India Ratings Being Relevant for Indian Capital Market

BeingRelevant™
www.indiaratings.co.in

India Ratings BeingRelevant™
India Ratings & Research (India Ratings) is India's Most Respected rating agency committed to providing the Indian credit markets
with accurate, timely and prospective credit opinions. Built on a foundation of independent thinking, rigorous analytics, and an
open & balanced approach towards credit research, India Ratings has grown rapidly during the past decade to establish itself as
the THOUGHT LEADERS in Indian fixed income market. Offering a world of knowledge and experience behind every rating, we
transform information to deliver meaning and utility to investors, issuers and other market participants. The additional context,
perspective and insights we provide help financial professionals make important business decisions with confidence.
Transparency Consistency Reliability Leadership

India Ratings & Research (India Ratings) is India's Most Respected rating agency committed to providing the India's credit markets
the THOUGHT LEADERS in India's fixed income market. Offering a world of knowledge and experience behind every rating, we
► Well Defined Rating Triggers
► Peer Comparison
► Master Criteria in Public
► Sector Credit Factors
► Confidentiality Agreement

India Ratings – BeingRelevant™ 2015
Rating Triggers are clearly defined in
the rating rationale
Well Defined Rating Triggers
© India Ratings 2015. Confidential Document. 4

Comparison with similar industry
players within an industry or rating
category
Peer Comparison

India Ratings bases its ratings analysis and rating
decisions, which are the agency's opinions, upon
established criteria, methodologies and ratings
definitions, and applies them in a consistent manner.
These criteria, methodologies and ratings definitions
identify the specific factors that India Ratings
considers during the rating and surveillance
processes, which are published in public from time
to time.
Credit Policy: 4
Corporates: 16
Financial Institutions: 5
Infrastructure & Project Finance: 4
Public Finance: 10
Structured Finance: 6
Cross Sector: 2
India Ratings Criteria reports are available at
http://www.indiaratings.co.in/ratingDefnition/criteriaReport.jsp
Master Criteria in public

Criteria Creation
 Analysts prepare the Criteria
 Draft submitted to Peer Review
Committee (PRC)
 PRC consists of members of Chief Credit
Officer, Group Heads and Team Leads of
various ratings groups
 No voting rights with analysts
 Market feedback sought on draft criteria
 Resulting in Independent Criteria Creation
Process

Hierarchy of Criteria
Master Rating Criteria
Nation wide
Cross Sector
Corporates
Cross-Sector
Rating Criteria
Sector-Specific
Rating Criteria
Sector Credit Factors
Recovery Rating
and Notching

Criteria for Each Product Group
Corporate
Finance
Banks & FIs
Public
Finance
-Corporate
- Infrastructure
- Project Finance
- Power
- Banks - FIs
- Finance & Leasing - Covered Bonds
- Securities Companies - Insurance
- Funds & AMCs - REITs
- Sovereigns
- International Public Finance
- Supra Nationals

Example
Master Rating Criteria for
Project Finance
Toll Bridge Airports Seaports Solar Thermal Wind
Availability Based
Project
Annuity Bond/BOT
Transportation Energy

Sector Credit Factors reports show how India Ratings’ Corporate Rating Methodology is applied to corporate sub sectors.
SCFs are designed to mirror the thought process involved in arriving at a rating. Firstly, a broad rating range for a given sector is defined; then the rating is refined by looking at
company specific risk factors; then financials; and finally ‘other’ factors, such as country ceiling.

India Ratings in its course of rating process
receives confidential data.
India Ratings treats this data with utmost
importance and confidence and the same is
governed by the Confidentiality policy which is
applicable to all employees of India Ratings.
Confidentiality Agreement
CONFIDENTIALITY AGREEMENT
India Ratings and Research Pvt. Ltd] (“Ind-Ra”) may be given access from time to time to certain nonpublic
information, including but not limited to audited and unaudited financial information, regarding [name of
Corporate] (the “Company”) (the “Nonpublic Information”) in connection with the rating process. Information
independently known to Ind-Ra prior to disclosure from Company or which is otherwise publicly known shall
not be considered Nonpublic Information for purposes of this agreement.
1. Ind-Ra agrees not to reveal any Nonpublic Information to anyone, except (i) in response to a valid request for
information in a subpoena, court order or as otherwise required by applicable law or by any judicial, legislative
or regulatory authority and/or (ii) to those employees, consultants and agents of Ind-Ra needing such
Nonpublic Information (“Ind-Ra Representatives”) in connection with rating and other non-rating credit
opinions, reports, statements, press releases, presentations or other informational materials issued by Ind-Ra
in the course of its business (“Ind-Ra Products”). Prior to disclosing Nonpublic Information to Ind-Ra
Representatives, Ind-Ra will take reasonable precautions to ensure that such Ind-Ra Representatives will act in
accordance with this Confidentiality Agreement.
2. Ind-Ra will use such Nonpublic Information in forming its rating and other non-rating credit opinions. Ind-Ra
may use information and analysis derived from such Nonpublic Information (without disclosing any Nonpublic
Information itself) in (i) reports, statements, press releases, presentations or other informational materials
issued by Ind-Ra in the course of its business, and/or in (ii) written or oral communications that Ind-Ra may
have in its discretion following the issuance of a rating or other non-rating credit opinion.
3. Ind-Ra agrees that if it is required to reveal any Nonpublic Information pursuant to Paragraph 1(i) above, to
the extent practical and permitted by law, regulation or regulatory or other governmental authority, Ind-Ra (i)
will notify the Company before doing so in order that the Company may have an opportunity to object to such
disclosure or to obtain a protective order or other appropriate relief and (ii) will provide such reasonable
cooperation and assistance as the Company may reasonably request in any effort by the Company to protect
the confidentiality of such Nonpublic Information, provided however, that Ind-Ra may, in its reasonable
discretion, seek reimbursement for its costs in providing such assistance and cooperation.
4. Notwithstanding anything to the contrary in Paragraph 3 above, in the event that Ind-Ra is required to reveal
Nonpublic Information pursuant to a request from the SEC or any other regulatory authority in connection with
an audit or other investigation, Ind-Ra shall have no obligation to provide advance notice of the disclosure to
Company.
[This agreement shall be governed by and construed in accordance with the laws of Republic of India and any
dispute with respect to this agreement shall be decided by the Indian courts at Mumbai.]
IN WITNESS WHEREOF, Ind-Ra has signed this agreement this [●] day of [●], 20[●●].
[India Ratings and Research Pvt. Ltd]
By:__________________________
Name:
Title:

► Rating of SPV vs. Holding Company
► Hybrids issued by Corporates

Rating consistency in Parent and
Subsidiary Company
The rating considerations are outlined in five steps, and assist
the agency in determining when it is appropriate to:
Assign a rating to a parent company and its subsidiary according to their
► respective standalone credit profiles;
► equalise the ratings of a parent company and its subsidiary
due to a very high degree of financial, legal and/or business
integration;
► notch the IDR of a subsidiary higher than its standalone credit
profile would indicate, due to its relationship with a parent
company that has a stronger credit profile; or
► notch the IDR of a subsidiary lower than its standalone credit
profile would indicate, due to its close relationship with a
parent company that has a weaker credit profile.

Hybrids issued by Corporates
The terms “hybrid instruments,” “hybrid securities,” or
“capital securities” are applied interchangeably. India
Ratings’ definition encompasses all instruments that are
neither common stock nor ordinary senior or subordinated
debt.

► Default and Transition Study
► 12 months Review

Transition and Default Study
India Ratings’ T & D study are published on a periodical
basis across the global. The analysis is done sector wise
and also on geographical basis. Links to various T & D
reports is mentioned below:
http://www.indiaratings.co.in/upload/research/specialReports/2013/9
/24/indra24TD.pdf

All credits reviewed under 12
months
As per IOSCO and EU regulation, India Ratings’ credits
are reviewed within 12 months of assignment of the
rating and subsequently before each anniversary.
India Ratings conforms to this regulation/directive.
India Ratings was established in 1995 and is a recognized by SEBI
and RBI in India.

► Credit research – an Industry trend setter
► Cross Sector Linkages
► Criteria based Research
► Timely comment on recent market activities

Credit research – developed into
Industry Standard
India Ratings’ credit reports have set standards within
peers in the industry.
India Ratings was the first rating agency to introduce
pre-sale reports for structured finance transactions in
India.

Cross sector linkages
India Ratings’ research details impact of credit actions
across sector and specifies to the investors the triggers
to look forward. Further the actions are substantiated
with clear and concise facts and figures.

Ind-Ra Affirms Bank of Baroda at ‘IND AAA’; Outlook Stable
Ind-Ra- Mumbai-7 February 2014: India Ratings & Research (Ind-Ra) has affirmed Bank of Baroda’s (BOB) Long-Term Issuer Rating at ‘IND AAA’ with a Stable Outlook and Short-Term Issuer rating at ‘IND A1+’. A full list of rating actions is at
the end of this commentary.
KEY RATING DRIVERS
BOB’s ratings reflect Ind-Ra’s expectation of continued strong support from its principal shareholder – the government of India (GoI, 55.4% shareholding as at end-September 2013 (1HFY14)). This reflects BOB’s systemic importance as the
second-largest bank in terms of total deposits and third-largest bank in terms of total assets, and its large pan-India franchise (4,483 branches). GoI injected INR5.5bn of common equity into BOB in January 2014.
The ratings also factor in BOB’s competitive financials and funding with respect to similar rated peers. The bank is adequately capitalised (Basel III Tier 1 ratio as at 1HFY14: 9.25%, excluding half yearly profit) to sustain its loan growth,
which is targeted at around 1% in excess of system average for the next three years. However, asset quality pressures are visible over the near-to-medium term which may impact the bank’s profitability.
Gross NPL ratio rose to 3.15% in 1HFY14 (FY13: 2.4%) on account of general macroeconomic deterioration across various sectors. Ind-Ra expects this trend to continue, although the gross NPL ratio is likely to remain below the system
average and peer government banks’. Restructuring trend is also continuing with around 1.0% of loans restructured in 1HFY14 (H1FY13: 0.9%), originating mainly from the power sector and large corporates. BOB’s cumulative
restructured loans were 7.7% of total advances in 1HFY14. Ind-Ra expects the stressed assets (unseasoned restructured and gross NPLs) to increase by another 2%-3% over the near-to-medium term.
Profitability continues to maintain past trends (return on average assets: 0.84% in 1HFY14; FY13: 0.9%) despite rising credit costs due to competitive funding profile. The ratio of low-cost current and savings deposit to total deposits
increased to 32.65% in 1HFY14 (FY13: 30.38%), which is healthy and comparable to peers. Ind-Ra expects slight moderation in BOB’s profitability due to an increase in stressed assets and a corresponding rise in credit costs. Nevertheless,
stress tests on BOB indicate that it has been able to sufficiently price in risks from its loan portfolio.
RATING SENSITIVITIES
A rating downgrade in unlikely in the medium term considering continuous support from GoI to BOB, in view of its high systemic importance to the Indian banking system.
COMPANY PROFILE
BOB is the second-largest government-owned bank in India. As on 30 September 2013, the bank’s total loans and deposits was INR3,399bn and INR4,849bn, respectively.
BOB’s ratings:
- Long-Term Issuer Rating: affirmed at ‘IND AAA’; Outlook Stable
- Short-Term Issuer Rating: affirmed at ‘IND A1+’
- INR25bn lower tier 2 subordinated debt: affirmed at ‘IND AAA’
- Short-term debt programme: affirmed at ‘IND A1+’
- Fixed deposit rating: affirmed at ‘IND tAAA’
Contacts:
Primary Analyst
Bhaskar Som
Director
+91 22 4000 1766
India Ratings & Research Pvt Ltd
Wockhardt Towers, Level 4, West Wing
Bandra Kurla Complex, Bandra (East)
Mumbai 400051
Secondary Analyst
Prakash Agarwal
Associate Director
+91 22 4000 1753
Committee Chairperson
Ehsan Syed
Director
+91 22 4000 1722
Media Relations: Saraanya Shetty, Mumbai, Tel: + 91 22 4000 1729, Email: saraanya.shetty@indiaratings.co.in.
Additional information is available at www.indiaratings.co.in.The ratings above were solicited by, or on behalf of, the issuer, and therefore, India Ratings has been compensated for the provision of the ratings.
Ratings are not a recommendation or suggestion, directly or indirectly, to you or any other person, to buy, sell, make or hold any investment, loan or security or to undertake any investment strategy with respect to any investment, loan
or security or any issuer.
Applicable criteria, ‘Financial Institutions Rating Criteria' and ‘Rating of Bank Legacy Hybrid and Subdebt’, both dated 12 September 2012, are available
on www.indiaratings.co.in.
ALL CREDIT RATINGS ASSIGNED BY INDIA RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS
LINK:HTTP://INDIARATINGS.CO.IN/UNDERSTANDINGCREDITRATINGS.JSP. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.INDIARATINGS.CO.IN'.
PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. INDIA RATINGS’ CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER
RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE.
Research based
on published
criteria and
reports
India Ratings’ credit
reports are developed
and based on criteria and
credit published earlier
and available in the
public domain. The links
to the same are provided
in each press release.

Timely comment on recent trends
and Events
India Ratings comments on recent and evolving events
and trends in timely and transparent opinions with
superior analytical coverage.

India Ratings Firsts
 First to rate an Infra Debt Fund (IDF)
 First to rate sports stadium and training facility
 First to rate a bond under QFI regulation
 First to rate a Asset Manager
 First to rate a utility tariff backed debt programme
 First to rate a desalination plant
 First to rate a PPP Metro Rail project
 First to rate an International Airport in India
 First to rate a Life Insurance Co.
 First to rate a Ultra Mega Power Project
 First to rate a Railway project on BOT model
 First to rate a Municipal Pooled Fund
 First to publish Credit Enhancement Calculator and Pre
Sale Reports
Wing Commander Rakesh Sharma
India’s first astronaut to conquer space

Credit Outlook FY2016

• STABLE
• Low leverage of OEMs;
Intense competition; Lower
cost of ownership; Uptick in
industrial activity
Auto
• STABLE
• Revival in auto demand
• Higher focus on exports
• “Make in India‟ Campaign
Auto
Suppliers
• STABLE
• Significant Capital
Requirements Ahead; Gradual
Profitability Pick-up from FY16
Banks
• STABLE
• Benefit of last year's low
base; Improving capacity
utilisation; Better Profitability
Cement
• STABLE
• Expected pick-up in
execution; New order inflow ;
Liquidity & credit metrics to
improve
Construction
• STABLE
• Earnings Drivers Intact, Profitability
Decline to be Offset by Top-Line
Growth
Healthcare
• STABLE TO NEGATIVE
• Subsidy Bill to Swell;
Government Ignores Core
Issues
Fertilizer
•STABLE
• Borrowers’ Repayment Capacity to
Improve on Economic Recovery
NBFC
• NEGATIVE TO STABLE
• Mild economic recovery; Less
improvements in counterparty
credit; Hurting fuel supply;
Stressed sponsor BS
Infra
•STABLE
• Muted Growth but Stable
Credit Profile
IT Services
•STABLE
•Brand Lineage Supports
Enrolments, Austerity Measures
Delay Market Expansion
Education
• STABLE
• Spectrum Auction Could Weigh
on Operators’ Balance Sheets
Telecom
• STABLE (FY15)
• Under Recoveries to Reduce
But So Will Gross Refining
Margins
Oil & Gas
• Input cost pressures; Credit
profiles to Improve
Paper
• POSITIVE
• Decelerating Export Growth on Low
Patent Expiry, Large Issuers to
Maintain Credit Profiles
Pharma
• STABLE TO NEGATIVE
• Fuel Supplies; Sector
Consolidation; Muted Capacity
Addition in XIIIth Plan Period
Power
• Weak End-user Demand;
Persistent High Prices;
Deterioration in Credit
Metrics
Real Estate
(FY15)
•Operational Efficiency Drags
Sector from Trough
Retail
• NEGATIVE
• Global Surplus to Weigh
Down Prices for another Year
Cotton
•NEGATIVE
•Demand Uptick, but
Recovery in Credit Health
Marginal
Steel
• STABLE
•Asset Class Outlook Revised Upwards
• Industrial Growth to Boost CV
Demand
Structured
Finance
•STABLE
• Ad Spend to Drive GrowthMedia
•STABLE
• Government support and enabling
environment
Dairy
• STABLE (FY15)
• On the Comeback Trail Driven
by Growing Exports, Stable
Policy Regime
Textiles

Investor Outreach – Select Domestic Coverage
• Employee Provident Fund
Organisation
• Life Insurance Corporation of
India
• General Insurance
Corporation of India
• ICICI Prudential Life
Insurance
• ICIC Prudential General
Insurance
• Reliance Mutual Fund
• ICIC Prudential AMC
• Birla Sunlife Mutual Fund
• DSP Blackrock
• IDFC Mutual Fund
• HDFC Mutual Fund
• LIC NOMURA Mutual Fund
• UTI Mutual Fund
• Religare Mutual Fund
• Kotak Mutual Fund
• Edelweiss Mutual Fund
• J P Morgan Mutual Fund
• Franklin Templeton
• L&T Investment Management
• Tata Asset Management
• JM Financial AMC
• SBI Funds AMC
• Canara Robeco AMC
• State Bank of India
• Union Bank of India
• Canara Bank
• Punjab National Bank
• Bank of Baroda
• Bank of India
• Syndicate Bank
• Oriental Bank of Commerce
• Indian Bank
• Indian Oversees Bank
• ICICI Bank
• HDFC Bank
• Kotak Bank
• IDFC Bank
• Coal Miners Pension Fund
• Armed Forces Insurance Fund
1 June 2015
And many others…

Investor Outreach – Select Offshore Coverage
• GIC
• Temasek
• Everest Capital
• Principal Global Investors
• Metisq Capital
• New Silk Road Investment
• Nippon Life Insurance
Company
• Flowering Tree Inv Mgt
• GE Asset Management
• Heritas Capital
Management
• Tokio Marine
• Tree Line Advisors
• UOB Asset Management
• HSBC Global Asset
Management
• PIMCO
• Capital International
• Schroder Investment
Management
• Franklin Local Funds
• Nomura AMC
• Comgest Far East
• Lion Global Investors
• Wellington Management
• Eastspring Investments
• Ward Ferry Management
• Sumitomo Mitsui AMC
• Mirae Asset Global
Investments
• AIA International
• APG Algemne Pension
Group
• Canada Pension Plan
Investment Board
• Cathay Conning AMC
• DnB AMC
• East Capital AB
• Highbridge Capital
• Moore Capital
• Marshall Wace
• Invesco
• BNP Paribas
• Vontobel AMC
• Fidelity Management
• Capital World
• SAFE Investment
• Indus Capital
• Lone Pine Capital
• AMP Capital Investors
• Bernstein Value
• RCM Asia Pacific
• Amundi
• Aberdeen AMC
• Myraid AMC
• Blackrock
• Bank of Tokyo Mitsubishi
UFG
• Platinum AMC
• Teachers Pension Plan
Ontario
• Sanlam Investment
Management
1 June 2015
And many others…

About India Ratings and Research
India Ratings & Research (India Ratings) is India's Most Respected rating agency committed to providing the Indian credit markets with accurate, timely
and prospective credit opinions. Built on a foundation of independent thinking, rigorous analytics, and an open & balanced approach towards credit
research, India Ratings has grown rapidly during the past decade to establish itself as the THOUGHT LEADERS in Indian fixed income market. Offering a
world of knowledge and experience behind every rating, we transform information to deliver meaning and utility to investors, issuers and other market
participants. The additional context, perspective and insights we provide help financial professionals make important business decisions with confidence.
Ind-Ra currently maintains coverage of corporate issuers, financial institutions, which includes banks and insurance companies. Finance & leasing
companies and managed funds, Urban Local Bodies and Project Finance.
Ind-Ra has six offices in India located at Mumbai, Delhi, Chennai, Bangalore, Hyderabad and Kolkata. Ind-Ra is recognised by the Securities and
Exchange Board of India, the Reserve Bank of India and National Housing Bank.
Ind-Ra is a 100% owned subsidiary of the Fitch Group.
More information available on www.indiaratings.co.in
About Fitch Group
Fitch Group is a global leader in financial information services with operations in more than 30 countries. Fitch Group is comprised of: Fitch Ratings, a
global leader in credit ratings and research; Fitch Solutions, a leading provider of credit market data, analytical tools and risk services; BMI Research, an
independent provider of country risk and industry analysis specializing in emerging and frontier markets; and Fitch Learning, a preeminent training and
professional development firm.
With dual headquarters in London and New York, Fitch Group is majority owned by Hearst Corporation.
More information available on www.fitchratings.com ; www.fitchsolutions.com ; www.fitchlearning.com ; www.bmiresearch.com

Disclaimer
India Ratings & Research’s (India Ratings) credit ratings rely on factual information received from issuers and
other sources.
India Ratings cannot ensure that all such information will be accurate and complete. Further, ratings are
inherently forward-looking, embody assumptions and predictions that by their nature cannot be verified as
facts, and can be affected by future events or conditions that were not anticipated at the
time a rating was issued or affirmed.
The information in this presentation is provided “as is” without any representation or warranty.
A India Ratings credit rating is an opinion as to the creditworthiness of a security and does not
address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned.
A India Ratings report is not a substitute for information provided to investors by the issuer and its agents in
connection with a sale of securities.
Ratings may be changed or withdrawn at any time for any reason in the sole discretion of
India Ratings. The agency does not provide investment advice of any sort. Ratings are not
a recommendation to buy, sell, or hold any security.
ALL INDIA CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS
AND THE TERMS OF USE OF SUCH RATINGS AT WWW.INDIARATINGS.CO.IN

Corporate Headquarters
India Ratings and Research Private Limited
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