL REPORT Earnings Per Share (EPS) As on As on Dec 31, 2007 Dec 31, 2006 Profit After Taxation as per Profit and Loss Account (including discontinued operations) 706,707, ,768,749 Weighted average number of equity shares in calculating basic EPS 7,102,546 6,632,452 Add: Equity shares for no consideration arising on grant of stock options under ESOP - 365,569 Weighted average number of equity shares in calculating diluted EPS 7,102,546 6,998,021 Basic Earnings Per Share (Face Value Rs.10 per share) Diluted Earnings Per Share (Face Value Rs.10 per share) Profit After Taxation as per Profit and Loss Account (excluding discontinued operations) 701,269, ,514,868 Basic Earnings Per Share (Face Value Rs.10 per share) Diluted Earnings Per Share (Face Value Rs.10 per share) List of Related Parties Parties Relationship Standard & Poors', LLC Holding Company The McGraw-Hill Companies, Inc The Ultimate Holding Company CRISIL Risk and Infrastructure Solutions Limited Subsidiary Gas Strategies Group Limited Subsidiary Alphatania Limited Subsidiary of Gas Strategies Group Limited Gas Matters Limited Subsidiary of Gas Strategies Group Limited Gas Strategies Consulting Limited Subsidiary of Gas Strategies Group Limited Overview Outreach Limited Subsidiary of Gas Strategies Group Limited Global Data Services Of India Limited Subsidiary (till March 31, 2007) CRISIL Research and Information Services Limited Subsidiary (till March 31, 2007) CRISIL Properties Limited Subsidiary (till March 31, 2007) Irevna Research Services Limited Subsidiary (till March 31, 2007) Irevna Limited, UK Subsidiary Irevna LLC, USA Subsidiary of Irevna Limited, UK India Index Services and Products Limited Joint Venture CRISIL Credit Information Services Limited Subsidiary Roopa Kudva Managing Director & Chief Executive Officer (with effect from July 27, 2007) R. Ravimohan Managing Director & Chief Executive Officer (till July 27, 2007)

23 Related Party Disclosure Name of the related party Nature of transaction As on As on Dec 31, 2007 Dec 31, 2006 Standard & Poors' LLC Professional Services Rendered 521,813, ,992,842 Expense Recovered 16,922,576 - Dividend Paid 55,814,220 37,209,480 Amount Receivable 82,213,191 90,173,732 CRISIL Research and Information Services Limited Professional Fees paid 13,800,000 49,200,000 Amount Payable - 2,700,000 Global Data Services of India Limited Professional Fees Paid 2,700,000 3,601,500 Irevna Research Services Limited Dividend Income - 45,004,500 CRISIL Properties Limited Maintenance charges paid - 2,368,351 } Global Data Services Of India Limited CRISIL Research and Information Services Limited Amalgamation of Subsidiaries CRISIL Properties Limited (Refer note 2 - Schedule P) Irevna Research Services Limited CRISIL Risk and Infrastructure Solutions Limited Professional Services Paid - 75,000 Revenue share received 1,939,773 - Revenue share paid 1,780,924 - Loan Given 120,500,000 28,500,000 Loan Repaid During the year 48,300,000 28,500,000 Loan Outstanding 72,200,000 - Interest Income On Short Term Loan Given 5,049, ,644 Expenses Recovered 29,991,864 - Share of overhead expenses received 33,305,408 Consideration received towards 96,241,233 - sale of advisory division Equity Shares Subscribed - 9,999,900 Amount Receivable / (Payable) 9,773 (84,180) Irevna Limited, U.K. Professional Services Rendered 676,749, ,125 Amount Receivable 339,860,529 - Irevna LLC, U.S. Professional Services Rendered 236,302,550 - Amount Receivable 149,883,711 - Gas Strategies Group Limited Professional Services Rendered 473,658 6,848,331 (Formerly known as EconoMatters Group) Professional Fee Paid - 1,132,352 Amount Receivable / (Payable) - 1,144,239 Corporate Recharge 8,820,550 Dividend Received 59,422,219 - CRISIL Credit Information Services Limited Equity Shares Subscribed 500,000 - India Index Services and Products Limited Dividend Received 955, ,000 R.Ravimohan Remuneration paid 7,677,464 10,401,292 Number of stock options exercised 30,000 10,000 Roopa Kudva Remuneration paid 11,046,007 8,052,117 Number of stock options exercised 24,000 8,000 Note: As the future liability for gratuity and leave encashment is provided on an actuarial basis for the Company as a whole, the amount pertaining to directors is not ascertainable and, therefore, not included above.