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CRISIL Ltd.

BSE: 500092 Sector: Others
NSE: CRISIL ISIN Code: INE007A01025
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VOLUME 22146
52-Week high 2490.00
52-Week low 1750.00
P/E 50.21
Mkt Cap.(Rs cr) 15822.54
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Sell Price 2218.00
Sell Qty 5.00
OPEN 2219.50
CLOSE 2204.40
VOLUME 22146
52-Week high 2490.00
52-Week low 1750.00
P/E 50.21
Mkt Cap.(Rs cr) 15822.54
Buy Price 0.00
Buy Qty 0.00
Sell Price 2218.00
Sell Qty 5.00

CRISIL Ltd. (CRISIL) - Director Report

Company director report

Dear Member

The Directors are pleased to present to you the 29th Annual Report of CRISIL Limitedalong with the audited accounts for the year ended December 312015.

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 1423.16 1277.07 1000.70 935.41
Profit before depreciation exceptional item and taxes was 442.82 412.17 349.38 331.31
Deducting depreciation of 37.12 36.12 24.03 23.92
Profit before tax was 405.70 376.05 325.35 307.39
Deducting taxes of 120.55 107.62 103.35 91.88
Profit 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 theGenerally Accepted Accounting Principles in India (Indian GAAP) to comply with theAccounting Standards notified under Section 211 (3C) of the Companies Act 1956 (whichcontinue to be applicable in respect of Section 133 of the Companies Act 2013 in terms ofapplicable rules of The Companies (Indian Accounting Standards) Rules 2015) and therelevant provisions of the Companies Act 1956 / Companies Act 2013 as applicable andguidelines issued by the Securities and Exchange Board of India (“SEBI”). Thereare no material departures from the prescribed norms stipulated by the AccountingStandards in preparation of the Annual Accounts. Accounting policies have beenconsistently applied except where a newly issued accounting standard if initially adoptedor a revision to an existing accounting standard requires a change in the accountingpolicy hitherto in use. Management evaluates all recently issued or revised accountingstandards on an ongoing basis. The Company discloses consolidated and standalone financialresults on a quarterly basis of which standalone results are subjected to limited reviewand 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. 1423.16crore 11% higher than Rs. 1277.07 crore in the previous year. Overall operationalexpenses for the year were Rs. 1017.46 crore against Rs. 901.01 crore in the previousyear. Operating Profit (EBITDA) improved to Rs. 442.82 crore against Rs. 412.17 crore inthe previous year. Profit after Tax for the year at Rs. 285.15 crore 20% of revenue washigher 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. 1000.70crore 7% higher than Rs. 935.41 crore in the previous year. Overall operational expensesfor 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 theprevious year. Profit 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 isincluded in the “Management's Discussion and Analysis” Report which forms partof this Annual Report.

DIVIDEND

The Directors recommend for approval of the members at the Annual General Meeting to beheld on April 19 2016 payment of Final Dividend of Rs. 7 per equity share and SpecialDividend 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 ofRs. 4 each and the third interim dividend of Rs. 5 per equity share of face value of Re. 1each. The total dividend for the year works out to Rs. 23 per share (including a SpecialDividend of Rs. 3 per share) on a face value of Re. 1 per share in 2015 as against Rs. 20per share (including a Special Dividend of Rs. 4 per share) on a face value of Re. 1 pershare 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 profit for the year 285.15 222.00
Balance of Reserve at the beginning of the year 113.37 113.37
Transfer to General Reserve 22.20 22.20
Transfer to Capital Redemption Reserve (0.05) (0.05)
Used towards buy back of equity shares (3.65) (3.65)
Balance of Reserve at the end of the year 131.87 131.87

BUYBACK OF SHARES

During year the Company had sought the approval of shareholders to buy-back its ownfully paid equity shares of Re. 1/- each (“Equity Share”) through the stockexchange mechanism prescribed under the Securities and Exchange Board of India (Buy-backof Securities) Regulations 1998 (“Buy-back Regulations”) and the Companies Act2013 (“Act”) for an amount not exceeding Rs. 102 crore (Rupees One Hundred andtwo crore only) (hereinafter referred to as the “Maximum Offer Size”) (beingless than 15% of the total paid- up equity capital and free reserves of the Company as perlast standalone audited balance sheet as on December 312014) at a price not exceedingRs. 2310/- (Rupees Two Thousand Three Hundred and Ten only) per Equity Share (hereinafterreferred to as the “Buyback”) from the open market through BSE Limited and theNational Stock Exchange of India Limited in accordance and consonance with the provisionscontained in the Act and the provisions contained in the Buy-back Regulations.

The Company conducted a postal ballot seeking the approval of the shareholders forbuy-back of shares. The result of the postal ballot was declared on June 15 2015. Thevotes cast in favour of the resolution for the buy-back were 99.98% of the total validvotes polled and the special resolution for buy-back was thus passed with requisitemajority.

The Buy-back commenced from July 2 2015. The Company bought back 511932 equityshares for a total consideration of Rs. 101.98 crore at an average price of Rs. 1992.02per share. In terms of the Buy-back Regulations after expending 99.98% of the totalapproved amount of Rs. 102 crore towards the Buy-back the Buyback was closed on July 142015.

The equity share capital of the Company before the Buyback was 71450520 equityshares of Re. 1 each and after extinguishment of 511932 equity shares the equity sharecapital of the Company was 70938588 equity shares of Re. 1 each.

INCREASE IN ISSUED SUBSCRIBED AND PAID-UP EQUITY SHARE CAPITAL

During the year the Company issued and allotted 363980 equity shares of the Companyto eligible employees on exercise of options granted under Employee Stock Option Schemesof the Company. At the end of the year the issued subscribed and paid-up capital of theCompany at the end of the year was 71209103 equity shares of Re. 1 each.

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 FV Re. 1 each)
Capital at the beginning of the year i.e. as on January 1 2015 - 71357055
Allotment of shares to employees on exercise of options granted under Employee Stock Option Scheme 2011 and Employee Stock Option Scheme 2012 93465 71450520
Extinguishment of shares consequent to buy back (511932) 70938588
Allotment of shares to employees on exercise of options granted under Employee Stock Option Scheme 2011 Employee Stock Option Scheme 2012 and Employee Stock Option Scheme 2014 270515 71209103
Capital at the end of the year i.e. as on December 31 2015 - 71209103

REVIEW OF OPERATIONS 2015

A. RATINGS

Highlights

• Announced 3312 new Bank Loan Ratings (BLRs) during the year; total BLRsoutstanding exceed 13776 Assigned over 16000 SME ratings during the year

• Conducted a series of high profile franchise activities during the year thatreceived 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 engagedwith other MHFI businesses that included deepening support for Platts

Business environment

India's economic and business environment remained subdued during 2015 due to weakinvestment demand and delay in decision-making by corporates. However growth has pickedup 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 capacityutilisation rates. However revival of private investments is expected only by the secondhalf of next fiscal. Also the Seventh Central Pay Commission pay-outs could be anadditional 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) asof December 2015. Poor monsoon muted investments weak working capital demand risingrisk aversion owing to deteriorating asset quality of public sector banks and an increasein cheaper funds raised via commercial papers slowed credit offtake. We expect a gradualpick-up in banks' credit towards the end of FY16 driven by a rise in retail loans publicsector investments and finance requirements of small scale enterprises. Overall bankingsector credit growth is projected to increase to 11-12% by March 2016 vis-a-vis ~10% inFY15.

The capital market witnessed an increase in activity in the third quarter of the yeardue to falling interest rates in line with easing policy rates. However base rates ofbanks saw much weaker transmission; issuances were primarily driven by refinancing of debtand not by the need for capital investment. Hence the bond market which saw a big leg upin quarter three was again subdued in the last quarter. We believe the Reserve Bank ofIndia (RBI) will keep policy rates unchanged for the rest of this fiscal unless inflationsurprises on the downside. Additionally the RBI is addressing the issue of weaktransmission of its repo rate cuts in to lending rates of banks by fixing banks' base ratedetermination methodology on marginal cost of funds from April 2016. We believe thatgrowth in capital market issuances will be linked to the pace of change in lending ratesof banks and investment demand pick-up.

In 2015 CRISIL's BLR business witnessed a muted growth due to weak credit offtake inthe manufacturing sector and intensified competition. These factors adversely impactedaverage realisations. While pricing pressures are likely to continue expectation of apick-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 underthe NSIC - Performance & Credit Rating Scheme. However CRISIL continues to servesmall and medium enterprises (SMEs) without subsidy from the government and there has beenan uptick in volumes in second half of 2015 due to enhanced efforts taken to scale thebusiness. The outlook for the SME sector remains positive supported by favourable policychanges 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 benefitsof ratings and to increase banks' acceptance of CRISIL's SME ratings. We believe theseefforts will positively impact the business.

Operations

CRISIL Ratings maintained its market leadership in 2015 backed by strong performance inits bond ratings bank loan ratings and SME ratings businesses. CRISIL announced 3312 newBLRs and 16000 SME ratings during the year. It has to date assigned more than 13776BLRs and over 91000 SME ratings/assessments. This year SME ratings/ assessments werefocused on newer geographies such as the northeast region of the country. The SME businessadded new clients from the interiors of north and south India.

In 2015 CRISIL Ratings rated various innovative instruments in the corporate bond andsecuritisation market. We rated a partially-guaranteed debenture issue of a passiveinfrastructure special purpose vehicle (SPV). We assigned the first highest-safety ratingfor a future-flow securitisation of an interstate transmission service project. We alsoassigned rating on the borrowings of chit funds for the first time. In another uniqueexample CRISIL rated passthrough certificates that were backed by receivables from bothretail as well as corporate loans instead of them being usually backed only bysecuritised retail loans. All the above innovations were well received by the market andare seen as significant milestones in deepening of the corporate bond market in India.

CRISIL Ratings continued to conduct regular outreach programmes aimed at providinginsights on credit issues to investors and other market participants. The outreachprogrammes included opinion pieces bankers' meetings investor discussion forumsweb-conferences and newsletters.

CRISIL Ratings held the 3rd edition of its annual bond market seminar titled ‘NewTemplates to Fund Growth' which focused on innovation in India's corporate bond market.We organised an investor discussion forum on the power sector to address some of thecrucial industry issues faced by both corporates and lenders. Our analysis was wellreceived by all stakeholders including regulators and policy makers.

Some high-impact franchise activities during 2015 included web-conferences on loanagainst property market road sector real estate market apart from press releases onbanking sector telecom sector etc. We also launched Credit Conversations a bi-monthlynewsletter that highlights noteworthy developments in the credit space. This publicationreceived appreciation from our key stakeholders including clients and investors.

GAC continued to work closely with S&P growing in new areas such as riskmanagement and regulatory support including model validation and documentation supportwhile increasing the level of integration with S&P teams globally. With the evolvingglobal regulatory requirements GAC continued its focus on strengthening its internalcontrols framework in collaboration with S&P's control functions. GAC's culture ofcontinuous improvement has created ongoing efficiency gains for S&P through leanmanagement tools work standardisation and process reengineering.

GAC also expanded its support to the larger MHFI family including increased support toPlatts a leading global provider of energy petrochemicals metals and agricultureinformation and a premier source of benchmark price assessments for those commoditymarkets. The focus this year was to grow beyond traditional credit skills and enhance newand niche areas including quantitative skills for S&P and product support for Platts.

B. RESEARCH

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

Highlights

• Financial Research and Risk & Analytics built a strong base across businesssegments driven by new opportunities arising out of the changing regulatory environment

• Risk & Analytics vertical registered strong business growth with addition ofnew customers and substantial expansion with existing clients

• In Corporate Research the twin focus of new analytics solutions andstrengthening our relationship with existing client accounts helped drive new business

• Coalition continued its tradition of product innovation and has entered theTransaction 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 sizeof the investment banking industry has reached its lowest level since the global financialcrisis of 2008-09 with fixed income products at the same level as in 2005. Banks are alsoactively transforming their front middle and back-office activities to providedifferentiated services achieving cost efficiencies and increasing productivity: This hasresulted in a large portion of the derivatives business being shifted to captives andother cheaper (cost-friendly) offshoring entities. On the brighter side increasingregulatory changes have opened up newer opportunities for CRISIL GR&A especially inthe Risk & Analytics vertical as well as Coalition. The Coalition Index which tracksthe performance of the top 10 global investment banks is expected to decrease by 2%. Itis a telling barometer of the performance of the global investment banking industry. In2015 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 anincrease of 12% (following a decrease of 5% in 2014) while investment banking revenuesfrom mergers & acquisitions and debt and equity markets decreased by 4% (following agrowth of 11% in 2014).

In Financial Research we have added clients across business segments of buy-sidesell-side and credit risk. The majority of the incremental business has come from newareas and/or clients. There was excellent demand for our services from buy-sideespecially from traditional managers insurance companies and hedge funds. Our sell-sidebusiness witnessed increasing demand from our existing clients on change mandates drivenby a tougher regulatory environment. Our Credit Risk business gained from newopportunities related to risk management from financial institutions due to increasedregulatory oversight globally.

The Risk & Analytics vertical continued to see good demand from banks in areas suchas stress testing model validation and regulatory change initiatives. New regulationssuch as the Fundamental Review of the Trading Book (FRTB) as well as increased demand forour services with banks and financial institutions in the areas of operational riskcredit risk market risk compliance analytics and risk infrastructure support have beengrowth drivers. Specific opportunities such as the US DFAST/CCAR requirements continue todrive banks to make investments in risk modeling and model validation.

In Corporate Research we were faced with a challenging business environment. Due toshrinking client budgets and restricted spend making inroads into new client accounts wasa challenge. This necessitated increased on-ground presence with frequent outreach acrossregions - showcasing our CI (Competitive Intelligence) and DA (Data Analytics)capabilities. Further we have shifted our focus from supporting Strategy and Marketingfunctions where client spends are discretionary to core functions of clients such asOperations and Sales. With this objective in mind we have launched multiple new serviceswhere we expect to see traction in coming years.

Operations

In Financial Research we embarked on several initiatives to accelerate growthmaximise value to clients increase sales effectiveness optimise costs and fortify ourbrand globally - all of which has enhanced our competitiveness. We have significantlyincreased our market presence which buoyed growth in a tough business environment. Wealso undertook several thought leadership initiatives targeting traditional active assetmanagers insurance companies hedge funds investment banks and regulators acrosscontinents which received excellent response and reinforced our position as an industryleader. Our global research centres continue to scale up with Poland benefiting fromregulation-driven-change mandates and China building on its growth momentum due toincreased demand for Asia research support.

In Risk & Analytics investments in previous years have put us on an ideal footingto capitalise on the new requirements coming up in areas such as compliance analyticscounterparty credit risk and IFRS9 modelling etc. In the past year we have been able toexpand our business in all geographies including Poland and Argentina with several key newproject additions or expansion of existing client teams. We continue to invest in ourhuman capital with several training and other learning & development initiatives tokeep up pace with the ever-changing global regulatory requirements and client mandates.

In Corporate Research we introduced new analytics solutions and ensured consistentoutreach 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 - HRin particular and sales analytics and we are accordingly ramping-up team strength to meetthe increased demand.

In 2015 Coalition added several clients among the top 25 global corporate andinvestment banks and is now working with all of the top 15 investment banks and more than20 corporate & investment banks. Coalition delivered a strong performance driven byits core Competitor and Client Analytics which reported solid growth. Newer analyticssuch as Cost/Operating Margin and RWA/Exposure have performed well. Clients areincreasingly looking at comprehensive return on equity analysis of their performanceacross Revenue Cost and Capital. Coalition has also launched its first analysis of theTransaction Banking and Security Services industries to offer a comprehensive view forCorporate and Investment Banks. Its media strategy has delivered very good resultsleading to an estimated media market share of over 40%.

B.2. India Research Highlights

• Maintained its dominant and premium position in its flagship Industry Researchbusiness Introduced our pioneering Security Level Valuations to insurance companies andwon mandates

• Our assessments of coal block bidding and potential impact of GST shapedthinking on the issues. We sensitised the industry on importance of better investmentplanning 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 poorcredit growth high NPAs and squeezed profitability impacted research budgets.Consequently the growth of the Industry Research business remained modest. The CustomisedResearch business was impacted due to decline in private sector investments for the thirdyear in a row. CRISIL Research maintained its high quality independent research and wonrepeat business from existing and large global clients.

Economic revival is expected in the latter half of 2016 and CRISIL Research is wellpositioned to assist banking financial services and corporates through its proprietaryresearch and training products.

The assets under management of mutual funds grew 23% over last year and the Researchbusiness was at the forefront providing qualitative research on investments. Changingmarket dynamics open up new opportunities with corporate treasuries exempt trusts andoffshore investors and these will be our focus for 2016. The business will also focus onbuilding new products around investment research and investment risk management.

Therefore we will continue to focus on enhancing our existing offerings launching newproducts with more granular and action-oriented research and increasing our clientengagement initiatives keeping a sharp tab on our franchise activities that showcase ourdifferentiated positioning in the market.

Operations

During the year CRISIL Research launched many new enhanced products. The new versionof 'Ratings Analytics' (CRISIL's unique web-based platform providing information onratings) was launched with enhanced features and received positive customer response. Wealso rolled out new products focused on corporate clients in Automobiles and Logisticssectors. With continued rising interest in SME lending we have increased our focus onthis space by enhancing our offerings.

We increased outreach and traction in the offshore category for valuations andcustomised indices. Continued focus on increasing outreach with corporates (treasuries andexempted trusts) helped gather considerable momentum in the same.

CRISIL Research released a co-branded report with Financial Intermediaries Associationof India on distribution industry titled 'Indian Financial Distribution Industry at theCusp - Vision 2020'. We also released a report on the provident funds sector titled'Whither Safety Net When India Ages'. Driving its thought leadership agenda furtherCRISIL Research was a knowledge partner at many industry events including ASSOCHAM(Associated Chambers of Commerce and Industry) conferences on provident funds where wereleased reports titled 'Provident Funds in Equity: Emulating Global Trends' and 'GivingProvident Funds the Equity Boost'; the Economic Times Pension and Retirement BenefitSummit where we released a White Paper on retirement industry.

We were also chosen to represent and become members of various sub committees under theSecurities and Exchange Board of India (SEBI) and Pension Fund Regulatory and DevelopmentAuthority (PFRDA).

We conducted more than 100 open programmes in 2015 compared with 80 in 2014 for theExecutive Training business. By launching more programmes per month with new focus areasacross locations the total number of training days increased from 455 days in 2014 to 675in 2015.

The CRISIL Centre for Economic Research (C-CER) continued to focus on conductingdistinctive research on macroeconomic issues and published several landmark reports duringthe year. There were seven special reports in its series Economy Insight coveringcontemporary macroeconomic issues such as the pension challenge impact of deficient rainsand farm stress inflation dynamics external trade rupee volatility India's ability toface global shocks consumption and investment dynamics and direct benefit transfer schemeof the government.

C-CER published a study on the need for pension reforms in India. The report envisagedthat India's aged population would treble to 300 million by 2050 and fiscal drag on thecentral government on providing for this segment could increase by 120 basis points timesto 3.4% of GDP while leaving large segment of the retired population financially insecureif corrective steps are not taken now. The emphasis on social security and adequatepension resonated in the Union Budget presented in Parliament in February 2015.

CRISIL released 'Modified Expectations' a report evaluating the economy-relatedperformance of the Narendra Modi-led government as it completed one year in office. Thereport integrated the views of Research and Ratings with a macroeconomic assessment tocome out with a 360-degree view of the economy. The report received excellent responsefrom media clients and other stakeholders

C-CER released 'Angsty farms' a report evaluating the impact of rising weather-relatedshocks on India's agriculture which remains highly vulnerable. The report received verygood response from various stakeholders. We also hosted a successful webinar and a twitterchat on the report.

These reports helped build CRISIL Research's franchise among investors andpolicymakers reaffirming its position as a thought leader in the macro economy and policyspace.

C. INFRASTRUCTURE ADVISORY AND RISK SOLUTIONS

CRISIL conducts its infrastructure advisory and risk solutions business through itssubsidiary CRISIL Risk and Infrastructure Solutions Limited (CRIS).

C.1. CRISIL Infrastructure Advisory Highlights

• Supported the Indian government on some of their flagship programmes such asSmart Cities Mission Power for All Rurbanisation and Indian Railways

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

• Deepened penetration in select international markets in Africa and SoutheastAsia

Business environment

India's infrastructure sector faces several challenges. Even though several newinfrastructure programmes and policy initiatives have been launched by the government theinvestment climate has not yet picked up. Infrastructure financing remains a keychallenge and the government is working on a few structural changes in regards to fundingof infrastructure development. The private sector which was expected to play a key rolein infrastructure development is still extremely wary of investments in the sector.Meanwhile the government has been working to create a more conducive business environmentand has been undertaking various reforms for sustainable economic growth. Outside IndiaAfrica and Southeast Asia have begun to show positive progress.

It is expected that the Government of India will take up the lion's share ofinfrastructure investments over the next couple of years. The government has launchedquite a few large and visionary programmes and the focus is likely to shift to theirimplementation and sustainability. This has created several hotspot opportunities in theinfrastructure advisory space and the business is looking at supporting the Indiangovernment on several of these programmes. The key is how quickly the government is ableto rollout various reforms and implement them on the ground.

In the international markets Africa continues to show progress albeit at a very slowpace. The business is involved closely with infrastructure development in key Africanmarkets especially east Africa. Some emerging markets in south-east Asia and the SAARCcountries show promise in the near future.

Operations

CRISIL Infrastructure Advisory started the year slowly but picked up momentum in thesecond half of the year. We won several large and prestigious mandates in India and in theinternational markets as well. This has helped the business to build up a robust orderbook which is significantly larger than previous years. We have maintained steady revenuegrowth with improved margins.

Our focus on government and multilateral agencies as clients has paid off. Theinfrastructure advisory business is proud to support several flagship programmes of theIndian government viz. Smart Cities Mission Power for All Rurbanisation NationalSolar 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 Powerfor All by 2019 for 11 states and union territories. CRISIL Infrastructure Advisory wasthe first consultant appointed for this programme. In the energy sector we also supportedMinistry of Petroleum & natural Gas (MoPNG) and Directorate General of Hydrocarbons(DGH) in preparing the hydrocarbon vision document for the northeast. Another prestigiousmandate with the Petroleum Planning and Analysis Cell involved preparing a comprehensivemaster 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 supportthe Ministry of Rural Development in rolling out the Shyama Prasad Mukherjee RurbanMission. On the Smart Cities Mission programme the business won mandates with five citiesin Maharashtra to assist them in preparing proposals for the Smart Cities Challenge. Thebusiness has also got the mandate from World Bank on proposing a Railways Development Fundto support the investment plan of Indian Railways. The business is also supporting theKarnataka government on its state highways improvement programme.

CRISIL Infrastructure Advisory had a higher share of international business in theyear as compared to the previous year. The business won several large mandates in Africaand Southeast Asia including an Urban Water Supply and Sanitation management projectenergy improvement programs in Africa and a Regional infrastructure development fundproject 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 managementservices with several mandates from banking and non-banking clients.

• Continued to expand footprint in South-Asia Middle- East and other newgeographies.

Business environment

The business environment continued to witness improved traction during the year inIndia. With increasing focus on strengthening credit risk management and monitoringdemand 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 Indiaand 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. Theseinvestments made to strengthen the product base are expected to play a key role in theexpansion and growth of the business and significantly contribute to revenues over thenext 3 years.

The new channels of business through partnerships began to yield good results withsignificant mandate wins in the Middle East and Sri Lanka. These partnerships and plansfor increased collaboration within MHFI should help growth and deepen business penetrationin the international markets.

Apart from new products investments are being planned to upgrade our old stack ofproducts to newer technology platforms and also develop mobile-based applications forthem. We anticipate faster proliferation of mobile-based applications in financialservices and have therefore taken measures to enter this space early. Also there wereseveral process initiatives undertaken during the year to standardise the implementationof projects to improve quality and reduce implementation costs and timelines.

The business development team continued to build CRS's franchise. We were knowledgepartners for the Small Business Banking Network workshop in Goa in January where theDeputy Governor of the Reserve Bank of India was the chief guest. We spoke at severalbanking forums such as the ASSOCHAM conference on SME financing and a financial servicesround table. We organised a webinar on effective credit monitoring and undertook atraining session on effective credit risk management for the senior management of aleading government financing entity. We will continue to invest time and money in buildingour franchise in the coming years.

CRS expects to maintain its growth momentum in 2016 and anticipates revenue to bedriven by newer products. The investments made in products and structure should providemuch 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 initiativesin different geographies. An S&P - CRISIL joint seminar 'India - Grinding up amidstchallenges' was organised for investors in Hong Kong and Singapore. The discussions atthe seminar revolved around India's macro-economic overview and outlook the road aheadfor India's sovereign rating views on the credit quality of Indian companies and theoutlook for key sectors. We also collaborated with S&P this year on their flagshipevent 'India through the lens of global financial markets' in Mumbai. The speakers madepresentations on major credit trends and outlook for India Inc. from a global perspectiveand the event was appreciated by investors and issuers alike.

As part of our joint outreach initiatives we also organised a breakfast meeting forS&P Asia-Pacific Chief Economist Paul Gruenwald and S&P US Chief Economist BethAnn Bovino to exchange notes on the Indian and global economy. CRISIL Chief EconomistDharmakirti Joshi participated as a panellist in the Global Economic Outlook Conference inNew York sponsored by the McGraw Hill Financial Global Institute. He was also the keynotespeaker at S&P Dow Jones Indices' annual thought leadership seminar 'India: Trulyemerging' held in Mumbai.

S&P hosted our special report 'Modified Expectations' on the S&P Global CreditPortal. In addition C-CER continued to provide an outlook on the Indian economy toS&P and contributed two articles on India in S&P's bi-annual publication 'GlobalEconomic Outlook'. CRISIL and S&P jointly hosted the post-budget webinar.

Following their success in the Middle East S&P Capital IQ and CRISIL RiskSolutions continue to collaborate successfully in other regions to expand their globalfootprint. In 2015 they also tasted our first joint success in Kazakhstan. The twocompanies commenced their relationship in 2011-12 with one project in Saudi Arabia; it hassince progressed to over eight projects over the last three years across six countries. In2015 they are currently delivering two key projects in Kuwait and Kazakhstan that webelieve will provide the required impetus in these new markets for future growth. Thesuccess in the Middle East needs to be translated in other regions and the focus of 2016will 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 anddevelopment agendas during the year. As on December 31 2015 CRISIL's headcount was 3753including all its wholly owned subsidiaries.

Highlights

• CRISIL's senior management team was strengthened through hiring of leaders instrategic roles. CRISIL also continued to strengthen its campus programme which has beena key source of talent.

• Business HR partners helped drive employee engagement and people agenda acrossbusinesses and regions. Key areas involved assimilation of new talent performancemanagement process rewards and recognition and employee connect. The team was alsoinstrumental in driving and executing various employee engagement and fun activitiesthrough the year.

• This year the function focussed hugely on training need identification. CRISILconducted 116 training programmes throughout the year covering 2041 man- days.

• We had a rigor in implementation performance management by early closure ofindividual goals higher objectivity in goal setting mid-year review and leadershipsurveys.

SEGMENT-WISE RESULTS

The Company has identified three business segments in line with the Accounting Standardon 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 financialstatements.

DIRECTORS

The members of the Board of Directors of the Company are eminent persons of provencompetence and integrity. Besides having financial literacy experience leadershipqualities and the ability to think strategically the Directors have a significant degreeof commitment to the Company and devote adequate time for the meetings preparation andattendance. Board members possess education expertise skills and experience in varioussectors and industries required to manage and guide the Company.

The Policy of the Company on Directors' appointment and remuneration including criteriafor determining qualifications positive attributes independence of a Director and othermatters provided under sub-section (3) of section 178 is appended as Annexure I to thisReport.

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 recordtheir sincere appreciation of the valuable contribution made by her to CRISIL.

Ms. Ashu Suyash took over as the Managing Director & Chief Executive Officer ofCRISIL. The Board approved her appointment as Additional Director and Managing Director& Chief Executive Officer with effect from June 1 2015. The appointment of Ms. AshuSuyash as director liable to retire by rotation and the terms and conditions ofappointment were put up to the shareholders for their approval by way of postal ballotresults of which were announced on June 15 2015. The shareholders approved the saidresolution.

Mr. Neeraj Sahai resigned as Director of the Company on October 17 2015. YourDirectors place on record their sincere appreciation of the valuable contribution made byhim to CRISIL.

The Board of Directors appointed Mr. John Francis Callahan Jr. as an AdditionalDirector of the Company with effect from October 18 2015. Mr. john Callahan holds officeas Additional Director until the ensuing Annual General Meeting and is eligible forappointment as Director as provided under Article 129 of the Articles of Association ofthe Company. The Company has received notice under Section 160 of the Companies Act 2013from a member signifying her intention to propose the candidature of Mr. john Callahan forthe office of Director. A brief profile of Mr. john Callahan has been given in the noticeconvening the Annual General Meeting.

In accordance with the Articles of Association of the Company and the provisions of theCompanies Act 2013 Mr. Yann Le Pallec retires by rotation and being eligible seeksreappointment.

BOARD INDEPENDENCE

Our definition of 'Independence' of Directors is derived from Regulation 16(b) of theSecurities 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 relationshipsdisclosed 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 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 heldduring the year are provided in the Report on Corporate Governance a part of this AnnualReport.

NUMBER OF MEETINGS OF THE BOARD

The Board meets at regular intervals to discuss and decide on Company / business policyand strategy apart from other Board business. The Board / Committee Meetings arepre-scheduled and a tentative annual calendar of the Board and Committee Meetings iscirculated to the Directors well in advance to facilitate them to plan their schedule andto ensure meaningful participation in the meetings. However in case of a special andurgent business need the Board's approval is taken by passing resolutions throughcirculation 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. Usuallymeetings of the Board are held in Mumbai. The Agenda of the Board / Committee meetings iscirculated at least a week prior to the date of the meeting. The Agenda for the Board andCommittee meetings includes detailed notes on the items to be discussed at the meeting toenable the Directors to take an informed decision.

The Board met five times in financial year 2015 viz. on February 14 April 17 April28 July 17 and October 17. The maximum interval between any two meetings did not exceed120 days.

ANNUAL EVALUATION BY THE BOARD

During the year the Board has carried out the annual evaluation of its own performanceas well as the evaluation of the working of its Committees and individual Directorsincluding Chairman of the Board. This exercise was carried out through a structuredquestionnaire prepared separately for Board Committee and individual Directors.

The questionnaire for Board evaluation was prepared taking into consideration variousaspects of the Board's functioning such as understanding of Board members of their rolesand responsibilities time devoted by the Board to Company's long-term strategic issuesquality and transparency of Board discussions quality quantity and timeliness of theinformation flow between Board members and management Board's effectiveness indisseminating information to shareholders and in representing shareholder interests Boardinformation on industry trends and regulatory developments and discharge of fiduciaryduties by the Board.

Committee performance was evaluated on the basis of their effectiveness in carrying outrespective mandates.

Peer assessment of Directors based on parameters such as participation andcontribution to Board deliberations ability to guide the Company in key matters andknowledge and understanding of relevant areas were received by the Board for individualfeedback.

The Board acknowledged certain key improvement areas emerging through this exercise andaction plans to address these are in progress. The performance evaluation of the Chairmanwas carried out by the Independent Directors at a separate meeting of the IndependentDirectors.

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 theManaging 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 andefficient conduct of its business including adherence to the Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial disclosures. The Company's internal control systems are commensuratewith the nature of its business and the size and complexity of its operations. These areroutinely tested and certified by Statutory as well as Internal Auditors. Significantaudit observations and follow up actions thereon are reported to the Audit Committee. Forensuring independence of audits the Internal Auditors report directly to the AuditCommittee. Both Internal and Statutory Auditors have exclusive executive sessions with theAudit Committee on a regular basis. In addition during the year the Management performeda 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 variousrisks to key business objectives which has been enhanced during this year. Major risksidentified by the businesses and functions are systematically addressed through mitigatingactions on a continuing basis. These are discussed at the meetings of the Audit Committeeand the Board of Directors of the Company. These have also been reported and discussed indetail in the Management's Discussion and Analysis Report annexed to this report.

Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the Internal Statutory andSecretarial Auditors and external consultants and the reviews performed by Management andthe relevant Board committees including the Audit Committee the Board is of the opinionthat the Company's internal financial controls were adequate and effective during thefinancial year 2015.

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors hereby confirm that:

i. in the preparation of the annual accounts the applicable accounting standards havebeen followed and that no material departures have been made from the same;

ii. they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofits of the Company for that period;

iii. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

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 internalfinancial controls are adequate and operating effectively; and

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

MATERIALCHANGESAND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments if any affecting the financialposition of the Company which have occurred between the end of the financial year of theCompany to which the financial statements relate and the date of the report.

PARTICULARS REGARDING CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNExCHANGE EARNINGS AND OUTGO

The particulars regarding foreign exchange earnings and outgo appear as separate itemsin the notes to the Accounts. Since the Company does not own any manufacturing facilitythe other particulars relating to conservation of energy and technology absorptionstipulated in the Companies (Accounts) Rules 2014 are not applicable.

However in order to protect and conserve precious natural resources following designaspects 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 insulationto minimize the air- condition load on the floor beneath.

d) Usage of recycled water through sewerage treatment for flushing and gardeningpurpose.

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 beenset up for waterless sanitation systems.

Similar design aspects have been factored for Gurgaon office also. The Pune SEZ(Hinjewadi) office which is of about 42500 sq. ft. is designed with LED lighting. Thisgives higher savings in energy consumption as compared with the CFL lighting.

CORPORATE SOCIAL RESPONSIBILITY

The Company has constituted a Corporate Social Responsibility (CSR) Committee inaccordance with Section 135 of the Companies Act 2013. The role of the Committee is toreview the CSR Policy indicate activities to be undertaken by the Company towards CSR andformulate a transparent monitoring mechanism to ensure implementation of projects andactivities undertaken by the Company towards CSR.

The CSR Policy of the Company and further details about the initiatives taken by theCompany on Corporate Social Responsibility during the year under review have been appendedas Annexure II to this Report.

VIGIL MECHANISM

The Company has established a vigil mechanism for Directors and employees to reporttheir genuine concerns details of which have been given in the Corporate GovernanceReport annexed to this Report.

SUBSIDIARY COMPANIES

As on December 31 2015 the Company had four Indian and seven overseas wholly ownedsubsidiaries. There has been no change in the number of subsidiaries or in the nature ofbusiness of the subsidiaries during the year under review. In accordance with Section129(3) of the Companies Act 2013 the Company has prepared a consolidated financialstatement of the Company and all its subsidiary companies which is forming part of theAnnual Report. A statement containing salient features of the financial statements of thesubsidiary companies is also included in the Annual Report.

The Company has no associate companies within the meaning of Section 2(6) of theCompanies Act 2013.

In accordance with third proviso of Section 136(1) of the Companies Act 2013 theAnnual Report of the Company containing therein its standalone and the consolidatedfinancial 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 thesubsidiary 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 thesubsidiary companies may write to the Company Secretary at the Company's registeredoffice.

The Company has obtained a certificate from the Statutory Auditors certifying that theCompany is in compliance with the FEMA regulations with respect to the downstreaminvestments 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 intheir meeting held on October 17 2015 after considering the recommendations of the AuditCommittee approved the amalgamation of its three wholly owned subsidiary companies viz.Pipal Research Analytics and Information Services India Private Limited CoalitionDevelopment Systems (India) Private Limited and Mercator Info-Services India PrivateLimited with the Company through a Scheme of Amalgamation (Scheme) under Section 391/394of the Companies Act 1956 subject to necessary approvals of the Stock Exchanges andsanction of the Hon'ble High Court of Judicature at Mumbai.

The Company has received in terms of Clause 24(f) of the erstwhile Listing Agreementobservation letters dated December 31 2015 from NSE (National Stock Exchange of IndiaLimited) and December 30 2015 from BSE (BSE Limited) the Stock Exchanges where theequity shares of the Company are listed to the draft Scheme of Amalgamation conveyingtheir 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 alreadybeen filed and will come up for hearing in due course in 2016.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION188(1)

A significant quantum of related party transactions undertaken by the Company is withits subsidiary companies engaged in product delivery of CRISIL businesses and businessdevelopment activities. The Company has also been providing analytical support to McGrawHill Financial Inc. (MHFI) entities as a part of a Master Services Agreement whichtransaction has been approved by the shareholders though a resolution passed by postalballot on December 15 2014.

The Audit Committee pre-approves all related party transactions. The details of therelated party transactions undertaken during a particular quarter are placed at themeeting of the Audit Committee held in the succeeding quarter.

All contracts / arrangements / transactions with related parties that were executed in2015 were in the ordinary course of business and at an arms' length. During the yearthere were no related party transactions which were materially significant and that couldhave a potential conflict with the interests of the Company at large. All related partytransactions are mentioned in the notes to the accounts. The particulars of materialcontracts or arrangements with related parties referred to in Section 188(1) is given inprescribed Form AOC - 2 as Annexure III.

As required under Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 the Company has formulated a Related PartyTransactions 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 operatingprocedures 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 section186 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 yearsuntil the conclusion of the 30th Annual General Meeting subject to ratification by theshareholders at the intermittent 29th Annual General Meeting.

The Company has received letter from them to the effect that their appointment ifratified would be within the prescribed limits under Section 141 (3)(g) of the CompaniesAct 2013 and that they are not disqualified from appointment.

The Board recommends ratification of their appointment from the conclusion of thisAnnual 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 PractisingCompany Secretary to conduct the Secretarial Audit and his Report on Company's SecretarialAudit 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 Committeeof 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 asstipulated under Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 is annexed to this report.

CORPORATE GOVERNANCE

The Company is committed to maintaining the highest standards of Corporate Governanceand adhering to the Corporate Governance requirements as set out by Securities andExchange Board of India. The Report on Corporate Governance as stipulated under Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 forms part of the Annual Report. The Certificate from the Auditors of the Companyconfirming compliance with the conditions of Corporate Governance as stipulated under theaforementioned 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 Rule5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 thenames and other particulars of employees are available at the Registered Office of theCompany during working hours for a period of 21 days before the Annual General Meeting andshall be made available to any shareholder on request. Such details are also available onyour Company's website http://www.crisil.com/investor/financial-reports.html .

Disclosures with respect to the remuneration of Directors and Employees as requiredunder Section 197(12) of Companies Act 2013 read with Rule 5(1) Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 have been appended as Annexure v tothis Report.

The nomination and Remuneration Committee of the Company has affirmed at its meetingheld on February 9 2016 that the remuneration is as per the remuneration policy of theCompany.

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 throughpostal ballot on February 4 2011. The Employee Stock Option Scheme - 2012 (ESOS 2012) wasapproved by the shareholders vide a special resolution passed through postal ballot onApril 10 2012. The Employee Stock Option Scheme - 2014 (ESOS 2014) was approved by theshareholders 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 AnnexureVI to this Report.

EXTRACT OF ANNUAL RETURN

The Extract of Annual Return as provided under Section 92(3) of the Companies Act 2013and as prescribed in Form No. MGT-9 of the rules prescribed under Chapter VII relating toManagement 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 ofprincipal or interest on public deposits was outstanding as on the date of the balancesheet.

LITIGATIONS

During the year under review there were no significant or material orders passed byany regulatory / statutory authorities or courts / tribunals against the Company impactingits going concern status and operations in future.

FINANCIAL YEAR

The applications made by CRISIL and all its Indian subsidiary companies for seekingexemption from applicability of section 2(41) of the Act were approved by the Hon'bleCompany Law Board during the year and accordingly the Company and all its subsidiarycompanies in India and across the world would follow the calendar year as the financialyear.

CEO & CFO CERTIFICATION

Certificate from Ms. Ashu Suyash Managing Director & CEO and Mr. Amish MehtaChief Financial Officer pursuant to provisions of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 for the year underreview was placed before the Board of Directors of the Company at its meeting held onFebruary 9 2016.

ACKNOWLEDGEMENTS

The Board of Directors wishes to thank the employees of CRISIL for their exemplarydedication 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 inthe professional integrity of CRISIL by customers and investors who have patronised itsservices. 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 ofDirectors also wishes to place on record its gratitude for the faith reposed in CRISIL bythe Shareholders Securities and Exchange Board of India the Reserve Bank of India theGovernment of India and the state governments. The role played by the media inhighlighting 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)

ANNEXURE I TO THE DIRECTORS' REPORT

NOMINATION AND REMUNERATION POLICY

1. INTRODUCTION:

The company considers human resources as its invaluable assets. This policy onnomination and remuneration of directors Key Managerial Personnel (KMPs) and otheremployees has been formulated in terms of the provisions of the Companies Act 2013 andthe listing agreement in order to pay equitable remuneration to the Directors KMPs andemployees of the company and to harmonise the aspirations of human resources consistentwith the goals of the Company.

2. OBJECTIVE AND PURPOSE OF THE POLICY:

The objectives and purpose of this policy are:

2.1 To formulate the criteria for determining qualifications competencies positiveattributes and independence for appointment of a Director (Executive and NonExecutive) andrecommend to the board policies relating to the remuneration of the Directors keymanagerial personnel and other employees;

2.2 To formulate the criteria for evaluation of performance of all the Directors on theBoard;

2.3 To devise a policy on Board diversity; and

2.4 To lay out remuneration principles for employees linked to their effortperformance and achievement relating to the Company's goals.

3. CONSTITUTION OF THE NOMINATION AND REMUNERATION COMMITTEE:

The Board has constituted the ‘Nomination and Remuneration Committee' on February14 2014. This is in line with the requirements under the new Act.

The Board has authority to reconstitute this Committee from time to time.

Definitions

• 'Board' means the Board of Directors of the Company.

• 'Directors' means Directors of the Company.

• 'Committee' means Nomination and Remuneration Committee of the Company asconstituted or reconstituted by the Board.

• 'Company' means CRISIL Limited.

• 'Independent Director' means a Director referred to in Section 149 (6) of theCompanies Act 2013 and rules.

• Key Managerial Personnel (KMP) means

i) the Managing Director or the Chief Executive Officer or the manager and in theirabsence a wholetime director;

ii) the Company Secretary; and

iii) the Chief Financial Officer

• 'Senior Management' means personnel of the company who are members of its coremanagement team excluding the Board of Directors comprising all members of management onelevel below the Executive Directors including the functional heads.

Unless the context otherwise requires words and expressions used in this policy andnot defined herein but defined in the Companies Act 2013 and Listing Agreement as may beamended from time to time shall have the meaning respectively assigned to them therein.

General

• This policy is divided in three parts: -

Part-A covers the matters to be dealt with and recommended by the Committee to theBoard;

Part-B covers the appointment and nomination; and

Part-C covers remuneration and perquisites.

• This policy shall be included in the Report of the Board of Directors.

PART-A

MATTERS TO BE DEALT WITH PERUSED AND RECOMMENDED TO THE BOARD BY THE NOMINATION ANDREMUNERATION COMMITTEE

The following matters shall be dealt by the Committee

(a) Size and composition of the Board

• Periodically reviewing the size and composition of the Board to ensure that itis structured to make appropriate decisions with a variety of perspectives and skills inthe best interests of the Company as a whole;

(b) Directors

• Formulate the criteria determining qualifications positive attributes andindependence of a Director and recommending candidates to the Board when circumstanceswarrant the appointment of a new director having regard to the range of skillsexperience and expertise on the Board and who will best complement the Board;

(c) Succession plans

• Establishing and reviewing board and senior executive succession plans in orderto ensure and maintain an appropriate balance of skills experience and expertise on theBoard and Senior Management;

(d) Evaluation of performance

• Make recommendations to the Board on appropriate performance criteria for theDirectors.

• Formulate the criteria and framework for evaluation of performance of everyDirector on the Board of the Company.

• Identify ongoing training and education programmes for the Board to ensure thatNon-Executive Directors are provided with adequate information regarding the options ofthe business the industry and their legal responsibilities and duties.

(e) Board diversity

The Committee is to assist the Board in ensuring Board nomination process with thediversity of gender thought experience knowledge and perspective in the Board.

(f) Remuneration framework and policies

The Committee is responsible for reviewing and making recommendations to the Board on

(a) the remuneration of the Managing Director Wholetime Directors and KMPs

(b) the total level of remuneration of Non-Executive Directors and for individualremuneration for NonExecutive Directors and the Chairman including any additional feespayable for membership of Board committees;

(c) the remuneration policies for all employees including KMPs senior management andother employees including base pay incentive

payments equity awards retirement rights and service contracts having regard to theneed to

(i) attract and motivate talent to pursue the Company's long term growth;

(ii) demonstrate a clear relationship between executive compensation and performance;and

(iii) be reasonable and fair having regard to best governance practices and legalrequirements.

(d) the Company's equity based incentive schemes including a consideration ofperformance thresholds and regulatory and market requirements;

(e) the Company's superannuation arrangements and compliance with relevant laws andregulations in relation to superannuation arrangements; and

(f) the Company's remuneration reporting in the financial statements and remunerationreport.

PART-B

POLICY FOR APPOINTMENT AND REMOVAL OF DIRECTOR KMP AND SENIOR MANAGEMENT

Appointment criteria and qualifications

1. The Committee shall identify and ascertain the integrity qualification expertiseand experience of the person for appointment as Director KMP or senior management leveland recommend to the Board his / her appointment.

2. A person to be appointed as Director KMP or senior management level should possessadequate qualification expertise and experience for the position he / she is consideredfor appointment. The Committee has discretion to decide whether qualification expertiseand experience possessed by a person is sufficient / satisfactory for the concernedposition.

3. A person to be appointed as Director should possess impeccable reputation forintegrity deep expertise and insights in sectors / areas relevant to CRISIL ability tocontribute to CRISIL's growth complementary skills in relation to the other Boardmembers.

4. The Company shall not appoint or continue the employment of any person as ManagingDirector / Executive Director who has attained the age of sixty years. Provided that theterm of the person holding this position may be extended beyond the age of sixty yearswith the approval of shareholders by passing a special resolution based on the explanatorystatement annexed

to the notice for such motion indicating the justification for extension of appointmentbeyond sixty years.

5. A Whole-time KMP of the company shall not hold office in more than one companyexcept in its subsidiary company at the same time. However a whole-time KMP can beappointed as a Director in any company with the permission of the Board of Directors ofCRISIL.

Term / Tenure

1. Managing Director/Wholetime Director

• The Company shall appoint or re-appoint any person as its Managing Director andCEO or Wholetime Director for a term not exceeding five years at a time. No re-appointmentshall be made earlier than one year before the expiry of term.

2. Independent Director

• An Independent Director shall hold office for a term up to five consecutiveyears on the Board of the Company and will be eligible for reappointment on passing of aspecial resolution by the Company and disclosure of such appointment in the Board'sreport.

• No Independent Director shall hold office for more than two consecutive termsbut such Independent Director shall be eligible for appointment after expiry of threeyears of ceasing to become an independent director. Provided that an Independent Directorshall not during the said period of three years be appointed in or be associated withthe Company in any other capacity either directly or indirectly. However if a person whohas already served as an Independent Director for 5 years or more in the Company as onApril 1 2014 or such other date as may be determined by the Committee as per regulatoryrequirement he / she shall be eligible for appointment for one more term of 5 years only.

• At the time of appointment of Independent Director it should be ensured thatnumber of Boards on which such Independent Director serves is restricted to seven listedcompanies as an Independent Director and three listed companies as an Independent Directorin case such person is serving as a Whole-time (Executive) Director of a listed company.

Removal

Due to reasons for any disqualification mentioned in the Companies Act 2013 rulesmade thereunder or under any other applicable Act rules and regulations the Committeemay recommend to the Board with reasons recorded in writing removal of a Director or KMPsubject to the provisions and compliance of the said Act rules and regulations.

Retirement

The Whole-time Directors KMP and senior management personnel shall retire as per theapplicable provisions of the Companies Act 2013 and the prevailing policy of the Company.The Board will have the discretion to retain the Whole-time Directors KMP and seniormanagement personnel in the same position / remuneration or otherwise even afterattaining the retirement age for the benefit of the Company.

PART-C

POLICY RELATING TO THE REMUNERATION FOR DIRECTORS KMPs AND OTHER EMPLOYEES

General

1. The remuneration / compensation / commission etc. to Directors will be determinedby the Committee and recommended to the Board for approval.

2. The remuneration and commission to be paid to the Managing Director shall be inaccordance with the provisions of the Companies Act 2013 and the rules made thereunder.

3. Increments to the existing remuneration / compensation structure may be recommendedby the Committee to the Board which should be within the limits approved by theShareholders in the case of Managing Director.

4. Where any insurance is taken by the Company on behalf of its Managing DirectorChief Financial Officer the Company Secretary and any other employees for indemnifyingthem against any liability the premium paid on such insurance shall not be treated aspart of the remuneration payable to any such personnel. Provided that if such person isproved to be guilty the premium paid on such insurance shall be treated as part of theremuneration.

Remuneration to KMP and other Employees

The policy on remuneration for KMP and other employees is as below:

1. Fixed Pay

The remuneration and reward structure for employees comprises two broad components— annual remuneration and long-term rewards. The Committee would determine theremuneration of the Directors and formulate guidelines for remuneration payable to theemployees.

These guidelines are as under:

a) Annual remuneration

Annual remuneration refers to the annual compensation payable to the employees of theCompany. This comprises two parts - a fixed component and a performance-linked variablecomponent based on the extent of achievement of the individual's objectives andperformance of the business unit. Every employee is required to sign a performancecontract which clearly articulates the key performance measures for that particulardefined role. The performance-linked variable pay will be directly linked to theperformance on individual components of the performance contract and the overallperformance of the business. An employee's variable pay would therefore be directlydependent on key performance measures that represent the best interests of shareholders.

The objective is to set the total remuneration at levels to attract motivate andretain high-caliber and high potential personnel in a competitive global market. The totalremuneration level is to be reset annually based on a comparison with the relevant peergroup in the Indian market established through independent compensation surveys fromtime to time.

b) Long-term rewards

Long-term rewards may include a Long-Term Incentive Plan (LTIP) or a plan under whichincentives would be granted to eligible key employees based on their contribution to theprofitability of the Company relative position in the organisation and length of serviceunder the supervision and approval of the Committee. The company could implement variouslong term awards schemes that could include Long-Term Incentive Plan (LTIP) spread overseveral years with payouts in multiple tranches linked to Company's performance. Anotherform of long term rewards could be in the nature of stock options of the company. Stockoptions may be granted to key employees and high performers in organisation who would beselected by the Committee based on their criticality past performance and potential. Thegrant vesting and other scheme details will be formulated from time to time.

These long-term reward schemes are implemented to attract and retain key talent in theindustry.

2. Minimum remuneration to Managing Director

If in any financial year the Company has no profit or its profit was inadequate theCompany shall pay remuneration to its Managing Director in accordance with the provisionsof Schedule V of the Companies Act 2013 and if it is not able to comply with suchprovisions with the previous approval of the Central Government.

3. Short Term Loans

The Company shall provide interest-free short-term loans to KMP and employees of theCompany the repayment for which is deducted from the monthly salary of the concernedemployee in twelve equated monthly installments.

Remuneration to Non-Executive / Independent Directors:

1. Commission

The commission payable to each Non-Executive Director is limited to a fixed sum peryear as determined by the Board and is revised from time to time depending on individualcontribution the Company's performance and the provisions of the Companies Act 2013 andthe rules made thereunder. The commission payable to NonExecutive Directors nominated byStandard & Poor's (S&P) is paid to Standard & Poor's International LLC.

The overall commission to the Non-Executive Directors (including Independent Directors)may be paid within the monetary limit approved by shareholders subject to the limit notexceeding 1% of the profit of the Company computed as per the applicable provisions of theCompanies Act 2013.

2. Sitting Fees

The Non-Executive Directors (including Independent Directors) will receive remunerationby way of fees for attending meetings of Board or Committee thereof as decided by theCommittee from time to time subject to the limit defined under the Companies Act 2013 andrules.

3. Stock Options

The Independent Directors shall not be entitled to any stock option of the Company.

Policy Review

This policy is framed based on the provisions of the Companies Act 2013 and rulesthereunder and the requirements of the Clause 49 of the equity Listing Agreement with thestock exchanges as on December 31 2014.

In case of any subsequent changes in the provisions of the Companies Act 2013 or anyother regulations which makes any of the provisions in the policy inconsistent with theAct or regulations then the provisions of the Act or regulations would prevail over thepolicy and the provisions in the policy would be modified in due course to make itconsistent with law.

This policy shall be reviewed by the Nomination and Remuneration Committee as and whenany changes are to be incorporated in the policy due to change in regulations or as may befelt appropriate by the Committee. Any changes or modification on the policy asrecommended by the Committee would be given for approval of the Board of Directors.

This policy is updated on February 9 2016.

ANNEXURE II TO THE DIRECTORS' REPORT

CORPORATE SOCIAL RESPONSIBILITY POLICY

INTRODUCTION

CRISIL (the 'Company' or 'CRISIL') has identified Corporate Social Responsibility (CSR)as a strategic tool for sustainable growth. For CRISIL CSR means not only investment offunds for Social Activity but also includes a continuous Integration of Business processeswith Social processes.

In March 2013 CRISIL set up the CRISIL Foundation to steer our CSR agenda and guidingprinciples by taking into consideration the position of our stakeholders the spirit oftrusteeship and the intention of enhancing social capital. CRISIL believes in equitablesocieties and efficient markets and has always endeavoured to follow these lodestars.

THE CSR POLICY

CRISIL would carry out the following activities:

• Strengthen the financial capabilities of socially and economicallyunderprivileged communities

• Conservation of the environment by focusing on relevant programmes in thevicinity of CRISIL offices so that employees get directly involved in CSR initiatives

• Employee participation in financial literacy / promoting education andenvironment conservation as well as allowing employees to undertake projects of theirchoice with small budget allocations reviewed by a Management Committee provided thatthe projects were also covered under the Schedule VII to the Companies Act 2013 asamended from time to time.

• Participation in and conducting of awareness programme for Disaster Management;relief to victims of Natural calamities like earthquake cyclone drought & floodsituation in India and; to organise and contribute directly or indirectly i.e. throughvarious agencies whether government or semi-government or private agencies likeNon-Government organisations for rehabilitation work in disaster affected areas.

To enhance reach and to accelerate the implementation of the CSR programmes to a largerset of target population CRISIL may also partner or work with other well-knownFoundations implementation agencies NGOs or other intermediaries with a good trackrecord for deploying the CSR Program.

CSR FUNDING AND ALLOCATION

For achieving its CSR objectives through implementation of meaningful and sustainableCSR programmes CRISIL will annually contribute up to 2% of average net profit for thelast three years towards CSR activities.

CSR contribution for the year will be determined by CRISIL management at the beginningof each calendar year based on audited financial statements for the last three years.

Any unspent CSR allocation of a particular year will be reviewed by the CSR Committeeand decision would be taken whether the unspent amount should be carried over to thesubsequent year/s. The CSR Committee while determining the requirement for carry over tonext year will consider various factors like availability of desired projectsutilisation trend practical aspects of spending the required amount in a particulartimeframe and best interests of all the stakeholders.

APPLICABILITY

CRISIL CSR policy has been prepared in accordance with Section 135 of the CompaniesAct 2013 (referred to as the Act in this policy) on CSR and in accordance with the CSRrules (hereby referred to as the Rules) notified by the Ministry of Corporate AffairsGovernment of India in 2014.

IMPLEMENTATION

CRISIL CSR initiatives will be implemented by the CRISIL management and CRISILFoundation under the guidance of Corporate Social Responsibility Committee (the“Committee”) of the Board of Directors (the 'Board') of CRISIL.

CONSTITUTION OF THE CSR COMMITTEE

The Board has constituted the 'CSR Committee' of the Board on February 14 2014. TheCommittee shall consist of minimum of three members with at least one being an independentdirector.

The Board has authority to reconstitute this Committee from time to time.

MEETINGS AND QUORUM

The committee shall meet at least twice a year. Two members present shall form thequorum for the meeting of the committee.

ROLES AND RESPONSIBILITIES OF THE COMMITTEES

The roles and responsibilities of the committee shall be the following:

• Formulate monitor and recommend to the Board the CSR policy

• Recommend to the Board modifications to the CSR policy as and when required

• Recommend to the Board the amount of expenditure to be incurred on theactivities undertaken

• Review the performance of the Company in the area of CSR including theevaluation of the impact of the Company's CSR Activities

• Review the Company's disclosure of CSR matters

• Recommend the deployment strategy for CSR Activities through partnerships withvarious agencies intermediaries and foundations and determine outreach channelsincluding social media and IT interfaces

• Consider other functions as defined by the Board or as may be stipulated underany law rule or regulation including the listing agreement and the Companies Act 2013.

POLICY REVIEW

This policy is framed based on the provisions of the Companies Act 2013 and rulesthereunder.

In case of any subsequent changes in the provisions of the Companies Act 2013 or anyother regulations which makes any of the provisions in the policy inconsistent with theAct or regulations then the provisions of the Act or regulations would prevail over thepolicy and the provisions in the policy would be modified in due course to make itconsistent with law.

This policy shall be reviewed by the Corporate Social Responsibility Committee as andwhen any changes are to be incorporated in the policy due to change in regulations or asmay be felt appropriate by the Committee. Any changes or modification on the policy asrecommended by the Committee would be given for approval of the Board of Directors.

This Policy is updated on February 9 2016

ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES

as prescribed under Section 135 of the Companies Act 2013 and Companies (CorporateSocial Responsibility Policy) Rules 2014

1. A brief outline of the Company's CSR policy including overview of projects orprogrammes proposed to be undertaken and a reference to the web-link to the CSR policy andprojects or programmes: Kindly refer the Corporate Sustainability Report publishedelsewhere in this annual report and the Company's website (www.crisil.com ).

2. The Composition of the CSR Committee: Dr. Nachiket Mor (Chairman) Ms. VinitaBali and Ms. Ashu Suyash.

3. Average net profit of the company for last three financial years (2012-2014): Rs.288.80 crore.

4. Prescribed CSR Expenditure (2% of the amount as in item 3 above) (2012 - 2014): Rs.5.83 crore.

5. Details of CSR spend during the financial year:

(a) Total amount to be spent for the financial year: Rs. 5.83 crore

(b) Amount unspent if any: Refer to Note 6

(c) Manner in which the amount spent during the financial year is detailed below:

(1) (2) (3) (4) (5)

(6)

(7) (8)
Sl No. CSR project or activity identified Sector in which the project is covered Projects or programmes (1) Local area or other Amount outlay (budget) projects or programme-

Amount spent on the projects or programmes

Cumulative expenditure up to the reporting Amount spent : Directly or Through Implementing
(2) Specify the state or district where projects or programmes were undertaken wise Direct expenditure on programmes or projects Overheads period Agency*
(Rs. Crore) (Rs. Crore) (Rs. Crore) (Rs. Crore)
1 Mein Pragati Initiative Education - Financial Literacy Assam 2.31 3.05 0.16 3.21 Rashtriya Grameen Vikas Nidhi
2 CRISIL Re Environmental Conservation through volunteerism Mumbai Pune Chennai Gurgaon 1.43 0.88 0.05 0.93 United Ways Mumbai Green Yatra

RASHTRIYA GRAMIN VIKAS NIDHI (RGVN)

RGVN was founded in April 1990 as a development support organisation and is registeredunder the Society's Registration Act of 1860. RGvN has its Head Quarters at GuwahatiAssam and its operations are spread across the North Eastern and Eastern states of India.RGVN's projects are mainly in the areas of rural livelihood and capacity building ofgrassroot level NGOs.

RGVN's founder sponsor was Industrial Financial Corporation of India (IFCI). The othersponsors of RGVN are Industrial Development Bank of India (IDBI) National Bank forAgriculture and Rural Development (NABARD) and Tata Social Welfare Trust (TSWT)

For FY 2014-15 RGvN had a balance sheet size of Rs.19.10 crore and reported income ofRs.7.28 crore. Its total staff strength is 106 including 34 permanent employees and 72contractual staff. RGVN now operates in 14 states of the country namely - AssamMeghalaya Arunachal Pradesh Tripura Nagaland Manipur Mizoram Sikkim Orissa BiharJharkhand Eastern Uttar Pradesh Chhattisgarh and coastal Andhra Pradesh.

Some of the prominent projects handled during the previous two financial years includeCross - Border Transfer of Agricultural Technologies with European Union NABARD Lead CropProject in Assam and Sustainable Livelihood Enhancement And Enterprise Promotion - Aproject supported by HIVOS.

UNITED WAY OF MUMBAI (UWM)

United Way of Mumbai (UWM) is a non-profit organisation that endeavours to leveragecorporate employee and leadership talent for community development. Through corporategifts and employee giving campaigns United Way of Mumbai seeks to successfully engage thecorporate sector into meaningful Social Responsibility structures bringing about apositive and lasting change in the communities. UWM is a chapter of United Way Worldwidewhich tops the list of the world's 15 largest charities.

UWM commenced its operations in 2002 and specializes in mainly three areas EducationLivelihood creation and Health. For FY 2014-15 the total income reported was INR258786874 and total expenses was INR 256897613. UWM has staff strength of 27employees.

UWM's key donors include Deloitte Consulting India Pvt Ltd Wells Fargo JP MorganJohn Deere Foundation Bank of America Citibank and Bristol Myers Squibb Foundation.

United Way of Mumbai has been our nodal partner in executing CRISIL RE - our EmployeeVolunteering Programme across our offices in Mumbai Pune Gurgaon and Chennai. They havehelped execute our ongoing environment conservation programmes across these cities alongwith the local NGO partners under the twin themes of Greening and Waste Managementplanned employee engagement activities as well as monitored these programmes.

GREEN YATRA

Green Yatra is a Non-Profit-Non-Governmental organisation (NGO); A devoted Yatra(journey) toward protection conservation and improvement of our Mother Nature andHumanity. Their sole objective is to pass on a habitable GREEN pollution free Earth and abetter World to the future generations.

Green Yatra commenced its operations in 2010 and speacialises in the areas of Treeplantation Environment Consultancy Education and Waste Management. Its key donorsinclude names such as Reserve Bank of India Shopper's Stop McDonald's and Tata Capital.

Green Yatra has supported CRISIL in planting 4000 trees at Vishwagadh Village BhiwandiTaluka Maharashtra through 3 employee engagement drives and is now currently supportingits maintenance for the next 3 years. Additionally Green Yatra has helped distributematerial to villages in Bhiwandi Taluka that were collected from our Mumbai and Puneoffices during the Joy of Giving Week. They also conducted the very successfulEco-friendly Ganesha making workshops at our Mumbai and Pune offices.

6. In case the company has failed to spend two per cent of the average net profit ofthe last three financial years or any part thereof the company shall provide the reasonsfor not spending the amount in its Board report:

We have spent 1.42% of the 3-year average profit as part of our CSR in the reportingperiod. During the year the Company has invested significant time and resources laying astrong foundation including high-quality content back-end robust technology platform forprogramme monitoring and enabling infrastructure to rapidly scale up existing projects.The Company has also put in place strong institutional arrangements for further expansionto newer geographical locations and has forged robust partnerships with other corporatefoundations. Both these initiatives will not only help achieve rapid scale but alsoposition CRISIL as a thought leader in the social sector. Going forward in addition toutilising its CSR budget fully CRISIL in line with its mission of making marketsfunction better is also committed to use its research and analytical capabilities to bringin greater transparency to social sector.

7. The CSR Committee of the Company hereby confirms that the implementation andmonitoring of CSR Policy is in compliance with CSR objectives and Policy of the Company.

For CRISIL Ltd. For and on behalf of the CSR Committee of CRISIL Ltd.
Ashu Suyash Vinita Bali
Managing Director Chairperson for the
& Chief Executive Officer 6th Corporate Social Responsibility Committee Meeting
(DIN: 00494515) (DIN: 00032940)
Mumbai February 9 2016 Mumbai February 9 2016

ANNEXURE III TO THE DIRECTORS' REPORT

Form No. AOC - 2

[Pursuant to clause (h) of sub-section (3) of section 134 of the Companies Act 2013and Rule 8(2) of the Companies (Accounts) Rules 2014]

Form for disclosure of particulars of contracts / arrangements entered into by theCompany with the related parties referred to in sub-section (1) of section 188 of theCompanies Act 2013 including certain arm's length transactions under third provisothereto.

1. DETAILS OF CONTRACTS OR ARRANGEMENTS OR TRANSACTIONS NOT AT ARM'S LENGTH BASIS

Sl. No. Name of the related party and nature of relationship Nature of contracts / arrangements / transactions Duration of contracts / arrangements / transactions Salient features of contracts / arrangements / transactions including value if any Justification for entering into such contracts / arrangements / transactions Date(s) of approval by the Board Amount paid as advances if any Date on which special resolution was passed in general meeting u/s 188(1)
(a) (b) (c) (d) (e) (f) (g) (h)
Not Applicable

2. DETAILS OF MATERIAL CONTRACTS OR ARRANGEMENTS OR TRANSACTIONS AT ARM'S LENGTH BASIS

Sl. No. Name of the related party and nature of relationship Nature of contracts / arrangements / transactions Duration of contracts / arrangements / transactions Salient features of contracts / arrangements / transactions including value if any Justification for entering into such contracts / arrangements / transactions Date(s) of approval by the Board / Audit Committee Amount paid as advances if any Date on which special resolution was passed in general meeting u/s 188(1)
(a) (b) (c) (d) (e) (f) (g) (h)
1 McGraw-Hill Financial Inc. (MHFI) or any of MHFI group related entity Global Analytical Centre Ongoing subject to renewal as per contractual terms Support MHFI and its group in their global operations consideration of around Rs. 144.47 crore per annum Services rendered by CRISIL are at arm's length pricing (ALP) and in the ordinary course of business. CRISIL maintains appropriate documentation to support ALP with MHFI and its group Companies. February 14 2015 Nil December 15 2014
2 CRISIL Irevna UK Ltd (100% Subsidiary) Global Research and Analytical Services Ongoing subject to renewal as per contractual terms CRISIL invoices CRISIL Irevna UK for GR&A services which Irevna UK has recovered from external clients. The pricing is after considering appropriate remuneration to Irevna Uk to meet its functional obligation (Amount invoiced by CRISIL to CRISIL Irevna UK Ltd. in 2015 is Rs. 186.76 crore). Services rendered by CRISIL Irevna Uk are at arm's length pricing (ALP) and in the ordinary course of business. CRISIL maintains appropriate documentation to support ALP with CRISIL Irevna Uk. February 14 2015 Nil Not applicable
3 CRISIL Irevna US LLC (100 % Subsidiary) Global Research and Analytical Services Ongoing subject to renewal as per contractual terms CRISIL invoices CRISIL Irevna US for GR&A services which CRISIL Irevna US has recovered from external clients. The pricing is after considering appropriate remuneration to CRISIL Irevna US to meet its functional obligation (Amount invoiced by CRISIL to CRISIL Irevna US LLC in 2015 is Rs. 157.42 crore) Services rendered by CRISIL Irevna US are at arm's length pricing (ALP) and in the ordinary course of business. CRISIL maintains appropriate documentation to support ALP with CRISIL Irevna US. February 14 2015 Nil Not applicable
4 CRISIL Irevna UK Ltd Loan given by CRISIL 10 years Loan outstanding Rs. 140.24 crore from CRISIL Irevna UK Ltd. Tenure of loan is ten years and interest rates are based on appropriate benchmarking Loan given by CRISIL India to CRISIL Irevna UK for financing acquisitions. July 17 2014 Nil Not applicable
5 CRISIL Irevna Argentina S. A. Global Research and Analytical Services Ongoing subject to renewal as per contractual terms CRISIL Irevna Argentina is captive centre and provides research services to CRISIL GR&A clients. The pricing is after considering appropriate remuneration to CRISIL Irevna Argentina to meet its functional obligation. (Amount invoiced by CRISIL Irevna Argentina S. A. to CRISIL Limited is Rs. 50.55 crore in 2015) Services rendered by CRISIL Irevna Argentina are at arm's length pricing (ALP) and in the ordinary course of business. CRISIL maintains appropriate documentation to support ALP with CRISIL Irevna Argentina. February 14 2015 Nil Not applicable

ANNEXURE IV TO THE DIRECTORS' REPORT

SECRETARIAL AUDIT REPORT

For The Financial Year ended 31 December 2015

[Pursuant to section 204(1) of the Companies Act 2013 and Rule No. 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014]

To:

The Members

CRISIL Ltd.

CRISIL HOUSE Central Avenue

Hiranandani Business Park

Powai Mumbai - 400076.

I have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by CRISIL Ltd. (hereinaftercalled 'the Company'). Secretarial Audit was conducted in a manner that provided me areasonable basis for evaluating the corporate conducts / statutory compliances andexpressing my opinion thereon.

Based on my verification of the Company's books papers minute books forms andreturns filed and other records maintained by the company and also the informationprovided by the Company its officers agents and authorised representatives during theconduct of Secretarial Audit I hereby report that in my opinion the Company has duringthe audit period covering the financial year ended on December 312015 ('Audit Period')complied with the statutory provisions listed hereunder and also that the Company hasproper Board- processes and compliance-mechanism in place to the extent in the manner andsubject to the reporting made hereinafter :

I have examined the books papers minute books forms and returns filed and otherrecords maintained by the Company for the financial year ended on December 312015according to the provisions of :

(i) The Companies Act 2013 (the Act) and the rules made thereunder;

(ii) The Securities Contracts (Regulation) Act 1956 ('SCRA') and the rules madethereunder;

(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed thereunder;

(iv) Foreign Exchange Management Act 1999 and the rules and regulations madethereunder to the extent of Foreign Direct Investment Overseas Direct Investment andExternal Commercial Borrowings (Not applicable to the Company during the Audit Period);

(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 ('SEBI Act') :

(a) The Securities and Exchange Board of India

(Substantial Acquisition of Shares and Takeovers) Regulations 2011;

(b) The Securities and Exchange Board of India

(Prohibition of Insider Trading) Regulations 1992 and Securities and Exchange Boardof India (Prohibition of Insider Trading) Regulations 2015;

(c) The Securities and Exchange Board of India

(Issue of Capital and Disclosure Requirements) Regulations 2009 (Not applicable tothe Company during the Audit Period);

(d) The Securities and Exchange Board of India

(Share Based Employee Benefits) Regulations 2014;

(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations 2008 (Not applicable to the Company during the Audit Period);

(f) The Securities and Exchange Board of India

(Registrars to an Issue and Share Transfer Agents) Regulations 1993 regarding theCompanies Act and dealing with client;

(g) The Securities and Exchange Board of India

(Delisting of Equity Shares) Regulations 2009 (Not applicable to the Company duringthe Audit Period); and

(h) The Securities and Exchange Board of India

(Buyback of Securities) Regulations 1998.

(vi) I further report that having regard to the compliance system prevailing in theCompany and on examination of the relevant documents and records in pursuance thereof theCompany has complied with the following laws applicable specifically to the Company :

• The Securities and Exchange Board of India (Credit Rating Agencies) Regulations1999

• The Securities and Exchange Board of India (Research Analysts) Regulations2014

• The Reserve Bank of India's related rules /regulations as an External CreditAssessment Institution status for the Company's Bank Loan Ratings business.

I have also examined compliance with the applicable clauses of the following:

(i) Secretarial Standards issued by The Institute of Company Secretaries of Indiaeffective from 1 July 2015.

(ii) The Listing Agreements entered into by the Company with Stock Exchanges.

During the period under review the Company has complied with the provisions of the ActRules Regulations Guidelines Standards etc. mentioned above.

I further report that:

the Board of Directors of the Company is duly constituted with proper balance ofExecutive Directors Non-Executive Directors and Independent Directors. The changes in thecomposition of the Board of Directors that took place during the period under review werecarried out in compliance with the provisions of the Act.

Adequate notice is given to all directors to schedule the Board Meetings agenda anddetailed notes on agenda were generally sent at least seven days in advance and a systemexists for seeking and obtaining further information and clarifications on the agendaitems before the meeting and for meaningful participation at the meeting.

All decisions at Board Meetings and Committee Meetings were carried out unanimously asrecorded in the minutes of the meetings of the Board of Directors or Committees of theBoard as the case may be.

I further report that there are adequate systems and processes in the Companycommensurate with the size and operations of the Company to monitor and ensure compliancewith applicable laws rules regulations and guidelines.

I further report that during the audit period:

• the Company has bought back a total of 511932 Shares utilising a total of Rs.1019780637.97 (excluding transaction costs) which represents 99.98% of the MaximumBuyback Size; and

• subject to the other required consents / approvals the Board of Directors ofthe Company approved the scheme of amalgamation of Company's three wholly-owned Indiansubsidiaries viz. Pipal Research Analytics and Information Services India PrivateLimited Coalition Development Systems (India) Private Limited and Mercator Info- ServicesIndia Private Limited with the Company.

• the Board of Directors of the Company approved the proposal to invest upto Rs.30 crores in financial technology companies in areas / sectors that are deemed strategicfor the Company.

Dr. K R Chandratre
FCS No. 1370 Place : Pune
C. P No.: 5144 Date : 9 February 2016

ANNEXURE V TO THE DIRECTORS' REPORT

Disclosures pursuant to Section 197(12) of the Companies Act 2013 and Rule 5(1) ofCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014

Note: The information provided below is on standalone basis for Indian Listed entity

1. The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year:

Sl No. Name of the Director Ratio of the remuneration to the median remuneration of the employees
a. Mr. Douglas L. Peterson - Chairman Non-Executive Director 0.07*
b. Mr. H. N. Sinor - Independent Director 5.19
c. Dr. Nachiket Mor - Independent Director 5.32
d. Mr. M Damodaran - Independent Director 5.35
e. Ms. Vinita Bali - Independent Director 4.93
f. Mr. Yann Le Pallec - Non-Executive Director NA*
g. Mr. John Francis Callahan Jr. - Non-Executive Director NA*
h. Mr. Ravinder Singhania - Alternate Director to Mr. Douglas L. Peterson NA
i. Ms. Ashu Suyash - Managing Director & Chief Executive Officer 46.56A

*Sitting Fees and Commission payable to Non- Executive Directors nominated by Standard& Poors' (S&P) was paid to ‘Standard & Poors' International LLC'. SinceApril 2015 MHFI has waived the sitting fees payable to its nominees. Also commission forthe year 2014 and 2015 has been waived by MHFI.

A Since remuneration is for a part of the year it is not comparable. Based onannualised remuneration the ratio will be 81.97.

2. The percentage increase in remuneration of each director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year :

Sl No. Name of the Director 2014 Remuneration 2015 Remuneration Percentage increase in remuneration
Rs. Rs.
a. Mr. Douglas L. Peterson - Chairman Non-Executive Director 80000* 40000* -50%
b. Mr. H. N. Sinor - Independent Director 2350000 3100000 31.91%
c. Dr. Nachiket Mor - Independent Director 2410000 3175000 31.74%
d. Mr. M Damodaran - Independent Director 2430000 3195000 31.48%
e. Ms. Vinita Bali - Independent Director 2370000 2945000 24.26%
f. Mr. Yann Le Pallec - Non-Executive Director 160000* 0* -100%
g. Mr. John Francis Callahan Jr. - Non-Executive Director Nil* Nil* NA
h. Mr. Ravinder Singhania - Alternate Director to Mr. Douglas L. Peterson Nil Nil NA
i. Ms. Roopa kudva - Managing Director & Chief Executive Officer (up to April 30 2015) 85547296 127938137 $
j. Ms. Ashu Suyash - Managing Director & Chief Executive Officer (with effect from June 12015) Nil 27809450 NA
k. Mr. Amish Mehta - Chief Financial Officer 8453642 24904484 194.60% a
l. Mr. Neelabja Chakrabarty - Company Secretary (up to February 27 2015) 3130172 950613 **
m. Ms. Minal Bhosale - Company Secretary (joined with effect from June 1 2015) Nil 4364075 NA

*Sitting Fees and Commission payable to Non-Executive Directors nominated by Standard& Poor's (S&P) was paid to Standard & Poor's International LLC. Since April2015 MHFI has waived the sitting fees payable to its nominees. Also commission for theyear 2014 and 2015 has been waived by MHFI.

ASince Mr. Mehta joined on October 3 2014 the remuneration for 2014 and 2015 are notcomparable.

$ Remuneration is not comparable in view of cessation of employment during 2015. Therewas no increase in base pay and the increase in remuneration is on account of exercise ofstock options.

** Remuneration not comparable in view of cessation of employment during 2015.

3. The percentage increase in the median remuneration of employees in the financialyear: Median pay has increased by 5.04% in 2015 as compared to 2014.

4. The number of permanent employees on the rolls of company: 2858

5. The explanation on the relationship between average increase in remuneration andCompany performance: Average increase implemented in 2015 was 16.05%. The objective ofthe CRISIL remuneration framework is to set the total remuneration at levels whichattract motivate and retain high-calibre and high-potential personnel in a competitiveglobal market. The total remuneration level is reset annually as necessary based on acomparison with the relevant peer group in the Indian market established throughindependent compensation surveys from time to time. Variable compensation is an integralpart of our total reward package and is directly linked to an individual performancerating and business performance. Salary increases during the year were in line withCompany's performance as well as per Company's market competitiveness.

6. Comparison of the remuneration of Key Managerial Personnel (KMP) against theperformance of the Company: In accordance with the CRISIL remuneration framework theKMP remuneration similarly comprises a fixed component that aims at market competivenessand need for high-calibre talent and a variable component which is directly linked toindividual performance as well as that of the Company. Stock options for CRISIL shares aregranted to key employees based on their criticality potential and other parametersestablished by the Nomination & Remuneration Policy. Hence the Company's performancehas a significant correlation with the variable remuneration to Key Managerial Personnel.

Aggregate remuneration of KMP Rs. 18.60 Crore
Revenue Rs. 1000.70 Crore
Remuneration of KMP as % of revenue 1.86%
PBT Rs. 325.35 Crore
Remuneration of KMP as % of PBT 5.72%

7. Variations in the market capitalisation of the Company and price-earnings ratio asat the closing date of the current financial year and previous financial year andpercentage increase / decrease in the market quotations of the shares of the Company incomparison to the rate at which the Company came out with the last public offer

The market capitalisation of the Company increased by 3.37% from Rs. 13551.42 croreon December 31 2014 to Rs. 14008.97 crore on December 31 2015. The price to earningsratio was 63.28 times as at December 31 2015 (previous year 62.54 times).

The last public offer by the Company was made in the year 1994 at a price of Rs. 40 pershare of face value Rs. 10 each. For ease of comparison we may therefore assume thesaid price to be Rs. 4 per share for the equity share of face value Re 1 each.

The closing price of the equity share of CRISIL on the National Stock Exchange of Indiaas on December 31 2015 was Rs. 1967.30. The percentage increase in the market rate ofthe equity share of CRISIL is thus 49082.50%.

8. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration: Averageincrease in salary for 2015 over 2014 is 16.05%. Overall managerial remuneration to KMPshas increased by 88.24%. During the year on account of succession changes to the positionof CEO and Managing Director one-time payments such as end-term benefits exercise ofoptions and joining bonus are included in the remuneration. For clarity on the details ofthe individual compensation to Key Managerial Personnel please refer to Annexure VII ofthe Directors' Report.

9. Comparison of the each remuneration of the Key Managerial Personnel against theperformance of the company: Refer point 6 above

10. Key parameters for any variable component of remuneration availed by the directors:Variable pay for CEO and Managing Director is determined based on the assessment ofkey performance areas including financial targets. Commission to Non-Executive IndependentDirectors is determined by the Nomination & Remuneration Committee with reference to athreshold of eligible profits within the statutory limits and an annual externalbenchmarking exercise. Non-Executive Directors nominated by Standard & Poors'(S&P) have waived off their commission and sitting fees for 2015.

11. Ratio of the remuneration of the highest paid director to that of the employees whoare not directors but receive remuneration in excess of the highest paid director duringthe year: none

12. Affirmation that the remuneration is as per the remuneration policy of the Company:Yes

ANNEXURE VI TO THE DIRECTORS' REPORT

EMPLOYEE STOCK OPTION SCHEMES

Information required to be disclosed under the Securities and Exchange Board of India(Employee Stock Option Scheme) and (Employee Stock Purchase Scheme) Guidelines 1999

Sr. No. Description

ESOS 2011

ESOS 2012

ESOS 2014

YR 2015 YR 2014 YR 2015 YR 2014 YR 2015 YR 2014
1. Pricing formula 100% of the closing market price immediately prior to the date of grant on the stock exchange which recorded highest trading volume
2. Options outstanding at the beginning of the year 76863* 469220 464682 760465 2577250 NIL
3. Options granted during the year (January to December) 22000 33000 NIL 123000 71507 2860300
4. Options vested during the year 6600 381200 255280 298220 79100 NIL
5. Options exercised during the year 32763 422607 226907 311038 79100 NIL
6. Total number of shares arising as a result of exercise of options 31243 406607 224157 27558 79100 NIL
7. Options lapsed during the year nil 2750 32965 107745 373850 283050
8. Total number of options in force at the end of the year 66100 76863 204810 464682 2195807 2577250
9. Money realised by the exercise of options (Rs. Crore) 2.74 23.58 25.23 31.54 9.62 Nil
10. Grant to Senior Management during the year (further details given below in Note 4) 22000 33000 NIL 123000 71507 630000
11. Diluted earnings per share pursuant to issue of shares on exercise of option calculated in accordance with AS 20 ‘Earnings per Share' (Rs.) (Standalone) 30.76 30.03 30.76 30.03 30.76 30.03
12. Weighted average exercise price (Rs) of the options whose:
a. Exercise price equals market price 642.96 617.98 1067.14 1067.14 1238.76 1217.20
b. Exercise price is greater than market price Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable
c. Exercise price is less than market price Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable
13 Weighted average fair value (Rs) of the options whose :
a. Exercise price equals market price 201.00 195.31 321.77 320.09 475.31 469.48
b. Exercise price is greater than market price Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable
c. Exercise price is less than market price Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable
14. Method of calculating fair value of options The fair value of the options granted has been estimated using the Black-Scholes option pricing model. Each tranche of vesting has been considered as a separate grant for the purpose of valuation. The assumptions used in the estimation of the same are given below.

Share options granted during the period the weighted average fair value of thoseoptions at the measurement date and information on how that fair value was measured:

Variables Grant dates
February 25 2015 June 12015
Stock Price 2025.20 2090.90
Volatility 25.80% 27.43%
Risk-free Rate 7.73% 7.82%
Exercise Price 2025.20 2090.90
Expected Life (Time to Maturity) 3.2 5.0
Dividend yield 1.57% 2.00%
Fair value per option 515.78 708.36

We have used Black-Scholes option pricing model for the purpose estimating fair valueof the options granted during the year. Notes:

1) *After the sub-division of shares from Rs. 10 per equity share to Re 1 per equityshare with effect from October 1 2011.

2) None of the employees were granted in any one year options equal to 1% or more ofthe issued capital of the Company at the time of grant.

3) There was no variation of the terms of options granted.

4) Options granted to Senior Managerial Personnel up to December 31 2015 are asfollows:

Sl No. Name ESOS - 2011 (number of options granted) ESOS - 2012 (number of options granted) ESOS - 2014 (number of options granted)
1 Ashu Suyash nil nil 71507
2 Raman Uberoi 30000 15000 45000
3 Pawan Agrawal 22000 10000 30000
4 Ramraj M Pai 22000 18000 38000
5 Ramnath narayan Iyer* 22000 8000 54000
6 Gurpreet S Chhatwal 22000 10000 45000
7 Srinivasan V 22000 10000 54000
8 Priti Arora 8000 5000 24000
9 Subodh Kumar Rai 11000 5000 45000
10 Suprabha A D 11000 4500 45000
11 Manish Jaiswal nil 32000 30000
12 Sameer Bhatia nil nil 24000
13 Stephane Besson nil 48000 nil
14 Pankaj Jain nil nil 45000
15 Amish Mehta 33000 nil nil
16 Rajasekhar kaza 22000 nil nil

* Ceased to be in employment as on the date of this report.

5) none of the employees other than senior management personnel details of optionsgranted to whom have been given at note no. 4 above were granted options equal to 5% ormore of total options granted during the year.

6) The Company uses intrinsic value method to record compensation cost arising onaccount of grant made under ESOS 2011 ESOS 2012 and ESOS 2014. The Company has notrecorded any compensation cost as the grant has been given at the market price. Had theCompany recorded the compensation cost on the basis of Fair Valuation method instead ofintrinsic value method employee compensation cost would have been higher by Rs.360854250 (P.Y. Rs. 284857244) and Earning Per Share (EPS) would have been as under :

Earnings Per Share: Nominal value of Re 1 per share

Details

Consolidated

Standalone

Year ended December 31 2015 Year ended December 31 2014 Year ended December 31 2015 Year ended December 31 2014
Basic (Rs) 34.96 33.82 26.10 26.36
Diluted (Rs) 34.51 33.44 25.76 26.06

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