The company held its Analyst Meet on 17/04/2011 and was addressed by MD and CEO, Roopa Kudva

Key highlights

• There was a forex loss of Rs 2.87 crore for Q1 CY'12 as against gain of Rs 1.57 crore in the corresponding previous quarter. Forex would continue to play a big role in margins as nearly 52% of its forex revenues come in $ currency and the about 36% of its forex revenues in Pounds. However, management now has adopted a simple hedge policy and so far has hedged to the extent of its 40% of its CY'12 forex revenues.

• Other expense apart from the forex losses includes some provision of bad debts which is normal provisioning done by the company and some additional miscellaneous expenditure.

• Rating segment which contribute about 44% of total revenues, reported spurt in margins from 39% to 46% for Q1 CY'12 quarter. This was lead by higher number of bond ratings particularly in the month of Mar'12 from NBFC companies as compared to NIL for the corresponding previous quarter, higher bank loan ratings due to increase in number of companies rated (just to give comparison for whole year, under Basel 2 requirement, Crisil rated bout 2750 companies in CY'11, while for Q1 CY'12 alone, the figure stood at 1100) and increase in Global Analytical Research work from S&P. Lower base effect of Q1 CY'11, also helped in resultant spurt in Q1 CY'12 margins.
• The company continued to maintain its market share of about 51% in BLR ratings. In SME, Crisil completed about 25000 client's ratings and there are about 20000 more SME's who are unrated. The margins are maintained in this sub segment, despite lower ticket size and tough competition as company worked on a model where it links its costs and income and thereby maintain its delta.

• Going forward, the management expects Ratings business to continue to grow, lead by higher number of Basel 2 ratings, SME ratings, better bond market paper. Crisil through its leadership position, brand name, preference from bankers, its exhaustive knowledge in the domain and by better communicating and establishing the relationships with clients, will continue to grow despite higher competition and increase in regulations. Apart from that, new products like Education ratings, Real Estate ratings, playgroup ratings etc will continue to add to growth.

• In Research business, which constitutes about 50% of Q1 CY'12 revenues, the margins stood at about 30% as against 36% y.o.y largely due to forex losses and higher base effect of Q1 CY'11. Crisil has merged the Irevna and Pipal research under one umbrella called Crisil Global Research and Analysis which allows better communication of brand to existing and new customers.

• Further transparency of information and more and more information are sought by the regulatory authorities which result in increase in scope of activities of Irevna and Pipal. Also more and more banks are coming back with more confidence to Crisil. Securitization research, Documentation, model validation, Stress tests etc are some of the further activities which will drive the revenue stream.

• There is not enough business for the Advisory Service business during CY'11 and Q1 CY'12 due to uncertainty and lack of policy action on government front. Also less number of project tenders, environment and land issues continues to remain a problem area. The segment reported Rs 12.71 crore of revenue and about Rs 1.25 crore of profits.

• Overall, although the competition and regulatory issues will increase, Crisil has in the past grown and will continue to grow in all three segments of businesses. Its geographical diversion has played a key role in ensuring a strong sustainable business model where at one point of time in 2001 about 98% of revenue came from India and today it is around 45%.