DIRECTORS REPORT

DEAR MEMBER,

The Directors are pleased to present to you the 29th Annual Report of CRISIL Limited, along with the audited accounts, for the year ended December 31, 2015.

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211 (3C) of the Companies Act, 1956 (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of applicable rules of The Companies (Indian Accounting Standards) Rules, 2015) and the relevant provisions of the Companies Act, 1956 / Companies Act, 2013, as applicable and guidelines issued by the Securities and Exchange Board of India ("SEBI"). There are no material departures from the prescribed norms stipulated by the Accounting Standards in preparation of the Annual Accounts. Accounting policies have been consistently applied except where a newly issued accounting standard, if initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. Management evaluates all recently issued or revised accounting standards on an ongoing basis. The Company discloses consolidated and standalone financial results on a quarterly basis of which standalone results are subjected to limited review and 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. 1,423.16 crore, 11% higher than Rs. 1,277.07 crore in the previous year. Overall operational expenses for the year were Rs. 1,017.46 crore, against Rs. 901.01 crore in the previous year. Operating Profit (EBITDA) improved to Rs. 442.82 crore, against Rs. 412.17 crore, in the previous year. Profit after Tax for the year at Rs. 285.15 crore, 20% of revenue, was higher 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. 1,000.70 crore, 7% higher than Rs. 935.41 crore in the previous year. Overall operational expenses for 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 the previous 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, is included in the "Management's Discussion and Analysis" Report, which forms part of this Annual Report.

DIVIDEND

The Directors recommend for approval of the members at the Annual General Meeting to be held on April 19, 2016, payment of Final Dividend of Rs. 7 per equity share and Special Dividend 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 of Rs. 4 each and the third interim dividend of Rs. 5 per equity share of face value of Re. 1 each. The total dividend for the year works out to Rs. 23 per share (including a Special Dividend of Rs. 3 per share) on a face value of Re. 1 per share in 2015 as against Rs. 20 per share (including a Special Dividend of Rs. 4 per share) on a face value of Re. 1 per share in the previous year.

BUYBACK OF SHARES

During year, the Company had sought the approval of shareholders to buy-back its own fully paid equity shares of Re. 1/- each ("Equity Share"), through the stock exchange mechanism prescribed under the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 1998 ("Buy-back Regulations") and the Companies Act, 2013 ("Act"), for an amount not exceeding Rs. 102 crore (Rupees One Hundred and two crore only) (hereinafter referred to as the "Maximum Offer Size"), (being less than 15% of the total paid-up equity capital and free reserves of the Company as per last standalone audited balance sheet as on December 31, 2014), at a price not exceeding Rs. 2,310/-(Rupees Two Thousand Three Hundred and Ten only) per Equity Share (hereinafter referred to as the "Buy-back") from the open market through BSE Limited and the National Stock Exchange of India Limited in accordance and consonance with the provisions contained in the Act and the provisions contained in the Buy-back Regulations.

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

The Buy-back commenced from July 2, 2015. The Company bought back 5,11,932 equity shares for a total consideration of Rs. 101.98 crore at an average price of Rs. 1,992.02 per share. In terms of the Buy-back Regulations, after expending 99.98% of the total approved amount of Rs. 102 crore towards the Buy-back, the Buy-back was closed on July 14, 2015.

The equity share capital of the Company before the Buy-back was 7,14,50,520 equity shares of Re. 1 each and after extinguishment of 5,11,932 equity shares, the equity share capital of the Company was 7,09,38,588 equity shares of Re. 1 each.

INCREASE IN ISSUED, SUBSCRIBED AND PAID-UP EQUITY SHARE CAPITAL

During the year, the Company issued and allotted 3,63,980 equity shares of the Company to eligible employees on exercise of options granted under Employee Stock Option Schemes of the Company. At the end of the year, the issued, subscribed and paid-up capital of the Company at the end of the year was 7,12,09,103 equity shares of Re. 1 each

REVIEW OF OPERATIONS 2015 A. RATINGS Highlights

• Announced 3,312 new Bank Loan Ratings (BLRs) during the year; total BLRs outstanding exceed 13,776 Assigned over 16,000 SME ratings during the year

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

Business environment

India's economic and business environment remained subdued during 2015 due to weak investment demand and delay in decision-making by corporates. However, growth has picked up 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 capacity utilisation rates. However, revival of private investments is expected only by the second half of next fiscal. Also, the Seventh Central Pay Commission pay-outs could be an additional 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) as of December 2015. Poor monsoon, muted investments, weak working capital demand, rising risk aversion owing to deteriorating asset quality of public sector banks, and an increase in cheaper funds raised via commercial papers slowed credit off take. We expect a gradual pick-up in banks' credit towards the end of FY16, driven by a rise in retail loans, public sector investments and finance requirements of small scale enterprises. Overall, banking sector credit growth is projected to increase to 11-12% by March 2016 vis-a-vis ~10% in FY15.

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

In 2015, CRISIL's BLR business witnessed a muted growth due to weak credit offtake in the manufacturing sector and intensified competition. These factors adversely impacted average realisations. While pricing pressures are likely to continue, expectation of a pick-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 under the NSIC -Performance & Credit Rating Scheme. However, CRISIL continues to serve small and medium enterprises (SMEs) without subsidy from the government and there has been an uptick in volumes in second half of 2015 due to enhanced efforts taken to scale the business. The outlook for the SME sector remains positive, supported by favourable policy changes 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 benefits of ratings, and to increase banks' acceptance of CRISIL's SME ratings. We believe these efforts will positively impact the business.

Operations

CRISIL Ratings maintained its market leadership in 2015 backed by strong performance in its bond ratings, bank loan ratings and SME ratings businesses. CRISIL announced 3,312 new BLRs and 16,000 SME ratings during the year. It has, to date, assigned more than 13,776 BLRs and over 91,000 SME ratings/assessments. This year, SME ratings/ assessments were focused on newer geographies such as the northeast region of the country. The SME business added new clients from the interiors of north and south India.

In 2015, CRISIL Ratings rated various innovative instruments in the corporate bond and securitisation market. We rated a partially-guaranteed debenture issue of a passive infrastructure special purpose vehicle (SPV). We assigned the first highest-safety rating for a future-flow securitisation of an interstate transmission service project. We also assigned rating on the borrowings of chit funds for the first time. In another unique example, CRISIL rated pass-through certificates that were backed by receivables from both retail as well as corporate loans, instead of them being usually backed only by securitised retail loans. All the above innovations were well received by the market, and are seen as significant milestones in deepening of the corporate bond market in India.

CRISIL Ratings continued to conduct regular outreach programmes aimed at providing insights on credit issues to investors and other market participants. The outreach programmes included opinion pieces, bankers' meetings, investor discussion forums, web-conferences, and newsletters.

CRISIL Ratings held the 3rd edition of its annual bond market seminar titled 'New Templates 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 the crucial industry issues faced by both corporates and lenders. Our analysis was well received by all stakeholders including regulators and policy makers.

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

GAC continued to work closely with S&P, growing in new areas such as risk management and regulatory support, including model validation and documentation support while increasing the level of integration with S&P teams globally. With the evolving global regulatory requirements, GAC continued its focus on strengthening its internal controls framework, in collaboration with S&P's control functions. GAC's culture of continuous improvement has created ongoing efficiency gains for S&P through lean management tools, work standardisation and process reengineering.

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

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

Highlights

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

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

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

• Coalition continued its tradition of product innovation, and has entered the Transaction 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 size of the investment banking industry has reached its lowest level since the global financial crisis of 2008-09 with fixed income products at the same level as in 2005. Banks are also actively transforming their front, middle and back-office activities to provide differentiated services, achieving cost efficiencies and increasing productivity: This has resulted in a large portion of the derivatives business being shifted to captives and other cheaper (cost-friendly) offshoring entities. On the brighter side, increasing regulatory changes have opened up newer opportunities for CRISIL GR&A, especially in the Risk & Analytics vertical as well as Coalition. The Coalition Index, which tracks the performance of the top 10 global investment banks, is expected to decrease by

2%. It is a telling barometer of the performance of the global investment banking industry. In 2015, 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 an increase of 12% (following a decrease of 5% in 2014), while investment banking revenues from mergers & acquisitions, and debt and equity markets decreased by 4% (following a growth of 11% in 2014).

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

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

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

Operations

In Financial Research, we embarked on several initiatives to accelerate growth, maximise value to clients, increase sales effectiveness, optimise costs, and fortify our brand globally - all of which has enhanced our competitiveness. We have significantly increased our market presence, which buoyed growth in a tough business environment. We also undertook several thought leadership initiatives targeting traditional active asset managers, insurance companies, hedge funds, investment banks and regulators across continents, which received excellent response and reinforced our position as an industry leader. Our global research centres continue to scale up, with Poland benefiting from regulation-driven-change mandates, and China building on its growth momentum due to increased demand for Asia research support.

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

In Corporate Research, we introduced new analytics solutions and ensured consistent outreach 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 - HR in particular and sales analytics, and we are accordingly ramping-up team strength to meet the increased demand.

In 2015, Coalition added several clients among the top 25 global corporate and investment banks and is now working with all of the top 15 investment banks and more than 20 corporate & investment banks. Coalition delivered a strong performance, driven by its core Competitor and Client Analytics, which reported solid growth. Newer analytics such as Cost/Operating Margin and RWA/Exposure have performed well. Clients are increasingly looking at comprehensive return on equity analysis of their performance across Revenue, Cost and Capital. Coalition has also launched its first analysis of the Transaction Banking and Security Services industries to offer a comprehensive view for Corporate and Investment Banks. Its media strategy has delivered very good results, leading to an estimated media market share of over 40%.

B.2. India Research

Highlights

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

• Our assessments of coal block bidding and potential impact of GST shaped thinking on the issues. We sensitised the industry on importance of better investment planning 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 poor credit growth, high NPAs and squeezed profitability, impacted research  budgets. Consequently, the growth of the Industry Research business remained modest. The Customised Research business was impacted due to decline in private sector investments for the third year in a row. CRISIL Research maintained its high quality independent research and won repeat business from existing and large global clients.

Economic revival is expected in the latter half of 2016 and CRISIL Research is well positioned to assist banking, financial services and corporates through its proprietary research and training products.

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

Therefore, we will continue to focus on enhancing our existing offerings, launching new products with more granular and action-oriented research, and increasing our client engagement initiatives, keeping a sharp tab on our franchise activities that showcase our differentiated positioning in the market.

Operations

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

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

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

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

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

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

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

CRISIL released 'Modified Expectations', a report evaluating the economy-related performance of the Narendra Modi-led government as it completed one year in office. The report integrated the views of Research and Ratings with a macroeconomic assessment to come out with a 360-degree view of the economy. The report received excellent response from media, clients and other stakeholders

C-CER released 'Angsty farms', a report evaluating the impact of rising weather-related shocks on India's agriculture, which remains highly vulnerable. The report received very good response from various stakeholders. We also hosted a successful webinar and a twitter chat on the report.

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

C. INFRASTRUCTURE ADVISORY AND RISK SOLUTIONS

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

C.1. CRISIL Infrastructure Advisory Highlights

• Supported the Indian government on some of their flagship programmes such as Smart 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 Southeast Asia

Business environment

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

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

In the international markets, Africa continues to show progress, albeit at a very slow pace. The business is involved closely with infrastructure development in key African  markets, especially east Africa. Some emerging markets in south-east Asia and the SAARC countries show promise in the near future.

Operations

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

Our focus on government, and multilateral agencies as clients has paid off. The infrastructure advisory business is proud to support several flagship programmes of the Indian government, viz., Smart Cities Mission, Power for All, Rurbanisation, National Solar 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 Power for All by 2019 for 11 states and union territories. CRISIL Infrastructure Advisory was the first consultant appointed for this programme. In the energy sector, we also supported Ministry of Petroleum & Natural Gas (MoPNG) and Directorate General of Hydrocarbons (DGH) in preparing the hydrocarbon vision document for the Northeast. Another prestigious mandate with the Petroleum Planning and Analysis Cell involved preparing a comprehensive master 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 support the Ministry of Rural Development in rolling out the Shyama Prasad Mukherjee Rurban Mission. On the Smart Cities Mission programme, the business won mandates with five cities in Maharashtra, to assist them in preparing proposals for the Smart Cities Challenge. The business has also got the mandate from World Bank on proposing a Railways Development Fund to support the investment plan of Indian Railways. The business is also supporting the Karnataka government on its state highways improvement programme.

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

• Continued to expand footprint in South-Asia, Middle-East and other new geographies.

Business environment

The business environment continued to witness improved traction during the year in India. With increasing focus on strengthening credit risk management and monitoring, demand 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 India and 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. These investments made to strengthen the product base are expected to play a key role in the expansion and growth of the business and significantly contribute to revenues over the next 3 years.

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

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

The business development team continued to build CRS's franchise. We were knowledge partners for the Small Business Banking Network workshop in Goa in January where the Deputy Governor of the Reserve Bank of India was the chief guest. We spoke at several banking forums such as the ASSOCHAM conference on SME financing, and a financial services round table. We organised a webinar on effective credit monitoring and undertook a training session on effective credit risk management for the senior management of a leading government financing entity. We will continue to invest time and money in building our franchise in the coming years.

CRS expects to maintain its growth momentum in 2016 and anticipates revenue to be driven by newer products. The investments made in products and structure should provide much 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 initiatives in different geographies. An S&P - CRISIL joint seminar, 'India - Grinding up amidst challenges', was organised for investors in Hong Kong and Singapore. The discussions at the seminar revolved around India's macro-economic overview and outlook, the road ahead for India's sovereign rating, views on the credit quality of Indian companies and the outlook for key sectors. We also collaborated with S&P this year on their flagship event 'India through the lens of global financial markets' in Mumbai. The speakers made presentations on major credit trends and outlook for India Inc. from a global perspective, and the event was appreciated by investors and issuers alike.

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

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

Following their success in the Middle East, S&P Capital IQ and CRISIL Risk Solutions continue to collaborate successfully in other regions to expand their global footprint. In 2015, they also tasted our first joint success in Kazakhstan. The two companies commenced their relationship in 2011-12 with one project in Saudi Arabia; it has since progressed to over eight projects over the last three years across six countries. In 2015, they are currently delivering two key projects in Kuwait and Kazakhstan that, we believe, will provide the required impetus in these new markets for future growth. The success in the Middle East needs to be translated in other regions and the focus of 2016 will be to create synergies on products and markets to create value globally.

CRISIL's Human Resources team successfully ran its talent acquisition, retention and development agendas during the year. As on December 31, 2015, CRISIL's headcount was 3,753 including all its wholly owned subsidiaries.

Highlights

• CRISIL's senior management team was strengthened through hiring of leaders in strategic roles. CRISIL also continued to strengthen its campus programme, which has been a key source of talent.

• Business HR partners helped drive employee engagement and people agenda across businesses and regions. Key areas involved assimilation of new talent, performance management process, rewards and recognition and employee connect. The team was also instrumental in driving and executing various employee engagement and fun activities through the year.

• This year, the function focussed hugely on training need identification. CRISIL conducted 116 training programmes throughout the year, covering 2,041 man-days.

• We had a rigor in implementation performance management by early closure of individual goals, higher objectivity in goal setting, mid-year review and leadership surveys.

SEGMENT-WISE RESULTS

The Company has identified three business segments in line with the Accounting Standard on 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 financial statements.

DIRECTORS

The members of the Board of Directors of the Company are eminent persons of proven competence and integrity. Besides having financial literacy, experience, leadership qualities and the ability to think strategically, the Directors have a significant degree of commitment to the Company and devote adequate time for the meetings, preparation and attendance. Board members possess education, expertise, skills and experience in various sectors and industries required to manage and guide the Company.

The Policy of the Company on Directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of section 178, is appended as Annexure I to this Report

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

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

Mr. Neeraj Sahai resigned as Director of the Company on October 17, 2015. Your Directors place on record their sincere appreciation of the valuable contribution made by him to CRISIL.

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

In accordance with the Articles of Association of the Company and the provisions of the Companies Act, 2013, Mr. Yann Le Pallec retires by rotation and being eligible, seeks re-appointment.

BOARD INDEPENDENCE

Our definition of 'Independence' of Directors is derived from Regulation 16(b) of the Securities 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 relationships disclosed, 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 held during the year, are provided in the Report on Corporate Governance, a part of this Annual Report.

NUMBER OF MEETINGS OF THE BOARD

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

The Board met five times in financial year 2015 viz., on February 14, April 17, April 28, July 17 and October 17. The maximum interval between any two meetings did not exceed 120 days.

ANNUAL EVALUATION BY THE BOARD

During the year, the Board has carried out the annual evaluation of its own performance as well as the evaluation  of the working of its Committees and individual Directors, including Chairman of the Board. This exercise was carried out through a structured questionnaire prepared separately for Board, Committee and individual Directors.

The questionnaire for Board evaluation was prepared taking into consideration various aspects of the Board's functioning such as understanding of Board members of their roles and responsibilities, time devoted by the Board to Company's long-term strategic issues, quality and transparency of Board discussions, quality, quantity and timeliness of the information flow between Board members and management, Board's effectiveness in disseminating information to shareholders and in representing shareholder interests, Board information on industry trends and regulatory developments and discharge of fiduciary duties by the Board.

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

Peer assessment of Directors, based on parameters such as participation and contribution to Board deliberations, ability to guide the Company in key matters and, knowledge and understanding of relevant areas were received by the Board for individual feedback.

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

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 the Managing 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 and efficient conduct of its business,  including adherence to the Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures. The Company's internal control systems are commensurate with the nature of its business and the size and complexity of its operations. These are routinely tested and certified by Statutory as well as Internal Auditors. Significant audit observations and follow up actions thereon are reported to the Audit Committee. For ensuring independence of audits, the Internal Auditors report directly to the Audit Committee. Both Internal and Statutory Auditors have exclusive executive sessions with the Audit Committee on a regular basis. In addition, during the year, the Management performed a 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 various risks to key business objectives which has been enhanced during this year. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Audit Committee and the Board of Directors of the Company. These have also been reported and discussed in detail in the Management's Discussion and Analysis Report, annexed to this report.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the Internal, Statutory and Secretarial Auditors and external consultants and the reviews performed by Management and the relevant Board committees, including the Audit Committee, the Board is of the opinion that the Company's internal financial controls were adequate and effective during the financial year 2015.

DIRECTORS' RESPONSIBILITY  STATEMENT

Your Directors hereby confirm that:

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

ii. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the

Company at the end of the financial year and of the profits of the Company for that period;

iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. t hey have prepared the annual accounts on a going concern basis;

v. they have laid down internal financial controls for the Company and such internal financial controls are adequate and operating effectively; and

vi. they have devised proper systems to ensure compliance with the provisions of all applicable 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 financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

PARTICULARS REGARDING  CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, AND FOREIGN EXCHANGE EARNINGS  AND OUTGO

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

However, in order to protect and conserve precious natural resources, following design aspects 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 insulation to minimize the air-condition load on the floor beneath.

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

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) I n order to save energy and cost of recycling water, the key valve system has been set up for waterless sanitation systems.

Similar design aspects have been factored for Gurgaon office also. The Pune SEZ (Hinjewadi) office, which is of about 42,500 sq. ft., is designed with LED lighting. This gives higher savings in energy consumption as compared with the CFL lighting.

CORPORATE SOCIAL RESPONSIBILITY

The Company has constituted a Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of the Companies Act, 2013. The role of the Committee is to review the CSR Policy, indicate activities to be undertaken by the Company towards CSR and formulate a transparent monitoring mechanism to ensure implementation of projects and activities undertaken by the Company towards CSR.

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

VIGIL MECHANISM

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

SUBSIDIARY COMPANIES

As on December 31, 2015, the Company had four Indian and seven overseas wholly owned subsidiaries. There has been no change in the number of subsidiaries or in the nature of business of the subsidiaries, during the year under review. In accordance with Section 129(3) of the Companies Act, 2013, the Company has prepared a consolidated financial statement of the Company and all its subsidiary companies, which is forming part of the Annual Report. A statement containing salient features of the financial statements of the subsidiary companies is also included in the Annual Report.

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

In accordance with third proviso of Section 136(1) of the Companies Act, 2013, the Annual Report of the Company, containing therein its standalone and the consolidated financial 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 the subsidiary 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 the subsidiary companies may write to the Company Secretary at the Company's registered office.

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

The Company has received, in terms of Clause 24(f) of the erstwhile Listing Agreement, observation letters, dated December 31, 2015 from NSE (National Stock Exchange of India Limited) and December 30, 2015

from BSE (BSE Limited), the Stock Exchanges where the equity shares of the Company are listed, to the draft Scheme of Amalgamation conveying their 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 already been filed and will come up for hearing in due course in 2016.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION  188(1)

A significant quantum of related party transactions undertaken by the Company is with its subsidiary companies engaged in product delivery of CRISIL businesses and business development activities. The Company has also been providing analytical support to McGraw Hill Financial Inc. (MHFI) entities as a part of a Master Services Agreement, which transaction has been approved by the shareholders though a resolution passed by postal ballot on December 15, 2014.

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

All contracts / arrangements / transactions with related parties that were executed in 2015 were in the ordinary course of business and at an arms' length. During the year, there were no related party transactions which were materially significant and that could have a potential conflict with the interests of the Company at large. All related party transactions are mentioned in the notes to the accounts. The particulars of material contracts or arrangements with related parties referred to in Section 188(1), is given in prescribed Form AOC - 2 as Annexure III.

As required under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated a Related Party Transactions 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 operating procedures 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 section 186 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 years until the conclusion of the 30th Annual General Meeting, subject to ratification by the shareholders at the intermittent 29th Annual General Meeting.

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

The Board recommends ratification of their appointment from the conclusion of this Annual 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, Practising Company Secretary to conduct the Secretarial Audit and his Report on Company's Secretarial Audit 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 Committee of 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, as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, is annexed to this report.  

CORPORATE GOVERNANCE

The Company is committed to maintaining the highest standards of Corporate Governance and adhering to the Corporate Governance requirements as set out by Securities and Exchange Board of India. The Report on Corporate Governance as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,

2015 forms part of the Annual Report. The Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforementioned 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 Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees are available at the Registered Office of the Company during working hours for a period of 21 days before the Annual General Meeting and shall be made available to any shareholder on request. Such details are also available on your Company's website, <http://www.crisil.com/investor/financial-reports.html>.

Disclosures with respect to the remuneration of Directors and Employees as required under Section 197(12) of Companies Act, 2013 read with Rule 5(1) Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 have been appended as Annexure V to this Report.

The Nomination and Remuneration Committee of the Company has affirmed at its meeting held on February 9,  2016 that the remuneration is as per the remuneration policy of the Company.

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 through postal ballot on February 4, 2011. The Employee Stock Option Scheme - 2012 (ESOS

2012) was approved by the shareholders vide a special resolution passed through postal ballot on April 10, 2012. The Employee Stock Option Scheme - 2014 (ESOS 2014) was approved by the shareholders 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 Annexure VI to this Report.

EXTRACT OF ANNUAL RETURN

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

LITIGATIONS

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

FINANCIAL YEAR

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

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

ACKNOWLEDGEMENTS

The Board of Directors wishes to thank the employees of CRISIL for their exemplary dedication 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 in the professional integrity of CRISIL by customers and investors who have patronised its services. 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 of Directors also wishes to place on record its gratitude for the faith reposed in CRISIL by the Shareholders, Securities and Exchange Board of India, the Reserve Bank of India, the Government of India, and the state governments. The role played by the media in highlighting 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  

(DIN: 05102955)

Place : Mumbai,

date : February 9, 2016