The Power of Growth and International Reach

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The Power of Growth and International Reach

• CRISIL Analyst MeetAugust 3, 2005

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Highlights of recent developments

• Irevna acquisition is complete and current
  performance is presently better than our earlier
  anticipation at the time of due diligence
• The growth platform created over the past 15
  months for EconoMatters has started yielding
  benefits (the turnaround)
• The process of integration of CRISIL with SP is
  currently on board representation is in line
  with McGraw Hill Corporate governance policies,
  the CRISIL leadership team continues and business
  as usual for CRISIL.
• Existing businesses growing well.
• We are exploring business opportunities with SP
  and our teams have started regular interactions.
  We believe these initiatives will benefit in the
  long run. (with a word of caution that benefits
  may not result in the immediate future).
• . . . We believe there is more power to CRISIL
  growth (Irevna, EconoMatters, Risk management)
  through the readily available global platform
  (SP)Pp).

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The changing composition of CRISIL businesses
Our strategy to diversify has yielded results as
it provides stability for the business model and
at the same time ensures growth across all
businesses
Ratings would continue to dominate the overall
profit proportion and it is expected that other
businesses would gradually add to the proportion
of the overall profit.
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The coverage
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CRISIL Businesses
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Financial performance
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The power of growth International reach
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1
CRISIL Businesses
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Current Activities
1.1 Ratings

• Full service rating agency
• Industrials, banks/FI, non-banks, insurance,
  funds, infrastructure, State governments, urban
  local bodies etc.
• Several innovative products
• Grading services for healthcare institutions
• Corporate governance and value creation ratings
• Micro-finance institutions grading
• Rating of real estate developers and projects
• Grading of maritime training institutes, etc.
• Dedicated fund services offerings
• SME rating and executive training business
• International projects SP delivery centre
• Technical consultancy to national rating agencies
  in emerging markets

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1.2 Infrastructure Advisory

• Indias leading advisor on Infrastructure
  development.
• Actively engaged in the Power, Gas, Urban,
  Transportation, Tourism, Mining sectors.
• Reputed for delivering Solutions that Make a
  Difference to its clients that include
  Governments, Leading Organisations, Multilateral/
  Bilateral lending Agencies etc.
• Pioneering work done in the areas of
• Creating enabling legislations for PPP
• Vision infrastructure master plans for States
• Implementing Reforms in the Power sector.
• Market studies, pricing, procurement of Gas/ LNG
• Catalysing change in the Urban sector
• Bid Process management
• Well positioned to capture growing opportunities
  in the sectors

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1.3 Investment Risk Management Services (CIRM)

• Indias leading player in the risk solutions
• Offer Credit Risk, Market Risk Operational
  Risk Solutions (Basel II services)
• Official service provider of valuations to the
  Mutual Fund industry
• Implemented Credit Risk solutions for over 10
  Indian Banks Financial Institutions
• Completed some important assignments in the risk
  consulting space
• Acquired first client in the Middle East region
• Unique business model technology domain
  combined

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1.4 EconoMatters - What are we famous for?

• Leading provider of Consultancy, Training and
  Information in the growing Natural Gas LNG
  sector. Our unique model delivers Expertise,
  Insights Perspectives in all its businesses.
• Gas Strategies the well established consulting
  brand is the market leader in LNG commercial due
  diligence and in European Gas Markets.
• Alphatania training courses are recognised for
  their innovative and interactive training
  methodology that challenges delegates and
  stimulates learning.
• Publications such as Gas Matters , LNG Focus,
  Gas Matters Today GMT Asia are widely read by
  clients across the sector. They are known for the
  Insights and Perspectives they offer on
  developments in the sector.
• Clients include Oil Majors, National Oil
  companies, Pipelines companies, LNG players
  across the chain, gas consumers , Governments

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1.5 Research Information

• Indias largest independent, integrated research
  house
• Off the shelf products Analysis and forecast on
  Indian
• Economy
• Industry (40) 118 Industry Risk Scores (inputs
  to risk assessment models)
• Companies (150)
• Customized Research
• State Fiscal Restructuring
• Industry Short/Long term demand forecasters
• Companies Equity/Debt Research/ Valuations
• International Projects
• Equity Research project SP IS Retail Market
  in Europe

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1.6 CRISIL MarketWire (Financial News)

• Financial news agency
• 4-yr old financial news arm of CRISIL
• Expertise Indian markets, wire reporting
• 60 accomplished journalists
• CMW MoneyWire
• CMW EquityReport
• CMW FundWire

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1.7 Irevna

• Largest provider of high end equity research and
  analytics on an outsourced basis
• Range of activities
• Financial modeling and valuation
• Company and sector report (initiation and update)
• Data Search and aggregation
• Analytics
• Nature of engagement
• Dedicated teams - Offshore associates attached to
  client sector/strategy teams
• Product teams - Prepare research products
  (reports, databases) for clients
• Ad-hoc research
• Over 200 people working in the delivery centre.

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Financial Performance
2.1 Revenue performance 2.2 Profit
performance 2.3 Quarterly performance 2.4
Expenses 2.5 Talent pool
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2.1 Revenue performance over the last five years

• Growth across all segments
• The share of Ratings as a proportion of overall
  revenue has come down from a peak of 70 to 50
  in the last year the diversification provides
  stability for the business model
• Research Information includes revenue from
  News business

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2.2 Profit performance over the last five years

• Overall growth in profits
• Dominance of profit of Ratings division in the
  overall share
• Economatters loss was budgeted to be so - as
  part of commitment of new expenses for business
  growth
• RI business showing a relatively consistent
  profit position during the last three years

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2.3 CRISIL Consolidated First quarter
performance

• The current year first quarter revenue includes
  Irevna revenue for june only
• EconoMatters showed an improved performance
  during the quarter
• The above segmental expenses do not include
  unallocable expense of Rs24.7 mn.
• The first quarter expenses include a
  non-recurring expenses of appx. Rs.120 lakhs
• The advisory business showed an operational loss
  due to the effect of milestone billing requirement

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2.4 Expenses

• Increase in staff cost form Rs. 1039.lakhs to
  1404.34 lakhs (35 increase)
• - On account of increments by appx 18
• - the rest on headcount increase
• Establishment (53 includes) includes rental
  for additional space requirement, and new office
  interiors (non-recurring expense) of Rs.60 lakhs
• Other expenses increase (87) on account of
• travel by Rs. 53 lakhs
• professional fees Rs.60 lakhs (one time fee
  expense for Irevna acquisition)
• Associate costs for Economatters

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2.5 Our Talent pool
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The Power of Growth International Reach
3.1
Future outlook
3.2
Irevna Fuels the power of growth
3.3
Potential expansion of Outsourcing business with
SP
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3.1
Future outlook
Ratings

• Expanding scale of outsourcing with SP/MHC
• Offering new products and innovative structures
  Structured Finance
• Bank loan ratings
• Expanding suite of products/services Fund
  Services industry
• SME Ratings and Executive training
• Technical consultancy to set up rating agencies
  in new markets

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Investment Risk Management Services

• Expanding into selective new geographies
• Entry into other verticals, such as for Oil
  Natural gas sector,
• Fixed income valuation services for the banking
  segment
• New products for Clause 49 /Sox compliance,
  retail risk software, etc.
• Collaborate with large international technology /
  consulting players for joint offerings

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Infrastructure Advisory

• Capturing opportunities emanating from EA 2003
• Developing the Transportation/ Tourism space.
• Increased thrust in the Multilateral funded
  assignments.
• Capturing opportunities in fuel sourcing area
  Gas, LNG, Coal
• Exploring joint SP CRISIL offerings in the Asia
  Pacific region
• Targeting NURM opportunities

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Economatters Limited UK

• Delivering turnaround in financial performance.
• Creating a Single delivery Model between London
  Delhi for capturing quality and cost
  efficiencies.
• Making initial forays in the Solutions space of
  consulting.
• Establish a strong Executive Development practice
  in training.
• Establish as the Information provider of choice.
• Leverage SP capability and market presence in
  pursuit of our strategic objectives.

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Research Information

• Retention of vast client base
• Enhancing value of existing relationships cross
  selling/customized research
• Acquisition of new clients deeper penetration
• Growing the customized business in the corporate
  and BFSI sector transition from research
  provider to research partner
• Offering India Research to international
  markets
• Enlarging the scope of engagement with SP/MHC

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CRISIL MarketWire (Financial News)

• Expand market through web products
• Currently accounting for 25 of revenues
• Launch CMW CommodityWire
• Explore new arrangements for distribution of News

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3.2
Irevna Fuels the power of growth

• Increase size of engagement for dedicated client
  teams
• Converting ad-hoc research clients to dedicated
  roles
• Acquisition of new clients within equity research
• Targeting new verticals such as credit research,
  fixed income research, middle office activities
  in investment banks, venture capital
• Integration of systems and processes with CRISIL

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3.3
Potential expansion of SP Outsourcing business

• The perceived barrier confidentiality no
  longer exists as SP has a controlling stake in
  CRISIL and would be comfortable to extend
  business as CRISIL is part of their group (as
  against the vendor relationship earlier).
• The International projects (Ratings) group with
  a team of over 100 has established timely and
  quality delivery processes with SP and ready to
  expand the business
• CRISIL businesses have started showcasing the
  various capabilities with their counterparts in
  SP
• CRISIL could use the global offices and extend
  the CRISIL products to the international market
• A word of caution all efforts for increasing
  the outsourcing business may not result in
  immediate revenue increases

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Thank you!
Contact Details Mr D Ravishankar, Chief
Financial Officer CRISIL Ltd. dravishankar_at_crisil.
com