saija final reportsaija.in/wp-content/uploads/2016/01/crisil_2013.pdf · the mfi grading report and...
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DISCLAIMER
CRISIL's microfinance institution (MFI) Grading reflects CRISIL’s current opinion on the ability of an
MFI to conduct its operations in a scalable and sustainable manner. In the case of NGO-MFIs and
entities with multiple businesses, CRISIL’s MFI Gradings apply only to their microfinance programmes.
The MFI Grading is a one-time exercise and the Grading will not be kept under surveillance. This
grading is valid for a period of one year from the date of assignment. However, CRISIL reserves the
right to suspend, withdraw, or revise the MFI grading at any time, on the basis of any new information
or unavailability of information or any other circumstances brought to CRISIL’s notice, which CRISIL
believes may have an impact on the grading. CRISIL recommends that the user of the Grading seeks a
review of the Grading if the graded institution/microfinance programme experiences significant
changes/events during this period which could impact the graded institution/its grading.
CRISIL MFI Gradings are based on the information provided by the Institution, or obtained by CRISIL
from sources it considers reliable. CRISIL does not guarantee the completeness or accuracy of the
information on which the MFI Grading is based. CRISIL MFI Grading is not a recommendation to
purchase, sell or hold any financial instrument issued by the graded MFI, or to make loans and
donations / grants to the institution. The MFI Grading does not constitute an audit of the graded MFI by
CRISIL.
The MFI Grading Report and the information contained therein are the intellectual property of CRISIL.
The MFI Grading Report should not be reproduced or distributed or communicated directly or indirectly
in any form to any other person or published or copied in whole or in part, for any purpose or by any
means without the prior written permission of CRISIL. The MFI Grading should not be used for
mobilising deposits/savings/thrift/insurance funds/other funds (including equity) from their
members/clients or general public and should not be used in its external communications, promotional
materials or member/client passbooks. CRISIL is not responsible for any errors and especially states
that it has no financial liability, whatsoever, to the subscribers/ users/transmitters/distributors of its MFI
Gradings. For the latest information on any outstanding CRISIL MFI Gradings, please contact CRISIL
RATING DESK at [email protected] or at (+91-22)-3342 3047/3064.
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CRISIL MFIGrading
MICROFINANCE INSTITUTION (MFI) GRADING
MFI GRADING HISTORY
mfR1 CRISIL’s microfinance institution (MFI) Grading is a current opinion
on the ability of an MFI to conduct its operations in a scalable and
sustainable manner. The MFI Grading is assigned on an eight-point
scale, with ‘mfR1’ being the highest, and ‘mfR8’ the lowest. The MFI
Grading is a measure of the overall performance of an MFI on a
broad range of parameters under CRISIL’s MICROS framework. It
includes a traditional creditworthiness analysis using the CRAMEL
approach, modified to be applicable to the microfinance sector. The
acronym MICROS stands for Management, Institutional
arrangement, Capital adequacy and asset quality, Resources and
asset-liability management, Operational effectiveness, and
Scalability and sustainability.
MFI Grading scale: mfR1 - highest; mfR8 – lowest
mfR2
mfR3
mfR4
mfR5
mfR6
mfR7
mfR8
MFI Grading Assigned in mfR5 April 18, 2012 mfR5 January, 2011 mfR5 July, 2009
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FACT SHEET
Name of the MFI : Saija Finance Private Limited (previously known as
Regards Finance Private Limited)
Year of Incorporation : September 1997
Year of commencement of microfinance programme
: November 2007
Legal status : Private limited company registered as a non-banking
finance company (NBFC) with the RBI and classified
as a non-deposit taking NBFC (NBFC-ND)
Managing Director : Mr. SR Sinha
Office address : 3rd floor, Uma Complex, Frazer Road
Patna - 800 001, Bihar
Tel: +91 612 2216 009
Email: [email protected], [email protected]
Web: www.saija.in
Bankers and lenders : State Bank of India, Maanaveeya Holdings and
Investments Private Limited, IFMR Capital Finance
Private Limited, and Small Industries Development
Bank of India
Statutory Auditors : BSSR and Company, Gurgaon
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CRISIL MFIGrading
ABOUT THE MICROFINANCE PROGRAMME As on March 31, 2013
Lending model : Lends to joint-liability groups (JLGs)
Products : • Microfinance loans: The MFI extends 46 weeks, 12
months, 24 months and 12 months loans of Rs.5,000 to
Rs.50,000 at an interest of 26.00 per cent (on a
reducing-balance basis). Processing fee is one per cent
of the loan amount. Loans include:
o Saija Karobar Rin (SKR): Business loan for self-
employed men and women organised in groups of 4
to 6 members
o Saija Mahila Rin (SMR): Household loan for
income-generating activities, extended to women
organised in groups of 10 to 15
• Loan insurance: The MFI has a tie-up with Life
Insurance Corporation of India (LIC) and India First Life
Insurance Company to offer life insurance to borrowers
(and spouse). It collects an insurance fee of Rs.102 for
loan size of Rs.10,000 and provides life insurance cover
for an assurance of Rs.10,000.
Borrower base : 30,489 (5,702 as on March 31, 2012)
Employees : 120 (77 credit officers)
Number of branches : 7
Loan outstanding : Rs.245.82 million (Rs.23.77 million as on March 31, 2012)
Loans disbursed : Rs.408.87 million (Rs.73.03 million as on March 31, 2012)
Geographical reach : 5 districts of Bihar
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SOCIAL AND TRANSPARENCY INDICATORS As on March 31, 2013 in per cent
Average loan outstanding/per capita gross national income (GNI), 2012 12
Percentage of women staff 10
Percentage of women borrowers 88
Effective IRR (including interest, processing fees, and any other fees) 26.00
Client dropout rate 8
Is interest rate (on declining basis) communicated to clients in writing? Yes
Are processing charges communicated to clients in writing? Yes
Does the MFI provide an official receipt to clients after repayment collections? Yes
Is access to loan of other MFIs a parameter to select/screen clients? Yes
Is access to loan of other MFIs/residual income factored in appraising the client’s repayment capacity?
Yes
Does the MFI appraise the client’s income/poverty/asset level and use this data to target other low-income clients?
Yes
Does the MFI capture and analyse reasons for client dropout rate? Partial**
Are clients provided head office contact details as part of the grievance redressal mechanism?
Yes
*Source: Based on Central Statistical Organisation (CSO) data
GNI is based on current prices and is a quick estimate for financial year 2012-13 **Dropout rates are recorded but not analysed.
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CRISIL MFIGrading
GRADING RATIONALE CRISIL’s microfinance institution (MFI) grading on Saija Finance Private Limited (SFPL) reflects
the following strengths:
• Experienced board and senior management
• Strong financial and managerial support from Accion International and PI International
• Adequate capitalisation to support midterm growth
• Above-average asset quality
The listed grading strengths are offset by the following weaknesses:
• Moderate resource profile
• Concentration of operation in a few districts of Bihar
• High operating expenses and weak earnings profile
Profile
SFPL is a Bihar-based NBFC-ND, registered in New Delhi. It was incorporated in 1997 and
acquired by its current management in 2007. In the same year, it started its microfinance
programme by taking over a small loan portfolio from Saija Vikas, its associate non-profit
organisation. Saija Vikas was registered in July 2007 under the Societies Registration Act No. 21
of 1860.
SFPL’s microfinance programme seeks to facilitate small income-generation ventures, such as
green-groceries, embroidery shops, eateries, tailoring establishments, and agriculture-related
activities. It currently operates through seven branches across five districts of Bihar, namely Patna,
Bhojpur, Vaishali, Saran, and Muzaffarpur. The MFI plans to expand its operations across Bihar
and to Jharkhand and Uttar Pradesh as well. SFPL had 30,489 borrowers and loans outstanding of
Rs.245.82 million as on March 31, 2013.
SFPL offers two types of JLG loans — Saija Karobar Rin for business purposes and Saija Mahila
Rin for household purposes. The former is extended to groups of 4–6 men and women and the
latter to groups of 10–15 women. The loan size varies from Rs.5,000 to Rs.50,000, as per the
client’s repayment capacity, number of loan cycles, and type of activity. The loans are extended for
tenure of 46 weeks, 12 months, 24 months and 12 months at a reducing interest rate of 26.00 per
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cent per annum. The loans are repayable in weekly, fortnightly, and monthly instalments and carry
a one-time processing fee of one per cent of the loan amount.
Shareholding Pattern as on April 30, 2013
*includes share premium amount
6%
5%
35%
35%
19%
Shareholding Pattern as on April 30, 2013
Promoter directors
ACCION Gateway Fund LLC
ACCION Af rica Asia Investment Company
PI Systems International LP
Saija Management and Employee Welfare Trust
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CRISIL MFIGrading
MANAGEMENT
Extensive microfinance experience in area of operations
• SFPL’s founders has over 25 years of experience in banking,
finance, insurance, and providing microfinance services in the
organisation’s area of operations. CRISIL believes that the
founder’s prior experience in a high degree of operational expertise
will help the organisation to expand in new areas, while also
maintaining its portfolio quality.
Adequate credit-approval mechanisms
• The MFI has adequate client selection and credit-approval
mechanisms, as loans are sanctioned only after due diligence is
conducted by the assistant branch manager (ABM) and BM.
• The MFI’s loan sanction process is decentralised at the branch
level. It has tie-ups with two credit bureaus—High Mark and
Equifax—to identify instances of multiple lending.
Continues to receive support from its international partner-Accion International
• SFPL has partnered with the global organisation Accion
International (AI), which has partnerships with more than 60 MFIs
in Latin America, Asia, and Africa. AI provides Saija Finance with
technical support, including the development of loan products,
delivery models, MIS, internal control systems and operations
processes. AI has also deputed two professionals to manage
SFPL’s operations.
Adequate systems and processes
• The MFI’s systems and processes have improved significantly
since the previous grading as it starts using a loan tracking
software called ‘Omni Enterprises’ at the head office (HO) and
branch levels to generate demand and collection statements.
• The software is integrated with the accounting package and can
generate various other reports as on daily basis, including portfolio
at risk (PAR) statement, documentation on loan processing and
disbursements, and progress reports at the field and branch levels.
Adequate internal audit system for current scale of operations
• SFPL has an internal audit team of four personnel to verify demand
and collection sheets and other documents at the branches. The
internal audit is conducted on a monthly basis on Ho and branch
level, and the findings are shared with the respective BMs. The
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branches are required to send the compliance document to the
HO. CRISIL believes that the MFI’s internal audit process is
adequate for its current scale of operations.
Moderate cash management practices
• SFPL has a separate bank account for each branch, which helps
the HO track financial transactions on field. Each branch deposits
its daily collections at its bank and updates the system on the same
day. The HO conducts monthly reconciliation. SFPL has also
availed cash-in-transit and a cash-in-safe insurance. However,
CRISIL identified a few instances where the branches were
maintaining excess cash balance.
Good social impact • In 2011, SFPL launched an entrepreneurial development program
(EDP) and a financial literacy program (FLP) for its members. EDP
provides skill training on general business and basic accounting,
while FLP creates awareness on how savings can be used to
create assets and working capital. CRISIL believes that the MFI
can significantly improve its social impact by scaling up these
programs. About 200 members have enrolled already.
INSTITUTIONAL ARRANGEMENT
Experienced board and senior management
• SFPL has a six-member board, comprising one promoter, two AI-
nominated directors, two Pragati International nominated directors,
and one independent director. The board members have extensive
experience in financial services, banking, development, and
microfinance.
• SFPL’s senior management comprises professionals with
experience in finance, HR, IT, and strategic planning. The team’s
significant microfinance experience is expected to help the
organisation steer its programme.
• SFPL has formed a five-year technical agreement with AI, under
which the latter provides technical assistance and deputes two full-
time professionals to manage SFPL’s operations.
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CRISIL MFIGrading
CAPITAL ADEQUACY AND ASSET QUALITY
Adequate capitalisation
• SFPL’s net worth improved to Rs.252.74 million (as on March 31,
2013) from Rs.6.80 million (as on March 31, 2012) due to equity
infusion in May 2012 from its partners Accion International and
Pragati International.
• Following capital infusion:
o Its capital adequacy ratio (CAR) improved significantly to 97.28
per cent as on March 31, 2013 from 33.83 per cent as on March
31, 2012. Similarly, its debt-equity ratio declined to 0.03 times
from 6.45 times in the same period.
o Moreover, its portfolio increased to Rs.245.82 million as on March
31, 2013 from Rs.23.77 million as on March 31, 2012.
• SFPL has aggressive growth plans for the next two years and
envisages a loan outstanding of Rs.1063.85 million for March 2014.
CRISIL believes its present capital will be sufficient to support growth
over the medium term.
Above average asset quality
• SFPL has maintained above-average asset quality with an on-time
repayment rate of 99.98 per cent as on March 31, 2013 and portfolio
at risk greater than 90 days (PAR>90 days) of 0.02 per cent.
• CRISIL believes that SFPL’s ability to extend repeat loans and meet
the credit demand on a timely basis will be an important grading
factor.
Significant geographic concentration
• SFPL’s entire loan portfolio is concentrated in five districts of Bihar,
thus making it vulnerable to high credit and operational risks.
• As operations are expected to remain concentrated over the near
term, any adverse credit event in area of operations could affect the
MFI’s capitalisation levels. Its ability to maintain delinquency at
acceptable levels while also pursuing growth remains a key grading
sensitivity factor.
RESOURCES AND ASSET LIABILITY MANAGEMENT
Moderate resource profile and high cost of borrowings
• SFPL is extensively dependent on a few lenders including banks,
and financial institutions (FIs). As on September 30, 2012, it had
outstanding borrowings of Rs.671.72 million, sourced from more
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than six lenders. Though the MFI raised Rs.460 million during the
last quarter of 2011-12 (refers to financial year, April 1 to March 31),
it was unable to raise any incremental borrowings in the last six
months of the year.
• SFPL’s weighted average cost of borrowings for the year ended
March 31, 2011, was 15.00 per cent. Its weighted average cost is
similar when compared to other similar MFIs due to constrained
funding from banks to the MFI sector.
• CRISIL believes SFPL’s inability to raise adequate resources on
time will not only impact its business growth but also its asset
quality. Hence, the MFI’s poor borrower to member ratio was 40.00
per cent as on September 30, 2012. Continuous transfer of SHGs
from HIH resulting in incremental demand and dependence on a few
lenders could create liquidity pressures on the MFI.
OPERATIONAL EFFECTIVENESS
Pressure on earnings profile
• Improved income following increase in asset size enabled SFPL to
reduce its net loss to Rs.3.48 million in 2012-13 from Rs.17.35
million in 2011-12. The loss in 2012-13 occurred due to intangibles
written off (Rs.8.00 million).
• Following increase in asset size:
o SFPL’s operational self-sufficiency (OSS) improved to 110.88
per cent as on March 31, 2013 from 54.20 per cent as on March
31, 2012.
o Field productivity indicators have also improved, with loan
outstanding per credit officer increasing to Rs.3.19 million as on
March 31, 2013 from Rs.0.52 million as on March 31, 2012.
Loan outstanding per branch increased to Rs.35.12 million as on
March 31, 2013 from Rs.3.40 million as on March 31, 2012.
o Operating expense (opex) declined to 23.75 per cent in 2012-13
from 30.12 per cent in the previous year. However, as the MFI’s
opex is still higher than its similar-sized peers, it has decided to
increase the productivity of existing staff and branches.
• CRISIL expects SFPL’s earnings profile to remain modest despite
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CRISIL MFIGrading
an increase in disbursements and productivity levels.
SCALABILITY AND SUSTAINABILITY
Adequate management’s experience to sustain operations
• CRISIL believes SFPL has adequate managerial experience,
processes and systems in place to scale and sustain its operations
over the long-term. It benefits from the financial and technical
support it receives from its international partner (Accion Gateway
Fund).
• SFPL expects its advances to increase to Rs.1,063.85 million in
2013-14 from Rs.245.82 million in 2012-13. Given its current size,
these projections may be ambitious but CRISIL expects the MFI to
be able to scale up its operations due to support from Accion as well
as its ability to raise fresh borrowings.
BUSINESS PROFILE
97.62
23.77
245.82
16
6
0
50
100
150
200
250
300
Mar-11 Mar-12
Rs. m
illio
n
Business Growth
Loan outstanding No. of borrowers
245.82 30
0
10
20
30
40
Mar-13
Thousands
Business Growth
No. of borrowers
7 7
5 5
0
2
4
6
8
Mar-11 Mar-
No.
Business Outreach
Branches Districts covered
12%
12%
11%9%
Branch-wise concentration of loan portfolio as on March 31,
2013
14%
72%
Borrowing profile as on March 31, 2013
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5
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Business Outreach
Districts covered Groups
56%
wise concentration of loan portfolio as on March 31,
2013
Patna
Bhojpur
Vaishali
Saran
Muzaffarpur
14%
Borrowing profile as on March 31, 2013
State Bank of India
Maanaveeya Holdings and Investments Private Limited
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CRISIL MFIGrading
FINANCIAL INDICATORS Income and expenditure statement Rs. million
For the year ended 2015 2014 2013 2012 2011
MFI’s Projections Provisional Audited
Fund based income 362.09 208.30 45.72 20.63 21.68
Interest and finance charges 147.80 70.52 4.36 15.62 8.18
Gross spread 214.29 137.77 41.36 5.01 13.50
Fee based income - - 3.64 0.89 4.19
Total income 362.09 208.30 49.36 21.52 25.86
Gross surplus 214.29 137.77 45.00 5.90 17.68
Personnel expenses - - 19.76 13.12 15.14
Administrative expenses 120.65 98.29 17.08 8.98 6.97
Total expenses 120.65 98.29 36.84 22.10 22.11
Provision for loan loss 9.93 17.83 0.03
0.26
Write-off of bad debts - - 0.05 0.13 -
Write-off of intangible assets - - 8.00* - -
Total write-offs and provisions 9.93 17.83 8.46 0.13 0.26
Depreciation 6.35 5.98 2.86 1.86 2.07
Profit/loss before tax 77.37 15.66 -3.16 -18.19 -6.75
Tax 25.53 5.17 0.32 -0.83 0.51
Net surplus 51.84 10.49 -3.48 -17.35 -7.26
*Intangible assets (trademark) written-off
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Balance sheet Rs. million
As on March 31, 2015 2014 2013 2012 2011
Liabilities MFI’s Projections Provisional Audited
Net worth 388.45 336.61 252.74 6.80 23.84
Borrowings 1,260.28 828.06 7.20 43.84 100.21
Provision for loan loss 31.21 21.28 0.63 0.26 -
Other liabilities and provisions 6.94 6.94 24.72 4.37 5.50
Total current liabilities 38.14 28.22 31.46 8.06 5.50
Total liabilities 1,686.87 1192.88 291.40 58.69 129.56
Assets
Loans and advances 1,560.28 1,063.85 245.82 23.77 97.62
Cash & bank balances 2.38 1.02 31.26 5.76 14.70
Security deposit - - 0.14 0.12 -
Total funds deployed 1,562.66 1,064.87 277.42 32.82 113.92
Other current assets & advances 114.53 114.53 8.33 15.27 3.29
Net fixed assets 9.68 13.48 5.66 10.60 12.35
Total assets 1,686.87 1,192.88 291.40 58.70 129.56
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CRISIL MFIGrading
Key Financial Ratios in per cent
For the period ended March 31, 2015 2014 2013 2012 2011
Yield MFI’s Projections Provisional Audited
Fund based yield 27.56 31.04 26.55 23.61 24.78
Portfolio Yield 27.60 31.81 30.55 28.55 28.60
Fee based income/Avg. funds deployed - - 2.35 1.21 5.06
Total income/Avg. funds deployed 27.56 31.04 28.90 24.82 29.84
Cost of funds
Interest paid/Avg. funds deployed 11.25 10.51 2.81 21.29 9.89
Interest paid/Avg. borrowings 14.15 16.89 17.07 21.69 12.37
Interest spread
Spreads on lending 13.41 14.15 9.48 1.93 12.41
Overheads
Operating expense ratio 9.18 14.65 23.75 30.12 26.73
Personnel expense ratio - - 12.74 17.88 18.30
Administrative expense ratio 9.18 14.65 11.01 12.23 8.43
Profitability
Net surplus/Avg. net worth 14.30 3.56 -2.68 -113.28 -25.84
Net profit/Avg. funds deployed 3.95 1.56 -2.24 -23.65 -8.78
Operational self sufficiency 127.17 108.13 110.88 54.20 79.31
Asset quality
Provisioning/Avg. loan outstanding 0.76 2.72 5.96 - 0.36
Capitalisation
Total debt/net worth (times) 3.24 2.46 0.03 6.45 4.20
Capital adequacy 23.06 28.24 97.28 33.83 29.88
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Annexure
1.1 Outreach summary ........................................................................................................ 18
1.2 Human resource and productivity summary ................................................................. 18
1.3 Asset quality.................................................................................................................. 19
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CRISIL MFIGrading
1.1 Outreach summary
As on/For the period ended Unit Mar-13 Mar-12 Mar-11
Borrowers No. 30,489 5,702 16,270
Groups No. 3,220 754 1,889
Branches No. 7 7 7
Villages covered No. 2477 580 1453
Districts No. 5 5 5
Women borrowers % 88 68 84
Disbursements Rs. mn 408.87 73.03 202.98
Loan outstanding Rs. mn 245.82 23.77 97.62
1.2 Human resource and productivity summary
As on/For the period ended Unit Mar-13 Mar-12 Mar-11
Total employees No. 120 75 101
Credit officers No. 77 46 62
Women employees No. 13 9 13
Borrowers/branch No. 4,356 815 2,324
Loan outstanding/branch Rs. mn 35.12 3.40 13.95
Borrowers/credit officer No. 396 124 262
Loan outstanding/credit officer Rs. mn 3.19 0.52 1.57
Average loan outstanding/borrower Rs. mn 8,063 4,169 6,000
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1.3 Asset quality Rs. million
Mar-13 Mar-12 Mar-11
Total outstanding balance associated with loans that are
Amt % of PAR Amt % of PAR Amt % of PAR
Portfolio being current 245.76 99.98 23.74 99.86 97.66 99.79
Late (at least one payment) - - - - -
1-30 days 0.01 -
- 0.04 0.04
31-90 days 0.01 -
- 0.01 0.01
91-180 days
- 0.01 0.03 0.05 0.05
181-365 days 0.01 - 0.03 0.13 0.11 0.11
1 year or more - -
- - -
Total portfolio 245.82 100.00 23.77 100.00 97.87 100.00
Portfolio at risk > 30 days 0.01 0.15 0.17
Portfolio at risk > 90 days - 0.15 0.16
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Contact Us
Analytical Contacts
Mr. Yogesh Dixit Director
[email protected] +91 22 3342 3037
Mr. T Raj Sekhar Associate Director
[email protected] +91 44 4226 3614
CRISIL House, Central Avenue, Hiranandani Business Park Powai, Mumbai 400 076 Phone: + 91 22 3342 3000 Fax: + 91 22 3342 3001 Email: [email protected] www.crisil.com