Annual Report 2006-07 - ICRA

annual 

report 

Enhancing Business Value through Intellectual Leadership 

ICRA Limited 

An Associate of Moody’s Investors Service

Contents 

ICRA at a Glance .............................................................................................. 2 


Board of Directors ............................................................................................. 8 

Senior Management ........................................................................................ 11 

Directors’ Report .............................................................................................. 12 

Annexures to the Directors’ Report .................................................................... 20 

Corporate Governance Report ......................................................................... 21 

Auditors’ Certificate ......................................................................................... 35 

Certificate by Chief Executive Officer and Chief Financial Officer ....................... 36 

Management Discussion and Analysis Report .................................................. 37 

Financial Highlights of ICRA Limited ................................................................ 48 

Auditors’ Report .............................................................................................. 49 

Annexure to the Auditors’ Report ..................................................................... 51 

Balance Sheet ................................................................................................. 54 

Profit and Loss Account ................................................................................... 55 

Schedules ....................................................................................................... 56 

Notes forming part of the Accounts .................................................................. 63 

Balance Sheet Abstract and Company’s General Business Profile ..................... 69 

Statement pursuant to Section 212 of the Companies Act, 1956 ........................ 70 

Cash Flow Statement of ICRA Limited .............................................................. 71 

Group ICRA 

Auditors’ Report on the Consolidated Financial Statements ............................... 73 

Consolidated Balance Sheet ............................................................................ 75 

Consolidated Profit and Loss Account .............................................................. 76 

Schedules ....................................................................................................... 77 

Notes forming part of the Accounts .................................................................. 84 

Cash Flow Statement of Group ICRA ............................................................... 88 

Frequently Asked Questions ............................................................................ 90 

Trends in Select Financial Indicators ................................................................. 92 

ICRA Management Consulting Services Limited (IMaCS) 

Board of Directors ........................................................................................... 99 

Directors’ Report ............................................................................................ 100 

Auditors’ Report ............................................................................................ 107 

Annexure to the Auditors’ Report ................................................................... 109 

Balance Sheet ............................................................................................... 112 

Profit and Loss Account ................................................................................. 113 

Schedules ..................................................................................................... 114 

Notes forming part of the Accounts ................................................................ 120 

Balance Sheet Abstract and Company’s General Business Profile ................... 123 

Cash Flow Statement ..................................................................................... 124 

ICRA Techno Analytics Limited (ICTEAS) 

Board of Directors ......................................................................................... 131 


Auditors’ Report ............................................................................................ 138 


Balance Sheet ............................................................................................... 142 


Schedules ..................................................................................................... 144 



Cash Flow Statement ..................................................................................... 154 

ICRA Online Limited 

Board of Directors ......................................................................................... 159 


Auditors’ Report ............................................................................................ 165 


Balance Sheet ............................................................................................... 170 


Schedules ..................................................................................................... 172 



Cash Flow Statement ..................................................................................... 183

annual 

report 

2006- 

2007 


Sixteenth Annual Report

ICRA at a Glance 

ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited) was set up in 

1991 by leading financial/investment institutions, commercial banks and financial services companies as 

an independent and professional Investment Information and Credit Rating Agency. Today, ICRA and its 

subsidiaries together form the ICRA Group of Companies (Group ICRA). 

GROUP ICRA 

ICRA 

Credit 

Rating 

Management 

Consulting 

IT 

(Software) 

BPO 

• ICRA Limited 

• ICRA Management Consulting Services Limited 

• ICRA Techno Analytics Limited 

• ICRA Online Limited 

Alliance with Moody’s Investors Service 

The international Credit Rating Agency Moody’s Investors Service is ICRA’s largest shareholder. The 

participation of Moody’s is supported by a Technical Services Agreement, which entails Moody’s 

providing certain high-value technical services to ICRA. Specifically, the agreement is aimed at benefiting 

ICRA’s in-house research capabilities, and providing it with access to Moody’s global research base. The 

agreement also envisages Moody’s conducting regular training and business seminars for ICRA analysts 

on various subjects to help them better understand and manage concepts and issues relating to the 

development of the capital markets in India. Besides this formal training programme, the agreement 

provides for Moody’s advising ICRA on Rating-products strategy, and the Ratings business in general. 

2

ANNUAL REPORT 2006-2007 • ICRA LIMITED 

The ICRA Factor 

Facilitating efficiency in business... 

ICRA information products, Ratings, and solutions reflect independent, professional and impartial 

opinions, which assist businesses enhance the quality of their decisions and help issuers access a 

broader investor base and even lesser known companies approach the money and capital markets. 

The research factor... 

We strongly believe that quality and authenticity of information are derivatives of an organisation’s 

research base. We have dedicated teams for Monetary, Fiscal, Industry and Sector research, and a 

panel of Advisors to enhance our in-house capabilities. Our research base enables us to maintain the 

highest standards of quality and credibility. 

Committed to the development of the financial market... 

The focus of ICRA in the coming years will continue to be on developing innovative concepts and 

products in a dynamic market environment, generating and promoting wider investor education and 

interest, enhancing efficiency and transparency in the financial market, and providing a healthier 

environment for market participants and regulators. 

Our products and services are designed to: 

• Provide information and guidance to institutional and individual investors/creditors. 

• Enhance the ability of borrowers/issuers to access the money market and the capital market for 

tapping a larger volume of resources from a wider range of the investing public. 

• Assist the regulators in promoting transparency in the financial markets. 

• Provide intermediaries with a tool to improve efficiency in the funds raising process. 

Range of Services 

Rating Services 

As an early entrant in the Credit Rating business, ICRA Limited is one of the most experienced Credit 

Rating Agencies in the country today. ICRA Rates rupee-denominated debt instruments issued by 

manufacturing companies, commercial banks, non-banking finance companies, financial institutions, 

public sector undertakings and municipalities, among others. ICRA also Rates structured obligations 

and sector-specific debt obligations such as instruments issued by Power, Telecom and Infrastructure 

companies. The other services offered include Corporate Governance Rating, Stakeholder Value and 

Governance Rating, Rating of Claims Paying Ability of Insurance Companies, Project Finance Rating, 

and Line of Credit Rating. Recently, ICRA, along with National Small Industries Corporation Limited 

(NSIC), has launched a Performance and Credit Rating Scheme for Small Scale Enterprises in India. The 

service is aimed at enabling Small and Medium Enterprises (SMEs) improve their access to institutional 

credit, increase their competitiveness, and raise their market standing. 

Grading Services 

The Grading Services offered by ICRA employ pioneering concepts and methodologies, and include 

Grading of: Construction Entities; Real Estate Developers and Projects; Mutual Fund Schemes and 

Fund Houses; Healthcare Entities; Maritime Training Institutes; and Initial Public Offers (IPOs). The 

Grading of Construction Entities seeks to provide an independent opinion on the quality of 

performance of the entities Graded. Similarly, the Grading of Real Estate Developers and Projects seeks 

to make property buyers aware of the risks associated with real estate projects and with the developers’ 

ability to deliver in accordance with the terms agreed. ICRA’s Mutual Fund Gradings aim at providing 

an independent opinion on the credit/performance risks associated with investing in various Mutual 

Fund schemes and on the managerial and governance quality of Asset Management Companies. 

3

Mr. D.N. Ghosh, Chairman, ICRA, striking the gong at the BSE to mark the commencement of trading in the 

ICRA stock as (from left) Mr. Rajnikant Patel, Managing Director & CEO, BSE, Mr. Naresh Takkar, Managing Director, 

ICRA, and Mr. P.K. Choudhury, Vice-Chairman & Group CEO, ICRA, look on 

From left: Mr. Naresh Takkar, Managing Director, ICRA; Mr. R. Sridharan, Managing Director & CEO, SBI Capital 

Markets; Mr. P.K. Choudhury, Vice-Chairman & Group CEO, ICRA; and Mr. R. Raghuttama Rao, Managing Director, 

IMaCS; during the Road Show in Mumbai ahead of ICRA's IPO 

4


Mr. D.N. Ghosh, Chairman, ICRA, speaking at the ICRA Online Mutual Fund Awards Function in Mumbai 

From left: Mr. R. Sivakumar, Fund Manager, ABN AMRO Asset Management Company; Mr. Mahendra Jajoo, 

Head–Fixed Income, ABN AMRO Asset Management Company; and Mr. A.P. Kurian, Chairman, 

Association of Mutual Funds in India, at the ICRA Online Mutual Fund Awards Function in Mumbai 

5

ICRA’s Healthcare Gradings present an independent opinion on the quality of care provided by 

healthcare entities. In the education sector, ICRA offers the innovative service of Grading of Maritime 

Training Institutes in India. In IPO Grading, an ICRA-assigned IPO Grade represents a relative 

assessment of the “fundamentals” of the issue Graded in relation to the universe of other listed equity 

securities in India. 

Information Services 

The Information Services Division focuses on providing authentic data and value-added products 

used by intermediaries, financial institutions, banks, asset managers, institutional and individual 

investors, and others. The Division’s portfolio of products includes sector/industry-specific studies/ 

publications, corporate reports, and mandate-based studies (customised research). 

Advisory Services 

ICRA Management Consulting Services Limited (IMaCS), a subsidiary of ICRA, offers wide-ranging 

management Advisory Services covering the areas of Strategy Practice, Risk Management Practice, 

Regulatory Practice, Transaction Practice, and Content. While Strategy Practice focuses on improving 

an organisation’s competitiveness across its value chain, Regulatory Practice advises clients like 

governments and regulators on formulation of economic and financial policies. Under Transaction 

Practice, IMaCS provides consulting service at a transaction level to infrastructure projects, while 

under Risk Management Practice advice is offered on the efficient management of risk to banks and 

other lenders. 

Online Software and Business Process Outsourcing 

ICRA Online Limited, a subsidiary of ICRA, provides technology solutions, both in the form of 

products and services, targeted at distributors of third-party financial products, insurance brokers, and 

stock broking houses. The Business Process Outsourcing (BPO) Division of ICRA Online serves 

financial services companies, financial institutions, investment banks, private equity and venture 

capital funds, boutique investment advisors, market researchers, financial information vendors, 

consulting companies, and the like. The focus is on high-end knowledge processing like financial 

modelling, data analysis, valuation, outsourced research, equity research, fixed income research, 

financial assets pricing, financial report writing, and econometric analysis. 

Software Development 

ICRA Techno Analytics Limited (ICTEAS), a subsidiary of ICRA, offers a complete portfolio of Information 

Technology (IT) solutions to meet the dynamic needs of present day businesses. The services range from 

the traditional development of client-server, web-centric and mobile applications to the generation of 

cutting edge business analytics. An in-depth knowledge of various technology areas enables ICTEAS 

provide end-to-end services of excellent quality. ICTEAS uses a mix of onsite/offshore strategies to 

optimise bottom-line benefits for its customers. 

6

annual 

report 




ICRA LIMITED 

7

Board of Directors 

Mr. D.N. Ghosh, Chairman 

Dr. Uddesh Kohli 

Prof. Deepak Nayyar 

Mr. Piyush G. Mankad 

Mr. Amal Ganguli 

Mr. Chester V.A. Murray 

Mr. Thomas J. Keller 1 

Ms. Jennifer Elliott 2 

Mr. P.K. Choudhury 

Mr. Naresh Takkar 

Audit Committee 

Remuneration 

Committee 

Shareholders’/Investors’ 

Committee 

Auditors 

Solicitors 

Formerly, Chairman, State 

Bank of India 

Formerly, Chairman & 

Managing Director, Power 

Finance Corporation Limited 

Formerly, Vice Chancellor, 

University of Delhi 

Formerly, Executive Director, 

Asian Development Bank 

Formerly, Chairman and 

Senior Partner, 

PricewaterhouseCoopers 

Executive Vice President, 

International, Moody’s Investors 

Service 

Group Managing Director, 

Global Project Finance and 

Structured Finance Business 

Development, Moody’s 

Investors Service 

Group Managing Director, 

Asia Pacific, Moody’s 

Asia Pacific Limited 

Vice-Chairman & Group CEO 

Managing Director 


Dr. Uddesh Kohli 


Mr. Amal Ganguli 

Mr. Thomas J. Keller 3 

Ms. Jennifer Elliott 4 



Mr. Piyush G. Mankad 

Mr. Chester V.A. Murray 

Dr. Uddesh Kohli, Chairman 



Vipin Aggarwal & Associates 

E-4, Defence Colony 

New Delhi 110024 

Luthra & Luthra Law Offices 

103, Ashoka Estate 

Barakhamba Road 


Company Secretary 

Bankers 

Share Transfer Agent 

Registered Office 

Amarchand & Mangaldas & 

Suresh A. Shroff & Co. 

Amarchand Towers 

216, Okhla Industrial Estate 

Phase III, New Delhi 110020 

Fox Mandal & Co. 

Solicitors & Advocates 

FM House, A-9, Sector 9 

Noida 201301 

Mr. Vijay Wadhwa 

HDFC Bank Limited 

Surya Kiran Building 

KG Marg, New Delhi 110001 

ABN Amro Bank N.V. 

Hansalaya, 

15 Barakhamba Road 


State Bank of Hyderabad 


KG Marg, New Delhi 110001 

Deutsche Bank AG 

Ground Floor, Infinity Tower 

DLF, Phase II 

Gurgaon 122002, Haryana 

Intime Spectrum Registry Limited 

A-31, 3 rd Floor 

Naraina Industrial Area, Phase I 

Near P.V.R. Naraina 


1105, Kailash Building, 11 th Floor 

26, Kasturba Gandhi Marg 

Connaught Place 


Corporate Office Building No. 8, 

2 nd Floor, Tower A 

DLF Cyber City, Phase II 


Visit us at 

www.icra.in 

www.icraratings.com 

1 

has ceased to be ICRA’s Director since May 23, 2007 

2 

appointed Additional Director on ICRA’s Board with effect from May 23, 2007 

3 

has ceased to be a member since May 23, 2007 

4 

appointed member with effect from May 23, 2007 

8


ICRA Board of Directors 

Mr. Dhruba Narayan 

Ghosh is the Non-Executive 

Chairman and an 

Independent Director of ICRA 

and has been associated with 

the Company since its 

incorporation. He is also 

Chairman of ICRA’s Rating 

Committee, Audit 

Committee, and 

Remuneration Committee, 

besides being Chairman of 

ICRA Management 

Consulting Services Limited. 

Mr. Ghosh has extensive 

experience in the fields of 

finance and administration, 

having worked as Secretary, 

Department of Production & 

Supplies, Ministry of 

Defence; Chairman of State 

Bank of India; Chairman of 

the Boards of Directors of 

Philips India Limited and 

Larsen & Toubro Limited; 

Chairman of the Board of 

Governors of the Indian 

Institute of Management, 

Lucknow; Chairman of 

Management Development 

Institute, Gurgaon; and 

Chairman of the Peerless 

Group of Companies. 

Currently, Mr. Ghosh is 

associated with a number of 

companies as Chairman and 

Director. 

Dr. Uddesh Kohli is an 

Independent Director of 

ICRA. He is an Engineer from 

the University of Roorkee and 

holds a Post-Graduate 

Diploma in Industrial 

Administration from the 

Manchester University, UK. 

He obtained his Ph.D. in 

Economics from the Delhi 

School of Economics. 

Dr. Kohli has been Chairman 

and Managing Director of 

Power Finance Corporation 

Limited, and has worked with 

the Planning Commission, 

Government of India, 

reaching the position of 

Advisor (Additional Secretary 

level). He has carried out 

international assignments for 

Asian Development Bank, 

United Nations Industrial 

Development Organization, 

United Nations Development 

Programme, United Nations 

Office for Project Services, 

International Labour 

Organization, and the United 

Nations. He is at present a 

Director on the Boards of 

National Research 

Development Corporation 

Limited, National Mineral 

Development Corporation 

Limited, Alstom Projects 

India Limited, Lanco 

Infratech Limited, J&K 

Minerals Limited, WEBCON 

Limited, and CybizCall 

(International) Limited. Dr. 

Kohli’s areas of expertise 

include development 

planning, finance and 

project formulation, 

appraisal, sustainability and 

monitoring, energy 

planning, training and 

human resource 

development. 

Prof. Deepak Nayyar, 

an eminent economist, is an 


ICRA. He is Professor of 

Economics at Jawaharlal 

Nehru University, New Delhi. 

Earlier, he has taught at the 

University of Oxford, the 

University of Sussex, and the 

Indian Institute of 

Management, Calcutta. 

Professor Nayyar was Vice 

Chancellor of the University 

of Delhi from 2000 to 2005. 

He also served as Chief 

Economic Adviser to the 

Government of India and 

Secretary in the Ministry of 

Finance. In the past, he was 

a Director on the Boards of 

State Trading Corporation of 

India, the State Bank of 

India, Export-Import Bank of 

India, and Maruti Udyog. 

He was educated at St. 

Stephen’s College, University 

of Delhi. Thereafter, as a 

Rhodes Scholar, he went on 

to study at Balliol College, 

University of Oxford, where 

he obtained a B. Phil and a 

D. Phil in Economics. He 

has received the V.K.R.V. Rao 

Award for his contribution to 

research in Economics. He is 

an Honorary Fellow of Balliol 

College, Oxford. Professor 

Nayyar is Chairman of the 

Board of Governors of the 

UNU World Institute for 

Development Economics 

Research, Helsinki, a 

Member of the Board of 

Directors of the Social 

Science Research Council in 

the United States, and 

Chairman of the Advisory 

Council for the Department 

of International 

Development, Queen 

Elizabeth House, University of 

Oxford. He is a member of 

the National Knowledge 

Commission in India. He is 

also Vice President of the 

International Association of 

Universities, Paris. 

Mr. Piyush Gunwantrai 

Mankad, an Independent 

Director of ICRA, is a retired 

civil servant with a 

distinguished career of over 

40 years in the prestigious 

Indian Administrative 

Service, which he joined in 

1964, topping his batch. He 

was educated at Delhi 

University, India, and later 

at Cambridge, UK, where he 

obtained a post-graduate 

Diploma in Development 

Studies, with distinction. 

Some of the important 

positions that he held 

include Counselor 

(Economic) in the Indian 

Embassy, Tokyo; Controller 

of Capital Issues, Ministry of 

Finance; Finance Secretary, 

Government of India; and 

Executive Director for India 

and four other countries and 

Board Member, Asian 

Development Bank, Manila, 

which was his last 

assignment till July 2004. 

His areas of experience and 

expertise include, among 

others, public finance and 

policy; capital market 

regulation and 

development; promotion of 

industry, foreign direct 

investment and 

infrastructure; and public 

administration. 

Mr. Amal Ganguli is an 


ICRA. He is a Fellow of the 

Institute of Chartered 

Accountants in England & 

Wales as well as the Institute 

of Chartered Accountants of 

India. He did his training in 

London, and worked there 

with Peat Marwick Mitchell & 

Co. Mr. Ganguli joined 

Price Waterhouse in India in 

1964 and at the time of his 

retirement, was the 

Chairman and Senior Partner 

of PricewaterhouseCoopers 

in India. He has been a 

member of several study 

groups of the Institute of 

Chartered Accountants of 

India and has also worked as 

an independent short-term 

consultant to the World Bank 

after his retirement. 

Mr. Ganguli is on the Boards 

of a number of companies 

including Flextronics Software 

Systems Limited, Tube 

Investments of India Limited, 

HCL Technologies Limited, 

New Delhi Television Limited, 

Century Textiles and 

Industries Limited, AVTEC 

Limited, Maruti Udyog 

Limited, and Videsh Sanchar 

Nigam Limited. 

9


Mr. Chester Van Alen 

Murray is a Non- 


ICRA. He holds a Bachelor of 

Arts Degree in International 

Relations from Brown 

University, USA. Mr. Murray 

has been Executive Vice 

President—International for 

Moody’s Investors Service 

since January 2004, and is 

responsible for Moody’s 

Ratings and Research 

business internationally. His 

career with Moody’s began 

in 1985, when he was a 

Senior Analyst in the 

Financial Institutions Group. 

In 1990, he was named 

Associate Director for that 

group. The following year he 

was named Associate 

Director for Moody’s 

Insurance Group and in 

1993 he was elevated to the 

position of Managing 

Director, with responsibility 

for the Life Insurance Group 

and Managed Funds 

worldwide. He was 

transferred to London in 

1996 as Group Managing 

Director—Europe. In 2001, 

Mr. Murray returned to New 

York to assume the role of 

Senior Managing Director in 

charge of Investor Services, 

Managed Funds, and 

Corporate and Rating 

Communications. In October 

2002, Mr. Murray was 

named Senior Vice President 

and Chief Human Resources 

Officer of Moody’s 

Corporation, having 

responsibilities for Human 

Resources and 

Communications globally. 

Mr. Thomas John Keller is 

a Non-Independent Director 

of ICRA. 1 He is a Graduate 

from the University of Rhode 

Island and holds a BBA 

Degree in Finance, as well as 

an MBA Degree from Iona 

College, USA. From August 

2002 to March 2007, 

Mr. Keller was Group 


responsible for Moody’s 

offices and ratings in Asia 

Pacific, based in Hong Kong. 

Prior to that, he worked in 

Tokyo for five years, first as 

Managing Director of the 

Ratings Group and then as 

Representative Director of 

Moody’s Japan. In March 

2007, Mr. Keller assumed 

responsibility for Global 

Project Finance, and 

Structured Finance business 

development. Mr. Keller 

joined Moody’s in 1992 and 

his initial analytical 

responsibilities covered a 

broad range of sectors, 

including high grade 

corporate, and high yield 

industrials and financial 

services. Prior to joining 

Moody’s, Mr. Keller worked 

for Chemical Bank and 

Manufacturer’s Hanover Trust 

Company, both of the USA. 

Mr. Chetan Modi is a Non- 

Independent Alternate 

Director to Mr. Chester Van 

Alen Murray in ICRA. 2 

Mr. Modi holds a Bachelor of 

Arts Degree from Christ’s 

College, University of 

Cambridge, UK, and an 

MBA from the University of 

Warwick, UK. Mr. Modi 

joined the London office of 

Moody’s as a Senior Analyst 

in 2001 and was transferred 

to Moody’s India in 2006. 

He has over 20 years of 

professional experience. Prior 

to joining Moody’s, Mr. Modi 

worked for Rolls-Royce, 

Powergen, Halliburton and 

the British Antarctic Survey, in 

various roles covering project 

finance, international power 

project development, energy 

trading, oil exploration, and 

space science. He was 

appointed Alternate Director 

to Mr. Murray by the ICRA 

Board in February 2007. 

Ms. Jennifer Elliott is a Non-Independent Director of 

ICRA. 3 She received her B.A. in English Literature and 

L.L.B. from the University of Sydney and has an M.A. in 

Southeast Asian Business Studies from the School of 

Oriental and African Studies, London University. 

Ms. Elliott is Group Managing Director, Asia Pacific, 

Moody’s Asia Pacific Limited, and in that capacity has 

management and oversight of Moody’s business in the 

region. She also has responsibility for management of 

the Structured Finance Business (excluding derivatives) 

in Asia Pacific and Japan. Ms. Elliott has been with 

Moody’s for over 13 years working in the United 

States, Europe and Asia, in both credit and general 

management functions. Most recently, she was Vice 

President and Chief Human Resources Officer of 

Moody’s Corporation. In that role, which she held 

since February 2005, Ms. Elliott was responsible for all 

aspects of Moody’s global Human Resources (HR) 

activities, including recruiting, employee relations, 

compensation and benefits, organisational 

development, and HR information systems. Ms. Elliott 

joined Moody’s Sydney office in 1993 as an analyst in 

the Structured Finance Group. In 1996, she transferred 

to Moody’s London office, where she was a Vice 

President—Senior Credit Officer responsible for rating 

asset-backed commercial paper (ABCP) and term 

transactions across Europe. In 1999, Ms. Elliott was 

appointed Managing Director for Moody’s Australia, 

and also had responsibility for the Australian Structured 

Finance Group and the Asian Business Development 

Group. Prior to joining Moody’s, Ms. Elliott worked as 

a banking and finance lawyer in Sydney. 

1 

Mr. Keller has ceased to be a Director of ICRA Limited since May 23, 2007. 

2 

Mr. Modi has ceased to be a Director of ICRA Limited since May 23, 2007. 

3 

Ms. Elliott has been appointed Additional Director of ICRA Limited since May 23, 2007. 

10



Senior Management 

Mr. Pranab Kumar 

Choudhury is the Vice- 

Chairman of ICRA and CEO 

of the ICRA Group. He is 

also the Chairman of ICRA 

Online Limited and a 

Director on the Boards of 


Consulting Services Limited 

and ICRA Techno Analytics 

Limited. Besides, he is the 

Vice-Chairman of the 

Manila-based Association of 

Credit Rating Agencies in 

Asia (ACRAA), and a Director 

on the Board of Oil and 

Natural Gas Corporation 

Limited (ONGC). 

Mr. Choudhury holds a 

Bachelor’s and a Master’s 

Degree in Commerce from 

the University of Calcutta 

(now Kolkata). He is a 

Chartered Accountant from 

the Institute of Chartered 

Accountants of India and 

also holds a Post-Graduate 

Diploma in Advanced 

Financial Management from 

the Maastricht School of 

Management, The 

Netherlands. Besides, 

Mr. Choudhury is a C.A.I.B. 

from The Institute of Bankers, 

London, and a C.A.I.I.B. 

from the Indian Institute of 

Bankers. With a professional 

experience of over 35 years 

now, Mr. Choudhury has, 

prior to joining to ICRA, 

worked in the manufacturing 

industry, and the commercial 

banking, development 

banking, and merchant 

banking sectors. 

Mr. Naresh Takkar is the 

Managing Director of ICRA. 

He is also a Director of ICRA 

Techno Analytics Limited. 

Mr. Takkar is a Chartered 

Accountant from the Institute 

of Chartered Accountants of 

India and holds a Bachelor’s 

Degree in Commerce from 

the University of Delhi. He 

has been associated with 

ICRA for over 15 years now. 

Mr. Takkar has led ICRA’s 

teams for rating many firsttime 

transactions in India, 

including the first future flow 

securitisation, collateralised 

debt obligation, partial 

guarantee structure, and 

whole business 

securitisation, besides 

spearheading ICRA’s 

initiatives in introducing 

concepts like corporate 

governance rating in the 

domestic market. He has led 

ICRA’s teams for developing 

analytical criteria for various 

sectors, including corporate 

entities, banks, project 

finance, structured finance, 

and corporate governance, 

and has handled rating 

assignments in diverse areas 

including structured finance, 

power, telecommunications, 

roads, utilities, public 

finance, real estate, hotels, 

automobiles and building 

materials, among others. 

Ms. Anuradha Ray 

Senior Vice-President 

Mr. L. Shivakumar 


Mr. Jayanta Chatterjee 



Chief Financial Officer & 


Mr. Vivek Mathur 


Mr. R.S. Walia 

Vice-President 

11

Directors’ Report 

To the Members, 


Your Directors have pleasure in presenting the 16 th Annual Report of your Company along with the 

Audited Accounts for the year ended March 31, 2007. 

Financial Performance 

During its 16 th year of operations, your Company earned a Net Profit of Rs. 161.00 million as against 

Rs. 126.51 million during the previous year. Growth in Profit after Tax during the year under review 

stood at 27% vis-à-vis 56% during the previous year. Your Company’s Earning per Share for the year 

ended March 31, 2007 was Rs. 18.23 as against Rs. 14.37 the previous year. The financial results of 

your Company for the year ended March 31, 2007 are presented in the following table. 

Particulars 2006-07 (Rs. million) 2005-06 (Rs. million) 

Rating Services Fees 388.95 312.94 

Information Services Fees 4.74 6.74 

BPO Services Fees 4.21 12.45 

Income from Operations 397.90 332.13 

Other Income 69.79 53.95 

Total Income 467.69 386.08 

Total Expenditure -228.93 -196.95 

Profit before Depreciation, Interest & Tax 238.76 189.13 

Depreciation -16.00 -15.23 

Profit before Interest & Tax 222.76 173.90 

Interest Paid -0.45 0.00 

Provision for Taxes -61.31 -47.39 

Profit after Tax 161.00 126.51 

Previous Year Adjustments -0.01 -3.70 

Profit Available for Appropriation 160.99 122.81 

Appropriation 

Proposed Dividend 45.00 35.22 

Corporate Tax on Proposed Dividend 7.64 4.94 

Transfer to General Reserve 108.35 82.65 

160.99 122.81 

12



Review of Operations 

Rating Services 

Market Overview 

The Indian economy continued to grow in 2006-07, and while the services sector accounted for a 

large portion of the growth in gross domestic product (GDP), the industrial sector also reported 

conspicuous growth during the year stated. The increase in the rate of investment since 2002-03, as 

reflected by Gross Domestic Capital Formation, continued during 2006-07, sustaining industrial 

performance. Resource mobilisation also kept pace with the increase in economic activity. Equity, 

Bank Credit and External Commercial Borrowings (ECBs) accounted for most of the resources 

mobilised by corporate entities during the year under review. Banks ran up high credit-deposit ratios, 

supplemented their funding base with certificates of deposit (CDs), liquidated their excess holdings of 

Statutory Liquidity Ratio (SLR) bonds, and expanded their capital through the issue of Tier-II and the 

newly-introduced hybrid bonds. 

Rating Services Review 

Corporate Sector 

Continued buoyancy and a positive outlook on the economy led to higher capital formation during 

the year under review. However, as in the previous year, in 2006-07 too, sources of funds for the 

corporate sector largely included bank credit, equity, and ECBs. There are some indications that, 

going forward, the corporate bond market would get more active, going by the emergence of “single 

loan sell-offs” (in such deals the primary lender, that is the bank, securitises the receivables through 

pass-through certificates, or PTCs; the investors in these PTCs are primarily the Mutual Funds). In 

addition, the Government is also taking initiatives to develop the corporate bond market. 

In recent years, infrastructure development in the country has been hard pressed to keep pace with 

economic growth. It is believed that if the current momentum of economic growth were to be 

sustained, investments in infrastructure would have to increase significantly. But even so, the bond 

market has not seen many debt issues by infrastructure project-financing entities, given that such 

projects are perceived to carry higher credit risk. Thus, Rating revenues from this sector have 

remained low. However, going forward, certain initiatives, like the Jawaharlal Nehru National Urban 

Renewal Mission (JNNURM) and the Public Private Partnership (PPP) initiatives of Government of India 

are expected to provide a fillip to infrastructure projects. These initiatives are also expected to have a 

positive impact on the Rating business. JNNURM, for instance, requires the relative ranking of risks 

associated with various issuers. Similarly, PPP projects are expected to obtain Ratings both at the preand 

post-bid stage. Your Company has the expertise to offer these products. 

Moving ahead, Ratings in the corporate sector (including infrastructure-related entities) are expected 

to report growth with the Reserve Bank of India (RBI) finalising its guidelines on risk Rating of bank 

loans and working capital for arriving at capital adequacy in accordance with the Standardised 

Approach of the Basel II Accord. Your Company’s strengths in this line of activity include a long track 

record of Rating companies across sectors, maintenance of Rating performance metrics, and 

acknowledged expertise in most sectors. These are likely to be the key factors that banks would 

consider while choosing Rating agencies to assess their portfolio. 

Financial Sector 

During 2006-07, activity in the domestic financial sector increased perceptibly with banks continuing 

to report high demand for credit (the rate of increase of such demand was however marginally lower 

than in the previous year). Mobilisation of Lower Tier–II debt and Hybrid debt increased significantly 

during the year under review as banks sought to enhance capital to support growth in asset book. 

13


Placement of CDs also increased sharply in 2006-07 as banks needed bulk funds to meet credit 

demand. With growth in corporate and structured finance Ratings being subdued and demand in the 

financial sector increasing, the revenue share of financial sector Ratings increased further in 2006-07. 

Towards the end of the financial year 2005-06, the RBI allowed banks, for the first time, to raise 

hybrid debt capital instruments, thereby enabling them to meet the increase in their capital 

requirements following credit growth and also provide for additional risk capital under the proposed 

Basel II norms. Your Company has evolved a methodology to rate such instruments, in line with 

international Rating best practices, and has also assigned Ratings to several issuers of hybrid debt 

capital instruments. However, your Company has a relatively low market share in this segment as its 

Rating methodology, which is aligned to international best practices unlike those of some other 

domestic credit Rating agencies, differentiates between hybrid instruments and normal subordinated 

debts for the purpose of Rating. 

During the year under review, your Company further strengthened the position of its debt mutual 

funds Rating product, adding new Asset Management Companies (AMCs) as clients, besides Rating 

more debt schemes of its existing AMC-clients. In August 2006, the Securities and Exchange Board of 

India (SEBI) allowed Indian mutual fund houses to launch capital protection oriented schemes. Such 

schemes seek to protect the capital invested therein through suitable orientation of their portfolio 

structure. Your Company has evolved a methodology to Rate such schemes and also Rated such 

products during the year under review. 

Currently, the Non-Banking Finance Companies (NBFC) sector, having gone through a phase of 

consolidation, has very few large entities, and these entities compete on the basis of their 

geographical proximity to, and superior understanding of, their respective borrower segments. Your 

Company has had a good share of Ratings in this segment, and added some new NBFC clients 

during the year under review. 

Going forward, investment and consumption demand in the economy are expected to remain strong, 

with the result that the need for funds is likely to be high. Bank credit is also expected to report robust 

growth, and with higher capital requirement, Rating activity is likely to increase. Additionally, in the 

financial sector, implementation of the Basel II capital adequacy framework is expected to provide a 

further boost to Rating mandates coming from banks. 

Structured Finance 

During the year under review, the volume of Structured Finance products issued increased significantly 

over the previous fiscal. The final guidelines on securitisation of performing assets, issued by the RBI 

in February 2006, prohibited Originators from booking profit up-front at the time of securitisation, 

raised the capital charge on credit enhancements provided, and prohibited release of credit 

enhancement during the course of the transaction. Consequently, capital relief and profit booking no 

longer remained the key motives for securitisation of assets. However, tight liquidity conditions, along 

with continued growth in retail assets, drove some of the key players in the retail loan industry— 

especially those whose portfolios grew rapidly—to securitise a significant portion of their incremental 

loan disbursements. 

Preference for bilateral/direct assignment of a loan pool to a single investor—as opposed to the issue 

of PTCs to multiple investors—gained further ground during the year under review, with a significant 

proportion of all ABS issuances in 2006-07 pertaining to such direct assignments. Another trend that 

gained strength during the year under review was that of private sector banks and multinational 

NBFCs acquiring retail loan portfolios from smaller NBFCs, on a bilateral basis. While these 

transactions typically happen on an “unrated basis”, your Company Rated some of these transactions on 

a private basis, at the request of the investor concerned. The increase in Structured Finance issuance was 

14



also driven partly by the significant rise in the securitisation of single corporate loans. During the year, 

ICRA also Rated a pool of Small Ticket Personal Loans (STPLs), a new asset class in the Indian market. 

The addition of new asset classes as well as new Originators and Investors augurs well, as it promises to 

lend greater depth to the domestic securitisation market. 

Research & Publications 

ICRA Bulletin: Money & Finance 

With the Indian economy undergoing fundamental changes, your Company has built up a research 

programme to analyse contemporary developments that characterise the Indian money and finance 

world. The ultimate objective is to develop analytical models that can explain the inter-related 

movements of the principal macro-variables that define the monetary and fiscal sector of the Indian 

economy. The ICRA Bulletin: Money & Finance is a periodical publication directed towards individuals 

with an interest in understanding the reasons underlying policy initiatives and outcomes. 

Industry and Sector Analysis 

For industry research, your Company leverages on its extensive sectoral knowledge base, which 

covers a diverse spectrum on industries. The industry studies present an in-depth analysis of different 

sectors/industries, providing insights into industry competitiveness, the imperatives for succeeding in a 

global scenario, and the relative positions of industry participants. 

Customised Research 

Your Company undertakes mandate-based exercises, which are customised to address the unique 

needs and requirements of clients. The need-based information solutions offered by your Company 

are ratified by a thorough verification of facts, thus providing an information advantage to the 

investor. Your Company has successfully conducted mandate-based studies for clients across a wide 

spectrum of industries, including power, ports, automobiles, information technology and textiles, 

among others. 

Corporate Analysis 

To facilitate investment decisions of large investors and meet the information requirements of others, 

your Company offers analysis and reports on Indian corporates. These reports provide exhaustive and 

reliable information, and analysis by your Company’s Research Analysts, on an ever-growing universe 

of corporates, with the critique covering all areas of business, industry, market, financial and 

operational analysis. The reports have regular updates to cover the implication of changes in business 

and economic conditions on corporates. 

Franchise Development 

During the year under review, your Company made considerable efforts towards franchise building. 

Such efforts included holding seminars and workshops, and instituting awards recognising excellence. 

Your Company organised several seminars and workshops during the year under review on 

contemporary topics, including ICRA’s Approach for Rating Hybrid Capital, and also Capital 

Protected Funds, ICRA’s Views on the Structured Finance Business, and Credit Quality Issues in the 

Construction Sector. Some of these seminars were held jointly with Moody’s Investors Service. Your 

Company also powered the Fourth Mutual Funds Awards organised by its subsidiary, ICRA Online 

Limited, during the year under review. Over the years, acceptance of the awards has been increasing 

among the Mutual Fund fraternity, and the industry looks forward to this recognition. Your Company 

also powered the Financial Advisor Awards and International Trade Awards along with CNBC-TV 18 

during the year under review. Both the awards were launched for the first time by the television 

channel mentioned. Your Company considers these to be strategic business initiatives, and would be 

making efforts to build further on them. 

15


Subsidiary Companies 

During the year under review, your Company acquired the balance shares of M/s ICRA Online 

Limited from the existing shareholders, converting ICRA Online Limited to a wholly-owned subsidiary 

of your Company. 

The Audited Statements of Account of the subsidiary companies, viz. M/s ICRA Management 

Consulting Services Limited, M/s ICRA Techno Analytics Limited, and M/s ICRA Online Limited, for the 

year 2006-07, together with the Directors’ Report and Auditors’ Report, are attached to the Balance 

Sheet of your Company as required under Section 212 of the Companies Act, 1956. The 

Consolidated Financial Statements of Group ICRA for the year 2006-07, which form part of the 

Annual Report, are also attached. 

Recovery of Security Deposit from Associated Journals Limited 

During the year 1998-99, your Company had filed a suit with the Hon’ble High Court of Delhi for 

recovery of a deposit of Rs. 4.67 million along with interest due thereon, receivable from Associated 

Journals Limited towards refund of the security deposit for premises located at Herald House, 

Bahadurshah Zafar Marg, New Delhi. Associated Journals Limited has made a counter claim of 

Rs. 1.29 million along with interest against your Company. Your Company has also filed another suit 

with the Hon’ble High Court of Allahabad for winding up of Associated Journals Limited. During the year 

under review, there was no significant progress in the matter. 

Branches of the Company 

At present, your Company operates its business from its offices located in Delhi, Mumbai, Kolkata, 

Chennai, Ahmedabad, Bangalore, Hyderabad, and Pune. 

During the year under review, the Head Office of your Company was shifted from New Delhi to 

Gurgaon, Haryana, on leased premises. 

Human Resource Development & Training 

Human resource development continued to be accorded high priority during the year under review, 

with emphasis being placed on improving skill, competence and knowledge through regular training 

and in-house/external professional development programmes. The relation between employees and 

management of your Company continued to remain very harmonious during the year. The 

management had periodical discussions with employees, with such discussions being aimed at 

providing the best work environment and facilities to them. Your Company has a consultative and 

participative management style, which has facilitated achievement of its corporate goals. The morale 

of employees continued to remain high during the year under review, contributing positively to the 

progress of your Company. 

Employees Stock Option Scheme (ESOS) 

Pursuant to the resolution passed by the Shareholders at the Annual General Meeting held on June 

12, 2006 for the grant of options, options for 906,000 Equity Shares amounting to 9.06% of the 

Equity Shares Capital of your Company have been granted to eligible employees. The Employees 

Stock Option Scheme is administered by the ESOS Compensation Committee of the Board of your 

Company and the ESOS Welfare Trust. These Stock Options were granted to eligible employees and 

16



Wholetime Directors of your Company and its subsidiaries during the year under review. The details of 

the Stock Options granted under the Scheme are annexed to the Directors’ Report. 

Particulars of Employees 

The information on employees who received remuneration of Rs. 2.4 million or more per annum is 

required to be given under Section 217 (2A) of the Companies Act, 1956 and Companies (Particulars 

of Employees) Rules, 1975, as annexure hereto. However, in terms of Section 219 (1) (b) (iv) of the 

Companies Act, 1956, the Directors’ Report is being sent to all the shareholders of the Company 

without this annexure. Any shareholders interested in obtaining a copy of the said annexure may write 

to the Company Secretary at the Registered Office of the Company. 

Conservation of Energy, Technology Absorption, and Foreign Exchange 

Earnings and Expenditure 

As your Company is not engaged in any manufacturing activity, the particulars relating to 

conservation of energy and technology absorption as mentioned in the Companies (Disclosure of 

Particulars in the Report of the Board of Directors) Rules, 1988 are not applicable to it. However, 

emphasis is placed on employing techniques that result in the conservation of energy. Details on the 

foreign exchange earnings and expenditure of your Company appear in the Notes on Accounts. 

Directors 

During the year under review, Mr. Piyush G. Mankad, Mr. Amal Ganguli, Mr. Chester V.A. Murray, 

and Mr. Thomas J. Keller were appointed Directors of your Company by the shareholders in the 

Annual General Meeting held in June 2006. Further, Mr. P.K. Choudhury was elevated from the level 

of Managing Director to the level of Vice-Chairman & Group CEO, while Mr. Naresh Takkar was 

appointed Managing Director with the approval of the shareholders in the aforementioned Annual 

General Meeting. 

Mr. Chetan Modi was appointed Alternate Director to Mr. Chester V.A. Murray on February 14, 2007. 

However, Mr. Chetan Modi ceased to be Alternate Director with Mr. Chester V.A. Murray being present 

for the Board meeting on May 23, 2007. 

Mr. Thomas J. Keller has ceased to be Director following his resignation from the Board on May 23, 

2007. The Board places on record its deep appreciation of the valuable advice and guidance 

provided by him throughout his tenure with your Company. 

Ms. Jennifer Elliott has been appointed Additional Director of your Company at the Board Meeting 

held on May 23, 2007. She will hold office till the date of the next Annual General Meeting. The 

resolution seeking her appointment as Director has been included in the Agenda of the Annual 

General Meeting. 

Pursuant to the provisions of Section 256 of the Companies Act, 1956, and the Articles of Association 

of your Company, Mr. D.N. Ghosh and Dr. Uddesh Kohli retire by rotation, and being eligible, offer 

themselves for reappointment. 

17


Directors’ Responsibility Statement 

As required under the provisions contained in Section 217(2AA) of the Companies Act, 1956 your 

Directors hereby confirm that: 

• in the preparation of the Annual Accounts, the applicable accounting standards had been 

followed; 

• the Directors had selected such accounting policies and applied them consistently and made 

judgements 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 profit of the 

Company for that period; 

• the Directors had taken proper and sufficient care for the maintenance of adequate accounting 

records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets 

of the Company and for preventing and detecting frauds and other irregularities; and 

• the Directors had prepared the Annual Accounts on a going concern basis. 

Auditors 

M/s Vipin Aggarwal & Associates, Chartered Accountants, Statutory Auditors of your Company, retire 

at the forthcoming Annual General Meeting and are eligible for reappointment. They have confirmed 

their eligibility for reappointment under the provisions of Section 224 (IB) of the Companies Act, 

1956. 

Dividend 

The Board of Directors recommends for approval of the shareholders at the forthcoming Annual 

General Meeting, payment of dividend of Rs. 4.50 per equity share (previous year Rs. 4.00 per equity 

share) for the financial year ended March 31, 2007. If the shareholders approve the dividend at the 

forthcoming Annual General Meeting, the dividend shall be paid to (i) all those Members whose 

names appear in the Register of Members as on July 24, 2007 and (ii) all those Members whose 

names appear on that date as beneficial owners as furnished by National Securities Depository Limited 

and Central Depository Services (India) Limited. 

Acknowledgements 

Your Directors acknowledge the co-operation and assistance received from various institutions, 

Government agencies and professionals in different disciplines. 

Your Directors wish to place on record their appreciation of the contribution made by the members of 

staff of your Company. 

On behalf of the Board of Directors 

Place : New Delhi 

(D.N. Ghosh) 

Date : May 23, 2007 Chairman 

18


Mr. D.N. Ghosh, Chairman, ICRA, lighting the lamp at the ICRA Listing Ceremony 

in Mumbai 

From left: Mr. P.K. Choudhury, Vice-Chairman & Group CEO, ICRA, and 

Mr. Chetan Salve, Executive Director & Co-Head, Equity Product Group, 

Kotak Mahindra Capital Company, at the ICRA Listing Ceremony in Mumbai. 

Mr. D.N. Ghosh, Chairman, ICRA, is in the foreground 

From left: Mr. Antony Kottackal of SBI Capital Markets; Mr. Naresh Takkar, 

Mr. P.K. Choudhury, and Mr. Vijay Wadhwa, all of ICRA; and Mr. Rasesh Vasa of 

Kotak Mahindra Capital Company during the Road Show in Mumbai ahead of 

ICRA’s IPO 

19 

19

Annexures to the Directors’ Report 

Information required to be disclosed under SEBI (ESOS & ESPS) 

Guidelines, 1999 

Description As on March 31, 2007 

a. Options Granted as on March 24, 2007 615,763 

b. Pricing Formula IPO Issue Price 

c. Options Vested Nil 

d. Options Exercised Nil 

e. Total Number of Shares arising as a result of Exercise of Options Nil 

f. Options Lapsed Nil 

g. Variation of Terms of Options Nil 

h. Money Realised by Exercise of Options Nil 

i. Total Number of Options in force 615,763 

j. Employee-wise details of Options granted to: 

(i) The options that will vest annually to Senior Managerial 

Personnel of your Company and its subsidiaries are as under: 

Name of Designation March 24, March 24, March 24, 

Employee 2008 2009 2010 

Mr. Pranab Kumar Vice-Chairman 20,000 15,000 15,000 

Choudhury 

& Group CEO 

Mr. Naresh Takkar Managing Director 20,000 15,000 15,000 

Mr. Raghavendra Managing Director, 20,000 15,000 15,000 

Raghuttama Rao ICRA Management 


Mr. L. Shivakumar General Manager 14,136 10,601 10,601 

Mr. Vivek Mathur General Manager 12,956 9,718 9,718 

Mr. Anjan Deb Ghosh General Manager 12,956 9,718 9,718 

Mr. Jayanta Chatterjee General Manager 12,956 9,718 9,718 

Mr. Vikas Aggarwal General Manager 7,780 5,834 5,834 

Ms. Anuradha Ray General Manager 7,131 5,348 5,348 

Mr. Subrata Ray General Manager 6,296 4,723 4,723 

Mr. Vijay Wadhwa CFO & Co. Secretary 5,563 4,172 4,172 

Mr. Prateep Guha Managing Director, 2,000 1,500 1,500 

ICRA Techno Analytics 

Limited 

Mr. Aditya Agarwal Joint Managing Director, 1,400 1,050 1,050 


(ii) any other employee who receives a grant in any one year of 

options amounting to 5% or more of option granted during that year. 

(iii) identified employees who were granted option, during any one year, 

equal to or exceeding 1% of the issued capital (excluding outstanding 

warrants and conversion) of the Company at the time of grant. 

N.A. 

N.A. 

k. Diluted Earning Per Share pursuant to issue of shares on exercise of 

option calculated in accordance with [Accounting Standard 

(AS) 20 Earning Per Share] (Rs.) 18.23 

l. Weighted average exercise price of the options (Rs.) N.A. 

m. Options have been granted at IPO Issue Price of Rs. 330 per share. 

Since grant price is higher than fair value of options as per Black-Scholes 

Pricing Model, there is no change in the compensation costs disclosed 

in the accounts. 

20


Corporate Governance Report 

A. Company’s Philosophy on Corporate Governance 

Your Company’s Corporate Governance system is based on certain key principles, including fairness 

and integrity, transparency and disclosure, accountability, equal treatment of all shareholders, and 

social responsibility. Corporate Governance extends beyond corporate laws. Its fundamental objective 

is not the mere fulfilment of the requirements of law, but also the institution of, and adherence to, 

systems and procedures ensuring commitment of the Board in managing a company in a transparent 

manner for the maximisation of long-term shareholder value. 

Your Company has adopted an appropriate Corporate Governance framework to ensure timely and 

accurate disclosure of all material matters, including financial position, performance, ownership, and 

governance. Significantly, your Company adopted Corporate Governance and Disclosure practices 

much before these became applicable to it. 

Your Company’s policies and practices relating to Corporate Governance are discussed in the 

following sections. 

B. Board of Directors 

(i) Composition of the Board 

The Board of Directors of your Company has an optimum combination of Executive and Non- 

Executive Directors so as to have a balanced Board Structure. The Board has nine Directors, two of 

whom are Executive Directors, and the rest seven, Non-Executive Directors. Of the seven Non- 

Executive Directors, five are Independent Directors. The Chairman of the Board of Directors of your 

Company is an Independent Director. The number of Independent Directors is more than one-third 

the total number of Directors. The number of Non-Executive Directors is more than 50% of the total 

number of Directors. 

None of the Directors on the Board of your Company is a member of more than 10 Committees and 

Chairman of more than five Committees (in compliance with Clause 49 of the Listing Agreement), 

considering all the companies in which they are Directors. One of the Independent Directors of your 

Company is a Director on the Board of Directors of “ICRA Management Consulting Services 

Limited”(IMaCS), a material non-listed Indian subsidiary company of your Company. 

21


The composition of the Board of Directors of your Company along with the other Directorships (if any) 

held by each of the Directors is brought out in the following two tables. 

Name of Position Relationship No. No. of Board No. of Board 

Director 1 with other of other Committee(s) Committee(s) 

Directors Directorships of which she/he of which she/he 

is a member 2 is Chairman 2 

Mr. Dhruba Chairman None 4 1 1 

Narayan Ghosh Non-Executive— 

Independent Director 

Mr. Pranab Kumar Executive— None 4 1 3 

Choudhury 

Non-Independent 

Director 

Mr. Naresh Takkar Executive—Non- None 1 1 None 


Mr. Uddesh Kohli Non-Executive— None 7 3 2 


Prof. Deepak Nayyar Non-Executive— None 1 2 None 


Mr. Piyush Non-Executive— None 9 6 2 

Gunwantrai Mankad Independent Director 

Mr. Amal Ganguli Non-Executive— None 11 4 4 


Mr. Chester Van Non-Executive— None 17*** None None 

Alen Murray 


Director 

Mr. Thomas 

Non-Executive— 

John Keller, Jr. 3 Non-Independent None 11*** 1 None 

Director 

Mr. Chetan Modi 4 Non-Executive—Non- None 2 None None 


(Alternate Director to 

Mr. Chester Van Alen 

Murray) 

Ms. Jennifer Elliott 5 Non-Executive— None 6 1 None 


Director 

1 

None of the Directors of your Company was holding any shares of your Company as on March 31, 2007. 

2 

Includes membership/chairmanship only of the Audit Committee(s) and Shareholders’/Investors’ Grievances Committee in all companies including ICRA Limited. 

3 

Mr. Thomas J. Keller has ceased to be Director following his resignation from the Board on May 23, 2007. 

4 

Mr. Chetan Modi ceased to be Alternate Director with Mr. Chester Van Alen Murray being present for the Board meeting on May 23, 2007. 

5 

Ms. Jennifer Elliott has been appointed Additional Director of your Company at the Board Meeting held on May 23, 2007. 

*** Including Private Companies and Foreign Companies. 

22



Name of Director 

Directorship in Other Companies 

Mr. Dhruba Narayan Ghosh • ICRA Management Consulting Services Limited 

• Sundaram BNP Paribas Asset Management Company Limited 

• Ismart Global Private Limited 

• Housing Development Finance Corporation Limited 

Mr. Pranab Kumar Choudhury • ICRA Management Consulting Services Limited 

• ICRA Online Limited 

• ICRA Techno Analytics Limited 

• Oil and Natural Gas Corporation Limited 

Mr. Naresh Takkar • ICRA Techno Analytics Limited 

Dr. Uddesh Kohli • CybizCall (International) Limited 

• National Research Development Corporation Limited 

• National Mineral Development Corporation Limited 

• Alstom Projects India Limited 

• Lanco Infratech Limited 

• J&K Mineral Development Corporation Limited 

• West Bengal Consultancy Organisation Limited 

Prof. Deepak Nayyar • Steel Authority of India Limited 

Mr. Piyush Gunwantrai Mankad • Tata International Limited 

• Tata Elxsi Limited 

• DSP-Merrill Lynch Fund Managers Limited 

• Mahindra & Mahindra Financial Services Limited 

• Max India Limited 

• Noida Toll Bridge Company Limited 

• U.B. (Holdings) Limited 

• Kingfisher Airlines Limited 

• Mysore Cement Limited 

Mr. Amal Ganguli • HCL Technologies Limited 

• Tube Investments of India Limited 

• Flextronics Software Systems Limited 

• Hughes Communications Limited 

• Century Textiles and Industries Limited 

• New Delhi Television Limited 

• Maruti Udyog Limited 

• AVTEC Limited 

• ML Infomap Private Limited 

• Videsh Sanchar Nigam Limited 

• AIG Trustee Company (India) Private Limited 

23


Name of Director 

Directorship in Other Companies 

Mr. Chester Van Alen Murray • Moody’s Investors Service Cyprus Limited 

• Moody’s Italia S.r.1. 

• Moody’s Japan K.K. 

• Korea Investors Service Inc. 

• Korea Investors Service Pricing Inc. 

• Moody’s Central Europe A.S. 

• Moody’s Interfax Rating Agency (MIRA) 

• Moody’s Interfax Rating Agency (MIRA) Ukraine 

• Moody’s Interfax Rating Agency (MIRA) Kazakhstan 

• Moody’s Taiwan Corporation 

• Moody’s Investment Company India Private Limited 

• Moody’s Investor Service Pty. Limited 

• Moody’s Investor Service Funds Pty. Limited 

• Moody’s China (B.V.I.) Limited 

• Moody’s Investors Service Beijing Limited 

• China Chengxin International Credit Rating 

Company Limited (CCXI) 

• Moody’s Mauritius Holdings Limited 

Mr. Thomas John Keller, Jr. • Moody’s Investors Service Pty. Limited 

• Moody’s Investors Service Funds Pty. Limited 

• Moody’s Investors Service (Beijing) Limited 

• Moody’s China (B.V.I.) Limited 

• PT Moody’s Indonesia 

• Moody’s Japan K.K. 


• Moody’s Singapore Pte. Limited 



• China Chengxin International Credit Rating 

Company Limited (CCXI) 

Mr. Chetan Modi • Moody’s Investment Company India Private Limited 


Ms. Jennifer Elliott • China Chengxin International Credit Rating Company Limited 

• Moody’s Asia Pacific Limited 


• Moody’s Investors Service (Korea) Inc. 

• Korea Investors Service 


24



(ii) Board Meetings 

During the year 2006-07, the Board of Directors of your Company met six times: on May 9, 2006, 

June 12, 2006, September 11, 2006, November 30, 2006, February 13, 2007, and February 14, 

2007. The last Annual General Meeting was held on June 12, 2006. 

Details regarding the attendance of Directors at the Board Meetings and the Annual General Meeting 

held during the year 2006-07 are presented in the following table. 

Director No. of Board No. of Board Whether Last Annual 

Meetings Held Meetings Attended General Meeting 

Attended 

Mr. Dhruba Narayan Ghosh 6 6 Yes 

Mr. Pranab Kumar Choudhury 6 6 Yes 

Mr. Naresh Takkar* 6 4 Not Applicable 

Dr. Uddesh Kohli 6 5 Yes 

Prof. Deepak Nayyar 6 5 Yes 

Mr. Piyush Gunwantrai Mankad 6 6 Yes 

Mr. Amal Ganguli 6 5 Yes 

Mr. Chester Van Alen Murray 6 4 No 

Mr. Thomas John Keller, Jr. 6 5 Yes 

Mr. Chetan Modi** 6 Not Applicable Not Applicable 

* Appointed Managing Director with effect from July 1, 2006. 

** Appointed Non-Independent Alternate Director to Mr. Chester Van Alen Murray with effect from February 14, 2007. However, Mr. Chetan Modi ceased to be Alternate Director with 

Mr. Chester Van Alen Murray being present for the Board meeting on May 23, 2007. 

(iii) Board Membership Criteria 

The members of the Board of Directors of your Company are expected to possess the required 

expertise, skill, and experience to effectively manage and direct your Company so that it can attain its 

organisational goals. They are expected to be persons with vision, leadership qualities, a strategic 

bent of mind, proven competence, and integrity. 

Each member of the Board of Directors of your Company is expected to ensure that her/his personal 

interest does not run in conflict with your Company’s interests. Moreover, each member is expected to 

use her/his professional judgement to maintain both the substance and appearance of independence 

and objectivity. 

(iv) Membership Term and Retirement Policy 

According to the Articles of Association of your Company, at every Annual General Meeting, onethird 

of such of the Directors for the time being as are liable to retire by rotation or, if their number is 

not three or a multiple of three, then the number nearest to one-third, shall retire from office. 

The Directors to retire by rotation at every Annual General Meeting shall be those who have been 

longest in office since their last appointment, but as between persons who became Director on the 

same day those who are to retire shall (unless they otherwise agree among themselves) be determined 

by lot. A retiring Director shall be eligible for re-election. 

25


(v) Code of Conduct 

The Board of Directors of your Company has prescribed a Code of Conduct for all members of the 

Board and the Senior Management of your Company. The Code of Conduct is available on your 

Company’s website www.icra.in. 

All the members of the Board and the Senior Management personnel of your Company have 

confirmed their compliance with the Code of Conduct for the year ended March 31, 2007. 

C. Board Committees 

In compliance with both the mandatory and non-mandatory requirements under the Listing 

Agreement, and the applicable laws, the Board of Directors of your Company has constituted the 

following Committees: 

(i) 

(ii) 

(iii) 

(iv) 

(v) 

(vi) 


Remuneration Committee 

Shareholders’/Investors’ Grievance Committee 

IPO [Initial Public Offer] Committee 

ESOS [Employee Stock Option Scheme] Compensation Committee 

Strategic Committee 

The Chairman of the Board, in consultation with the Company Secretary and the respective Chairmen 

of these Committees, determines the frequency of the meetings of these Committees. The 

recommendations of the Committees are submitted to the Board for approval. 

(i) Audit Committee 

The Audit Committee of the Board of Directors of your Company consists of five Non-Executive 

Directors, of whom four are Independent Directors. The Chairman of the Committee, Mr. Dhruba 

Narayan Ghosh, is a Non-Executive Independent Director. The Audit Committee of the Board met four 

times during the year 2006-07: on May 6, 2006, September 5, 2006, November 30, 2006, and 

February 13, 2007. 

The following table presents the details of attendance at the Audit Committee meetings held during 

the year 2006-07. 

Director No. of Meetings Held No. of Meetings Attended 

Mr. Dhruba Narayan Ghosh, Chairman 4 4 

Dr. Uddesh Kohli 4 3 

Prof. Deepak Nayyar 4 2 

Mr. Amal Ganguli 4 3 

Mr. Thomas John Kellar, Jr.* 4 3 

*Inducted as member of the Committee following his appointment as Additional Director with effect from May 9, 2006. However, Mr. Thomas J. 

Keller has ceased to be a member of the Audit Committee following his resignation from the Board on May 23, 2007. Ms. Jennifer Elliott has been 

appointed member of the Audit Committee with effect from May 23, 2007. 

26



The Company Secretary of your Company is the Secretary to the Audit Committee. 

The Terms of Reference/Scope of the Audit Committee include: 

(a) 

(b) 

(c) 

(d) 

Oversight of the Company’s financial reporting process, disclosure of financial information, to 

ensure accuracy of information. 

Recommending to the Board, the appointment, reappointment, replacement, removal of statutory 

auditors and fixation of audit fees. 

Approval of payment to statutory auditors for any other service so rendered. 

Reviewing, with the management, the annual financial statement before submission to the Board 

for approval, with particular reference to: 

• Matters required to be included in the Director’s Responsibility Statement to be included in 

the Board’s Report under Section 217 (2AA) of the Companies Act, 1956, 

• Changes, if any, in accounting policies and practices and the reasons for the same, 

• Major accounting entries involving estimates based on the exercise of judgement by 

management, 

• Significant adjustments made in the financial statement arising out of audit findings, 

• Compliance with listing and other legal requirements relating to financial statements, 

• Disclosure of any related-party transactions, and 

• Qualifications in the draft audit report. 

(e) 

(f) 

Reviewing, with the management, the quarterly financial statement before submission to the Board, 

performance of statutory and internal auditors, and adequacy of internal control. 

The Audit Committee shall mandatorily review the following information: 

• management discussion and analysis of financial condition and results of operation, 

• statement of significant related-party transactions, 

• management letters/letters of internal control weakness issued by statutory auditors, 

• internal audit report relating to internal control weakness, and 

• appointment, removal and terms of remuneration of chief internal auditor. 

(ii) Remuneration Committee 

The Remuneration Committee consists of four Non-Executive Directors, and they met two times during 

the year 2006-07: on May 9, 2006, and June 12, 2006. 

The following table presents the details of attendance at the Remuneration Committee meetings held 

during the year 2006-07. 

Director No. of Committee No. of Meetings 

Meetings Held 

Attended 

Mr. Dhruba Narayan Ghosh, Chairman 2 2 

Prof. Deepak Nayyar 2 2 

Mr. Piyush Gunwantrai Mankad 2 2 

Mr. Chester Van Alen Murray 2 1 

27


The Company Secretary of your Company is the Secretary to this Committee. 

Remuneration Policy 

Executive Directors 

During the year 2006-07, your Company paid remuneration to its Executive Directors within the limits 

envisaged under the applicable provisions of the Companies Act, 1956. The remuneration paid to 

the Executive Directors was approved by the Board and the Remuneration Committee within the limits 

approved by the shareholders. The Remuneration Committee determines your Company’s policy on 

specific remuneration packages for the Executive Directors. 

Remuneration paid to Executive Directors for the year ended March 31, 2007 

(Amounts in Rupees million) 

Name Mr. Pranab Kumar Mr. Naresh Takkar** 

Choudhury* 

Designation Vice-Chairman & Group CEO Managing Director 

Salary 5.14 3.78 

Perquisites 0.17 0.40 

Commission 2.12 2.12 

Provident Fund Contribution 0.24 0.17 

Total Remuneration 7.67 6.47 

Appointment Valid Till June 30, 2009 June 30, 2011 

Notice Period 3 months 3 months 

No. of Stock Options Granted 

During the Year Ended 

March 31, 2007 50,000 50,000 

* Mr. Pranab Kumar Choudhury was elevated from the level of Managing Director to the position of Vice-Chairman & Group CEO with effect from 

July 1, 2006. 

** Mr. Naresh Takkar was appointed Managing Director with effect from July 1, 2006, and the above salary is with effect from July 1, 2006. 

Non-Executive Directors 

The Non-Executive Directors of your Company are paid remuneration by way of sitting fees. Your 

Company pays sitting fees of Rs.10,000 per meeting to the Non-Executive Directors for attending the 

meetings of the Board and the Committees of the Board, which include the Audit Committee, 

Remuneration Committee, Shareholders’/Investors’ Grievance Committee, IPO Committee, ESOS 

Compensation Committee, and Strategic Committee. 

Sitting Fees paid to Non-Executive Directors during the year 2006-07 

(Amounts in Rupees) 

S. No Name of the Director Sitting Fee Paid 

1 Mr. Dhruba Narayan Ghosh 219,500* 

2 Dr. Uddesh Kohli 80,000 

3 Prof. Deepak Nayyar 160,000 

4 Mr. Piyush Gunwantrai Mankad 90,000 

5 Mr. Amal Ganguli 80,000 

6 Mr. Chester Van Alen Murray 40,000 

7 Mr. Thomas John Keller, Jr. 90,000 

8 Mr. Chetan Modi Nil 

* Includes sitting fees of Rs. 29,500 paid for attending Rating Committee Meetings 

28



Except for your Company’s Executive Directors, who are entitled to statutory benefits upon termination of 

their employment with your Company, no other Director is entitled to any benefit upon termination of their 

association with your Company. 

Members of Staff 

The remuneration structure for the employees of your Company has five components: 

(a) 

(b) 

(c) 

(d) 

(e) 

Fixed Pay: This consists of various heads of pay, such as Basic Salary, House Rent Allowance, 

Conveyance Allowance, City Compensatory Allowance, and other perquisites. The fixed pay 

depends on the designation of the employee and fitment in the Salary Scale; 

Variable Pay: This is paid in the form of Performance Incentive; 

Deferred Pay: This is paid in the form of Deferred Incentive; 

Share of Profit: This is paid in the form of Annual Bonus; and 

Stock Options: These are granted by the ESOS Compensation Committee under the Employees 

Stock Option Scheme. 

The compensation package of an individual Member of Staff is linked to skills and capabilities, 

standard of performance, and responsibilities handled. 

(iii) Shareholders’/Investors’ Grievance Committee 

The Shareholders’/Investors’ Grievance Committee of the Board of Directors of your Company is 

headed by a Non-Executive Director. The Committee consists of: 

1. Dr. Uddesh Kohli, Chairman 

2. Prof. Deepak Nayyar, and 

3. Mr. Pranab Kumar Choudhury 

Mr. Vijay Wadhwa, C.F.O. & Company Secretary, is the Compliance Officer of your Company. 

The Shareholders’/Investors’ Grievance Committee oversees redressal of shareholder and investor 

complaints on matters such as transfer of shares, non-receipt of shares, and non-receipt of declared 

dividends, ensures expeditious transfer of shares and issue of duplicate share certificates, approves 

sub-division/transmission of shares, etc. 

There were no complaints received from shareholders/investors during the financial year 2006-07 and 

there were no pending shareholder/investor complaints as on March 31, 2007. 

(iv) IPO Committee 

The IPO Committee of the Board of Directors of your Company is headed by a Non-Executive 

Director. The Committee consists of: 

1. Mr. Dhruba Narayan Ghosh, Chairman 

2. Prof. Deepak Nayyar, 

3. Mr. Pranab Kumar Choudhury, and 

4. Mr. Naresh Takkar 

29


(v) ESOS Compensation Committee 

The ESOS Compensation Committee of the Board of Directors of your Company is headed by a Non- 

Executive Director. The Committee consists of: 

1. Mr. Dhruba Narayan Ghosh, Chairman 

2. Prof. Deepak Nayyar, and 

3. Mr. Chester Van Alen Murray 

(vi) Strategic Committee 

The Strategic Committee of the Board of Directors of your Company is headed by a Non-Executive 

Director. The Committee consists of: 

1. Mr. Piyush Gunwantrai Mankad, Chairman 

2. Mr. Thomas John Keller, Jr., and 

3. Mr. Pranab Kumar Choudhury 

Note: Mr. Thomas J. Keller has ceased to be a member of the Strategic Committee following his 

resignation from the Board on May 23, 2007. Ms. Jennifer Elliott has been appointed member of the 

Strategic Committee with effect from May 23, 2007. 

D. General Body Meeting 

Details of the last three Annual General Meetings of your Company are presented in the following 

table. 

Nature of Meeting Date and Time Venue 

Thirteenth Annual July 14, 2004 Kailash Building, 4 th Floor; 

General Meeting at 12:15 hours 26, Kasturba Gandhi Marg; Connaught Place; 


Fourteenth Annual July 29, 2005 Kailash Building, 4 th Floor; 



Fifteenth Annual June 12, 2006 Kailash Building, 4 th Floor; 



The following Special Resolutions were passed by the members during the last three Annual General 

Meetings: 

Fifteenth Annual General Meeting held on June 12, 2006 

• To reappoint M/s Vipin Aggarwal & Associates, Chartered Accountants, as Auditors of your 

Company. 

• To approve issue and allotment of 906,000 Equity Shares on preferential basis to ICRA 

Employees Welfare Trust at the IPO Issue Price. 

• To approve issue and allotment of 288,900 equity shares on preferential basis to Moody’s 

Investment Company India Private Limited at the IPO Issue Price. 

• To approve amendment of the Articles of Association of your Company so as to incorporate the 

listing requirements of the Stock Exchanges. 

30



Fourteenth Annual General Meeting held on July 29, 2005 

• To reappoint M/s Vipin Aggarwal & Associates, Chartered Accountants, as Auditors of your Company. 

• To approve amendment of the Articles of Association of your Company. 

Thirteenth Annual General Meeting held on July 14, 2004 

• To reappoint M/s Vipin Aggarwal & Associates, Chartered Accountants, as Auditors of your Company. 

Postal Ballot 

For the year ended March 2007, there were no ordinary or special resolutions that needed to be 

passed by the shareholders through postal ballot. 

E. Disclosures 

(i) Related-Party Transactions 

There have been no materially significant related-party transactions, pecuniary transactions or 

relationships between your Company and the Directors, management, subsidiary or relatives except 

for those disclosed in the financial statements for the year ended March 31, 2007. 

(ii) Details of Non-Compliance 

There has been no non-compliance of any legal requirements nor have there been any strictures 

imposed by any Stock Exchange or SEBI or any statutory authority on any matter related to Capital 

Markets during the last three years. 

(iii) Whistle Blower Policy 

Your Company is in the process of preparing a Whistle Blowing Policy and the same will be 

implemented in the near future. However, no member of staff has ever been denied access to the 

Audit Committee. 

(iv) Corporate Governance Report 

Your Company has complied with all the mandatory requirements of Clause 49 of the Listing 

Agreement and has also complied with the non-mandatory requirement relating to constitution of 

Remuneration Committee. 

(v) Management Discussion and Analysis Report 

The Management Discussion and Analysis Report is annexed and forms part of the Directors’ Report. 

F. Means of Communication 

Your Company was listed on Bombay Stock Exchange Limited and National Stock Exchange of India 

Limited with effect from April 13, 2007. Your Company would be advertising its annual, half-yearly, 

and quarterly reports in future, and the same would also be available on its website www.icra.in. 

G. Auditors’ Certificate on Corporate Governance 

Auditors’ certificate with respect to compliance with Clause 49 of the Listing Agreement relating to 

Corporate Governance has been annexed to the Directors’ Report. 

31


H. CEO/CFO Certification 

As required under Clause 49 of the Listing Agreement, the CEO/CFO certificate has been annexed to the 

Directors’ Report. 

I. General Shareholders’ Information 

1. Annual General Meeting 

Date and Time 

Venue 

July 27, 2007 at 15:00 hours 

Air Force Auditorium, Subroto Park 

New Delhi – 110 010 

2. Financial Year Financial Year is April 1 to March 31 

Quarterly results will be 

declared as per the following 

tentative schedule: 

• Financial reporting for the quarter Second fortnight of July 2007 

ending June 30, 2007 

• Financial reporting for the half Second fortnight of October 2007 

year ending September 30, 2007 

• Financial reporting for the quarter Second fortnight of January 2008 

ending December 31, 2007 

• Financial reporting for the Second fortnight of May 2008 

year ending March 31, 2008 

3. Means of Communication 

• Newspapers in which the results The Financial Express and Jansatta 

are published 

• Website on which the Results www.icra.in 

are uploaded 

4. Dates of Book Closure July 25, 2007 to July 26, 2007 

(both days inclusive) 

5. Proposed Dividend Rs. 4.50 per share having nominal value of 

Rs. 10 each 

6. Dividend Payment Date Dividend on Equity shares as recommended by 

the Directors for the year ended March 31, 

2007 and approved by the shareholders at the 

Annual General Meeting, will be paid on or 

after July 27, 2007 

7. Listing on Stock Exchanges The shares of your Company are listed on: 

• Bombay Stock Exchange Limited 

Floor 25, P. J. Towers, Dalal Street, Mumbai – 400 001 

• National Stock Exchange of India Limited 

Exchange Plaza 

Bandra Kurla Complex, Bandra (E) 

Mumbai – 400 051 

Your Company has paid the initial listing fee 

along with the annual listing fee for the 

financial year 2007-08 to both the Exchanges 

32



8. Stock Code Bombay Stock Exchange Limited: 532835 

National Stock Exchange of India Limited: ICRA 

ISIN: INE725G01011 

9. Market Price Data and The Equity Shares of your Company were listed on 

Performance in comparison Bombay Stock Exchange Limited and National 

with Broad-based Indices Stock Exchange of India Limited with effect from 

April 13, 2007. Therefore, there was no market 

price data for the last financial year and 

performance in comparison with broad-based indices 

was not available. 

10. Registrar and Share Transfer Intime Spectrum Registry Limited 

Agent 

A-31, 3rd Floor, Naraina Industrial Area 

Phase 1, Near P.V.R. Naraina 

New Delhi 110 028 

Tel: +91 11 4141 0592 

Fax: +91 11 4141 0591 

11. Share Transfer System The Board has delegated the power of Share Transfer 

to your Company’s Registrar and Share Transfer 

Agent, Intime Spectrum Registry Limited (address 

mentioned above), for processing of share transfers. 

12. Compliance Officer Mr. Vijay Wadhwa 

C.F.O. & Company Secretary 


Building No. 8, 2 nd Floor, Tower A 

DLF Cyber City, Phase–II 

Gurgaon–122 002 

Haryana 

Tel: +91 124 4545300 

Fax: +91 124 4545350 

Email: ipo@icraindia.com 

13. Dematerialisation of 99.65% shares of your Company are held in the 

Shares and Liquidity 

electronic mode 

14. Electronic Clearing Service Members may please note that ECS details are 

(ECS) 

downloaded from the Depositories and the same 

would be reckoned for payment of dividend. 

Therefore members are requested to update their 

bank account details with their respective 

depository participants (for shares held in the 

electronic form) or write to the Company’s 

Registrar and Share Transfer Agent, M/s Intime 

Spectrum Registry Limited (for shares held in the 

physical form) 

33


15. Investor Complaints to be Registrar and Share Transfer Agent or to 

addressed to 

Mr. Vijay Wadhwa, Compliance Officer, at the 

addresses mentioned earlier 

16. Shareholding Pattern as on March 31, 2007 

Sr. Category No. of Equity % Holding 

No. 

Shares Held 

1. Moody’s Investment Company 

India Private Limited 2,850,900 28.509 

2. Banks and Financial Institutions 4,932,600 49.326 

3. Bodies Corporate 1,275,500 12.755 

4. Other (ICRA Employees Welfare Trust) 906,000 9.060 

5. Individuals 35,000 0.350 

Total 10,000,000 100.000 

17. List of Members as on March 31, 2007 

Sr. Name of Member No. of Equity % Holding 

No. 

Shares Held 

1. Moody’s Investment Company 

India Private Limited 2,850,900 28.509 

2. IFCI Limited 1,860,600 18.606 

3. State Bank of India 1,020,400 10.204 

4. Life Insurance Corporation of 

India Limited 765,300 7.653 

5. Administrator of the Specified 

undertaking of the Unit Trust of India 700,000 7.000 

6. Punjab National Bank 525,000 5.250 

7. General Insurance Corporation of India 510,200 5.102 

8. Central Bank of India 255,100 2.551 

9. Allahabad Bank 171,500 1.715 

10. Indian Bank 102,500 1.025 

11. Canara Bank 87,500 0.875 

12. UCO Bank 87,500 0.875 

13. Andhra Bank 87,500 0.875 

14. Oriental Bank of Commerce 35,000 0.350 

15. Ajay Kumar Kayan 35,000 0.350 

16. ICRA Employees Welfare Trust 906,000 9.060 

Total 10,000,000 100.000 

34


Auditors’ Certificate 

To the Members of ICRA Limited 

We have examined the compliance with conditions of Corporate Governance by ICRA Limited (“the 

Company”) for the year ended March 31, 2007, as stipulated in Clause 49 of the Listing Agreement 

of the Company with the Stock Exchanges in India. 

The compliance with conditions of Corporate Governance is the responsibility of the Company’s 

Management. Our examination was limited to procedures and implementation thereof, adopted by 

the Company for ensuring compliance with the conditions of Corporate Governance as stipulated in 

the said Clause. It is neither an audit nor an expression of opinion on the financial statements of the 

Company. 

In our opinion and to the best of our information and according to the explanations given to us and 

the representations made by the Directors and Management, we certify that the Company has 

complied with the conditions of Corporate Governance as stipulated in Clause 49 of the above 

mentioned Listing Agreement. 

We further state that such compliance is neither an assurance as to the future viability of the 

Company nor of the efficiency or effectiveness with which the Management has conducted the affairs 

of the Company. 

For Vipin Aggarwal & Associates 

Chartered Accountants 


Date : May 23, 2007 

(Vipin Aggarwal) 

(Partner) 

35

Certificate by Chief Executive Officer and 

Chief Financial Officer 

(Pursuant to Clause No. 49(I)(D)(ii) and 49(V) of the Listing Agreement) 

To the Members of ICRA Limited 

We, Naresh Takkar, Managing Director, and Vijay Wadhwa, Chief Financial Officer, of ICRA Limited, 

certify that: 

(a) 

We have reviewed the financial statements and the cash flow statement for the year ending 

March 31, 2007 and that to the best of our knowledge and belief: 

(i) 

(ii) 

these statements do not contain any materially untrue statement or omit any material fact 

or contain any statement that might be misleading; 

these statements together present a true and fair view of the company’s affairs and are in 

compliance with existing accounting standards, applicable laws and regulations. 

(b) 

(c) 

(d) 

To the best of our knowledge and belief, no transactions have been entered into by the company 

during the year that are fraudulent, illegal or violative of the company’s code of conduct. 

We accept responsibility for establishing and maintaining internal controls for financial reporting 

and we have evaluated the effectiveness of the internal control systems of the company 

pertaining to financial reporting and we have disclosed to the auditors and the Audit Committee 

deficiencies in the design or operation of such internal controls, if any, of which we are aware 

and steps have been taken or are proposed to be taken to rectify these deficiencies. 

We have indicated to the auditors and the Audit Committee that: 

(i) 

(ii) 

(iii) 

there were no significant changes in internal control over financial reporting during the 

year; 

there were no significant changes in accounting policies during the year; and 

there were no instances of fraud of which we have become aware and the involvement 

therein, if any, of the management or an employee having a significant role in the 

company’s internal control system over financial reporting. 

(e) 

We further declare that all Board Members and Senior Management have affirmed the 

compliance with the code of conduct for the year 2006-07. 

Place : New Delhi (Naresh Takkar) (Vijay Wadhwa) 

Date : May 23, 2007 Managing Director C.F.O. & Company Secretary 

36


Management Discussion and Analysis Report 

(Annexure to the Directors’ Report) 

A. Business and Industry Overview 

The Indian Credit Rating Industry has evolved over the years, supported to some extent by the 

regulatory requirement of Ratings for certain classes of debt instruments. Investment guidelines 

specified or adopted by the dominant investor groups have also driven the demand for, and use of, 

Ratings. Also, demand for Rating services is derived from the overall resource mobilisation in the 

economy, particularly from the growth of the debt markets. Economic growth acts as a catalyst for 

both investment and operations related demand for funds. In the competitive environment that 

currently characterises Indian business, many industries are also witnessing increasing consolidation. 

This in turn is pushing up the demand for funds for the financing of mergers and acquisitions. All 

these factors have been contributing to increasing the funding requirements of Indian corporate 

entities. This growing need for funds is being met through debt placement in the capital market, bank 

credit, cross-border financing such as external commercial borrowing and foreign currency 

convertible bonds, and equity placement. 

Over the last few years, bank credit has been a major source of funds for the corporate sector. Banks 

in India enjoy the relative advantage of extending loans (as different from investing in debt papers) 

that are not required to be “marked to market”. Banks in India also enjoy relatively low funding costs 

as the interest on savings deposits is regulated. The growth in bank credit during the last few years 

however has led to a significant increase in issuance by banks. Banks have raised considerable 

amounts of debt from the market to meet their growing capital requirements, either by issuing Tier-II 

bonds or hybrid bonds. 

Internationally, the debt markets have also benefited from the increased penetration achieved by 

pension funds and insurance companies, as these investors have an appetite for longer term 

investments. They are expected to raise the activity levels in the debt market significantly in the longer 

term buckets, hitherto characterised by relative slackness. Over the last few years, India too has seen 

the emergence of private insurance companies, which have grown rapidly. 

These factors apart, Government too has committed itself to developing the domestic debt markets. It 

has appointed high-level committees to recommend measures to improve buoyancy in both the 

primary and secondary debt markets. Thus, in the current economic scenario, favourable regulations 

may open up new opportunities for Rating agencies. 

ICRA Limited is one of the leading providers of Rating and Grading services, and research-based 

information services. With the passage of time, we have expanded our portfolio of products and 

services, which in turn has enabled us to obtain additional business from exiting clients and address a 

larger base of potential clients as well. Our strength lies in the fact that we have successfully 

introduced new products and services continually. In recent years, we have introduced various Rating 

and Grading products/services, such as Corporate Governance Rating, Project Finance Rating, Issuer 

Rating, Mutual Fund Rating, and Grading of Maritime Training Institutes, Healthcare Institutions and 

Real Estate Development Projects. 

37



B. Discussion on Financial Performance and Operations 

The key features of the Company’s financial performance for the year ended March 31, 2007 are 

presented in the accompanying financial statements, which have been prepared in accordance with 

the requirements of the Companies Act, 1956, and the Generally Accepted Accounting Principles 

(GAAP) and Accounting Standards prevailing in India. ICRA’s Management accepts responsibility for the 

integrity and objectivity of these financial statements. 

(1) Results of Operation 

The Operating Performance of the Company is summarised as under: 

(a) Incomes 

(Rs. in million) 

Particulars For the For the Growth For the For the Growth 

Fourth Fourth Year Year 

Quarter Quarter ended on ended on 

ended on ended on 31.03.2007 31.03.2006 

31.03.2007 31.03.2006 

Rating Services Income 

(Including Grading Services) 103.77 78.92 31% 388.95 312.94 24% 

Information Services Income 0.56 3.11 -82% 4.74 6.74 -30% 

BPO Services Income 0.63 3.30 -81% 4.21 12.45 -66% 

Total Operating Income 104.96 85.33 23% 397.90 332.13 20% 

Non-Operating Income 17.93 14.90 20% 69.79 53.95 29% 

Total Income 122.89 100.23 23% 467.69 386.08 21% 

The growth in Rating Services Income during fiscal 2006-07 is attributable primarily to the increase in 

Rating income from the corporate & infrastructure, financial, and structured finance sectors. While there 

was an increase in the issuance of debt by existing issuers, the Company was also able to add new 

issuers to its list of Rating clients. 

The number of instruments and volume of debt Rated by the Company during the last five years are 

as under: 

Year ended March 31 2007 2006 2005 2004 2003 

Number of Instruments Rated 464 312 283 262 248 

Volume of Debt Rated (in Rs. billion) 1775.65 1389.49 880.03 735.36 546.02 

Information Services operations were scaled down during fiscal 2006-07. As for BPO Services 

Income, this declined during the year stated following the assignment of some business to ICRA Online 

Limited by Moody’s Investors Service. 

38




Non-Operating Income 


Particulars 2006-07 2005-06 Growth 

Dividend on Non-Trade Investments 24.46 9.37 161% 

Profit on Sale/Redemption of Investments 24.98 34.00 -27% 

Rental Income 12.67 3.20 296% 

Others 7.68 7.38 4% 

Total 69.79 53.95 29% 

Dividend Income grew during the year under review with some Mutual Fund investments being shifted 

from Growth to Dividend Schemes, and some from Floating Income to Balanced Income Schemes. 

Profit on Sale/Redemption of Investments declined during fiscal 2006-07 with the profits generated 

by the redemption of Mutual Fund Units under the Dividend Option being lower as compared with the 

profits generated by the redemption of Units under the Growth Option in fiscal 2005-06. 

The Company has entered into an arrangement with M/s ICRA Management Consulting Services 

Limited (IMaCS) under which rent is payable by IMaCS to the Company for use of ICRA owned/ 

leased premises by IMaCS. The Company has received a sum of Rs. 12.45 million towards rent from 

IMaCS for fiscal 2006-07. 

(b) Expenses 


Particulars For the For the Growth For the For the Growth 

Fourth Fourth Year Year 

Quarter Quarter ended on ended on 

ended on ended on 31.03.2007 31.03.2006 

31.03.2007 31.03.2006 

Personnel Expenses 39.84 32.15 24% 140.54 121.22 16% 

Administrative Expenses 9.17 8.92 3% 42.71 37.68 13% 

Other Expenses 10.98 11.74 -6% 45.68 38.05 20% 

Total Expenses 59.99 52.81 14% 228.93 196.95 16% 

PBDIT 62.90 47.42 33% 238.76 189.13 26% 

Profit & Loss A/c — 

Some Indicators 

PBDIT/Total Income 51% 47% 51% 49% 

Personnel Expenses/Total Income 32% 32% 30% 31% 

Admn. Expenses/Total Income 7% 9% 9% 10% 

Other Expenses/Total Income 9% 12% 10% 10% 

Total Expenses/Total Income 49% 53% 49% 51% 

PBDIT: Profit before Depreciation, Interest and Taxes 

39



Personnel Expenses increased during fiscal 2006-07 primarily because of the grant of Allowances, 

increase in the Provision for Annual Bonus, and Payment/Provision for Deferred Incentive during fiscal 

2006-07 for the first time. However, with improvement in productivity and increase in revenue per 

employee as shown in the following table, Personnel Expenses as a percentage of Total Income declined 

marginally during fiscal 2006-07. 

The revenues and profits per employee for the last two years are as under: 

Year ended March 31 2007 2006 Growth 

Number of employees 78 75 4% 

Revenue per employee (in Rs. million) 6.00 5.15 17% 

Profit per employee (in Rs. million) 2.06 1.69 22% 

Administrative Expenses increased during fiscal 2006-07 partly because of the payment of rent for the 

period from May 2006 to August 2006 for two offices, one located at Gurgaon and the other at 4 th Floor 

of Kailash Building, New Delhi, since the Gurgaon office was under renovation during that period. 

However, it may be noted that Administrative Expenses as a percentage of Total Income declined 

marginally during the year under review. 

The increase in Other Expenses during fiscal 2006-07 is attributable primarily to the rise in 

expenses incurred on travelling and conveyance, conferences, and write-off of bad debts. There was 

also an increase in Advertisement Expenses during the year primarily on account of the Rs. 4.69 

million expenditure on advertisement during the IPO of the Company through Offer for Sale. 

However, Other Expenses as a percentage of Total Income remained at the same level as in fiscal 

2005-06. 

(2) Fixed Assets 

At the end of fiscal 2006-07, the fixed assets of the Company were as under: 


Particulars As on 31/03/2007 As on 31/03/2006 Growth 

Gross Block 286.32 282.18 1% 

Less: Accumulated Depreciation (105.48) (109.77) -4% 

Net Block 180.84 172.41 5% 

Depreciation as % of Total Income 3% 4% 

Accumulated Depreciation as % of Gross Block 37% 39% 

During the year under review, the Head Office of the Company was shifted from New Delhi to Gurgaon 

(Haryana) on leased premises. 

The Company purchased assets of Rs. 29.73 million and sold assets of Rs. 25.59 million during the year 

under review. The addition to assets involved mainly interior decoration at the Gurgaon Office of the 

Company and replacement of certain existing assets. The sale of assets had to be done mainly because 

of the shift of office from New Delhi to Gurgaon. 

40




(3) Investments 

(Amounts in Rs. million) 

Particulars As on % of Total As on % of Growth 

31/03/2007 31/03/2006 Total 

Long Term 

• In Subsidiaries 264.47 30% 94.83 14% 179% 

• Other than Subsidiaries 52.89 6% 60.82 9% -13% 

Current Investments 

• In Floating Rate Mutual Funds 250.00 29% 380.00 56% -34% 

• In Balanced Mutual Funds 167.16 19% 131.52 19% 27% 

• In Fixed Maturity Plans 145.00 16% 20.00 3% 

Total Investments 879.52 100% 687.17 101% 28% 

• Provision for Diminution in 

Value of Investments 0.00 0% (3.00) -1% 

Net Investments 879.52 100% 684.17 100% 29% 

Total investments of the Company increased during the year under review, following the deployment of 

internal accruals and proceeds of the preferential allotment of equity shares of the Company. 

Subsidiaries 

During the year under review, the Company also acquired additional equity shares of three subsidiary 

companies as under: 

Name of the Subsidiary Company No. of Shares Value 


ICRA Management Consulting Services Limited 14,950,000 149.50 

ICRA Techno Analytics Limited 2,000,000 20.00 

ICRA Online Limited 13,971 0.14 

Total 16,963,971 169.64 

ICRA Online Limited also became a wholly-owned subsidiary of ICRA following the acquisition of the 

balance equity shares from the existing shareholders. 

41



(4) Current Assets, Loans and Advances 

(Rs.in million) 

Particulars As on 31/03/2007 As on 31/03/2006 Growth 

(a) Receivables 

• Total Receivables 76.32 53.06 44% 

• Provision for Doubtful Debts (1.45) (3.81) -62% 

• Net Receivable 74.87 49.25 52% 

Debtors as % of Operating Income 19% 16% 

Debtors Age (No. of days) 71 59 

(b) Cash and Bank Balances 28293.63 39.16 

(c) Other Current Assets 2.40 2.49 

(d) Loans and Advances 

• Loan to ICRA Employees Welfare Trust 298.98 0.00 

• Loans and Advances to Subsidiaries 7.79 60.44 -87% 

• Income Tax Paid in Advance 57.75 49.55 17% 

• Others (include staff here) 35.92 32.78 10% 

• Total Loans and Advances 400.44 142.77 180% 

• Provision for Doubtful Loans and Advances (4.67) (4.67) 0% 

• Net Loans & Advances 395.77 138.10 187% 

Sundry Debtors increased during the year under review primarily on account of the increase in 

Operating Income and delay in the receipt of Surveillance Fees from certain clients who generally make 

payment after completion of the surveillance exercise. 

Cash and Bank Balances increased during the year following receipt of Rs. 28,228.22 million 

from the Initial Public Offer (IPO) of the Company through Offer for Sale; this sum was lying in the 

escrow accounts as on March 31, 2007 with the Bankers to the Issue. 

Loans and Advances increased during the year under review primarily because of a loan given to 

the ICRA Employees Welfare Trust for the purchase of equity shares of the Company. The Advance Tax 

Deposit (including TDS) increased in fiscal 2006-07 because of the higher profit earned by the 

Company. The amount receivable from Subsidiary Companies reduced during the year primarily 

because the demerger purchase consideration due from ICRA Management Consulting Services 

Limited at the beginning of the year was received in the form of shares. 

(5) Current Liabilities and Provisions 

Current Liabilities increased during the year under review because of the sum payable to the 

Selling Shareholders towards IPO proceeds (net of Out of Pocket Expenses recoverable) amounting to 

Rs. 797.70 million; refund due to the unsuccessful bidders of the IPO amounting to Rs. 27,376.46 

million; increase in Expenses Payable on account of the higher provision for Annual Bonus, and 

Deferred Incentive for the members of staff; and higher provisions for taxation, gratuity and leave 

encashment on the basis of actuarial valuation. 

42




C. Outlook 

The outlook for the Rating business remains positive. The Company continues to take initiatives to retain 

its competitive edge and is in a position to meet the challenges inevitably posed by rapidly changing 

business requirements. The Rating business has grown at a steady pace during the last few years. 

D. Opportunities and Threats 

Opportunities 

Opportunities in the Rating business are a function of the interplay of several factors and 

developments, some of which arise from the initiatives taken by a Rating agency and its strengths, 

while the others emanate from the environment that it operates in. Some of the environmental, or 

external, factors that ICRA sees as offering opportunities for growth of its business are the sustenance 

of economic growth, especially institutional demand, leading to increase in overall resource 

mobilisation in the economy; expansion of bank credit; proposed implementation of Basel II norms; 

and mandatory Rating of IPOs. In the longer run, opportunities are expected to arise from 

Governmental initiative in developing the domestic debt market; and greater market penetration by 

players such as insurance companies. 

ICRA is well placed to exploit the opportunities arising from each of the factors stated, given its 

competitive strengths and strategic initiatives. We believe that our competitive strengths primarily 

include the rich database and research support for our products and services; our proven ability to 

make product and service innovations; the demonstrated track record of our Ratings; our experienced 

and strong Management team and pool of high-quality employee talent; and our close association 

with our promoter, the Moody’s Group, besides our Technical Services Agreement with Moody’s 

Investors Service. 

Strengths apart, ICRA continues to undertake several initiatives that we believe will enable the 

Company take advantage of the opportunities coming up. Instances of such initiatives include, our 

efforts to expand our business by using our brand name, core competencies and strategic 

relationship with the Moody’s Group; expand our service offerings; and continue to attract, train and 

retain employees. 

Threats 

The threats confronting our business have their foundation in such Risks and Concerns as are 

discussed at length in the following section. 

E. Risks and Concerns 

(1) Business Risk 

Changes in the volume of debt securities issued in the domestic capital markets and any economic 

slowdown in India may have an impact on our business and revenues, as our Company is engaged 

primarily in the business of providing Rating services. During the last three years, on an average, the 

Indian economy has reported an annual 8.10% growth in Gross Domestic Product (GDP). In India, 

banks and financial institutions dominate the financial markets. Continued reliance on bank credit by 

domestic borrowers could negatively impact issuance in the domestic debt market. 

43



Investors’ preference in the domestic debt market is skewed towards higher-category Ratings. This may 

continue to constraint the volume of debt instruments issued in the Indian debt market. 

A substantial part of our Ratings business is dependent on the volume and number of debt securities 

issued in the capital markets in India. Currently, accessing overseas debt markets by certain Indian 

borrowers/issuers is regulated, which such regulation imposing certain end-use restrictions on such 

borrowings. Any change in the prevailing regulatory regime liberalising access to overseas markets for 

the raising of debt funds may adversely impact issuance of debt instruments in the domestic market. 

Unfavourable financial or economic conditions in India that either lower investor demand for debt 

securities or reduce issuers’ willingness and ability to issue such securities could reduce the issuance 

of debt securities in India. In the event there is a slowdown in the Indian economy or a reduction in 

the level of debt issuance in India, our operations and revenues may be affected adversely. 

Further, our revenues and financial condition are linked primarily to our ability to render services in 

the domestic financial market. Our services such as Credit Ratings, and Mutual Funds-based 

Information Services are dependent on the condition of the financial markets in India and abroad. 

Any increase in interest rates and credit spreads, volatility in the corporate bonds market or the 

interest rate environment, foreign exchange fluctuations, defaults by significant issuers, and other 

market and economic factors, both domestic and global, may negatively impact the issuance of 

credit-sensitive products and other financial services. A sustained period of volatility in the financial 

markets or a weakness or downturn in the financial markets domestically or internationally could have 

a materially adverse effect on our business and financial results. 

Further, our market share or profitability may be affected by competition, which is getting increasingly 

intense. Our Company competes on the basis of its market standing, specialised knowledge, 

methodologies, client service and our range of offerings. Our competitors and other financial services 

companies may come up with new products and services, better anticipate customer requirements 

using more sophisticated technology, and offer innovative solutions to our clients. Additionally, our 

Company has been facing increasing pricing pressures from our competitors. Inability on our part to 

provide constantly upgraded services and solutions may adversely affect our market share, business 

and operations. In the event our competitors invest and improve in any or all these aspects of 

business or offer more competitive prices, we may not be able to maintain our market share, which 

may adversely affect our results of operations and financial condition. 

Additionally, our business is largely dependent on the recognition of our brand and our reputation. In 

this regard, prominent investment grade defaults or failure to assess the creditworthiness of 

instruments Rated by us could result in the erosion of investor confidence in our services and 

negatively affect our brand recognition and reputation. This in turn may adversely affect our business, 

operations, and financial condition. 

(2) Liquidity Risk/Financial Risk 

A sound liquid position makes it possible for the Company to discharge all its payables within the 

stipulated time. The extent of liquidity/financial risk is influenced by various factors such as maturity of 

liabilities and degree of reliance on secured sources of funding. The Company has remained debt-free 

ever since it was incorporated, and has always sought to finance all its expansion and diversification 

plans with internal accruals. 

44




(3) Investment Risk 

The Company has made investments in bonds, debentures and other marketable securities, the returns 

on which would be impacted by changes in interest rates and volatility in the financial markets. We have 

made and intend to continue making investments in mutual funds, bonds, debentures and other 

marketable securities. Changes in interest rates and volatility in the financial markets may adversely affect 

our income and the market value of our securities portfolio. 

(4) Legal and Statutory Risk 

The Company is constantly complying with all the applicable laws, rules and regulations in force. The 

Company makes its decisions on the basis of comprehensive legal advice provided both by its own 

experts and by acknowledged external specialists. The Company Secretary and other compliance 

officers of the Company endeavour to keep themselves abreast of all amendments in various laws. 

Legal risks arise because of changes in regulations, accounting standards, tax codes, or the 

application of any of these. The Company mitigates this risk through dedicated monitoring of 

regulatory requirements. The Company also makes provisions in the balance sheet and regularly 

evaluates the adequacy thereof for legal risks relating to past events. The Board of Directors is 

informed periodically about compliance or non-compliance, if any, with various laws and rules in 

force. 

(5) Operational Risk/Technology Related Risk 

The Company has to depend on clients/third parties for the adequacy and accuracy of information 

relating to such clients. The quality of information made available to us may not be independently 

verifiable all the time. While we do have a systematic feedback method using which we gather this 

information, even so, we have to largely depend on clients and third party sources to obtain 

information relating to them. We may also rely on representations as to the accuracy and adequacy 

of the information. Inadequacy or inaccuracy of information may expose us to the risk of assigning an 

inappropriate Rating or Grading. This may in turn affect our business, reputation and operations. 

Information technology plays an important role in our business and operations. With the complexity of 

our business increasing, sound information system controls are needed, and we have established 

these already in our organisation. The risks involved here are of systems failures, loss of data, and 

many other internal organisational risks. To mitigate such risks and in turn to mitigate the losses 

arising from business disruptions because of electrical or telecommunications failure, the Company 

has established backup facilities. The security policies and effective functioning of all major systems 

are monitored on a regular basis by the Systems Analyst, in co-ordination with the information 

technology co-ordination team. 

(6) Policy Risk 

Material changes in the regulations that govern us or our businesses could affect the results of our 

operations. Most of ICRA’s revenues come from Rating services, which are influenced by regulatory 

requirements. In the event that there is change in the regulatory requirement of compulsory Rating for 

certain instruments or for certain investors to invest in Rated instruments, or there is such change in 

regulations that negatively impacts the level of issuance of debt instruments in the domestic market, 

there may be a decrease in the demand for Rating. This in turn may affect our business, revenues and 

financial condition. 

45



Further, we are regulated by the Companies Act, 1956, and are subject to detailed supervision and 

regulation by the Securities and Exchange Board of India (SEBI) for some of our activities. Also, we are 

generally subject to changes in Indian law, as well as to changes in regulation and Government policies. 

The laws and regulations governing us could change in future, and such changes could affect our 

business and financial performance. 

(7) Political Risk 

Political instability or changes in Government could delay the liberalisation of the Indian economy 

and adversely affect general economic conditions in India, which in turn could impact our financial 

results and prospects. Although the current Government has announced policies and taken initiatives 

that support the economic liberalisation policies pursued by previous Governments, the rate of 

economic liberalisation could change, and specific laws and policies affecting banking and finance 

companies, foreign investment and other matters affecting investment in our securities could change 

as well. Additionally, as economic liberalisation policies have been a major force in encouraging 

private funding of infrastructure development, any change in these policies could have a significant 

impact on infrastructure development, business and economic conditions in India. This in turn may 

affect our financial results and prospects. 

(8) Attrition Risk 

Our performance and success depend largely on our ability to nurture and retain the continued 

service of our management team and skilled personnel who can perform functions such as 

sophisticated credit and financial analysis. We also face a continuing challenge to recruit a sufficient 

number of suitably skilled persons, particularly as we continue to grow. There is significant 

competition for management and other skilled persons in the financial services industry. Further, we 

do not have a keyman insurance policy to cover for loss of our skilled personnel. High attrition levels 

may add to our personnel expenditures. Further, our competitors and other financial services entities 

may offer better compensation packages and incentives. In the event that we are unable to attract 

talented persons, experience high attrition levels (largely beyond our control), or are unable to 

motivate our existing employees, the future of our business and operations may be affected. 

To motivate and retain our valuable personnel and attract fresh talent we have adopted an Employee 

Stock Option (ESOP) Scheme, under which eligible employees of our Company and our Subsidiaries 

can participate, subject to such approvals as may be necessary. Under the ESOP Scheme, we are 

permitted to grant options up to a maximum of 906,000 Equity Shares, constituting 9.06% of our 

post-Offer (including Preferential Allotment to Moody’s India and the ESOS Welfare Trust) paid-up 

equity capital. We propose to grant stock options at an exercise price that shall be the same as the 

Offer Price. Under Indian GAAP, the grant of these stock options may result in a charge to our Profit 

and Loss Account because of amortisation of expenses, if any, relating to the grant of stock options 

over the vesting period of the stock options. 

F. Internal Control System and Their Adequacy 

The Company’s internal control system is commensurate with size and nature of its business. The 

internal control system is designed to ensure that financial and other records can be relied upon for 

the preparation of financial statements and other reports. In addition to this, the said system meets the 

following objectives: 

46




(a) Efficient use and safeguarding of resources 

(b) Compliance with statues, policies and procedures 

(c) Accurate recording and prompt reporting of transactions. 

The internal control system provides for well-documented policies, guidelines, authorisations, and 

approval procedures. The Internal Auditors conduct periodic Audits across all major locations and 

functions throughout the year. The observations made by such Auditors are reviewed periodically and 

monitored for compliance. The Audit Committee of the Board, on a regular basis, reviews the Internal 

Audit reports along with the report on the status of implementation of recommendations contained 

therein. The Company also has an extensive budgetary control mechanism using which the 

Management regularly reviews actual performance with reference to the budgets drawn up. 

G. Material Development in Human Resources and Industrial Relations 

With the Indian economy and the services sector reporting steady growth, the overall business 

prospects for the Company are getting brighter by the day. To meet the expectations of the market, 

the Company is continually recruiting talented persons from institutions of repute. Our success 

depends, in large part, on our Management team and skilled personnel, and on our ability to 

manage employee attrition, and attract and retain talent. We provide a challenging and exciting work 

environment for our employees. For continuous development of leadership skills the Company 

continually imparts training, besides focusing on building employee motivation through appropriate 

recognition and reward schemes. 

Forward-Looking Statements May Prove Inaccurate 

This Annual Report contains certain forward-looking statements that may be identified by words, 

phrases, or expressions such as “expected”, “will”, “would”, “continue”, “intend to”, “in future”, 

or their variations. These forward-looking statements are subject to certain risks and uncertainties 

that could cause actual results to differ materially from those reflected in the forward-looking 

statements. Factors that might cause such differences include, but are not limited to, those discussed 

under “Risks and Concerns”, which is a part of the “Management Discussion and Analysis Report”. 

Readers are cautioned not to place undue reliance on these forward-looking statements, which 

reflect Management’s analysis only as of the date hereof. The Company assumes no obligation to 

publicly update or otherwise revise any statements reflecting circumstances arising after the date 

hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not 

come to fruition. 

47

Financial Highlights of ICRA Limited 


Particulars 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 

1 Operating Income 148.71 168.90 178.01 221.36 277.22 308.76 328.61 371.52 332.13 397.90 

2 Non-Operating Income 29.83 31.63 38.69 54.36 44.95 56.78 71.36 41.73 53.95 69.79 

3 Total Income 178.54 200.53 216.70 275.72 322.17 365.54 399.97 413.25 386.08 467.69 

4 PBDIT 81.54 90.98 91.92 125.91 143.10 149.54 162.05 126.96 189.13 238.76 

5 Depreciation 8.61 16.19 15.07 14.26 14.20 14.33 13.74 14.25 15.23 16.00 

6 Interest 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.45 

7 Profit before Tax 72.93 74.79 76.85 111.65 128.90 135.21 148.31 112.71 173.90 222.31 

8 Tax Provision 22.25 18.08 18.39 29.70 36.98 36.58 37.72 31.72 47.39 61.31 

9 Profit after Tax 50.68 56.71 58.46 81.95 91.92 98.63 110.59 80.99 126.51 161.00 

10 Equity Share Capital 78.05 78.05 88.05 88.05 88.05 88.05 88.05 88.05 88.05 100.00 

11 Share Premium 218.76 218.76 268.76 268.76 268.76 268.76 268.76 268.76 268.76 651.12 

12 Net Worth 398.50 438.23 537.95 594.60 672.34 734.10 794.57 840.93 923.73 1423.20 

13 Dividend (%) 17.50% 20% 20% 25% 25% 30% 50% 35% 40% 45% 

14 Earnings Per Share (Rs.) 6.49 7.27 6.99 9.31 10.44 11.20 12.56 9.20 14.37 18.23 

15 Book Value (Rs.) 51.06 56.15 61.10 67.53 76.36 83.37 90.24 95.51 104.91 142.32 

PBDIT : Profit before Depreciation, Interest and Tax 

48


Auditors’ Report 

To 

The Members of 

M/s ICRA Limited 

1. We have audited the attached Balance Sheet of ICRA Limited as at March 31, 2007 and also the 

Profit and Loss Account and Cash Flow Statement for the year ended on that date, annexed 

thereto. These financial statements are the responsibility of the Company’s management. Our 

responsibility is to express an opinion on these financial statements based on our audit. 

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those 

standards required that we plan and perform the audit to obtain reasonable assurance about 

whether the financial statements are free of material misstatements. An audit includes examining 

on a test basis, evidence supporting the amounts and disclosures in the financial statements. An 

audit also includes assessing the accounting principles used and significant estimates made by 

management, as well as evaluating the overall financial statement presentation. We believe that 

our audit provides a reasonable basis for our opinion. 

3. As required by the Companies, (Auditor’s Report) Order, 2003 issued by the Central Government 

in terms of section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the 

matters specified in paragraph 4 and 5 of the said Order. 

4. Further to our comments in the annexure referred to in paragraph 3 above, we report that: 

a) We have obtained all the information and explanations which to the best of our knowledge 

and belief were necessary for the purposes of our audit; 

b) In our opinion, proper books of account as required by law have been kept by the Company 

so far as appears from our examination of those books and proper returns adequate for the 

purposes of our audit have been received from the branches not visited by us. The Branch 

Auditor’s Reports have been forwarded to us and have been appropriately dealt with. 

c) The Balance Sheet, Profit and Loss account and Cash Flow Statement dealt with by this report 

are in agreement with the books of account and with the audited returns from the Branches. 

d) In our opinion, the Balance Sheet, Profit and Loss account and Cash Flow Statement dealt with 

by this report comply with the Accounting Standards referred to in sub-section (3C) of section 

211 of the Companies Act, 1956; 

e) On the basis of written representations received from the Directors, as on 31 st March 2007 

and taken on record by the Board of Directors, we report that none of the directors is 

disqualified as on March 31, 2007 from being appointed as a director in terms of clause (g) 

of sub section (1) of section 274 of the Companies Act, 1956; 

49


(f) In our opinion and to the best of our information and according to the explanations given to us, 

the accounts gives the information as required by the Companies Act, 1956, in the manner so 

required and give a true and fair view in conformity with the accounting principles generally 

accepted in India; 

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 

2007; and 

(ii) In the case of the Profit and Loss account, of the profit of the Company for the year ended 

on that date. 

(iii) In the case of the Cash Flow Statement, of the cash flow of the Company for the year 

ended on that date. 






(Partner) 

50


Annexure to the Auditors’ Report 

Re: ICRA Limited 

Annexure referred to in paragraph 3 of our report of even date: 

As required by the Companies (Auditor’s Report) Order, 2003 and according to information & 

explanations given to us during course of the audit and on the basis of such checks we considered 

appropriate, we report that- 

1. (a) The Company has maintained proper records showing full particulars including quantitative 

details and situation of fixed assets. 

(b) 

(c) 

These assets have been physically verified by the management periodically at reasonable 

intervals, which in our opinion is reasonable having regard to the size of the company and 

the nature of its business. No material discrepancies were noticed on such verification. 

The Company has disposed of some of its Assets, but not substantial which will effect the 

Company as a going concern. 

2. Since the company do not have any inventories Clause (ii) of Paragraph 4, of the said Order is 

not applicable. 

3. The Company during the year has neither granted nor taken any loans, secured or unsecured, to 

and from companies, firms or other parties listed in the Register, maintained under section 301 

of the Companies Act, 1956. As the company has not granted / taken any loans, clauses (iii)(b), 

(iii)(c), (iii)(d), (iii)(f) and (iii)(g) of the Paragraph 4 of the said Order are not applicable. 

4. In our opinion and according to the information and explanations given to us, there are 

adequate internal control procedures commensurate with the size of the Company and nature of its 

business with regard to fixed assets and for invoicing of the services. During the course of our 

audit, no major weakness has been noticed in the internal controls. 

5 (a) In our opinion and according to the information and explanations given to us, the 

transactions made in pursuance of contracts or arrangement’s, that need to be entered 

into the register maintained under section 301 of the Companies Act, 1956 have been 

recorded in the register. 

(b) 

In our opinion and according to the information and explanation given to us, the 

transactions exceeding rupees five lakh in respect of any party during the year, have been 

made at prices, which are reasonable having regard to prevailing market prices at the 

relevant time. 

6. The Company has not accepted any deposits during the year from the public within the meaning of 

the provisions of Section 58A and 58 AA on any other relevant provisions of the Companies Act, 

1956. Hence, the clause (vi) of the order is not applicable. 

51


7. In our opinion, the Company has adequate internal audit system commensurate with the size and 

nature of its business. 

8. The Central Government has not prescribed maintenance of any cost records under section 

209(1) (d) of the Companies Act, 1956. Hence, Clause no. (viii) of the said Order is not 

applicable. 

9. (a) In our opinion and according to the information and explanations given to us and on the 

basis of our examination of the records of the Company, the Company is regular in 

depositing undisputed statutory dues including Provident Fund, Income Tax, Wealth Tax, 

Service Tax and other statutory dues with appropriate authorities. 

(b) 

In our opinion and according to the information and explanations given to us and the 

records of the Company verified by us, there are no undisputed amounts payable in 

respect of such statutory dues which have remained outstanding, as at March 31, 2007 for 

a period exceeding six months from the date they became payable except Cess under 

section 441A of the Companies Act, 1956 amounting to Rs. 101,960/- pending for 

Central Government Notification for the manner in which the Cess shall be paid. 

10. The Company does not have any accumulated losses at the end of the financial year and has 

not incurred cash losses in the current financial year and in the immediately preceding 

financial year. 

11. The Company has taken a short-term loan from a bank and has not defaulted in repayment of 

its dues. 

12. The Company has not granted any loans or advances on the basis of security by way of pledge 

of shares, debentures or other securities. 

13. The provisions of any Special statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/ 

Societies are not applicable to the Company. 

14. According to the information & explanations given to us, the Company has made investments in 

the shares of companies which are its subsidiaries and units of Mutual Funds which are held by 

the company in its name. 

15. According to the information and explanations given to us, the Company has not given any 

guarantee for loans taken by others from banks and financial institutions. 

16. The Company has not taken any term loans during the year under audit. 

17. The Company has raised funds on short term basis and has repaid the same during the year. 

18. The Company has not made any preferential allotment of shares to parties and companies covered 

in the register maintained under section 301 of the Companies Act, 1956 during the year. 

52



19. Since no debentures have been issued by the Company and hence, the requirements of Para 4 (xix) 

are not applicable to the Company. 

20. During the year under audit, a Public Offer of 2,581,100 Equity Shares of Rs. 10 each of the 

Company was made through an Offer for Sale by the existing Shareholders namely IFCI Limited, 

Administrator of the Specified Undertaking of The Unit Trust of India and State Bank of India, 

(“Selling Shareholders”). 

21. On the basis of our examination and according to the information and explanations given to us, 

no fraud, in or by the Company, has been noticed or reported during the year. 






(Partner) 

53

Balance Sheet 

Balance Sheet as at March 31, 2007 

(Rupees in thousand) 

PARTICULARS Schedule As at As at 

No. March 31, 2007 March 31, 2006 

Rs. 

Rs. 

SOURCES OF FUNDS 

i) Shareholders’ Funds 

(a) Share Capital (1) 100,000.00 88,051.00 

(b) Reserves and Surplus (2) 1,323,418.01 835,974.18 

1,423,418.01 924,025.18 

ii) Deferred Tax Liability (Net) 7,197.34 6,834.05 

Total 1,430,615.35 930,859.23 

APPLICATION OF FUNDS 

i) Fixed Assets (3) 

(a) Gross Block 286,320.07 282,184.99 

(b) Less: Depreciation 105,479.34 109,775.26 

Net Block 180,840.73 172,409.73 

ii) Investments (4) 879,525.17 684,166.94 

iii) Current Assets, Loans and Advances 

(a) Sundry Debtors (5) 74,870.53 49,253.26 

(b) Cash and Bank Balances (6) 28,293,629.02 39,158.62 

(c) Other Current Assets (7) 2,398.58 2,487.85 

(d) Loans and Advances (8) 395,773.99 138,099.38 

28,766,672.12 228,999.11 

Less: Current Liabilities and Provisions (9) 

(a) Liabilities 28,267,176.01 59,687.06 

(b) Provisions 129,462.39 95,325.64 

28,396,638.40 155,012.70 

Net Current Assets 370,033.72 73,986.41 

iv) Miscellaneous Expenditure (10) 215.73 296.15 

(To the extent not written off or adjusted) 

Total 1,430,615.35 930,859.23 

SIGNIFICANT ACCOUNTING POLICIES (15) 

AND NOTES TO ACCOUNTS 

The Schedules referred to above form an integral part of the Balance Sheet 

As per our report of even date attached 

For and on behalf of the Board 

for VIPIN AGGARWAL & ASSOCIATES 


(VIPIN AGGARWAL) (NARESH TAKKAR) (D.N. GHOSH) 

PARTNER MANAGING DIRECTOR CHAIRMAN 


Dated : May 23, 2007 

(VIJAY WADHWA) 

C.F.O. & CO. SECRETARY 

54


Profit and Loss Account 

Profit and Loss Account for the Period from April 1, 2006 to March 31, 2007 


PARTICULARS Schedule 2006-07 2005-06 

No. Rs. Rs. 

INCOME 

Rating Services Fees 388,950.33 312,938.89 

Information Services Fees 4,735.85 6,735.13 

BPO Services Fees 4,212.27 12,454.36 

Operating Income 397,898.45 332,128.38 

Other Incomes (11) 69,794.20 53,946.82 

467,692.65 386,075.20 

EXPENDITURE 

Personnel Expenses (12) 140,534.21 121,218.65 

Administrative Expenses (13) 42,711.18 37,675.26 

Other Expenses (14) 45,680.46 38,049.12 

228,925.85 196,943.03 

PROFIT BEFORE DEPRECIATION, INTEREST AND TAX 238,766.80 189,132.17 

Depreciation (16,002.05) (15,226.34) 

PROFIT BEFORE INTEREST AND TAX 222,764.75 173,905.83 

Interest Paid (450.52) 0.00 

PROFIT BEFORE TAX 222,314.23 173,905.83 

Income Tax (59,300.00) (42,200.00) 

Deferred Tax (363.29) (2,977.65) 

Wealth Tax (55.46) (92.54) 

Fringe Benefit Tax (1,594.18) (2,125.36) 

PROFIT AFTER TAX 161,001.30 126,510.28 

Taxes for Previous Years 0.00 (6.10) 

Prior Period Adjustments (Net) (6.40) (3,688.19) 

PROFIT AVAILABLE FOR APPROPRIATIONS 160,994.90 122,815.99 

APPROPRIATIONS 

Proposed Dividend 45,000.00 35,220.40 

Corporate Tax on Proposed Dividend 7,647.75 4,939.66 

Transferred to General Reserve 108,347.15 82,655.93 

160,994.90 122,815.99 



The Schedules referred to above form an integral part of the Profit and Loss Account 











55

Balance Sheet 

Schedules annexed to and forming an integral part 

of Balance Sheet as at March 31, 2007 


PARTICULARS As at As at 

March 31, 2007 March 31, 2006 

Rs. 

Rs. 

1. SHARE CAPITAL 

AUTHORISED 

15,000,000 Equity Shares of Rs. 10/- each 

(Previous Year 15,000,000) 150,000.00 150,000.00 

ISSUED, SUBSCRIBED AND PAID UP 


fully paid up (Previous Year 8,805,100) 88,051.00 88,051.00 

Add: Issued 906,000 Equity Shares of Rs. 10/- each 

fully paid up during the year to ICRA Employees Welfare Trust 

on Preferential Allotment Basis 9,060.00 0.00 


fully paid up during the year to Moody’s Investment Company 

India Private Limited on Preferential Allotment Basis 2,889.00 0.00 

100,000.00 88,051.00 

2. RESERVES AND SURPLUS 

a) Share Premium Account 

- As per last year 268,755.00 268,755.00 

- Received during the year 382,368.00 0.00 

651,123.00 268,755.00 

b) Contingency Reserve 5,000.00 5,000.00 

c) General Reserve 

- As per last Balance Sheet 562,219.18 479,563.25 

- Transitional Incremental Provision for Employees’ Benefits (3,271.32) 0.00 

- Transferred from Profit and Loss Account 108,347.15 82,655.93 

667,295.01 562,219.18 

1,323,418.01 835,974.18 

56



3. FIXED ASSETS 

GROSS BLOCK DEPRECIATION NET BLOCK 

Sl. PARTICULARS As at Additions Deductions/ As at Up to For Deductions/ Up to As at As at 

No. April 1, 2006 Adjustments March 31, 2007 March 31, 2006 the period Adjustments March 31, 2007 March 31, 2007 March 31, 2006 

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. 

1 Building and Flats 195,606.55 0.00 0.00 195,606.55 47,584.78 7,401.09 0.00 54,985.87 140,620.68 148,021.77 

2 Data Processing 28,974.31 3,919.61 (5,805.68) 27,088.24 23,524.19 2,996.40 (5,626.03) 20,894.56 6,193.68 5,450.12 

Equipment 

3 Intangible Assets - 5,547.64 406.37 0.00 5,954.01 4,914.73 315.26 0.00 5,229.99 724.02 632.91 

Softwares 

4 Furniture and Fixtures 22,258.99 16,034.13 (9,399.92) 28,893.20 16,660.62 2,529.50 (7,644.36) 11,545.76 17,347.44 5,598.37 

5 Office Equipment 11,433.99 2,519.82 (1,041.02) 12,912.79 6,587.82 1,045.63 (749.19) 6,884.26 6,028.53 4,846.17 

6 Air Conditioners 5,424.22 2,663.39 (2,204.48) 5,883.13 3,509.35 431.02 (1,592.72) 2,347.65 3,535.48 1,914.87 

7 Electrical Fittings 4,254.45 3,672.28 (2,266.06) 5,660.67 2,967.78 445.01 (1,802.23) 1,610.56 4,050.11 1,286.67 

8 Vehicles 8,684.84 515.29 (4,878.65) 4,321.48 4,025.99 838.14 (2,883.44) 1,980.69 2,340.79 4,658.85 

Total 282,184.99 29,730.89 (25,595.81) 286,320.07 109,775.26 16,002.05 (20,297.97) 105,479.34 180,840.73 172,409.73 

Previous Year 288,257.21 6,773.95 (12,846.17) 282,184.99 102,679.66 15,226.34 (8,130.74) 109,775.26 172,409.73 

57

4. INVESTMENTS 

Long Term Investments (At cost) 

PARTICULARS Quantity Quantity Amount Amount 

As at As at As at As at 

Face Value March 31, 2007 March 31, 2006 March 31, 2007 March 31, 2006 

(Rupees) (Numbers) (Numbers) (Rs. in thousand) (Rs. in thousand) 

Unquoted 

1) in Subsidiaries 

i Equity Shares of ICRA Online Limited 10 2,217,558 2,203,587 22,175.58 22,035.87 

ii 9% Optionally Convertible Cumulative Preference 10 304,329 304,329 4,901.49 4,901.49 

Shares of ICRA Online Limited 

iii Equity Shares of ICRA Management 10 15,000,000 50,000 150,000.00 500.00 


iv Equity Shares of ICRA Techno Analytics Limited 10 5,000,000 3,000,000 87,387.50 67,387.50 

Sub Total (1) 264,464.57 94,824.86 

2) Others 

a. Shares 

i 5% Redeemable Cumulative Preference 10 600,000 600,000 6,000.00 6,000.00 

Shares of IFCI Limited 

ii Equity Shares of Captech Online Private Limited 10 0 300,000 0.00 3,000.00 

Quoted 

b. Taxable Bonds 

i 14% Bonds of Industrial Development 5,000 0 2,000 0.00 9,925.00 

Bank of India 

c. Taxable Bonds (Capital Gain Exemption Schemes) 

i 7.5% Bonds of Rural Electrification 10,000 500 500 5,000.00 5,000.00 

Corporation Limited 

ii 5.50% NHB Capital Gains Bonds 2002 10,000 1,500 1,500 15,000.00 15,000.00 

iii 5.25% Bonds of Rural Electrification 10,000 500 0 5,000.00 0.00 


d. Taxfree Bonds 

i 6.60% Bonds of Unit Trust of India 100 218,834 218,834 21,883.40 21,883.40 

52,883.40 60,808.40 

Less:- Provision for Diminution in Value 10 0 300,000 0.00 (3,000.00) 

of Investments 

Sub Total (2) 52,883.40 57,808.40 

1) in Shares 

i Equity Shares of CRISIL Limited 10 300 300 15.00 15.00 

Sub Total (1) 15.00 15.00 

Aggregate Market Value of Quoted 801.86 203.64 

Long Term Investments 

Total (Long Term Investments) 317,362.97 152,648.26 

58


Contd... 

4. INVESTMENTS Quantity Quantity Amount Amount 

Current Investments in Mutual Funds 

(At Cost) As at As at As at As at 



i Prudential ICICI Balanced Fund -Dividend 10 1,821,418.082 1,821,418.082 26,465.20 26,465.20 

ii GFBG Grindlays Floating Rate-Short 10 0.000 3,546,193.604 0.00 40,000.00 

Term-Inst Plan B-Growth 

iii DSP Merrill Lynch Floating Rate Fund 10 0.000 3,524,819.133 0.00 40,000.00 

Regular Plan - Growth 

iv HDFC Floating Rate Income Fund - 10 3,477,897.958 3,477,897.958 40,000.00 40,000.00 

Short Term Plan - Growth 

v Templeton Floating Rate Income Fund 10 0.000 1,619,092.337 0.00 20,000.00 

Short Term Plan (Growth Option) 

vi Deutsche Floating Rate Fund 10 0.000 3,612,455.747 0.00 40,000.00 


vii Kotak Floater - Short Term - Growth 10 0.000 3,555,934.855 0.00 40,000.00 

viii TFRSG Tata Floating Rate Fund Short Term - Growth 10 0.000 1,825,000.684 0.00 20,000.00 

ix Birla Floating Rate Fund - Short Term - Growth 10 0.000 3,549,151.309 0.00 40,000.00 

x TBFD Tata Balanced Fund (Dividend) 10 0.000 967,455.566 0.00 26,256.47 

xi Principal Balanced Fund (Dividend Payout) 10 0.000 329,597.891 0.00 5,000.00 

xii FT India Balanced Fund (Dividend Payout) 10 1,878,654.976 1,878,654.976 33,797.00 33,797.01 

xiii HDFC Balance Fund (Dividend) 10 1,185,747.317 1,185,747.317 20,000.00 20,000.00 

xiv DSPML Balance Fund (Dividend) 10 2,008,566.089 1,097,694.841 40,000.00 20,000.00 

xv PFRPG Prudential ICICI Floating Rate Plan - Growth 10 0.000 1,756,280.900 0.00 20,000.00 

xvi Grindlays Fixed Maturity Plus Plan - 1 - B - Growth 10 1,000,000.000 1,000,000.000 10,000.00 10,000.00 

xvii UTI Fixed Term Income Fund - Series 1- 10 1,000,000.000 1,000,000.000 10,000.00 10,000.00 

Plan 18 - Q 3 Dividend Payout 

xviii SBI MF - MIF - FRP - Short Term 10 0.000 2,782,234.505 0.00 30,000.00 

xix LIC MF Floating Rate Fund - Short Term Plan - 10 4,562,335.186 4,562,335.186 50,000.00 50,000.00 

Growth Plan 

xx HDFC Prudence Fund - Dividend 10 1,491,777.728 0.000 46,900.00 0.00 

xxi Can Floating Rate - Short Term Growth Fund 10 3,594,633.213 0.000 40,000.00 0.00 

xxii Prudential ICICI Floating Rate Plan C - Growth 10 3,507,264.421 0.000 40,000.00 0.00 

xxiii Tata Floating Rate Short Term Inst. Plan - Growth 10 3,518,494.085 0.000 40,000.00 0.00 

xxiv SBI Magnum Insta Cash Fund - 10 3,175,258.387 0.000 40,000.00 0.00 

Liquid Floater Plan - Growth 

xxv Principal PNB fixed maturity plan (FMP-33) 10 1,000,000.000 0.000 10,000.00 0.00 

540 Days Plan-Series 1 - Jan 07 

xxvi Templeton Fixed Horizon Fund - Series 10 1,500,000.000 0.000 15,000.00 0.00 

1 - 15 Months Plan - Institutional Growth 

xxvii Franklin Templeton Fixed Tenure Fund - 10 2,000,000.000 0.000 20,000.00 0.00 

Series VII 370 Days Plan - Growth 

xxviii SBI Debt Fund Series - 13 Months - II - 10 2,000,000.000 0.000 20,000.00 0.00 

(March 07) Growth 

xxix ICICI Prudential FMP Series 34 - 10 2,000,000.000 0.000 20,000.00 0.00 

One Year Plan B Institutional Growth 

xxx Standard Chartered Fixed Matuirty Plan - 10 2,000,000.000 0.000 20,000.00 0.00 

Yearly Series 6 - Growth 

xxxi Principal PNB Fixed Maturity Plan - (FMP-37) 10 2,000,000.000 0.000 20,000.00 0.00 

385 Days - Series IV - Mar 07 

Total (Current Investments) 562,162.20 531,518.68 

Aggregate Market Value of Current Investments 584,123.09 570,533.74 

Grand Total (Long Term + Current Investments) 879,525.17 684,166.94 

59




Rs. 

Rs. 

5. SUNDRY DEBTORS (UNSECURED) 

Over six months 

- Considered Good 13,806.40 5,926.10 

- Considered Doubtful 1,604.76 4,148.97 

15,411.16 10,075.07 

Others 


76,315.76 53,065.76 

Less Provision for Doubtful Debts (1,445.23) (3,812.50) 

{Exclusive of Service Tax 

of Rs. 159.53 thousand (Previous Year Rs. 336.47 thousand)} 

74,870.53 49,253.26 

6. CASH AND BANK BALANCES 

Cash in Hand 78.60 523.44 

Balance with Scheduled Banks 

- In Current Accounts 28,232,398.98 6,090.07 

{Includes Rs. 28,228,222.88 thousand 

received from IPO Proceeds} 

- In Deposit Accounts 61,151.44 32,545.11 

28,293,629.02 39,158.62 

7. OTHER CURRENT ASSETS 

Interest accrued but not due on 

Investments and Deposits 2,398.58 2,487.85 

2,398.58 2,487.85 

8. LOANS AND ADVANCES 

Loans to Staff (Secured, Considered Good) 1,134.39 4,327.47 

{Includes Rs. 1,168.11 thousand due from Officers 

(Previous Year Rs. 518.09 thousand) Maximum Balance during 

the year Rs. 2,422.94 thousand (Previous Year Rs. 1,331.89 thousand)} 

Advances Recoverable in cash or in kind or for value to be received 

- Unsecured, Considered Good 14,804.83 15,766.92 

- Loan to ICRA Employees Welfare Trust 298,980.39 0.00 

- Loan and Advances to Subsidiaries 7,794.50 60,441.79 

Sundry Deposits 


- Unsecured, Considered Doubtful 4,672.50 4,672.50 

Income Tax Paid in Advance 56,622.32 45,219.00 

{Includes Rs. 25,122.32 thousand for TDS 

(Previous Year Rs. 23,219 thousand)} 

Fringe Benefit Tax Paid in Advance 1,404.62 1,752.73 

400,446.49 142,771.88 

Less: Provision for Doubtful Deposits (4,672.50) (4,672.50) 

395,773.99 138,099.38 

60





Rs. 

Rs. 

9. CURRENT LIABILITIES AND PROVISIONS 

A. CURRENT LIABILITIES 

Sundry Creditors 13,371.17 3,685.30 

Advances Received from Clients 10,863.63 12,897.50 

Due to Subsidiaries 370.80 8,812.95 

Payable to Public Offer Selling Shareholders (Net) 797,695.26 0.00 

Refund due to Public Offer Applicants 27,376,459.88 0.00 

Other Liabilities 68,415.27 34,291.31 

Sub Total (A) 28,267,176.01 59,687.06 

B. PROVISIONS 

Provision for Income Tax 59,300.00 42,200.00 

Provision for Fringe Benefit Tax 1,594.18 2,125.36 

Provision for Wealth Tax 55.46 92.54 


Provision for Corporate Tax on Proposed Dividend 7,647.75 4,939.66 

Provision for Retirement Benefits 15,865.00 10,747.68 

Sub Total (B) 129,462.39 95,325.64 

Grand Total (A+B) 28,396,638.40 155,012.70 

10. MISCELLANEOUS EXPENDITURE 


Share Issue and Other Expenses 

- As per last Balance Sheet 296.15 440.54 

Less : Written off during the year (80.42) (144.39) 

215.73 296.15 

61

Schedules annexed to and forming an integral part of 

Profit and Loss Account for the period from April 1, 2006 to March 31, 2007 


PARTICULARS 2006-07 2005-06 

Rs. 

Rs. 

11. OTHER INCOMES 

Interest 5,370.45 5,302.83 

{including TDS of Rs. 609.27 thousand 

(Previous Year Rs. 648.25 thousand)} 

Dividend on Non-Trade Investments 24,463.64 9,372.97 

Profit on Sale / Redemption of Investments 24,979.95 34,003.36 

Profit on Sale of Assets 650.57 148.24 

Interest on Staff Loans 110.27 107.33 

Foreign Exchange Gain (Net) 9.55 31.52 

Technical Services Income 384.71 391.83 

Rental Income 12,668.30 3,200.00 

Royalty Income 0.00 538.63 

Provision for Diminution in Value of Investments Written Back (Net) 300.00 0.00 

Miscellaneous Incomes 856.76 850.11 

69,794.20 53,946.82 

12. PERSONNEL EXPENSES 

Salaries and Allowances 113,312.19 101,367.74 

Managerial Remuneration 13,154.99 4,827.14 

Contribution to Provident Fund 4,909.96 5,663.04 

{including contribution for the Directors Rs. 418.80 thousand 


Staff Welfare Expenses 7,527.82 7,060.57 

{including payment to the Directors Rs. 572.17 thousand 


Training and Recruitment Expenses 1,629.25 2,300.16 

140,534.21 121,218.65 

13. ADMINISTRATIVE EXPENSES 

Rent 14,864.05 13,706.59 

Rates and Taxes 1,665.63 1,975.47 

Repairs and Maintenance - Building 712.46 564.13 

Repairs and Maintenance - Others 7,153.18 4,402.64 

Communication Expenses 6,327.28 6,936.70 

Electricity and Water Expenses 2,889.14 2,708.68 

Printing and Stationery 6,573.00 5,287.16 

Insurance Charges 488.37 423.74 

Books and Periodicals 2,038.07 1,670.15 

42,711.18 37,675.26 

14. OTHER EXPENSES 

Travelling and Conveyance 16,936.74 15,810.14 

{includes Rs. 5,100.68 thousand for Directors’ 

Travelling (Previous Year Rs. 3,932.92 thousand)} 

Directors’ Sitting Fees 759.50 309.50 

Legal and Professional Charges 10,225.67 12,971.03 

Conference and Meeting Expenses 2,932.04 1,631.12 

Advertisement Expenses 4,778.52 384.87 

Auditors’ Remuneration 288.30 167.00 

Business Development Expenses 338.77 1,185.31 

Technical Knowhow Fees 2,400.94 2,349.52 

Miscellaneous Expenditure Written Off 80.42 144.39 

Bad Debts Written Off (Net of Provisions) 2,686.22 1,284.63 

Fees and Subscription 579.77 499.63 

Loss on Sale of Assets 2,855.03 127.58 

Miscellaneous Expenses 818.54 1,184.40 

45,680.46 38,049.12 

62


15. SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS 

A. Significant Accounting Policies:- 

a) System of Accounting: - The Financial Statements are prepared on accrual basis of accounting 

and in accordance with Generally Accepted Accounting Principles, the applicable Accounting 

Standards issued by the Institute of Chartered Accountants of India and the provisions of the 

Companies Act, 1956. 

b) Revenue Recognition: - 

i) Income from Rating/Grading Services is recognised as income when the Ratings/Gradings 

are assigned by the Rating/Grading Committee of the Company. 

ii) Income from Surveillance Fees is recognised in the year in which it becomes due. The first 

annual surveillance fees on accepted Ratings/Gradings becomes due after 365 days from the 

date of assigning the Ratings/Gradings. However, the Surveillance Fees on the Rating 

assignments of Commercial Papers, Liquefied Petroleum Gas, Superior Kerosene Oil, 

Collective Investment Schemes and Grading assignments become due only on carrying out 

the surveillance exercise. 

iii) Income from Information Services is recognised in the year in which such assignments are 

carried out. 

iv) The dividend income, if any, from Investment in shares/units is accounted for in the year in 

which it is declared. Interest income is recognised in the year it is accrued. 

c) Fixed Assets: - Fixed Assets are stated at cost which comprise purchase price, duties and any 

directly attributable cost of bringing the asset to its working condition for intended use. 

d) Depreciation: - The depreciation on the assets is provided on the written down value of the 

assets at the rates and in the manner prescribed in the Schedule XIV of the Companies Act, 

1956. The depreciation is provided on a pro-rata basis on the assets acquired, sold or 

disposed of during the year. Individual assets costing less than Rs. 5,000 are depreciated in full 

in the year of acquisition. 

e) Impairment of Assets:- At each Balance Sheet date, the Company assesses whether there is any 

indication that an asset may be impaired. If any such indication exists, an impairment loss, i.e. 

the amount by which the carrying amount of assets exceeds its recoverable amount, is provided 

in the books of accounts. 

f) Investments: - Investments are stated at lower of Cost and Fair Market Value. Provision for 

diminution in case of long term investments is made if the decline in value is other than 

temporary in nature. 

g) Employees’ Benefits: - Employees’ benefits are provided in the form of Provident Fund, Pension 

Scheme, Leave Encashment and Gratuity. Contribution to Provident Fund is being deposited in 

accordance with the provisions of the Employees’ Provident Fund and Miscellaneous 

Provisions Act, 1952. Liabilities for Gratuity and Leave Encashment are provided on the basis 

of actuarial valuation at the year end. 

In terms of Accounting Standard 15, (revised 2005), on employees’ benefits, the shortfall in 

liability towards employees benefits i.e. Gratuity and Leave Encashment as on April 1, 2006 

based on revised actuarial valuation has been adjusted against the opening balance of 

General Reserve in terms of the transitional provisions of the standard. 

h) Miscellaneous Expenditure: - Shares Issue and Other Miscellaneous Expenses are amortised 

equally over a period of ten years starting from the year in which such expenses are incurred. 

63

i) Deferred Tax:- Provision for taxation for the year is ascertained on the basis of assessable profits 

computed in accordance with the provisions of the Income Tax Act, 1961. Deferred Tax is 

recognised, subject to the consideration of prudence, on timing differences, being the difference 

between taxable income and accounting income that originates in one period and are capable of 

reversal in one or more subsequent periods. 

j) Foreign Currency Transactions:- Transactions in foreign currencies are recognised at the 

prevailing exchange rates on the date of the transactions. The gains or losses arising out of 

fluctuations at the date of Balance Sheet are recognised in the Profit and Loss Account. 

B. Notes to Accounts:- 

1 Contingent Liabilities not provided for:- 

i) Contingent Liability on account of disputed claim against the Company not acknowledged as 

debt amounting to Rs. 1,285.38 thousand (Previous Year Rs. 1,285.38 thousand), is under 

litigation. 

ii) Guarantees of Rs. 6,098.57 thousand (Previous Year Rs. 4,839.75 thousand) given by Bank 

against Counter Guarantees of the Company. 

2 Public Offer of 2,581,100 Equity Shares of Rs. 10 each of the Company through an Offer for 

Sale by the existing Shareholders namely IFCI Limited, Administrator of the Specified 

Undertaking of The Unit Trust of India and State Bank of India, (“Selling Shareholders”) was 

made at a Price Band of Rs. 275 to Rs. 330 Per Equity Share. The issue opened on March 20, 

2007 and closed on March 23, 2007 and was oversubscribed by 73 times. A sum of 

Rs. 28,228,222.88 thousand was collected from the said Issue and the Price was fixed at 

Rs. 330 per Equity Share on March 24, 2007. Out of the said Issue Proceeds, 

Rs. 851,763.00 thousand was payable to the Selling Shareholders after allotment/transfer of 

Equity Shares to the successful bidders/applicants, Rs. 54,067.74 thousand was recoverable from 

the Selling Shareholders towards expenses incurred by the Company for the said Issue and Rs. 

27,376,459.88 thousand was refundable to the unsuccessful bidders/applicants of the Issue. 

3 Allotment of Shares on Preferential basis:- 

i) During the year, the Company established a trust called ICRA Employees Welfare Trust (Trust). 

The Company issued 906,000 Equity Shares on March 24, 2007 to the Trust on Preferential 

Allotment basis at the IPO Issue Price of Rs. 330 per Equity Share of the face value of Rs. 10 

each. The Trust purchased the aforesaid Equity Shares out of the funds borrowed from the 

Company. During the year, 615,763 Options were granted to the eligible Directors, 

employees of the Company and its subsidiary companies. Such Options shall be vested and 

exercisable within a specified period as per the provisions of the Employees Stock Option 

Scheme. 

ii) The Company issued 288,900 Equity Shares on March 24, 2007 to Moody’s Investment 

Company India Private Limited on Preferential Allotment basis at IPO Issue Price of Rs. 330 

per Equity Share of the face value of Rs. 10 each. 

4 Investments in Subsidiaries:- 

i) During the year, the Company acquired 2,000,000 Equity shares of ICRA Techno Analytics 

Limited (wholly owned subsidiary company) at par value of Rs. 10 each. 

ii) During the year, ICRA Online Limited became wholly owned subsidiary of the Company on 

acquisition of its additional 13,971 Equity Shares at par value of Rs. 10 each. 

64


iii) During the year 2004-05 a wholly owned subsidiary company namely ICRA Management 

Consulting Services Limited (IMaCS) was incorporated for taking over the Advisory Services 

Division of the Company. The Hon’ble Delhi High Court on March 29, 2006 has approved 

the Demerger Scheme with appointed date of April 1, 2005 for a total purchase consideration 

of Rs. 51,647,860. ICRA Limited had received 5,164,786 Equity Shares of Rs. 10 each at par 

value on September 11, 2006 against the said purchase consideration. In addition to the 

above the Company acquired 9,785,214 Equity Shares of the face value of Rs. 10 each of 

IMaCS at par value on June 12, 2006. 

5 During the year, the Company has paid an allowance of Rs. 7543.06 thousand for the period 

from October 1, 2005 to September 30, 2006 to some members of staff (including 

Managing Director and Vice-Chairman) as per the Value Allowance Scheme of the Company. 

Further, during the year, the Company has made provision for Rs. 3,109.84 thousand towards 

Deferred Incentive (i.e. Value Allowance) for the period from October 1, 2006 to March 31, 

2007 as per the Accounting Standard 15 issued by the Institute of Chartered Accountants 

of India. 

6 SME’s Disclosure: Sundry Creditors do not include any amounts due to Micro, Small and 

Medium Enterprises (SMEs) within the meaning of The Micro, Small and Medium Enterprises 

Development Act, 2006. 

7 Managerial Remuneration:- 

2006-07 2005-06 

(Rs. in thousand) (Rs. in thousand) 

Salary 8,919.45 3,420.66 

Commission 4,235.54 1,406.48 

Contribution to PF 418.80 217.80 

Perquisites 572.17 118.81 

Total 14,145.96 5,163.75 

65

8 Computation of Net Profit in accordance with section 349 of the Companies Act, 1956 for 

calculation of commission payable to the Vice-Chairman and the Managing Director:- 

Particulars 2006-07 2005-06 


Profit before Tax 222,314.23 173,905.83 

Add: Managerial Remuneration and Perquisites ** 14,145.96 5,163.75 

Add: Directors’ Sitting Fees 759.50 309.50 

Add: Loss on Sale of Assets 2,855.03 127.58 

Less: Provision for doubtful debts (Net) (2,367.27) (4,707.05) 

Less: Provision for Diminution in Value of Investments Written Back (3,000.00) 0.00 

Add: Depreciation as per P and L A/c. 16,002.06 15,226.34 

250,709.51 190,025.95 

Less: Depreciation as per sec. 350 (16,002.06) (15,226.34) 

Less: Profit on Sale/Disposal of Assets (650.57) (148.24) 

Less: Profit on Sale/Disposal of Investment (Net) (22,279.95) (34,003.36) 

Net Profit as per sec. 349 of the Companies Act, 1956 211,776.93 140,648.01 

Commission Payable to the Vice-Chairman and the 

Managing Director u/s 198 of the Companies Act, 1956 @1% 

each of the above profit 4,235.54 1,406.48 

(Commission was paid @ 1% to the Managing Director 

during the Previous Year) 

** does not include contributions made for gratuity and leave encashment since the same are made for the 

company as a whole. 

9 Remuneration to Auditors:- 

Statutory Auditors 

Branch Auditors 

Particulars 2006-07 2005-06 2006-07 2005-06 

(Rs. in (Rs. in (Rs. in (Rs. in 

thousand) thousand) thousand) thousand) 

Audit Fees 135.00 60.00 54.00 31.50 

Tax Audit Fees 20.00 20.00 20.00 16.50 

Other Matters 30.00 30.00 0.00 0.00 

Out of Pocket Expenses 29.30 9.00 0.00 0.00 

Total 214.30 119.00 74.00 48.00 

10 Expenditure in foreign currency during the year:- 



(i) Technical Knowhow 1,867.36 1,827.37 

(ii) Foreign Travel 2,576.43 2,880.86 

(iii) Others 416.50 361.35 

Total 4,860.29 5,069.58 

11 Earnings in foreign exchange during the year:- 



(i) Professional and Consultancy Fees 4,440.72 12,454.36 

(ii) Income from Publications 8.25 431.29 

(iii) Others 0.00 159.57 

Total 4,448.97 13,045.22 

66


12 Segment Reporting:- 

Segmentwise Revenues and Results 2006-07 2005-06 

(Rs. in 

(Rs. in 

thousand) 

thousand) 

Segment Revenues 

Operating Revenue from: 

a) Rating Services 388,950.33 312,938.89 

b) Information Services 4,735.85 6,735.13 

c) B.P.O. Services 4,212.27 12,454.36 

Segment Total 397,898.45 332,128.38 

Segment Results 

a) Rating Services Division 239,150.88 186,614.49 

b) Information Services Division (11,568.90) (14,359.98) 

c) B.P.O. Services Division (778.53) 852.37 

Total of all Segments 226,803.45 173,106.88 

Non-Operating Income over Expenses 11,963.35 16,025.29 

Profit before Depreciation, Interest and Tax 238,766.80 189,132.17 

Depreciation (16,002.05) (15,226.34) 

Profit before Interest and Tax 222,764.75 173,905.83 


Provision for Taxes (61,312.93) (47,395.55) 

Profit after Tax 161,001.30 126,510.28 

Note : Fixed assets used in the Company’s business or Liabilities contracted have not been identified to the said 

reportable segments as the fixed assets and services are used interchangeably. 

13 Earning Per Share:- 


(Rs. in 

(Rs. in 

thousand) 

thousand) 

Profit After Tax 161,001.30 126,510.28 

Number of Shares Outstanding at the end of 

the year (Face value Rs. 10 per share) 10,000.00 8,805.10 

Basic Earning Per Share (Rs.) 18.23 14.37 

Diluted Earning Per Share (Rs.) 18.23 14.37 

(The Earning Per Share has been calculated on weighted average basis) 

14 The net Deferred Tax Asset/Liability has been arrived at as follows: 


(Rs. in 

(Rs. in 

thousand) 

thousand) 

Depreciation 14,604.49 14,449.96 

Demerger Expenses 26.50 (105.99) 

Provision for Gratuity (3,342.10) (2,795.77) 

Provision for Leave Enchashment (1,998.06) (821.90) 

Provision for Doubtful Debts (486.46) (1,283.29) 

Provision for Doubtful Loans and Advances (1,572.76) (1,572.76) 

Provision for Diminution in Value of Investments 0.00 (1,009.80) 

Disallowance u/s 43B (Cess Provision) (34.27) (26.40) 

7,197.34 6,834.05 

67

15 Related Party Disclosure:- 

Name Relationship Nature of Transaction 2006-07 2005-06 

(Rs. in (Rs. in 

thousand) thousand) 

ICRA Management Subsidiary Professional Services Used 350.00 0.00 

Consulting Services Rent Recovered 12,451.94 3,200.00 

Limited Loan Given 0.00 0.00 

(Maximum loan amount during the year 

Rs. 4,000 thousand (Previous year Rs. NIL)) 

Demerger Purchase Consideration 0.00 51,647.86 

Interest Received 210.82 0.00 

Investment made in Shares 149,500.00 0.00 

Amount Receivable (Net) 1,596.69 2,563.32 

ICRA Techno Subsidiary Professional Services Used 265.00 0.00 

Analytics Limited Loan Given 0.00 2,500.00 


Rs. 2,500 thousand (Previous year 

Rs. 2,500 thousand)) 


Investment made in Shares 20,000.00 22,500.00 

Amount Receivable (Net) 0.00 2,500.00 

ICRA Online Subsidiary Professional Services Used 879.91 4,014.51 

Limited Internet Expenses Paid 0.00 52.00 

Software Expenses Paid 0.00 209.00 

Membership Fee and Subscription Paid 43.40 60.00 

Loan Given 5,800.00 1,800.00 


Rs. 5,800 thousand (Previous year 

Rs. 1,800 thousand)) 


Technical Services Fees Received 384.71 391.83 

Royalty Received 0.00 538.63 

Mutual Fund Ranking Income 0.00 1,500.25 

Amount Receivable including loan (Net) 5,827.01 3,730.61 

Mr. P.K. Choudhury Whole-time Managerial Remuneration 7,672.80 5,163.75 

Director 

Mr. Naresh Takkar Whole-time Managerial Remuneration 6,473.16 0.00 

Director (w.e.f. 01/07/2006) 

16 Figures are expressed in terms of decimals of thousands. 

17 Previous year figures have been regrouped/rearranged wherever considered necessary. 







Place: New Delhi 

Dated: May 23, 2007 



68


Statement pursuant to Part IV of Schedule VI of the Companies Act, 1956 

Balance Sheet Abstract and Company’s General Business Profile 

I. REGISTRATION DETAILS 

Registration No. 42749 

State Code 55 

Balance Sheet Date March 31, 2007 

II. 

III. 

IV. 

CAPITAL RAISED DURING THE YEAR 

(AMOUNT RS. IN THOUSAND) 

Public Issue 

Nil 

Right Issue 

Nil 

Bonus Issue 

Nil 

Private Placement 11,949.00 

POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS 


Total Liabilities 29,827,253.75 

Total Assets 29,827,253.75 


Paid-up Capital 100,000.00 

Reserve and Surplus 1,323,418.01 

Deferred Tax Liability (Net) 7,197.34 

Secured Loans 

Nil 

Unsecured Loans 

Nil 


Net Fixed Assets 180,840.73 

Investments 879,525.17 

Net Current Assets 370,033.72 

Misc. Expenditure 215.73 

Accumulated Losses 

Nil 

PERFORMANCE OF COMPANY 


Turnover 397,898.45 

Total Expenditure (Including Depreciation) 245,378.42 

Profit/Loss Before Tax 222,314.23 

Profit/Loss After Tax 161,001.30 

Annualised Earnings Per Share (in Rs.) 18.23 

Dividend Rate (%) 45.00% 

V. GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF 

THE COMPANY (AS PER MONETARY TERMS) 

Item Code No. 

Product Description 

Item Code No. 


Item Code No. 


Not Applicable 

Credit Rating 




BPO Services 


(NARESH TAKKAR) 

MANAGING DIRECTOR 

(D.N. GHOSH) 

CHAIRMAN 





69

Statement pursuant to Section 212 of the Companies Act, 1956, 

relating to Subsidiary Companies 


1 Name of the Subsidiary Company ICRA Management ICRA Techno ICRA Online 

Consulting Services Analytics Limited 

Limited 

Limited 

2 Financial year of the Subsidiary ended on March 31, 2007 March 31, 2007 March 31, 2007 

3 Holding Company’s share in Equity Share Capital 100% 100% 100% 

4 Net aggregate amount of the Profits of the subsidiary 

not dealt with in the Holding Company’s accounts. 

(i) Profits/Losses for the Current 

Financial Year of the Subsidiary Company 14,891.28 11,308.09 12,726.14 

(ii) Profits/Losses for the Previous 

Financial Year of the Subsidiary Company, 

since it became the subsidiary of ICRA 10,768.38 3,106.72 1,911.19 

5 Net aggregate amount of the Profits of 

the subsidiary dealt with in the Holding 

Company’s accounts. 

(i) For the Current Financial Year of the 

Subsidiary Company Nil Nil Nil 

(ii) For the Previous Financial Year of the 

Subsidiary Company, since it became the 

subsidiary of ICRA Nil Nil Nil 


(NARESH TAKKAR) 


(D.N. GHOSH) 

CHAIRMAN 





70


CASH FLOW STATEMENT OF ICRA LIMITED 



Increase/(Decrease) Increase/(Decrease) 

A. Cash Flow from Operating Activities 


Adjustments for: 

Depreciation 16,002.05 15,226.34 

Provision for Retirement Benefits 5,117.32 (3,443.61) 

Transitional Incremental Provision for Employees’ Benefits (3,271.32) 0.00 

(Profit)/Loss on sale of fixed assets 2,204.46 (20.66) 

Miscellaneous Expenditure written off 80.42 144.39 

Profit on sale of Investments (Net) (24,979.95) (34,003.36) 

Interest received on Securities (5,370.45) (5,302.83) 

Interest received on Loans (110.27) (107.33) 

Dividend Income (24,463.64) (9,372.97) 

Non-Operating Income (Other than Intt. and Dividend) (13,919.32) (5,073.97) 

Interest Paid on Loans 450.52 0.00 

Previous Year Adjustments (6.40) (3,688.19) 

Operating Profit before Working Capital changes 174,047.65 128,263.64 


Trade & Other Receivables 

Sundry Debtors (25,617.27) 51,573.32 

Loans to Staff 3,193.08 (1,939.72) 

Advances 962.09 272.28 

Sundry Deposits (4,441.47) (4,654.94) 

Trade Payables 

Sundry Creditors 9,315.27 (3,789.89) 

Advances (10,476.02) 3,706.60 


Cash generated from operations 181,107.29 177,941.04 

Taxes Paid (55,473.11) (45,027.73) 

Net Cash from Operating Activities 125,634.18 132,913.31 

71

Contd... 




B. Cash Flow from Investing Activities: 

Purchase of Fixed Assets (29,730.89) (6,773.95) 

Sale of Fixed Assets 3,093.38 4,736.09 

Investments made (526,539.70) (633,525.60) 

Sale of Investments 331,181.47 546,005.61 

Profit on sale of Investments (Net) 24,979.95 34,003.36 

Loans to ICRA Employees Welfare Trust (298,980.39) 0.00 

Loans and Advances to Subsidiaries 52,647.29 (60,441.79) 

Interest received on Securities 5,370.45 5,302.83 

Interest received on Loans 110.27 107.33 

Dividend Income 24,463.64 9,372.97 

Other Income 13,919.32 5,073.97 

Income accrued on investments 89.27 (164.87) 

Net Cash from Investing Activities (399,395.94) (96,304.05) 

C. Cash Flow from Financing Activities: 

Increase in Share Capital 11,949.00 0.00 

Increase in Securities premium 382,368.00 0.00 

Dividend & Dividend Tax paid (40,160.06) (35,140.05) 

Interest Paid on Loans (450.52) 0.00 

Net Cash from Financing Activities 353,706.42 (35,140.05) 

Payable to Public Offer Applicants 27,376,459.88 0.00 


Net Increase/(decrease) in Cash and Cash Equivalents 28,254,470.40 1,469.21 

Cash and Cash Equivalents (Opening balance) 39,158.62 37,689.41 

Cash and Cash Equivalents (Closing balance) 28,293,629.02 39,158.62 












72


Auditors' Report on the Consolidated Financial Statements 

to the Board of Directors of ICRA Limited 

1. We have audited the attached Consolidated Balance Sheet of ICRA Limited (‘the Company’) and its 

Subsidiary companies, (the Company and its subsidiaries constitute ‘the Group’) as at March 31, 

2007, the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement for the 

year ended on that date, both annexed thereto. These financial statements are the responsibility of 

the Company's Management. Our responsibility is to express an opinion on these financial 

statements based on our audit. 

2. We conducted our audit in accordance with generally accepted auditing standards in India. 

These Standards require that we plan and perform the audit to obtain reasonable assurance 

whether the financial statements are prepared, in all material respects, in accordance with an 

identified financial reporting framework and are free of material misstatements. An audit 

includes, examining on a test basis, evidence supporting the amounts and disclosures in the 

financial statements. An audit also includes assessing the accounting principles used and 

significant estimates made by the Management, as well as evaluating the overall financial 

statements presentation. We believe that our audit provides a reasonable basis for our opinion. 

3. We did not audit the financial statements of the subsidiaries whose financial statements, which in 

the aggregate reflect total assets (net) of Rs. 152,372.63 thousand as at March 31, 2007, total 

revenue of Rs. 315,328.57 thousand and share of profits (net) of Rs. 38,837.58 thousand for the 

year ended on that date. These financial statements have been audited by other auditors whose 

reports have been furnished to us, and our opinion, in so far as it relates to the amounts included 

in respect of such subsidiaries is based solely on the report of the other auditors. 

4. We further report: 

(i) 

(ii) 

That the Consolidated Financial Statements have been prepared by the Company in 

accordance with the requirements of Accounting Standard (AS) 21 on ‘Consolidated 

Financial Statements’ issued by The Institute of Chartered Accountants of India and on the 

basis of separate audited financial statements for the year ended March 31, 2007 of all 

the subsidiaries in the Consolidated Financial Statements; and 

On the basis of the information and according to the explanations given to us and on the 

consideration of the separate audit reports on individual audited financial statements of the 

Company and its aforesaid subsidiaries, in our opinion, the Consolidated Financial 

Statements give true and fair view in conformity with the accounting principles generally 

accepted in India: 

73

Auditors' Report on the Consolidated Financial Statements 

to the Board of Directors of ICRA Limited 

(a) 

(b) 

(c) 

in the case of the Consolidated Balance Sheet, of the consolidated state of affairs of the 

Group as at March 31, 2007; 

in the case of the Consolidated Profit and Loss Account, of the consolidated results of 

operations of the Group for the year ended on that date; and 

in the case of the Consolidated Cash Flow Statement, of the consolidated cash flows 

of the Group for the year ended on that date. 






(Partner) 

74


Consolidated Balance Sheet 

Consolidated Balance Sheet as at March 31, 2007 


PARTICULARS Schedule As at March As at 

No. 31, 2007 March 31, 2006 

Rs. 

Rs. 

1. SOURCES OF FUNDS 



(b) Reserves and Surplus (2) 1,373,856.35 848,164.71 

1,473,856.35 936,215.71 

ii) Loan Funds 

- Secured Loans 305.19 621.55 

(from Bank against hypothecation of cars) 

iii) Deferred Tax Liability (Net) 7,446.57 6,469.51 

iv) Minority Interest 0.00 69.33 

Total 1,481,608.11 943,376.10 

2. APPLICATION OF FUNDS 


(a) Gross Block 362,639.45 329,308.88 


Net Block 225,078.05 196,515.83 

Capital Work in Progress 4,022.41 2,331.26 

229,100.46 198,847.09 

ii) Goodwill on Consolidation 51,514.45 51,444.07 

iii) Investments (4) 685,723.74 589,592.08 

iv) Current Assets, Loans and Advances 


(b) Cash and Bank Balances (6) 28,352,024.75 63,299.54 

(c) Other Current Assets (7) 2,577.14 2,544.09 


28,966,099.25 284,324.33 

Less: Current Liabilities and Provisions (9) 

(a) Liabilities 28,306,874.11 77,344.42 

(b) Provisions 146,864.83 107,111.50 

28,453,738.94 184,455.92 


v) Miscellaneous Expenditure (10) 2,909.15 3,624.45 


Total 1,481,608.11 943,376.10 














75

Consolidated Profit and Loss Account 

Consolidated Profit and Loss Account for the period from April 1, 2006 to March 31, 2007 


76 


No. Rs. Rs. 

INCOME 

Rating Services Fees 388,950.33 312,938.89 

Advisory Services Fees 150,122.52 121,329.83 



Professional Services Fees 85,748.23 72,586.31 

Sales and Services Charges 22,631.02 5,713.39 


Other Incomes (11) 59,975.88 49,911.22 

765,699.15 593,123.81 

EXPENDITURE 

Purchases 248.57 599.88 




464,648.97 370,026.40 

PROFIT BEFORE DEPRECIATION, INTEREST AND TAX 301,050.18 223,097.41 

Depreciation (28,862.29) (23,178.94) 

PROFIT BEFORE INTEREST AND TAX 272,187.89 199,918.47 

Interest Paid (476.03) (1,350.47) 


Income Tax (67,461.30) (49,343.78) 

Deferred Tax (977.06) (2,613.11) 

Wealth Tax (55.46) (92.54) 


PROFIT AFTER TAX (BEFORE MINORITY INTEREST) 199,926.81 142,296.57 

Minority Interest 0.00 (6.86) 

PROFIT FOR THE YEAR 199,926.81 142,289.71 

Capital Profit (28.84) 6,588.58 

Taxes for Previous Years (0.01) (6.10) 

Prior Period Adjustments (23.05) (7,277.09) 

Actuarial Gain / (Loss) on Transitional Incremental (48.64) 0.00 

Provision for Employees’ Benefits 

Balance Brought Forward from Last Year (13,185.39) 0.00 




Corporate Tax on Proposed Dividend 7,647.75 4,939.66 


Capital Reserve (28.84) 6,588.58 

Balance Carried to Balance Sheet 10,783.54 (13,185.39) 

186,640.88 141,595.10 













C.F.O. & CO. SECRETARY


Consolidated Balance Sheet 


Consolidated Balance Sheet as at March 31, 2007 




Rs. 

Rs. 


AUTHORISED 

15,000,000 Equity Shares of Rs. 10 each 150,000.00 150,000.00 

350,000 9% Redeemable Preference Shares of Rs. 10 each 3,500.00 3,500.00 


8,805,100 Equity Shares of Rs. 10 each 


Add: Issued 9,06,000 Equity Shares of Rs. 10/- each 

fully paid up during the year to ICRA Employees Welfare Trust 

on Preferential Allotment Basis 9,060.00 0.00 


fully paid up during the year to Moody’s Investment Company 

India Private Limited on Preferential Allotment Basis 2,889.00 0.00 

100,000.00 88,051.00 


a) Share Premium Account 

- As per last year 268,755.00 268,755.00 

- Received during the year 382,368.00 0.00 

651,123.00 268,755.00 

b) Contingency Reserve 5,000.00 5,000.00 

c) General Reserve 


- Transitional Incremental Provision for Employees’ Benefits (3,883.72) 0.00 


706,949.81 587,595.10 

d) Surplus in Profit and Loss Account 10,783.54 (13,185.39) 

1,373,856.35 848,164.71 

77





No. April 1, 2006 Adjustments March 31, 2007 March 31, 2006 the year Adjustments March 31, 2007 March 31, 2007 March 31, 2006 


1. Building and Flats 195,606.55 0.00 0.00 195,606.55 47,584.78 7,401.09 0.00 54,985.87 140,620.68 148,021.77 

2. Data Processing 50,240.32 13,109.30 (8,005.78) 55,343.84 36,567.36 7,883.73 (7,633.37) 36,817.72 18,526.12 13,672.96 

Equipment 

3. Intangible Assets - 19,384.15 6,483.62 0.00 25,867.77 10,904.87 4,884.81 0.00 15,789.68 10,078.09 8,479.28 

Softwares 

4. Furniture and Fixtures 27,600.91 25,925.56 (10,727.61) 42,798.86 18,997.73 4,476.29 (8,645.00) 14,829.02 27,969.84 8,603.18 

5. Office Equipment 12,115.63 5,163.30 (1,049.01) 16,229.92 6,833.23 1,359.64 (754.54) 7,438.33 8,791.59 5,282.40 

6. Air Conditioners 7,421.96 4,333.34 (2,482.13) 9,273.17 3,946.99 731.19 (1,757.24) 2,920.94 6,352.23 3,474.97 

7. Electrical Fittings 6,119.65 6,718.72 (2,488.29) 10,350.08 3,096.03 882.38 (1,920.59) 2,057.82 8,292.26 3,023.62 

8. Vehicles 10,721.71 1,839.65 (5,490.10) 7,071.26 4,851.17 1,242.17 (3,383.20) 2,710.14 4,361.12 5,870.54 

9. Time Sharing Sterling 98.00 0.00 0.00 98.00 10.89 0.99 0.00 11.88 86.12 87.11 

Holiday Resort 

Total 329,308.88 63,573.49 (30,242.92) 362,639.45 132,793.05 28,862.29 (24,093.94) 137,561.40 225,078.05 196,515.83 

Capital Work in 2,331.26 2,365.00 (673.85) 4,022.41 0.00 0.00 0.00 0.00 4,022.41 1,657.41 

Progress 

Total 331,640.14 65,938.49 (30,916.77) 366,661.86 132,793.05 28,862.29 (24,093.94) 137,561.40 229,100.46 198,173.24 

Previous Year 314,277.70 32,966.99 (15,604.55) 331,640.14 115,266.54 23,178.94 (5,652.43) 132,793.05 198,173.24 

78



Long Term Investments (At cost) 





Unquoted 

1) Others 

a. Shares 

i 5% Redeemable Cumulative 10 600,000.000 600,000.000 6,000.00 6,000.00 

Preference Shares of IFCI Limited 

ii Equity Shares of Captech Online Private Limited 10 0.000 300,000.000 0.00 3,000.00 

iii M-Serve Business Solution Pvt. Ltd 10 25,000.000 25,000.000 250.00 250.00 

Quoted 

b. Taxable Bonds 

i 14% Bonds of Industrial Development 5,000 0.000 2,000.000 0.00 9,925.00 

Bank of India 

c. Taxable Bonds (Capital Gain Exemption Schemes) 

i 7.5% Bonds of Rural Electrification 10,000 500.000 500.000 5,000.00 5,000.00 


ii 5.50% NHB Capital Gains Bonds 2002 10,000 1,500.000 1,500.000 15,000.00 15,000.00 

iii 5.25% Bonds of Rural Electrification 10,000 500.000 0.000 5,000.00 0.00 


d. Taxfree Bonds 

i 6.60% Bonds of Unit Trust of India 100 218,834.000 218,834.000 21,883.40 21,883.40 

53,133.40 61,058.40 

Less:- Provision for Diminution in Value of Investments 10 0.000 300,000.000 0.00 (3,000.00) 

Sub Total (1) 53,133.40 58,058.40 

1) in Shares 

i Equity Shares of CRISIL Limited 10 300.000 300.000 15.00 15.00 

Sub Total (1) 15.00 15.00 

Aggregate Market Value of Quoted Long Term Investments 801.86 203.64 

Total (Long Term Investments) 53,148.40 58,073.40 

79

Contd... 

4. INVESTMENTS Quantity Quantity Amount Amount 


(At Cost) As at As at As at As at 



i Prudential ICICI Balanced Fund - Dividend 10 1,821,418.082 1,821,418.082 26,465.20 26,465.20 

ii GFBG Grindlays Floating Rate-Short Term-Inst 10 0.000 3,546,193.604 0.00 40,000.00 

Plan B-Growth 

iii DSP Merrill Lynch Floating Rate Fund 10 0.000 3,524,819.133 0.00 40,000.00 


iv HDFC Floating Rate Income Fund - 10 3,477,897.958 3,477,897.958 40,000.00 40,000.00 

Short Term Plan - Growth 

v Templeton Floating Rate Income Fund 10 0.000 1,619,092.337 0.00 20,000.00 

Short Term Plan (Growth Option) 

vi Deutsche Floating Rate Fund Regular Plan - Growth 10 0.000 3,612,455.747 0.00 40,000.00 

vii Kotak Floater - Short Term - Growth 10 0.000 3,555,934.855 0.00 40,000.00 

viii TFRSG Tata Floating Rate Fund Short Term - Growth 10 0.000 1,825,000.684 0.00 20,000.00 

ix Birla Floating Rate Fund - Short Term - Growth 10 0.000 3,549,151.309 0.00 40,000.00 

x TBFD Tata Balanced Fund (Dividend) 10 0.000 967,455.566 0.00 26,256.47 

xi Principal Balanced Fund (Dividend Payout) 10 0.000 329,597.891 0.00 5,000.00 

xii FT India Balanced Fund (Dividend Payout) 10 1,878,654.976 1,878,654.976 33,797.00 33,797.01 

xiii HDFC Balance Fund (Dividend) 10 1,185,747.317 1,185,747.317 20,000.00 20,000.00 

xiv DSPML Balance Fund (Dividend) 10 2,008,566.089 1,097,694.841 40,000.00 20,000.00 

xv PFRPG Prudential ICICI Floating Rate Plan - Growth 10 0.000 1,756,280.900 0.00 20,000.00 

xvi Grindlays Fixed Maturity Plus Plan - 1 - B - Growth 10 1,000,000.000 1,000,000.000 10,000.00 10,000.00 

xvii UTI Fixed Term Income Fund - Series 1- 10 1,000,000.000 1,000,000.000 10,000.00 10,000.00 

Plan 18 - Q 3 Dividend Payout 

xviii SBI MF - MIF - FRP - Short Term 10 0.000 2,782,234.505 0.00 30,000.00 

xix LIC MF Floating Rate Fund - Short Term Plan - 10 4,562,335.186 4,562,335.186 50,000.00 50,000.00 

Growth Plan 

xx HDFC Prudence Fund - Dividend 10 1,491,777.728 0.000 46,900.00 0.00 

xxi Can Floating Rate - Short Term Growth Fund 10 3,594,633.213 0.000 40,000.00 0.00 

xxii Prudential ICICI Floating Rate Plan C - Growth 10 3,507,264.421 0.000 40,000.00 0.00 

xxiii Tata Floating Rate Short Term Inst. Plan - Growth 10 3,518,494.085 0.000 40,000.00 0.00 

xxiv SBI Magnum Insta Cash Fund - 10 3,175,258.387 0.000 40,000.00 0.00 

Liquid Floater Plan - Growth 

xxv Principal PNB fixed maturity plan (FMP-33) 10 1,000,000.000 0.000 10,000.00 0.00 

540 Days Plan-Series 1 - Jan07 

xxvi Templeton Fixed Horizon Fund - Series 1 - 15 Months 10 1,500,000.000 0.000 15,000.00 0.00 

Plan - Institutional Growth 

xxvii Franklin Templeton Fixed Tenure Fund - 10 2,000,000.000 0.000 20,000.00 0.00 

Series VII 370 Days Plan - Growth 

xxviii SBI Debt Fund Series - 13 Months - II - (March 07) Growth 10 2,000,000.000 0.000 20,000.00 0.00 

xxix ICICI Prudential FMP Series 34 - 10 2,000,000.000 0.000 20,000.00 0.00 

One Year Plan B Institutional Growth 

xxx Standard Chartered Fixed Matuirty Plan - 10 2,000,000.000 0.000 20,000.00 0.00 

Yearly Series 6 - Growth 

xxxi Principal PNB Fixed Maturity Plan - (FMP-37) 10 2,000,000.000 0.000 20,000.00 0.00 

385 Days - Series IV - Mar 07 

xxxii Prudential ICICI FF-Plan B Growth 10 441,466.612 0.000 5,209.57 0.00 

xxxiii UTI - Floating Rate Fund - Short Term Plan 1,000 12,956.325 0.000 15,000.00 0.00 

(Growth Option) 

xxxiv TATA FRF -SP-IP-Growth 10 697,357.308 0.000 7,703.57 0.00 

xxxv Principal PNB Fixed Duration Fund 10 2,000,000.000 0.000 20,000.00 0.00 

xxxvi LIC MF Floating Rate Fund - ST-Growth 10 1,331,227.036 0.000 15,000.00 0.00 

xxxvii HDFC Prudence Fund-Dividend 10 159,632.207 0.000 5,000.00 0.00 

xxxviii DSP Merrill Lynch Balanced Fund Dividend-Payout 10 114,416.476 0.000 2,500.00 0.00 

Total (Current Investments) 632,575.34 531,518.68 

Aggregate Market Value of Current Investments 657,327.95 570,533.74 

Grand Total (Long Term + Current Investments) 685,723.74 589,592.08 

80





Rs. 

Rs. 

5. SUNDRY DEBTORS (UNSECURED) 



- Considered Doubtful 1,604.76 6,856.91 

41,949.56 19,240.31 

Others 


197,177.98 135,813.90 

Less Provision for Doubtful Debts (1,445.23) (6,352.05) 

{Exclusive of Service Tax of Rs. 159.53 thousand 


195,732.75 129,461.85 


Cash in Hand 509.55 568.31 

Balance with Scheduled Banks 

- In Current Accounts 28,262,916.86 16,911.00 

{Includes Rs. 28,228,222.88 thousand 

received from IPO Proceeds} 

- In Deposit Accounts 88,598.34 45,820.23 

28,352,024.75 63,299.54 


Income accrued but not due on 

Investments and Deposits 2,577.14 2,544.09 

2,577.14 2,544.09 


Loans to Staff (Secured, Considered Good) 2,811.35 4,549.96 

{Includes Rs. 2,659.86 thousand due from the Directors and Officers 


the year Rs. 4,002.01 thousand 

(Previous Year Rs. 1,487.19 thousand)} 


- Unsecured, Considered Good 21,360.01 20,307.52 

- Loan to ICRA Employees Welfare Trust 298,980.39 0.00 



- Unsecured, Considered Doubtful 4,672.50 4,672.50 


{(Includes Rs. 35,805.67 thousand for TDS 

(Previous Year Rs. 25,466.47 thousand)} 

Fringe Benefit Tax Paid in Advance 2,895.57 1,752.73 

420,437.11 93,691.35 

Less: Provision for Doubtful Deposits (4,672.50) (4,672.50) 

415,764.61 89,018.85 

81




Rs. 

Rs. 






Refund due to Public Offer Applicants 27,376,459.88 0.00 


Sub Total (A) 28,306,874.11 77,344.42 

B. PROVISIONS 


Provision for Fringe Benefit Tax 3,291.23 2,134.29 

Provision for Wealth Tax 55.46 92.54 


Provision for Corporate Tax on Proposed Dividend 7,647.75 4,939.66 


Sub Total (B) 146,864.83 107,111.50 

Grand Total (A+B) 28,453,738.94 184,455.92 



A. Preliminary Expenses 


- Add : Amount Incurred during the year 0.00 225.00 

- Less : Written off during the year (203.09) (276.46) 

Sub Total (A) 1.19 204.28 

B. Deferred Revenue Expenditure 



Sub Total (B) 2,907.96 3,420.17 

Grand Total (A+B) 2,909.15 3,624.45 

82



Consolidated Profit and Loss Account for the period from April 1, 2006 to March 31, 2007 



Rs. 

Rs. 


Interest 6,179.83 5,348.20 



Dividend on Non Trade Investments 25,261.80 9,372.97 

Profit on Sale of Investments 25,402.49 34,003.36 


Interest on Staff Loans 113.60 107.33 

Rental Income 216.36 0.00 

Provision for Diminution in Value of Investments Written Back (Net) 300.00 0.00 

Miscellaneous Incomes 1,851.23 919.46 

59,975.88 49,911.22 


Salaries and Allowances 248,949.63 206,841.76 

Managerial Remuneration 18,882.41 5,966.97 


{including contribution for the Directors Rs. 724.17 thousand 



{including payment to the Directors Rs. 713.25 thousand 


Training and Recruitment Expenses 2,642.84 3,521.24 

297,324.86 238,185.68 


Rent 20,412.75 18,986.66 

Rates and Taxes 5,135.50 3,409.07 

Repairs and Maintenance - Building 712.46 564.13 

Repairs and Maintenance - Others 11,554.07 7,540.84 

Communication Expenses 13,176.75 12,551.02 

Electricity and Water Expenses 7,194.02 5,025.52 

Printing and Stationery 9,151.63 6,700.99 


Books and Periodicals 2,767.12 3,006.15 

70,934.41 58,384.97 



{includes Rs. 8,081.10 thousand for the Directors’ 

Travelling (Previous Year Rs. 5,203.34 thousand)} 

Directors’ Sitting Fees 1,004.50 422.50 

Legal and Professional Charges 25,331.28 17,106.12 

Conference and Meeting Expenses 3,306.69 2,141.53 

Advertisement Expenses 4,932.65 986.77 


Business Development Expenses 776.74 1,560.00 

Technical Knowhow Fees 3,109.90 2,349.52 

Miscellaneous Expenditure Written Off 533.82 420.86 

Bad Debts Written Off (Net of Provisions) 3,410.53 4,479.75 

Fees and Subscription 798.67 681.72 

Foreign Exchange Loss (Net) 239.64 566.59 

Loss on Sale of Assets 3,486.49 677.06 

Miscellaneous Expenses 2,324.03 2,964.44 

96,141.13 72,855.87 

83

15. SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS 

A. Principles of Consolidation:- 

a) The Consolidated Financial Statements include the Financial Statements of ICRA Limited (‘the 

Company’) and its subsidiaries (collectively referred as ‘Group’). 

b) The Consolidated Financial Statements of the Company and its subsidiaries have been 

combined on a line by line basis by adding together the book value of like items of assets, 

liabilities, income and expenses, after duly eliminating intra-group balances and transactions 

resulting unrealilsed profits as per Accounting Standard 21 on Consolidated Financial 

Statements issued by the Institute of Chartered Accountants of India. 

c) The notes and significant policies to the Consolidated Financial Statements are intended to 

serve as a guide for better understanding of the Group’s position. In this respect, the Group 

has disclosed such notes and policies, which represent the required disclosure. 

d) The excess of Company’s portion of cost of investments over the net assets of M/s ICRA 

Techno Analytics Limited and M/s ICRA Online Limited acquired as at the dates of investments 

have been recognised as Goodwill on Consolidation. 

B. The Holding Company viz. ICRA’s holdings in the subsidiary companies are as under:- 

Name of the Company Date of becoming Ownership 

subsidiary in % 

ICRA Management Consulting Services Limited 21/12/2004 100% 

ICRA Techno Analytics Limited 26/08/2005 100% 

ICRA Online Limited 23/06/2005 100% 

All the subsidiary companies are incorporated in India. 

C. Significant Accounting Policies:- 

a) System of Accounting: - The Group adopts the accrual concept in the preparation of the 

accounts. The preparation of financial statements requires the Management to make estimates 

and assumptions considered in the reported amounts of assets and liabilities (including 

contingent liabilities) as of the date of the financial statements and the reported income and 

expenses during the reporting period. Management believes that the estimates used in 

preparation of the financial statements are prudent and reasonable. Future results could differ 

from these estimates. 

b) Fixed Assets: - Fixed Assets are stated at cost which comprises purchase price, duties and any 


c) Depreciation: - The depreciation on the assets is provided on the Written Down Value Method 

of the assets at the prevailing rates and in the manner prescribed in the Schedule XIV of the 

Companies Act, 1956. The depreciation is provided on pro-rata basis on the assets acquired, 

sold or disposed of during the year. Individual assets costing less than Rs. 5,000 are depreciated 

in full in the year of acquisition. Depreciation on Time share Sterling Holiday Resorts has been 

provided on the basis of duration of the rights. 

d) Investments: - Investments are stated at lower of Cost and Fair Market Value. Provision for 



84


e) Impairment of Assets:- At each Balance Sheet date, the Group assesses whether there is any 

indication that an asset may be impaired. If any such indication exists, an impairment loss, i.e. 

the amount by which the carrying amount of assets exceeds its recoverable amount is provided in 

the books of accounts. 

f) Employees’ Benefits: - Employees’ benefits are provided in the form of Provident Fund, Pension 

Scheme, Leave Encashment and Gratuity. Contribution to Provident Fund is being deposited in 

accordance with the provisions of the Employees’ Provident Fund and Miscellaneous 

Provisions Act, 1952. Liabilities for Gratuity and Leave Encashment are provided on the basis 

of actuarial valuation at the year end. 

In terms of Accounting Standard 15, (revised 2005), on employees’ benefits, the shortfall in 

liability towards employees benefits i.e. Gratuity and Leave Encashment as on April 1, 2006 

based on revised actuarial valuation has been adjusted against the opening balance of 

General Reserve in terms of the transitional provisions of the standard. 

g) Miscellaneous Expenditure:- Preliminary Expenses, Shares Issue and Other Miscellaneous 

Expenditure are amortised equally over a period of ten years starting from the year in which 

such expenses are incurred. 

h) Deferred Tax:- Provision for taxation for the year is ascertained on the basis of assessable 

profits computed in accordance with the provisions of the Income Tax Act, 1961. Deferred Tax 

is recognised, subject to the consideration of prudence, on timing differences, being the 

difference between taxable income and accounting income that originates in one period and 

are capable of reversal in one or more subsequent periods. 

i) Foreign Currency Transactions:- Transactions in foreign currencies are recognised at the 



j) Capital Work in Progress: Capital Work in Progress represents expenditure incurred on 

development of various softwares used for licensing, which are under development, at the 

end of the year. On completion of the such software, cost incurred is capitalised under 

Intangible Assets. 

D. Notes to Accounts:- 


i) Contingent Liability on account of disputed claim against the Group not acknowledged as 

debt amounting to Rs. 1285.38 thousand (Previous Year Rs. 1285.38 thousand), is under 

litigation. 

ii) Guarantees of Rs. 11,536.07 thousand (Previous Year Rs. 6,639.75 thousand) given by 

Banks against Counter Guarantees of the Group. 

2 Public Offer of 2,581,100 Equity Shares of Rs. 10 each of the Company through an Offer for 

Sale by the existing Shareholders namely IFCI Limited, Administrator of the Specified 

Undertaking of The Unit Trust of India and State Bank of India, (“Selling Shareholders”) was 

made at a Price Band of Rs. 275 to Rs. 330 Per Equity Share. The issue opened on March 20, 

2007 and closed on March 23, 2007 and was oversubscribed by 73 times. A sum of 

Rs. 28,228,222.88 thousand was collected from the said Issue and the Price was fixed at 

Rs. 330 per Equity Share on March 24, 2007. Out of the said Issue Proceeds, 

Rs. 851,763.00 thousand was payable to the Selling Shareholders after allotment / transfer of 

Equity Shares to the successful bidders/applicants, Rs. 54,067.74 thousand was recoverable from 

the Selling Shareholders towards expenses incurred by the Company for the said Issue and 

Rs. 27,376,459.88 thousand was refundable to the unsuccessful bidders/applicants of the Issue. 

85

3 During the year, the Company established a trust called ICRA Employees Welfare Trust (Trust). 

The Company issued 906,000 Equity Shares on March 24, 2007 to the Trust on Preferential 

Allotment basis at IPO Issue Price of Rs. 330 per Equity Share of the face value of Rs. 10 

each. The Trust purchased the aforesaid Equity Shares out of the funds borrowed from the 

Company. During the year, 615763 Options were granted to the eligible Directors, employees 

of the Company and its subsidiary companies. Such Options shall be vested and exercisable 

within a specified period as per the provisions of the Employees Stock Option Scheme. 

4 The Company issued 288,900 Equity Shares on March 24, 2007 to Moody’s Investment 

Company India Private Limited on Preferential Allotment basis at IPO Issue Price of Rs. 330 

per Equity Share of the face value of Rs. 10 each. 

5 SME’s Disclosure:- Sundry Creditors do not include any amounts due to Micro, Small and 

Medium Enterprises (SMEs) within the meaning of The Micro, Small and Medium Enterprises 

Development Act, 2006. 


Segmentwise Revenues and Results 




a) Rating Services 388,950.33 312,938.89 

b) Advisory Services 150,122.52 121,329.83 

c) Information Services 19,643.85 15,579.62 

d) B.P.O. Services 38,627.32 15,064.55 

e) Professional Services 85,748.23 72,586.31 

f) Sales and Service Charges 22,631.02 5,713.39 

Segment Total 705,723.27 543,212.59 


a) Rating Services Division 239,739.28 186,936.49 

b) Advisory Services Division 35,517.41 22,193.63 

c) Information Services Division (4,722.05) (11,363.88) 

d) B.P.O. Services Division 11,557.72 1,792.28 

e) Professional Services Division 12,166.89 8,694.09 

f) Sales and Service Charges 4,322.17 2,625.58 


Non-Operating Income over Expenses 2,468.76 12,219.22 

Profit before Depreciation, Interest and Tax 301,050.18 223,097.41 

Depreciation (28,862.29) (23,178.94) 

Profit before Interest and Tax 272,187.89 199,918.47 

Interest Paid (476.03) (1,350.47) 


Provision for Taxes (71,785.05) (56,271.43) 


Note : Fixed assets used in the Group’s business or Liabilities contracted have not been identified to the 

said reportable segments as the fixed assets and services are used interchangeably. 

86








Basic Earning Per Share (Rs.) 22.64 16.16 

Diluted Earning Per Share (Rs.) 22.64 16.16 

(The Earning Per Share has been calculated 

on weighted average basis). 


Name Name of the Relationship Nature of 2006-07 2005-06 

Company Transaction (Rs. in thousand) (Rs. in thousand) 

Mr. P.K. Choudhury ICRA Limited Whole-time Director Managerial 7,672.80 5,163.75 

Remuneration 

Mr. Naresh Takkar ICRA Limited Whole-time Director Managerial 6,473.16 0.00 

Remuneration 

(w.e.f. 01/07/2006) 

Mr. R. ICRA Management Whole-time Director Managerial Remuneration 2,536.78 0.00 

Raghuttama Rao Consulting Services (w.e.f. 26/08/ 2006) 

Limited 

Mr. P.K. Guha ICRA Techno Whole-time Director Managerial Remuneration 1,833.79 1,650.28 

Analytics Limited 

Mr. Aditya Agarwal ICRA Online Limited Whole-time Director Managerial Remuneration 1,968.25 0.00 

9 In respect of subsidiaries, uniform accounting policies have been followed except in case of 

M/s ICRA Management Consulting Services Limited and ICRA Techno Analytics Limited where 

expenditure incurred prior to commencement of commercial activities and preliminary expenses 

respectively are fully charged to the Profit and Loss Account during the year. 

10 Figures are expressed in terms of decimals of thousand. 

11 Previous year figures have been regrouped/rearranged wherever considered necessary. 











87

CASH FLOW STATEMENT OF GROUP ICRA 





Profit Before Tax 271,711.86 198,568.00 


Depreciation 28,862.29 23,178.94 

Provision for Retirement Benefits 7,784.48 672.79 

Transitional Incremental Provision for Employees’ Benefits (3,932.36) 0.00 

(Profit)/Loss on sale of fixed assets 2,835.92 517.16 

Miscellaneous Expenditure 715.30 627.64 

Profit on sale of Investments (Net) (25,402.49) (34,003.36) 

Interest received on Securities (6,179.83) (5,348.20) 

Interest received on Loans (113.60) (107.33) 

Dividend Income (25,261.80) (9,372.97) 

Non-Operating Income (Other than Interest and Dividend) (2,367.59) (1,056.81) 

Interest Paid on Loans 476.03 1,350.47 

Previous Year Adjustments (23.05) (3,689.11) 




Sundry Debtors (66,270.90) (16,307.31) 

Loans to Staff 1,738.61 (2,640.93) 

Advances (1,052.49) (69,480.93) 

Sundry Deposits (5,818.07) (6,441.44) 



Advances 1,235.20 (1,889.28) 


Cash generated from operations 233,076.86 141,880.97 

Taxes Paid (73,960.26) (49,500.31) 

Net Cash from Operating Activities 159,116.60 92,380.66 

88


Contd... 






Capital Work in Progress during the year (1,691.15) 6,530.81 


Investments made (430,313.14) (611,025.60) 

Sale of Investments 334,181.48 546,005.61 

Profit on sale of Investments (Net) 25,402.49 34,003.36 

Loans to ICRA Employees Welfare Trust (298,980.39) 0.00 

Minority Interest (69.33) 0.00 

Interest received on Securities 6,179.83 5,348.20 

Interest received on Loans 113.60 107.33 

Dividend Income 25,261.80 9,372.97 

Other Income 2,367.59 1,056.81 

Income accrued on investments (33.05) (221.11) 

Goodwill on acquisition of a subsidiary (70.38) 0.00 

Net Cash from Investing Activities (397,911.08) (34,284.22) 


Increase in Share Capital 11,949.00 0.00 

Increase in Securities premium 382,368.00 0.00 

Dividend & Dividend Tax paid (40,160.06) (35,140.05) 

Secured Loan (316.36) (299.96) 

Interest Paid on Loans (476.03) (1,350.47) 

Net Cash from Financing Activities 353,364.55 (36,790.48) 

Payable to Public Offer Applicants 27,376,459.88 0.00 



Cash and Cash Equivalents (Opening balance) 63,299.54 41,993.58 

Cash and Cash Equivalents (Closing balance) 28,352,024.75 63,299.54 












89

Frequently Asked Questions 

Q Since when and on which Stock Exchanges are ICRA’s Equity Shares listed? 

A ICRA’s Equity Shares have been listed on two Stock Exchanges with effect from April 13, 2007: 

1. Bombay Stock Exchange Limited (BSE): [Scrip Code: 532835] 

Floor 25, P.J. Towers 

Dalal Street, Mumbai 400 001 

Tel: +91 22 2272 1234/33 

Fax: +91 22 2272 2082 

2. National Stock Exchange of India Limited (NSE): [Symbol: ICRA] 

Exchange Plaza 

Plot No. C/1, G Block 

Bandra-Kurla Complex 

Bandra (E), Mumbai 400 051 

Tel: +91 22 2659 8100 to 114 (Board Lines) 

Fax: +91 22 2659 8120 

Q 

A 

What is ICRA’s Share Capital? 

ICRA’s Authorised Capital is Rs. 150 million. The Issued, Subscribed and Paid-up Equity Share 

Capital of the Company as on March 31, 2007 was Rs. 100 million, consisting of 10,000,000 

Equity Shares of Rs. 10/- each. 

Q When does ICRA’s financial year end? 

A ICRA’s financial year ends on March 31. 

Q How much dividend has ICRA paid during the last three financial year? 

A For the financial year 2005-06 40% 

For the financial year 2004-05 35% 

For the financial year 2003-04 50% 

Q 

A 

Q 

A 

Where is ICRA’s Registered office located? 

The Address of ICRA’s Registered Office and its contact details are as follows: 




New Delhi 110 001, India 

Tel: +91 11 2335 7940 

Fax: +91 11 2335 7014 

Website: www.icra.in 

Who should be contacted for any information or assistance on share related 

matters including dematerialisation/rematerialisation, transfer/transmission of 

shares, subdivision or consolidation of shares, issue of duplicate share certificates, 

and unclaimed/non-receipt of dividend? 

Please contact our Registrar and Share Transfer Agent: 

Intime Spectrum Registry Limited 

A-31, 3 rd Floor, Naraina Industrial Area 

Phase 1, Near P.V.R. Naraina 

New Delhi 110 028 

Email: delhi@intimespectrum.com 

Tel: +91 11 4141 0592/93/94 

Fax: +91 11 4141 0591 

90


Frequently Asked Questions 

Or, ICRA’s Compliance Officer: 


C.F.O. & Company Secretary 

Building No. 8 

2 nd Floor, Tower A 

DLF Cyber City, Phase II 

Gurgaon 122 002, Haryana 

Email: ipo@icraindia.com 

Tel: + 91 124 4545 300 

Fax: + 91 124 4545 350 

Q 

A 

Q 

A 

Who should be contacted for complaints? 

Our Registrar and Share Transfer Agent, M/s. Intime Spectrum Registry Limited, or our 

Compliance Officer, Mr. Vijay Wadhwa, at the relevant address as mentioned above. 

Who should be contacted for queries relating to ICRA’s Public Offer through Offer 

for Sale of Equity Shares? 

Our Registrar and Share Transfer Agent at their Registered Office at: 

M/s. Intime Spectrum Registry Limited 

C-13, Pannalal Silk Mills Compound 

L.B.S. Marg, Bhandup (W) 

Mumbai 400 078 

Email: icraipo@intimespectrum.com 

Tel: + 91 22 2596 3838/25960320-27 

Fax: + 91 22 2596 0328/29 

Or, our Compliance Officer, Mr. Vijay Wadhwa, at the relevant address as mentioned earlier. 

Q 

A 

Q 

A 

Q 

A 

Q 

A 

If the shares are dematerialised, what is the procedure for change of address? 

Since your records of dematerialised shares are maintained by your Depository Participant (DP), you 

have to inform your DP of any change in your address. Your DP will pass on this information to 

ICRA and the Registrar whenever any action like despatch of Annual Reports or payment of 

dividend is due to be taken by ICRA. Shareholders are advised to keep their address and bank 

account details updated with their respective DPs. 

If the shares are held in the physical form, what is the procedure for change of 

address? 

Please send a written request along with a certified photocopy of any two of the following 

documents: ration card, electricity bill, telephone bill, gas bill, bank pass book, passport, voter 

identity card, and driving licence. The request letter should be signed by the first shareholder or 

by all joint-holders stating the new address along with the PIN Code, and should be sent to the 

Registrar or ICRA (addresses mentioned earlier). Please quote your Folio number also. 

Can there be multiple addresses for a single Folio? 

No, there can be only one address for one Folio. 

Can joint-holders request a change of address? 

No, the letter of request will need to have the signature of the first Shareholder or of all 

Shareholders. 

91

Trends in Select Financial Indicators 

Trend in Operating Income 

Trend in Profit before Depreciation, Interest and Tax 

400 

360 

320 

280 

240 

200 

160 

178.01 

168.90 

148.71 

120 1997 

-98 

221.36 

277.22 

328.61 

308.76 

371.52 

332.13 

397.90 

1998 

-99 -2000 1999 2000 

-01 2001 

-02 2002 

-03 2003 

-04 2004 

-05 2005 

-06 2006 

-07 

238.76 

240 

220 

200 

189.13 

180 

162.05 

160 

143.10 149.54 

140 

125.91 

126.96 

120 

100 

81.54 90.98 91.92 80 1997 1998 

-98 -99 -2000 1999 2000 

-01 2001 

-02 2002 

-03 2003 

-04 2004 

-05 2005 



Trend in Profit after Tax 

Trend in Net Worth 

180 

160 

140 

120 

100 

80 

60 

40 

20 

161 

126.51 

110.59 

81.95 91.92 98.63 

80.99 

50.68 56.71 58.46 

1600 

1400 

1200 

1000 

800 

600 

400 

398.50 438.23 537.95 594.60672.34734.10794.57840.93923.73 1423.20 

0 

1997 

-98 

1998 

-99 -2000 1999 2000 

-01 2001 

-02 

2002 

-03 

2003 2004 2005 2006 

-04 -05 -06 -07 

200 1997 

-98 

1998 

-99 -2000 1999 2000 

-01 2001 

-02 2002 

-03 2003 

-04 2004 

-05 2005 



Trend in Earning Per Share 

Trend in Book Value Per Share 

20 

18 

16 

14 

12 

10 

8 

6.49 

6 1997 

-98 

12.56 

10.44 11.20 

9.31 

9.20 

7.27 6.99 

14.37 

18.23 

1998 

-99 -2000 1999 2000 

-01 2001 

-02 2002 

-03 2003 

-04 2004 

-05 2005 



160 

140 

120 

100 

80 

60 

40 

1997 

-98 

51.06 56.15 61.10 67.53 76.36 83.37 90.24 95.51 104.91 

142.32 

1998 

-99 -2000 1999 2000 

-01 2001 

-02 2002 

-03 2003 

-04 2004 

-05 2005 



92


Mr. George Joseph (third from right), Executive Director, Syndicate Bank, and Mr. Naresh Takkar (second from 

right), Managing Director, ICRA, during the signing of a Memorandum of Understanding in Bangalore for the 

credit rating of small and medium enterprises 

The ICRA team that attended the 2007 Annual Training Programme at Khandala, off Mumbai 

93

From left: Mr. Harish Bahl, Executive Vice President, SBI Capital Markets, and Mr. P.K. Choudhury, 

Vice-Chairman & Group CEO, ICRA, at the ICRA Listing Ceremony in Mumbai 

Concern India Corporate Quiz 2006: Mr. Siddharth Basu hands over the Runners-up Trophy to Ms. Mansi Balwani 

and Mr. Sabyasachi Majumdar of ICRA as Ms. Kavita Shah, CEO, Concern India Foundation, looks on 

94


From left: Ms. Namita Menon, Senior Analyst, ICRA; Ms. Christina Maynes, Represenative 

Director, Moody's Singapore Pte. Limited; Ms. P. Bharathi, Senior Accounts Officer, ICRA; 

Ms. Lynn Exton, Senior Vice President, Moody's Investors Service, London; Ms. Amabelle Fong, 

Associate Analyst, Moody's Singapore Pte Limited; Mr. Vineet Gupta, General Manager, ICRA; 

Ms. Vibha Batra, Assistant General Manager, ICRA; and Mr. Jayanta Chatterjee, General 

Manager, ICRA; after a seminar on 'Moody's Tool Kit for Hybrid Analysis' in Bangalore 

Ms. Uttara Menon (second from right) of ICRA along with delegates from Thailand, Korea and 

India during a Training Workshop on Real Estate Investment Trusts for Rating Agencies at the 

Indian School of Business, Hyderabad. The Workshop was organised jointly by the Association 

of Credit Rating Agencies of Asia and Asian Development Bank 

Delhi-ICRAites on their way to Sariska for the ICRA Annual Picnic, 2007 

95

Mr. Rajnikant Patel, Managing Director & CEO, BSE, lighting the lamp at the ICRA Listing Ceremony as 

Mr. D.N. Ghosh, Chairman, ICRA, looks on 

Ms. Lynn Exton, Senior Vice President, Moody's Investors Service, London, addressing a seminar on 

'Moody's Tool Kit for Hybrid Analysis' in Bangalore 

96

annual 

report 



ICRA 

MANAGEMENT 

CONSULTING 

SERVICES 

LIMITED 

(IMaCS)

Mr. R. Raghuttama Rao, Managing Director, IMaCS, addressing a seminar organised by India Energy Forum in 

New Delhi 

Mr. Dhruba Purkayastha, General Manager, IMaCS, addressing the 9 th Assocham Energy Summit in New Delhi 

98

ANNUAL REPORT 2006-2007 • ICRA MANAGEMENT CONSULTING SERVICES LIMITED 




Mr. D.P. Roy 

Mr. P.S. Shenoy 

Mr. C.M. Vasudev 

Mr. R. Raghuttama Rao 

Auditors 


Bankers 

Formerly, Chairman, State Bank of India 

Vice-Chairman and Group CEO, ICRA Limited 

Formerly, Executive Chairman and CEO, SBI Capital Markets Limited 

Formerly, Chairman and Managing Director, Bank of Baroda 

Formerly, Executive Director, World Bank, Washington DC 


L.B. Jha & Co. 

413 Naurang House 



Mr. Vinay Gupta 

HDFC Bank Limited 


Kasturba Gandhi Marg 


State Bank of Hyderabad 


Kasturba Gandhi Marg 


ABN AMRO Bank 

R-67, Greater Kailash-I 



Corporate Office 



Connaught Place 


Building No. 8, Tower ‘A’, 2 nd Floor 

DLF Cyber City, Phase-II 

Gurgaon – 122 002 

99


To 

The Members of M/s ICRA Management Consulting Services Limited 

Your Directors have pleasure in presenting the Third Annual Report of your Company along with the 

Audited Accounts for the year ended March 31, 2007. 


Your Company was incorporated on December 21, 2004 and a Certificate of Commencement of 

Business was issued on March 4, 2005 by the Registrar of Companies, Delhi and Haryana. The 

Company was incorporated with the objective of taking over the entire business of the erstwhile 

Management Consulting Division of ICRA Limited. 

The financial year 2006-07 was the second full year of operations of your Company during which 

period your Company posted Income from Operations of Rs. 150.47 million and earned a Net Profit 

of Rs. 14.89 million. The Earning Per Share for the financial year 2006-07 for your Company is 

Rs. 1.38. The financial results of your Company for the year ended March 31, 2007 are 

presented below: 

Particulars 2006-07 (Rs. million) 2005-06 (Rs. million) 

Income from Operations 150.47 121.33 


Total Income 153.24 121.50 

Total Expenditure 127.06 102.38 

Profit Before Depreciation, Interest & Tax 26.18 19.12 

Depreciation & Interest 3.39 1.20 

Profit Before Tax 22.79 17.92 

Provision for Taxes 7.90 7.15 

Profit After Tax 14.89 10.77 

Previous Year Adjustments NIL NIL 

Profit Available for Appropriation 14.89 10.77 

Appropriation 

Proposed Dividend NIL NIL 

Corporate Tax on Proposed Dividend NIL NIL 

Transferred to General Reserve 14.89 10.77 

100




A period of high growth 

The financial year to the end of March 2007 has been another fruitful and high-growth period for your 

Company, as reflected in the favourable financial results and an increase in the market standing of your 

Company in the Consulting industry. Revenue growth, at 24% year-on-year, was strong, accompanied by 

a more-than-proportional increase in profitability (38% year-on-year increase in Net Profit). Your 

Company has performed well across its various domains and practice areas. 

Achievements—growth through entry into new areas/regions and repeat assignments 

While IMaCS has hitherto cumulatively completed over 650 projects for about 350 clients, a mix of 

national and international organisations, Governments, regulators, banks, and corporate entities, 113 

assignments were won in the last financial year alone. These represent repeat assignments from existing 

clients as also assignments from new clients in new geographies—a reflection of expansion along with 

consolidation. 

Government and Infrastructure Practice—significant growth in multilateral/bilateral 

agency funded work 

There has been significant growth in your Company’s Government and Infrastructure Practice, largely 

with bilateral and multilateral agencies. Such agencies include The World Bank, The World Bank 

Institute, or WBI (the capacity building arm of the World Bank), Asian Development Bank, Department 

for International Development (DfID), Kreditanstalt für Wiederaufbau (KfW), and Japan Bank for 

International Co-operation (JBIC). 

There has also been a significant increase in the size and complexity of mandates that your Company 

has been awarded in this practice. Examples include a five-year World Bank-funded project for the 

design and development of an Internet-based database for Public Private Partnership (PPP) projects in 

the infrastructure sector and a recently-won engagement for developing infrastructure for a region in 

Himachal Pradesh, a State in Northern India. 

Energy Practice—substantial growth driven by investment needs of the private sector 

Your Company’s Energy Practice, largely in the sectors of Electricity, Gas, and Renewables, has shown 

strong growth in revenue, besides improvement in market standing. While several new clients such as 

HSBC, Teesta Urja, Torrent Group, and the Indian Railways have been added, the repeat business 

obtained from several key clients such as NTPC Limited, Bharat Heavy Electricals Limited, GAIL (India) 

Limited, GMR Group, and CLP reflects the increased standing of your Company in the Energy Sector. 

Not only has the average size of mandates increased in this Practice, but concentration risks arising from 

over-dependence on a few high-value mandates have also reduced, with the revenue being distributed 

better across a larger number of clients. 

Banking and Financial Services—a period of growth with consolidation 

The Banking and Financial Services Practice of your Company witnessed a period of continued 

consolidation with some major international projects being won or getting under execution. Your 

Company won or executed mandates from clients in Africa, Western Europe, Sri Lanka, West Asia, 

Canada, and the United States, besides of course India. During the year under consideration, your 

Company concentrated on building intellectual property and knowledge frameworks so as to equip itself 

for a faster scale-up of business in the coming years. 

101


Corporate Advisory Practice—a period of diversification into new sectors 

The Corporate Advisory Practice of your Company added some new verticals to its repertoire during the 

year under review, and won some prestigious mandates across the Automotive, Engineering, Hospitality, 

Media & Entertainment, and Healthcare sectors. Besides obtaining mandates from certain blue chip 

corporate entities, your Company partnered some leading industry associations such as the 

Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce & Industry 

(FICCI), India Brand Equity Foundation (IBEF), Society of Indian Automobile Manufacturers (SIAM), 

and Automotive Component Manufacturers’ Association of India (ACMA) to carry out certain 

milestone projects at the pan-industry level. 

Establishment of IT and Research Divisions as a backbone to consulting 

In line with the business growth achieved, your Company has set up two specialist divisions for 

Information Technology (IT) and Research activities. The two divisions would provide the required 

support to the Consulting division and also produce value-added products for their own clients, 

besides creating and managing knowledge, and bringing out publications/reports on various sectors/ 

industries. Both the IT and the Research Divisions will further enhance your Company’s effectiveness, 

besides enabling smooth scale-up of operations. 

Investment for consolidation and growth 

Your Company has made significant investments in technology and human resources, and in 

establishing new systems and processes, and branding. These investments are aimed at stepping up 

the pace of revenue growth via scale-up of operations and increase in the values of individual 

mandates. Your Company also stands to benefit from the continuing interest of international investors 

and businesses in the Indian growth story, and from the increasing efforts by Indian companies to go 

global. 

Infrastructure 

During the year under review, your Company moved its Head Office from New Delhi to a spacious 

accommodation in DLF Cyber City, Gurgaon (Haryana). Similarly, in Mumbai, your Company has 

moved its office to a new and spacious accommodation. Both the premises are on lease. Your 

Company remains committed to providing the best working conditions to employees, and the shift to 

the new premises is a step in that direction. 

Transfer to Reserves 

At the end of the current financial year your Company proposes to transfer Rs. 14.89 million to the 

General Reserves. 

Auditors’ Remarks 

Considering the business prospects/expansion plans of your Company, the Statutory Auditors have 

suggested that the scope of Internal Audit be enlarged. The Auditors have made the observation that 

in their opinion the in-house Internal Audit system of your Company needs to be strengthened and 

given a wider scope of coverage, considering the scale of activity and business of your Company. 

102



Directors’ Reply 

Your Company’s Directors have reviewed the observations made by the Statutory Auditors and have 

initiated the steps necessary to strengthen the process of Internal Audit. Your Company shall appoint a 

reputed firm of Chartered Accountants to carry out the Internal Audit in line with the guidelines and 

procedures prescribed by the Audit Committee and the Board of Directors. The Internal Audit 

Department shall submit its report on a periodic basis to the Audit Committee. 

Foreign Exchange Earnings and Outgo 

The details of foreign exchange expenditure and earnings appear in the Notes to Accounts. 

Branches of the Company 

At present, your Company operates from its Registered and Corporate offices located at New Delhi 

and Gurgaon, respectively. In addition to this, your Company has personnel stationed at four 

branches—in Mumbai, Kolkata, Chennai and Bangalore. 


The information required under Section 217 (2A) of the Companies Act, 1956 and Companies 

(Particulars of Employees) Rules, 1975, is given in the Annexure hereto and forms part of this report. 

Human Resource Development and Training 

Human resource development continues to be accorded high priority by your Company with 

emphasis being placed on improving skills, competencies and knowledge through regular training 

and external development programmes. Periodically, discussions are held between the Senior 

Management and Members of staff on issues relating to skill improvement, enrichment of the work 

environment, and career progression. Your Company has also introduced new Personnel Policies with 

effect from January 1, 2007 and put in place a new Performance Management System. 

The Directors hereby wish to place on record their appreciation of the dedicated, committed and 

high-quality services rendered by all employees and advisors of the Company. 

Energy Conservation 

Your Company operates in the Service sector and has limited scope for undertaking energy 

conservation exercises, but nevertheless continues to emphasise work practices that result in 

conservation of energy. At all the offices of your Company, special emphasis is placed on installation 

of energy-efficient lighting devices, use of natural light as best as possible, and adoption of effective 

procedures for conservation of electricity. 

103


Employee Profile 

The total strength of full-time employees of your Company as on March 31, 2007 stood at 62. The 

following table presents a designation-wise distribution of these employees. 

Designation 

No. 

Managing Director 1 

General Manager 2 

Assistant General Manager 7 

Manager 19 

Senior Analyst 9 

Analyst 8 

Associate Analyst 1 

Senior Software Engineer 2 

Senior Research Officer 6 

Research Officer 1 

Assistant Manager (Finance) 1 

Accounts Officer 3 

Assistant Secretary 2 

Total 62 

Expenditure on Research and Development 

Your Company is in the knowledge business and invests continually in creating new products and 

services. Most of the product/service offerings of your Company involve innovation and original 

thinking. To the extent that such efforts result in creation of intellectual property, your Company takes 

the necessary steps to register its rights over the same. In many cases, such products, models and 

frameworks have an economic life of a few years, and your Company capitalises such investments in 

accordance with the applicable accounting norms. 

Auditors 

The Auditors of your Company, M/s L.B. Jha & Company, Chartered Accountants, hold office till the 

conclusion of the ensuing Annual General Meeting of your Company and are eligible for 

reappointment. They have confirmed that their reappointment as Auditors of your Company, if done, 

would be in accordance with the limits specified under Section 224 (1B) of the Companies Act, 1956. 

Composition of Audit Committee 

The Companies Act, 1956, under Section 292A requires every public company having a Paid-up 

Share Capital of not less than Rs. 50 million to constitute an Audit Committee of the Board. Since the 

Paid-up Share Capital of your Company is in excess Rs. 50 million, your Company has constituted an 

Audit Committee consisting of the following Independent Directors: 

1. Mr. P.S. Shenoy, Chairman 

2. Mr. D.P. Roy 

3. Mr. C.M. Vasudev 

104



Directors 


of your Company, Mr. D. N. Ghosh retires by rotation, and being eligible, offers himself for 

reappointment. 


of your Company, Mr. P.K. Choudhury retires by rotation, and being eligible, offers himself for 

reappointment. 


As required under the provisions contained in Section 217(2AA) of the Companies Act, 1956 your 

Directors hereby confirm that: 

(i) 

(ii) 

(iii) 

(iv) 

in the preparation of the Annual Accounts, the applicable Accounting Standards had been 

followed; 

the Directors had selected such accounting policies and applied them consistently and made 

judgements 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 profit or loss of the 

Company for that period; 

the Directors had taken proper and sufficient care for the maintenance of adequate accounting 

records in accordance with the provisions of the Companies Act, 1956 for safeguarding the 

assets of the Company and for preventing and detecting frauds and other irregularities; and 

the Directors had prepared the Annual Accounts on a going concern basis. 

Dividend 

Since this is only the second full year of operations of your Company as an independent entity and 

since your Company is in an investment phase at this stage, the Board of Directors of the Company 

believes that the funds generated should be reinvested in the Company. The same may be utilised for 

providing additional resources for expansion programmes and meeting capital expenditures and 

working capital requirements of the Company. 

In view of the above, the Board of Directors does not recommend payment of dividend for this year. 


Your Directors acknowledge the co-operation and assistance received from the various institutions, 

Government agencies and professionals in different disciplines. 

Your Directors wish to place on record their appreciation of the contribution made by the members of 

staff of the Company. 


Place: Mumbai 


(D.N. Ghosh) 

Chairman 

105


Statement pursuant to Section 217(2A) of the Companies Act, 1956, and Companies (Particulars of Employees) Rules, 

1975, and forming part of the Directors’ Report for the year ended March 31, 2007 

Sr. Name and Qualifications Age in Designation/ Remuneration Experience Date of Last Employment 

No. Years Nature of Received (Rs.) No. of Years Commencement 

duties 

of Employment 

A. Employed throughout the year and in receipt of remuneration in aggregate of not less than Rs. 2,400,000/- per annum: 

1. Mr. R. Raghuttama Rao 43 Managing 4,875,996 20 16-09-1991 Senior Executive 

B. Tech. (Mech. Engineering), Director Maruti Udyog Limited 

Grad. C.W.A., PGDM 

2. Mr. V. Sriram 39 General 3,436,865 16 02-01-1998 Tata Consultancy 

B.Com., A.C.A., Grad. Manager Services 

C.W.A., Lic. I.C.S.I. 

3. Mr. Dhruba Purkayastha 

B.E., PGDM 42 General 2,773,689 18 10-01-2000 GE Services 

Manager 

B. Employed for a part of the year and in receipt of remuneration in aggregate of not less than Rs. 200,000/- per month: 

1. Mr. Indranil Das Gupta 38 General 1,025,132 15 01-01-2001 M.N. Dastur & Co. Limited 

Manager 

NOTES: 

1. Remuneration includes salary, allowances, value of perquisites and Company’s contribution to Provident 

Fund but excludes contributions made for Gratuity and Leaves Encashment during the year based on 

actuarial valuations. 

2. None of the employees mentioned above is a relative of any Director of the Company. 

3. The nature of employment in all cases is contractual. 


Place: Mumbai 


(D.N. Ghosh) 

Chairman 

106



To 


1. We have audited the attached Balance Sheet of ICRA Management Consulting Services 

Limited as at March 31, 2007 and also the Profit and Loss Account and Cash Flow Statement for 

the year ended on that date annexed thereto. These financial statements are the responsibility of 

the company’s management. Our responsibility is to express an opinion on these financial 

statements based on our audit. 


standards required that we plan and perform the audit to obtain reasonable assurance about 

whether the financial statements are free of material misstatements. An audit includes examining 





3. As required by the Companies, (Auditor’s Report) (Amendment) Order, 2004 issued by the Central 

Government in terms of section 227 (4A) of the Companies Act, 1956, we annex hereto a 

statement on the matters specified in paragraphs 4 and 5 of the said Order. 

4. Subject to our observations in para – 3 above and read with Notes to Accounts and Significant 

Accounting Policies as per Schedule – 15, we further report that: - 

a) We have obtained all the information and explanations which to the best of our knowledge 

and belief were necessary for the purposes of our audit; 

b) In our opinion, proper books of accounts as required by law have been kept by the company so 

far as appears from our examination of those books, for the purposes of our audit; 

c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report 

are in agreement with the books of accounts; 

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement, read with 

the significant Accounting Policies and Notes to Accounts thereon dealt with by this report 

comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the 

Companies Act, 1956; 

e) On the basis of written representations received from the Directors, as on March 31, 2007 and 

taken on record by the Board of Directors, we report that none of the Directors is disqualified 

as on March 31, 2007 from being appointed as a Director in terms of clause (g) of sub section 

(1) of section 274 of the Companies Act, 1956; 

107


f) In our opinion and to the best of our information and according to the explanations given to us, 

the said accounts read together with the Significant Accounting Policies and Notes to Accounts 

stated in Schedule-15 thereon, give the information required by the Companies Act, 1956, in the 

manner so required and give a true and fair view in conformity with the accounting principles 

generally accepted in India: 

i. In the case of the Balance Sheet, of the state of affairs of the company as at March 31, 2007. 

ii. In the case of Profit and Loss Account, of the Profit for the year ended on that date. 

iii. In the case of the Cash Flow Statement, of the cash flow of the company for the year ended 

on that date. 

For L.B. Jha & Co. 


(Satyabrata Pati) 

Place: Mumbai 

Partner 

Date : May 2, 2007 Membership No. 95080 

108



To 


(Referred to in paragraph 3 of our report of even date) 

As required by the Companies (Auditors Report) (Amendment) Order, 2004 issued by the Central 

Government of India and on the basis of such checks of the books and records of the company as we 

considered appropriate and on the basis of information and explanations provided to us during the 

course of our audit, we further report that:- 

1. a. The company has maintained proper records showing full particulars including quantitative 


b. Fixed assets have been physically verified by the management during the year and there is a 

programme of verification which, in our opinion, is reasonable having regard to the size of 

the company and the nature of its assets. No material discrepancies were noticed on such 

verification. 

c. Company has not disposed of any substantial part of its assets. 

2. The company was not holding any inventory during the year under review. 

3. a. To the best of our knowledge and as per our verification of the books and records of the 

company, no loan has been granted to companies, firms and other parties covered under 

section 301 of the Companies Act, 1956. 

b. The company has taken a loan of Rs. 40 lakh from its holding company covered in the Register, 

maintained under section 301 of the Companies Act, 1956 and the year end balance is nil. 

4. In our opinion and according to the information and explanations given to us, there are adequate 

internal control procedures commensurate with the size of the company and the nature of its 

business with regard to purchase of investment, fixed assets and sale of goods and services. During 

the course of our audit, we have not observed any continuing failure to correct major weakness in 

internal controls. 

5. a. According to the information and explanations given to us, we are of the opinion that the 

transactions that need to be entered into the register under Section 301 of the Companies 

Act, 1956 have been so entered. 

b. In our opinion and according to the information and explanations given to us, there are 

transactions during the year in pursuance of contracts or arrangements entered in the 

register maintained under Section 301 of the Companies Act, 1956 exceeding an 

aggregate of Rs. 5 lakh in respect of any party and these have been made at prices which are 

reasonable having regard to prevailing market prices at the relevant time. 

109


6. The company has not accepted any deposits during the year from the public within the meaning of 

the provisions of Section 58A and 58AA of the Companies Act, 1956 and rules made thereunder. 

Hence, the Clause (vi) of the order is not applicable. 

7. The company has an in-house internal audit system, which in our opinion needs to be strengthened 

with wider coverage of its scope, considering the size of activity and business. 

8. The Central Government has not prescribed maintenance of any cost records under Section 

209(1)(d) of the Companies Act, 1956. Hence, Clause No. (viii) of the said order is not 

applicable. 

9. a. The company is regular in depositing with appropriate authorities undisputed statutory dues 

including Provident Fund, Income Tax and Works Contract Tax, Service Tax, Sales Tax, Customs 

Duty and Excise Duty, Cess etc., as applicable. 

b. According to the information and explanations given to us, no undisputed amounts payable in 

respect thereof were in arrears as at March 31, 2007 for a period of more than six months from 

the date they became payable. 

c. According to the information and explanations given to us, there are no dues relating to Sales 

Tax, Wealth Tax, Income Tax, Service Tax etc. which have not been deposited on account of any 

dispute. 

10. The company does not have any accumulated losses in the books and it has not incurred cash 

losses during the financial year and in the immediately preceding financial year. 

11. The company has not taken any loans from banks / financial institutions and therefore has not 

defaulted in repayment of its dues to banks, financial institutions etc. 

12. The company has not granted any loans or advances on the basis of security by way of pledge of 

shares, debentures or other securities. 

13. The provisions of any Special statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund / 

Societies are not applicable to the company. 

14. The company is not dealing or trading in shares, securities, debentures or other investments and 

hence, the requirements of Para 4 (xiv) are not applicable to the company. 

15. According to the information and explanations given to us, the company has not given any 

guarantee for loans taken by others from banks and financial institutions. 

16. The company has not taken any term loans during the year under audit. 

110



17. According to the information and explanations given to us, and on an overall examination of the 

Balance Sheet of the Company, we report that no funds raised on short term basis have been used 

for long term investment. 

18. The company has not made any preferential allotment of shares to parties and companies 

covered in the register maintained under section 301 of the Companies Act, 1956 during the 

year. 

19. No debentures have been issued by the company and hence, the question of creating securities 

in respect thereof does not arise. 

20. During the year under audit, the company has not raised any money by way of Public issues. 

21. On the basis of our examination and according to the information and explanations given to us, 

no fraud, on or by the company, has been noticed or reported during the year. 

For L.B. Jha & Co. 


(Satyabrata Pati) 

Place: Mumbai 

Partner 

Date : May 2, 2007 Membership No. 95080 

111

Balance Sheet 




No. March 31, 2007 March 31 , 2006 

Rs. 

Rs. 



(a) Share Capital (1) 150,000.00 500.00 

(b) Reserves and Surplus (2) 25,046.58 10,767.70 

175,046.58 11,267.70 

ii) Deferred Tax Liability (Net) (1,521.44) (1,505.45) 

Total 173,525.14 9,762.25 



(a) Gross Block 17,515.79 3,197.69 


Net Block 13,194.45 2,049.89 

Capital Work in Progress 4,022.41 1,657.41 

17,216.86 3,707.30 

ii) Investments (4) 70,413.14 0.00 



(b) Cash & Bank Balances (6) 20,028.05 13,600.77 

(c) Other Current Assets (7) 54.78 56.24 

(d) Loans & Advances (8) 16,969.64 13,314.38 

119,016.66 79,473.54 

Less: Current Liabilities & Provisions (9) 

(a) Liabilities 20,159.15 63,614.58 

(b) Provisions 12,962.37 9,804.01 

33,121.52 73,418.59 


iv) Miscellaneous Expenditure (10) 0.00 0.00 


Total 173,525.14 9,762.25 

NOTES TO ACCOUNTS (15) 

The Schedules referred to above form an 

integral part of the Balance Sheet 


for L. B. Jha & Co. 



(SATYABRATA PATI) (R. RAGHUTTAMA RAO) (D. N. GHOSH) 


Place: Mumbai 


(VINAY GUPTA) 

COMPANY SECRETARY & 

ASST. MANAGER (FINANCE) 

112






No. Rs. Rs. 

INCOME 

Consulting Fees 150,472.52 121,329.83 


Other Incomes (11) 2,772.43 165.45 

153,244.95 121,495.28 

EXPENDITURE 




127,057.05 102,378.20 

PROFIT BEFORE DEPRECIATION, INTEREST & TAX 26,187.90 19,117.08 

Depreciation (3,182.42) (1,202.07) 

PROFIT BEFORE INTEREST & TAX 23,005.48 17,915.01 



Income Tax (6,700.00) (6,900.00) 

Deferred Tax 15.99 1,505.45 



Prior Period Adjustments (Net) 0.00 (0.68) 




14,891.28 10,767.70 


The Schedules referred to above form an 

integral part of the Profit and Loss Account 







Place: Mumbai 


(VINAY GUPTA) 



113

Balance Sheet 






Rs. 

Rs. 


AUTHORISED 

25,000,000 equity shares of Rs. 10/- each 

(Previous Year 1,000,000 equity shares 250,000.00 10,000.00 

of Rs. 10 each) 


50,000 equity shares of Rs. 10/- each 

fully paid up held by the Holding Company (Previous Year 50,000) 500.00 500.00 

Add: Issued 14,950,000 Equity Shares of Rs. 10/- each 

fully paid up during the year issued to the 149,500.00 0.00 

Holding Company (Previous Year Nil) 

150,000.00 500.00 


General Reserve 

- As per last Balance Sheet 10,767.70 0.00 

- Transitional Incremental Provision for Employees’ (612.40) 0.00 

Benefits at the beginning of the year 


25,046.58 10,767.70 

114








1 Data Processing 2,739.12 2,901.06 (19.65) 5,620.53 1,046.40 1,390.80 (8.88) 2,428.32 3,192.21 1,692.72 

Equipment 

2 Intangible Assets - 0.00 1,173.71 0.00 1,173.71 0.00 289.59 0.00 289.59 884.12 0.00 

Softwares 

3 Furniture & 0.00 6,487.19 0.00 6,487.19 0.00 987.60 0.00 987.60 5,499.59 0.00 

Fixtures 

4 Office Equipment 144.63 972.79 0.00 1,117.42 20.12 126.06 0.00 146.18 971.24 124.51 

5 Air Conditioners 0.00 721.17 0.00 721.17 0.00 82.77 0.00 82.77 638.40 0.00 

6 Electrical Fittings 0.00 1,458.00 0.00 1,458.00 0.00 170.58 0.00 170.58 1,287.42 0.00 

7 Vehicles 313.94 623.83 0.00 937.77 81.28 135.02 0.00 216.30 721.47 232.66 

Total 3,197.69 14,337.75 (19.65) 17,515.79 1,147.80 3,182.42 (8.88) 4,321.34 13,194.45 2,049.89 

Capital Work 1,657.42 2,364.99 0.00 4,022.41 0.00 0.00 0.00 0.00 4,022.41 1,657.41 

in Progress 

Total 4,855.11 16,702.74 (19.65) 21,538.20 1,147.80 3,182.42 (8.88) 4,321.34 17,216.86 3,707.30 

Previous Year 0.00 3,656.10 (458.41) 3,197.69 0.00 1,202.07 (54.27) 1,147.80 3,707.30 

(31/03/2006) 

115



(At Cost) 





(Rupees) (Numbers) (Numbers) 

i UTI - Floating Rate Fund-Short 

Term Plan (Growth Option) 1000 12,956.325 0.000 15,000.00 0.00 

ii Prudential ICICI FF - Plan B Growth 10 441,466.612 0.000 5,209.57 0.00 

iii TATA FRF - SP - IP - Growth 10 697,357.308 0.000 7,703.57 0.00 

iv Principal PNB Fixed Duration Fund 10 2,000,000.000 0.000 20,000.00 0.00 

v LIC MF Floating Rate Fund - ST -Growth 10 1,331,227.036 0.000 15,000.00 0.00 

vi HDFC Prudence Fund - Dividend 10 159,632.207 0.000 5,000.00 0.00 

vii 

DSP Merrill Lynch Balanced Fund 

Dividend - Payout 10 114,416.476 0.000 2,500.00 0.00 

Total (Current Investments) 70,413.14 0.00 

Aggregate Market Value of Current Investments 73,204.86 0.00 

116





Rs. 

Rs. 

5. SUNDRY DEBTORS 


- Unsecured 


- Considered Doubtful 0.00 2,128.45 

16,492.59 5,531.44 

Others 

- Unsecured 


81,964.19 54,462.21 

Less Provision for Doubtful Debts 0.00 (1,960.06) 

{(Exclusive of Service Tax of Rs. NIL) 

(Previous Year Rs. 168.39 thousand)} 81,964.19 52,502.15 


Cash in Hand 320.28 12.52 

Balance with Banks 

- In Current Accounts 

- With Scheduled Banks 13,989.24 8,743.13 

- In Deposit Accounts 


20,028.05 13,600.77 


Income accrued but not due on 

Deposits 54.78 56.24 

54.78 56.24 


Loans to Staff (Secured Considered Good) 507.75 129.09 

{Includes Rs. 507.75 thousand due from a Director & Officers 


the year Rs. 579.09 thousand (Previous Year Rs. 155.30 thousand)} 





Income Tax Paid in Advance 8,164.94 603.11 

{(Includes Rs. 5,314.94 thousand for TDS 


Fringe Benefit Tax Paid in Advance 1,029.43 0.00 

16,969.64 13,314.38 

117




Rs. 

Rs. 



Sundry Creditors 5,133.37 881.86 

Advances Received from Clients 15.00 15.00 


Sub Total (A) 20,159.15 63,614.58 

B. PROVISIONS 


Provision for Fringe Benefit Tax 1,219.37 4.42 


Sub Total (B) 12,962.37 9,804.01 

Grand Total (A+B) 33,121.52 73,418.59 



Preliminary Expenses 


- Less : Written off during the year 0.00 (240.27) 

0.00 0.00 

118






Rs. 

Rs. 


Interest 321.91 109.84 

{(including TDS of Rs. 60.57 thousand) 

(Previous Year Rs. 23.21)} 

Dividend on Non-Trade Investments 798.16 0.00 

Profit on Sale of Investments 413.14 0.00 


Foreign Exchange Gain 312.87 43.95 


2,772.43 165.45 


Salaries & Allowances 60,009.32 48,830.16 

Managing Director’s Remuneration 2,411.61 0.00 


{including contribution for a Director Rs. 125.17 thousand 

(Previous Year Rs. NIL)} 


{including payment to a Director Rs. 139.05 thousand 


Training Expenses 517.57 472.49 

Recruitment Expenses 124.30 674.45 

70,383.32 56,279.64 


Rent 12,451.94 6,607.51 

Rates & Taxes 1,803.85 563.54 

Repairs and Maintenance 2,834.35 2,292.48 

Postage & Telephone 1,976.77 2,193.45 

Internet and Network Charges 1,164.50 1,009.83 

Electricity & Water Expenses 1,467.41 1,205.97 

Printing & Stationery 1,939.63 1,445.52 


Books & Periodicals 678.61 1,310.61 

24,390.74 16,781.71 



{includes Rs. 1,491.73 thousand for Director 

Travelling (Previous Year Rs. 141.74 thousand)} 


Hire Charges 39.28 49.94 

Legal Charges 0.00 199.33 

Professional Charges 8,225.02 5,653.36 

Conference and Meeting Expenses 374.65 510.41 

Advertisement Expenses 45.92 555.00 


Business Development Expenses 161.08 253.94 

Bank Charges 69.34 44.19 

Share Issue & Other Expense Written Off 0.00 240.27 

Bad Debts Written Off (Net of Provisions) 327.74 2,996.22 

Fees & Subscription 37.34 33.09 

Foreign Exchange Loss 163.70 626.23 

Loss on Sale of Assets 8.00 2.68 

Miscellaneous Expenses 140.01 89.57 

32,282.99 29,316.85 

119

15. NOTES FORMING PART OF THE ACCOUNTS 

1 Significant Accounting Policies:- 


and in accordance with Generally Accepted Accounting Principles, the applicable Accounting 

Standards issued by the Institute of Chartered Accountants of India and the provisions of the 


b) Revenue Recognition: - Income from operations includes income from Consulting and Advisory 

Services. 

i) Income from Consulting and Advisory Services is recognised in the year in which such 

assignments are carried out. However, in the case of assignments that are in the process as at 

the end of the year, the revenue is recognised on the basis of percentage of completion of 

assignments and the bills are raised for the recovery of fees. 

ii) The income, if any, from Investment in shares/units is accounted for in the year in which it is 

declared. Interest income is recognised on accrual basis. 

c) Fixed Assets: - Fixed Assets are stated at cost which comprises purchase price, duties and any 


d) Depreciation: - The depreciation on the assets is provided on the written down value of the 

assets at the rates and in the manner prescribed in the Schedule XIV of the Companies Act, 

1956. The depreciation is provided on a pro-rata basis on the assets acquired, sold or 

disposed of during the year. Individual assets costing less than Rs. 5,000 are depreciated in full 

in the year of acquisition. 

e) Investments: - Investments are stated at Cost. Provision for diminution in case of long term 

investments is made if the decline in value is other than temporary in nature. 

f) Employees’ Benefits: - Employees’ benefits are provided in the form of Provident Fund, 

Pension Scheme, Leave Encashment and Gratuity. At present, contributions to Provident Fund 

and Pension Fund are being deposited with the Provident Fund Department. Provisions for 

Gratuity and Leave Encashment are made in the accounts on the basis of an actuarial 

valuation in accordance with Accounting Standard 15. 

g) Expenses incurred towards increase in Authorised Capital of the Company from Rs. 1 crore to Rs. 

25 crore have been fully charged to Profit and Loss Account as per Accounting Standard No. 26 

relating to “Accounting for Intangible Assets” issued by the Institute of Chartered Accountants of 

India. 

h) Deferred Tax: - The Company has provided for Deferred Tax Liability as per Accounting Standard 

22 relating to “Accounting for Taxes on Income” issued by the Institute of Chartered Accountants 

of India. 

i) Foreign Currency Transactions:- Transactions in foreign currencies are recognised at the 



j) Capital Work in Progress:- Capital Work in Progress represents expenditure incurred on 

development of various softwares used for licensing, which are under development, at the 

end of the year. On completion of such software, cost incurred is capitalised under 

Intangible Assets. 

120



Guarantees of Rs. 5,315 thousand (Previous Year Rs. 1,800 thousand) given by Bank against Counter Guarantee 

of the Company. 




Managing Director:- 

Salary 2,083.66 0.00 

Value Allowance 327.95 0.00 


2,536.78 0.00 




Statutory Auditors:- 

Audit Fees 20.00 6.00 

Tax Audit Fees 5.00 3.00 

Other Matters 15.00 0.00 

Out of Pocket Expenses 2.65 0.00 

Total 42.65 9.00 




Foreign Travel 3,855.32 1,623.93 

Total 3,855.32 1,623.93 




Professional & Consultancy Fees 35,307.03 13,099.44 

Total 35,307.03 13,099.44 






the year (Face value Rs. 10 per share) 15,000.00 500.00 

Basic Earning per Share (Rs.) 1.38 21.54 

121

8 The net Deferred Tax Asset / (Liability) has been arrived at as follows:- 



Depreciation 180.65 195.01 

Preliminary Expenses 0.00 (64.70) 

Provision for Gratuity (946.52) (822.37) 

Provision for Leave Enchashment (750.95) (153.63) 

Provision for Doubtful Debts 0.00 (659.76) 

Disallowance u/s 43B (Cess Provision) (4.62) 0.00 


(1,521.44) (1,505.45) 



(a) ICRA Limited Holding Company Rent Paid / Payable 12,451.94 3,200.00 

Loan taken 0.00 0.00 

[Maximum loan amount during 

the year Rs. 4,000 thousand 

(Previous Year Rs. NIL)] 

Interest paid on Loan 210.82 0.00 

Demerger Purchase Consideration 0.00 51,647.86 

Investment in Equity Shares by 149,500.00 0.00 


Professional Fee (Income) 350.00 0.00 

Amount Receivable 392.84 0.00 

Amount Payable 1,967.49 2,563.32 

(b) ICRA Online Group Company Professional Fee (Income) 123.54 0.00 

Limited Professional Fee Paid 0.00 20.00 

Amount Receivable (Net) 174.99 0.00 

(c) Mr. R. Raghuttama Managing Director Managerial Remuneration 2,536.78 0.00 

Rao (w.e.f August 26, 2006) 

10 The Company has no amounts due to small scale industrial undertaking(s). 


12 Previous year figures have been regrouped / rearranged wherever considered necessary to make them comparable 

with those of the current year ended on March 31, 2007. 







Place: Mumbai 


(VINAY GUPTA) 



122






State Code 55 


II. 

III. 



Public Issue 

Nil 

Right Issue 

Nil 

Bonus Issue 

Nil 




Total Liabilities 206,646.66 

Total Assets 206,646.66 



Reserve & Surplus 25,046.58 

Deferred Tax Liability (Net) (1,521.44) 

Secured Loans 

Nil 

Unsecured Loans 

Nil 



Investments 70,413.14 


Misc. Expenditure 

Nil 

Accumulated Losses 

Nil 

IV. 





Profit/Loss before Tax 22,794.66 

Profit/Loss after Tax 14,891.28 





Item Code No. 



Management Consulting 

Services 


(R. RAGHUTTAMA RAO) 


(D. N. GHOSH) 

CHAIRMAN 

Place: Mumbai 


(VINAY GUPTA) 



123

CASH FLOW STATEMENT 

(Rs. in thousand) 






Depreciation 3,182.42 1,202.07 


Transitional Incremental Provision for Employees’ Benefits (612.40) - 

(Profit) / Loss on sale of fixed assets 8.00 (8.98) 

Miscellaneous Expenditure - 240.27 

Profit on sale of Investments (Net) (413.14) - 

Interest received on Securities (321.91) (109.84) 

Dividend Income (798.16) - 

Non-Operating Income (Other than Interest and Dividend) (1,239.22) (43.95) 

Interest Paid on Loans 210.82 - 

Previous Year Adjustments - (0.68) 



Trade & other Receivables 

Sundry Debtors (29,462.04) (52,502.15) 

Loans (378.66) (658.91) 

Advances 6,569.96 (10,617.96) 

Sundry Deposits (1,255.30) (1,434.40) 



Advances - 15.00 

Other Liabilities (47,706.94) 62,717.61 

Cash generated from operations (43,026.99) 20,488.54 

Taxes Paid (15,495.68) (2,350.77) 

Net Cash from Operating Activities (58,522.67) 18,137.77 

124


Contd... 






Capital Work in Progress during the year (2,364.99) (1,657.41) 

Sale of Fixed Assets 2.76 413.12 

Investments made (87,913.14) - 

Sale of Investments 17,500.00 - 

Profit on sale of Investments (Net) 413.14 - 

Interest received on Securites 321.91 109.84 

Dividend Income 798.16 - 

Other Income 1,239.22 43.95 

Income accrued on investments 1.46 (56.24) 

Net Cash used in Investing Activities (84,339.23) (4,802.84) 


Increase in Share Capital 149,500.00 - 

Interest Paid on Loans (210.82) - 

Net Cash from Financing Activities 149,289.18 - 

Net Increase/(decrease) in Cash and Cash Equivalents 6,427.28 13,334.93 

Cash and Cash Equivalents (Opening balance) 13,600.77 265.84 

Cash and Cash Equivalents (Closing balance) 20,028.05 13,600.77 








Place: Mumbai 


(VINAY GUPTA) 



125

126 

IMaCS Annual Meet–2007, 

at Madh Island, Mumbai


IMaCS Annual Meet–2007, 

at Madh Island, Mumbai 

127

Mr. R. Raghuttama Rao, Managing Director, IMaCS, addressing a conference on ‘Tamil Nadu 

as a Manufacturing Hub’ organised by the Confederation of Indian Industry in Chennai 

Mr. R. Raghuttama Rao, Managing Director, IMaCS, addressing a seminar on 'Market 

Oriented Reforms & Corporate Governance Imperatives' in Chennai, organised by the 

Federation of Indian Chambers of Commerce and Industry 

Dr. Shyama S. Nagarajan of IMaCS (sitting second from left) along with other delegates at the 

X th Commonwealth Study Conference on 'Working Together for Inclusive Growth and 

Development' jointly organised by the Confederation of Indian Industry and the 

Commonwealth Study Conference Association of Malaysia in New Delhi 

128

annual 

report 



ICRA TECHNO 

ANALYTICS 

LIMITED 

(ICTEAS)

ICTEAS Annual Picnic at Raichak, off Kolkata 

Mr. Prateep Guha, Managing Director, ICTEAS, at the ICTEAS Annual Picnic 

130

ANNUAL REPORT 2006-2007 • ICRA TECHNO ANALYTICS LIMITED 




Bankers 


Mr. Naresh Takkar 

Mr. Prateep Kumar Guha 

Mr. Nitish Kumar 

Pijush Gupta & Co. 

P-199, C.I.T. Road 

Scheme IV-M, Kolkata-700 010 

IDBI Bank Limited 

Park Street, Kolkata-700 016 

Indian Overseas Bank 

India Exchange Place, Kolkata-700 001 

UTI Bank Limited 

Electronic Complex 

Salt Lake, Kolkata-700 091 



FMC Fortuna, A-10 & 11, 3rd Floor 

234/3A, A.J.C. Bose Road 

Kolkata-700 020 

Convergence Contact Centre 

Plot D 2/2, 7th Floor, Block EP & GP 

Sector-V, Salt Lake City 


Tel : 033-4009 7800 

Fax : 033-4009 7801 

Website: www.icteas.com 

e-mail: info@icteas.com 

131


Your Directors have pleasure in presenting the Fifteenth Annual Report of your Company along with 

the Audited Accounts for the year ended March 31, 2007. 


The summarised financial results of your Company for the year ended March 31, 2007 are 

presented below: 

Particulars 2006-07 (Rs.’000) 2005-06 (Rs.’000) 

Income from Operations 92,062.51 66,061.76 

Other Income 2,879.09 214.38 

Total Income 94,941.60 66,276.14 

Profit before Interest, Depreciation and Taxes 19,051.33 11,384.21 

Interest (138.78) (1,514.48) 

Depreciation (7,090.81) (5,141.98) 

Profit/(Loss) before Tax 11,821.74 4,727.75 

Provision for Taxes (513.65) (1,621.03) 

Profit/(Loss) after Tax 11,308.09 3,106.72 

Taxes for Previous Years (0.01) 0.00 

Prior Period Adjustments 46.71 (2,765.48) 

Profit/(Loss) after Prior Period Adjustments 11,354.79 341.24 

132



The Total Income of your Company for the year under review increased by 43.25% over the previous 

year to Rs. 94.94 million from Rs. 66.28 million. Repeat orders received from major existing 

customers, besides addition of some new customers, helped your Company attain this growth. 

The Profit before Depreciation, Interest and Taxes (PBDIT) earned by your Company increased by 

67.35% during the year under review to Rs. 19.05 million, from Rs. 11.38 million in the previous 

year. In addition, profitability at the PBDIT level (PBDIT/Total Income) also went up to 20.07% during 

2006-07, from 17.18% in the previous year. This is largely attributable to the optimal use of 

resources. 

For the year ended March 31, 2007, your Company reported a significant increase in Profit after Tax 

to Rs. 11.31 million, from Rs. 3.11 million in the previous year. Larger business from existing clients 

and optimum utilisation of resources/expenses, as stated earlier, contributed significantly to make this 

possible. 

The Earning per Share (EPS) of your Company for the year under review was Rs. 2.26 as against 

Rs. 1.04 in the previous year. This is also significant as your Company achieved a higher EPS despite 

having allotted 2.00 million fresh equity shares to ICRA Limited, New Delhi, during the year under 

review. 

Dividend 

Although the profit earned by your Company has increased substantially, the Board of Directors of 

your Company is not recommending any dividend for the year ended March 31, 2007 so that the 

available fund can be re-deployed in the Company to meet the expenses required for the proposed 

expansion of its activities. 


During the year under review, the financial performance of your Company improved significantly in 

terms of turnover as well as profitability. Your Company also expanded its operations in related areas 

during the year. 

The Directors of your Company placed significant emphasis on developing new business partners in 

various countries during the year under review. This has already translated into fresh business from a 

client and is expected to deliver further growth in the coming years. 

Your Company acquired new overseas as well as local customers during the year under review. Your 

Directors are optimistic that these would serve as strong reference points in the years ahead and help 

your Company acquire new customers. 

Your Directors take pleasure in mentioning that your Company was able to obtain several repeat 

orders from existing premium customers during the year under review. This clearly demonstrates the 

success of the policy followed by your Directors of relentlessly pursuing key customers with superiorquality 

deliveries. 

To enhance its competencies in the Business Analytics space, your Company recruited several highlyqualified 

personnel during the year under review; this resulted in your Company being able to execute 

several fresh orders successfully. It is expected that these initiatives would translate into further growth 

in this domain in the years to come. 

Awards & Recognitions 

Your Company went through the rigours of implementing stringent information security standards during 

the year under review and was able to successfully go through the various phases of the ISO: 27001 

audit. The ISO: 27001 is a certification of an organisation’s information security management system. 

133


Future Prospects 

Your Company remains optimistic about its future performance and it is expected that its financial 

performance will show further growth during the current financial year. 

You will be pleased to know that your Company is taking steps to ensure that it consolidates its 

position in various software segments. It plans to come up with innovative products and services 

catering for niche segments and aggressively market them. Besides, your Company is also keen on 

entering lucrative new markets particularly in the USA, Asia and Europe through its partner 

development programme. 

During the year under review, your Company initiated steps to incorporate a wholly-owned subsidiary 

in the USA. The company has been incorporated under the name ICRA Techno Analytics Inc. in April 

2007, and this is expected to immensely help in reaching out to new customers in the North 

American market. 

The Directors of your Company are optimistic about maintaining the growth momentum in software 

products & solutions and engineering services. Considering the present state of affairs and barring 

unforeseen circumstances, there should be significant improvement in the working of your Company 

in the current year. 

Increase in the Share Capital 

During the year under review, the Authorised Share Capital of your Company was increased from 

Rs. 50,000,000/- divided into 5,000,000 Equity Shares of Rs. 10/- each to Rs. 100,000,000/- 

divided into 10,000,000 Equity Shares of Rs. 10/- each. Consequent upon increasing the Authorised 

Capital of your Company, the Paid-up Capital was increased from Rs. 30,000,000/- divided into 

3,000,000 Equity Shares of Rs. 10/- each to Rs. 50,000,000/- by allotting 2,000,000 new Equity 

Shares of Rs. 10/- each at par value to ICRA Limited, New Delhi, for cash. 

Directors 

During the year under review, Mr. Prateep Kumar Guha was appointed Managing Director of your 

Company for a period of three years from the date of his appointment. 

Pursuant to the provisions of Section 256 of the Companies Act, 1956 and the Articles of Association 

of your Company, Mr. Naresh Takkar will retire by rotation, and being eligible, offers himself for reappointment. 


The Board of Directors of your Company consists of Mr. P.K. Choudhury, Mr. Naresh Takkar, and Mr. Prateep 

Kumar Guha. During the financial year ended March 31, 2007, five meetings were held as follows: 

Dates of Meetings Mr. P.K. Choudhury Mr. Naresh Takkar Mr. Prateep Kumar Guha 

01/05/2006 YES NO YES 

05/07/2006 YES YES YES 

18/08/2006 YES YES NO 

17/11/2006 YES YES YES 

12/02/2007 YES YES NO 

Total meetings 5 4 3 

attended 

134




This Committee has been constituted in line with the provisions of Section 292A of the Companies Act, 

1956. The Committee consists of three Directors, two of whom are Directors other than Managing/ 

Whole-Time Directors. The Composition of the Audit Committee and the attendance of the members at 

the meetings during 2006-07 are presented below: 

Dates of Mr. P.K. Choudhury Mr. Naresh Takkar Mr. Prateep Kumar Guha 

Meetings (Chairman) (Member) (Member) 

17.11.2006 Yes Yes Yes 

12.02.2007 Yes Yes No 

The Audit Committee meetings are also usually attended by the Statutory Auditors and the Internal 

Auditors of your Company, as special invitees. Mr. Nitish Kumar, Company Secretary of your 

Company, acts as the Secretary to the Audit Committee. 

The Board is responsible for constituting, assigning, co-opting and fixing the terms of service for the 

Committee and its members. 


Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm: 

(i) that in the preparation of the Annual Accounts for the financial year ended March 31, 

2007, the applicable Accounting Standards were followed along with proper explanation 

relating to material departures, if any; 

(ii) 

(iii) 

(iv) 

that the Directors have selected such accounting policies and applied them consistently 

and made judgements and estimates that were reasonable and prudent so as to give a 

true and fair view of the state of affairs of your Company at the end of the financial year 

and of the Profit and Loss Account of your Company for the year under review; 

that the Directors have taken proper and sufficient care for the maintenance of adequate 

accounting records in accordance with the provisions of the Companies Act, 1956 for 

safeguarding the assets of the Company and for preventing and detecting fraud and other 

irregularities; 

that the Directors have prepared the Annual Accounts for the financial year ended March 

31, 2007 on a ‘going concern’ basis. 

Auditors 

During the year under review, M/s Pijush Gupta & Co., Chartered Accountants, Statutory Auditors of 

your Company, will retire at the conclusion of the forthcoming Annual General Meeting and are 

eligible for re-appointment. They have confirmed their eligibility under Section 224(1B) of the Companies 

Act, 1956. 


The Notes to the Accounts referred to in the Auditors’ Report are self explanatory and therefore, do not 

call for any further comments on the Auditors’ Report under Section 217(3) of the Companies Act, 1956. 

135


Additional Information 

The additional information required in accordance with sub-section (1)(e) of Section 217 of the 

Companies Act, 1956, read with the Company (Disclosure of Particulars in the Report of the Board of 

Directors) Rules, 1988, in respect of Research and Development, Technology Absorption, Conservation of 

Energy, Foreign Exchange Earning and Outgo are given in Annexure to this report. 


There is no employee whose detail is required to be furnished in terms of sub-section (2A) of Section 217 

of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975. 


The Directors place on record their appreciation of the support and co-operation from various 

Government Agencies, Bankers of the Company, Professionals in different disciplines, suppliers and 

customers, who have continued to support the operations of your Company in various ways. 

Your Directors wish to place on record their appreciation of the contribution made by the members of the 

staff of your Company. 

Last but not the least, your Directors deeply acknowledge the continued trust and confidence you have 

placed in the Company. 

For and on behalf of the Board of Directors 

Place: Kolkata 

Date: May 18, 2007 

P.K. Choudhury 

Chairman 

Annexure 

Statement as required under Section 217 (1) (e) of the Companies Act, 1956 read with the Companies 

(Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 

Conservation of Energy 

The operations of the Company involve only low energy consumption. However, adequate measures 

have been taken to reduce energy consumption. 

Research and Development 

The Company has in-house staff for Research and Development activities. 

136


Technology Absorption, Adaption and Innovation 

The Company has in-house technical staff and follows the policy of absorbing any new technology 

required immediately after sourcing it for the first time. 

Foreign Exchange Earning and Outgo 

F.Y. 2006-07 F.Y. 2005-06 


Foreign Exchange Earning 76,983.38 54,779.57 

Foreign Exchange Outgo 27,313.82 13,618.48 

137


To 

The Shareholders, 

ICRA Techno Analytics Limited 

1. We have audited the attached Balance Sheet of ICRA Techno Analytics Limited as at 

March 31, 2007 and the related Profit and Loss Account and the Cash Flow Statement for the year 

ended on that date annexed thereto. These financial statements are the responsibility of the 

Company’s management. Our responsibility is to express an opinion on these financial statements 

based on our audit. 


standards require that we plan and perform the audit to obtain reasonable assurance about whether 

the financial statements are free of material misstatements. An audit includes examining, on a test 

basis, evidence supporting the amounts and disclosures in the financial statements. An audit also 

includes assessing the accounting principles used and significant estimates made by management, as 

well as evaluating the overall financial statement presentation. We believe that our audit provides a 

reasonable basis for our opinion. 

3. As required by the Companies (Auditor’s Report) Order, 2003 as amended by Companies 

(Auditor’s Report) (Amendment) Order, 2004 (together ’the Order’), issued by the Central 

Government of India in terms of Section 227(4A) of the Companies Act, 1956 [hereinafter 

referred to as the “Act”], and on the basis of such checks as we consider appropriate and 

according to the information and explanations given to us during the course of audit a statement 

on matters specified in the said order has been given in the Annexure hereof. 

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that: 

a) We have obtained all the information and explanation, which to the best of our knowledge and 

belief were necessary for the purposes of our audit; 

b) In our opinion, proper books of account as required by law have been kept by the Company so 

far as appears from our examination of those books; 

c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are 

in agreement with the books of accounts; 

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by 

this report comply with the accounting standards referred to in sub-section (3C) of section 211 of 

the Companies Act, 1956; 

e) On the basis of the written representation received from the Directors as on March 31, 2007 and 

taken on record by the Company, none of the Directors is disqualified as on March 31, 2007 

from being appointed as a director in terms of Clause (g) of sub-section (1) of Section 274 of the 

Companies Act, 1956; 

138



f) In our opinion and to the best of our information and according to the explanations given to us, 

the said accounts give the information required by the Companies Act, 1956, in the manner so 



(i) In case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2007 

(ii) In case of Profit and Loss Account, of the Profit for the year ended on that date and 

(iii) In the case of Cash Flow Statement, of the Cash Flows for the year ended on that date. 

Pijush Kumar Gupta 

Partner 

Membership No. 015139 

Kolkata, May 18, 2007 

For and on behalf of 



139


Annexure referred to in paragraph ‘3’ of the Auditors’ Report to the Shareholders of ICRA Techno 

Analytics Limited on the accounts for the year ended March 31, 2007. 

(i) (a) The Company has maintained proper records showing full particulars including quantitative 


(b) As per information and explanation given to us the fixed assets have been physically verified 

by the management at reasonable intervals and no material discrepancy was noticed on such 

physical verification. 

(c) There was no substantial disposal of fixed assets during the year. 

(ii) 

(iii) 

(iv) 

(v) 

(vi) 

(vii) 

Because of the nature of its business the company does not have to maintain any inventory and 

accordingly Paragraphs 4(ii)(a), 4(ii)(b) and 4(ii)(c) of the Order are not applicable to the company. 

According to the information and explanation given to us there is no contract or arrangements to 

which Section 297 or Section 299 applies and therefore there are no companies, firms or other parties 

covered in the register maintained u/s 301 of the Companies Act, 1956. Accordingly Paragraphs 

4(iii)(a) to 4(iii)(g) of the Order are not applicable to the company. 

In our opinion and according to the information and explanations given to us, there is an adequate 

internal control system commensurate with the size of the Company and the nature of its business 

for the purchase of fixed assets and sale of goods and services. During the course of our audit no 

major weakness has been noticed in the internal control system in respect of these areas. There is 

no purchase of inventory. 

According to the information and explanations given to us, there are no contracts or arrangements 

referred to in Section 301 of the Companies Act, 1956 that need to be entered in the Register 

required to be maintained under that Section. Accordingly Paragraphs 4 (v)(a) and 4(v)(b) are not 

applicable to the company. 

The Company has not accepted any deposits from the public. 

In our opinion and according to the information and explanations given to us the Company has an 

internal audit system commensurate with the size of the company and nature of its business. 

(viii) According to the information and explanations given to us maintenance of cost records has not 

been prescribed by the Central Government under the provisions of Section 209(1)(d) of the 

Companies Act. 

(ix) (a) According to the information and explanations given to us and the records of the Company 

examined by us, the company is generally regular in depositing undisputed statutory dues 

including Provident Fund, Income Tax, VAT, Central Sales Tax, Service Tax & Education Cess 

and Profession Tax with appropriate authorities. Investor Education and Protection Fund, 

Employees’ State Insurance Customs and Excise Duty and Cess are not applicable to the 

company. 

(b) According to the information and explanations given to us there is no case of dues of Income 

Tax/Sales Tax/Service Tax/Excise Duty/Cess which have not been deposited on account of any 

dispute. 

(x) 

The Company does not have any accumulated losses as at 31st March, 2007 and has not incurred 

any cash losses in the current financial year as well as in the immediately preceding financial year. 

140



(xi) 

(xii) 

The company does not have any dues to financial institutions or debenture holders and the Company 

is regular in repayment of installments towards car finance to Bank. 

The Company has not granted any loans and advances on the basis of security by way of pledge 

of share, debentures and other securities. Accordingly Paragraph 4(xii) of the Order is not applicable 

to the company. 

(xiii) The provisions of any special statue applicable to chit fund/nidhi/mutual benefit fund/societies are 

not applicable to the company. Accordingly Paragraph 4(xiii) including sub-clauses (a) to (d) of the 

Order is not applicable to the Company. 

(xiv) The company is not dealing or trading in shares, securities, debentures and other investments. 

Accordingly Paragraph 4(xiv) of the Order is not applicable to the Company. 

(xv) 

According to the information and explanations given to us the Company has not given any guarantee 

for loans taken by others from banks or financial institutions. Accordingly Paragraph 4(xv) of the 


(xvi) In our opinion and according to the information and explanations given to us Term Loans were 

applied for the purpose for which they were obtained. 

(xvii) According to the information and explanations given to us, there are no funds raised on a short 

term basis which have been used for long term investment. 

(xviii) According to the information and explanations given to us there are no parties or companies 

covered in the Register maintained under Section 301 of the Companies Act. Accordingly Paragraph 

4(xviii) of the Order in respect of preferential allotment of shares is not applicable to the Company. 

(xix) The company has not issued any debentures during the year. Accordingly Paragraph 4(xix) of the 


(xx) 

The company has not raised any money by way of public issue during the year. Accordingly Paragraph 

4(xx) of the Order is not applicable to the Company. 

(xxi) Based upon the audit procedure performed for the purpose of reporting whether the financial 

statements present a true and fair view and as per the information and explanations given to us it 

appears that no fraud on or by the company has been noticed or reported during the year. 

Pijush Kumar Gupta 

Partner 

Membership No. 015139 

Kolkata, May 18, 2007 




141

Balance Sheet 





Rs. 

Rs. 




(b) Reserves and Surplus (2) 11,680.09 325.30 

61,680.09 30,325.30 


- Secured Loans - (from Bank against hypothecation of cars) 305.19 621.55 

- Unsecured Loans 0.00 2,500.00 

iii) Deferred Tax Liability (Net) 877.35 1,140.91 

Total 62,862.63 34,587.76 



(a) Gross Block 40,340.13 31,531.82 


Net Block 22,548.33 19,069.09 

ii) Current Assets, Loans and Advances 





52,583.52 28,693.92 


(a) Liabilities 9,748.03 11,935.10 

(b) Provisions 2,521.19 1,442.65 

12,269.22 13,377.75 


iii) Miscellaneous Expenditure (9) 0.00 202.50 


Total 62,862.63 34,587.76 





(Pijush Kumar Gupta) (Prateep Kumar Guha) (P.K. Choudhury) 

Partner Managing Director Director 

Membership No.: 015139 





Dated: 18/05/2007 

(Nitish Kumar) 


142





PARTICULARS Schedule 01/04/06-31/03/07 01/04/05-31/03/06 

No. Rs. Rs. 

INCOME 


Sales 18,743.68 1,156.24 


Other Incomes (10) 2,879.09 214.38 

94,941.60 66,276.14 

EXPENDITURE 

Purchases 248.57 599.88 




75,890.27 54,891.93 


Depreciation (7,090.81) (5,141.98) 


Interest Paid (138.78) (1,514.48) 


Income Tax (481.20) (243.78) 

Deferred Tax 263.56 (1,140.91) 

Fringe Benefit Tax (296.01) (236.34) 


Taxes for Previous Years (0.01) 0.00 

Prior Period Adjustments 46.71 (2,765.48) 

Balance Brought Forward from Last Year 325.30 (15.94) 

PROFIT AVAILABLE FOR APPROPRIATIONS 11,680.09 325.30 


Balance Carried to Balance Sheet 11,680.09 325.30 

11,680.09 325.30 





(Pijush Kumar Gupta) (Prateep Kumar Guha) (P.K. Choudhury) 










143

Balance Sheet 






Rs. 

Rs. 


AUTHORISED 


(Previous Year 50,00,000 ) 100,000.00 50,000.00 



fully paid up (Previous Year 750,000 ) 30,000.00 7,500.00 

Add: Issued 2,000,000 Equity Shares of Rs. 10/- each 20,000.00 22,500.00 

fully paid up during the year (Previous Year 2,250,000) 

50,000.00 30,000.00 


a) Surplus in Profit and Loss Account 11,680.09 325.30 

11,680.09 325.30 

144








1 Data Processing 12,640.60 3,864.90 (53.77) 16,451.73 7,546.32 2,512.81 (2.51) 10,056.62 6,395.11 5,094.28 

Equipment 

2 Intangible Assets - 9,366.07 4.50 0.00 9,370.57 2,424.37 3,126.52 0.00 5,550.89 3,819.68 6,941.70 

Softwares 

3 Furniture & Fixtures 4,020.72 2,794.30 (1,298.29) 5,516.73 1,215.94 609.77 (971.24) 854.47 4,662.26 2,804.78 

4 Office Equipment 127.80 1,413.52 (7.99) 1,533.33 70.69 116.02 (5.35) 181.36 1,351.97 57.11 

5 Air Conditioners 1,692.15 913.50 (277.65) 2,328.00 324.02 188.90 (164.52) 348.40 1,979.60 1,368.13 

6 Electrical Fittings 1,865.20 1,588.44 (222.23) 3,231.41 128.25 266.79 (118.36) 276.68 2,954.73 1,736.95 

7 Vehicles 1,721.28 700.53 (611.45) 1,810.36 742.25 269.01 (499.76) 511.50 1,298.86 979.03 

8 Time Sharing Sterling 98.00 0.00 0.00 98.00 10.89 0.99 0.00 11.88 86.12 87.11 

Holiday Resort 

Grand Total 31,531.82 11,279.69 (2,471.38) 40,340.13 12,462.73 7,090.81 (1,761.74) 17,791.80 22,548.33 19,069.09 

Previous Year 14,327.07 19,504.72 (2,299.97) 31,531.82 5,610.91 5,141.98 1,709.84 12,462.73 19,069.09 8,716.16 

(01/04/05 - 

31/03/06) 

145




Rs. 

Rs. 



- Unsecured 

- Considered Good 360.61 97.26 

Others 

- Unsecured 


15,428.80 15,437.51 


Cash in Hand 14.71 2.67 






28,205.94 8,978.28 


Income accrued but not due on Deposits 123.78 0.00 

123.78 0.00 


Loans to Staff (Secured Considered Good) 28.12 2.00 

{Includes NIL due from a Director 

(Previous Year NIL) Maximum due during 

the year Rs. NIL (Previous Year Rs. NIL )} 

Loan to ICRA Online Limited 4,200.00 0.00 

Advances Recoverable in cash or 

in kind or for value to be received 



- Unsecured, Considered Good 29.50 1,017.50 


{(Includes Rs. 2362.60 thousand for TDS 


Fringe Benefit Tax Paid in Advance 294.97 0.00 

8,825.00 4,278.13 

146





Rs. 

Rs. 






Sub Total (A) 9,748.03 11,935.10 

B. PROVISIONS 

Provision for Income Tax 989.39 508.19 

Provision for Fringe Benefit Tax 296.01 0.00 

Provision for Retirement Benefits 1,235.79 934.46 

Sub Total (B) 2,521.19 1,442.65 

Grand Total (A+B) 12,269.22 13,377.75 





- Add : Amount Incurred during the year 0.00 225.00 


Total 0.00 202.50 

147

Schedules annexed to and forming an integral part of Profit and Loss Account for 

the year ended March 31, 2007 


148 


Rs. 

Rs. 

10.OTHER INCOMES 

Interest 1,445.39 189.54 


(Previous Year Rs. 42.53 thousand )} 

Assets Rental Charges 1,242.04 0.00 


2,879.09 214.38 

11.PERSONNEL EXPENSES 

Salaries & Other Benefits 49,334.56 40,794.12 

Managing Director’s Remuneration 1,442.60 0.00 

Contribution to Provident Fund 1,977.43 770.26 



Staff Welfare Expenses 1,408.07 931.31 

{including payment to a Director Rs. NIL 



54,217.03 42,569.83 

12.ADMINISTRATIVE EXPENSES 

Rent 2,994.92 1,518.53 

Rates & Taxes 1,651.02 865.06 

Repairs and Maintenance 720.36 730.02 

Postage & Telephone 573.24 684.46 

Internet and Network Charges 317.95 437.29 

Electricity & Water Expenses 1,644.84 823.62 

Printing & Stationery 209.11 64.88 


Books & Periodicals 26.46 9.72 

8,264.88 5,135.87 

13.OTHER EXPENSES 


{includes Rs. 963.38 thousand for Directors’ 



Hire Charges 579.20 775.13 






Bank Interest & Charges 99.60 173.41 

Share Issue Expenses 250.32 0.00 

Preliminary Expenses written off 202.50 35.60 

Deferred Revenue Expenses Written Off 0.00 0.01 

Bad Debts / Advances Written Off 46.14 0.00 


Foreign Exchange Loss (Net) 12.75 0.00 



13,159.79 6,586.35



1. Significant Accounting Policies:- 

a) System of Accounting: - The Financial Statements are prepared on accrual basis of 

accounting and in accordance with Generally Accepted Accounting Principles and the 

provisions of the Companies Act, 1956. 

b) Use of Estimates:- The presentation of financial statements in conformity with Generally 

Accepted Accounting Principles requires estimates and assumptions to be made that affect 

the reportable amounts of assets & liabilities on the date of the financial statement and the 

reportable amount of revenue and expenses during the reporting year. Differences between 

actual results and estimates are recognised in the year in which the results are known/ 

materialised. 

c) i) Revenue Recognition:- Revenue from professional services consists of revenue earned from 

services performed for software development, sub-licensing fee, web Development & hosting, 

etc. which is recognised as and when services are performed. However, in case of 

assignments which are in process at the end of the year, the revenue is recognised using 

the percentage of completion method of accounting. 

ii) Revenue from Sales is recognised as and when delivery of the softwares/licences/sub-licences 

are made. 

d) Fixed Assets:- Fixed Assets are stated at cost which comprise purchase price, duties and any 


e) Depreciation:- Depreciation on the assets is provided on written down value method at the 

prevailing rates and in the manner as prescribed in Schedule XIV of the Companies Act, 

1956 except the cost of softwares used for licensing which is amortised on Straight Line 

Method in three years from the date of capitalisation. Depreciation is provided on pro-rata 

basis on the assets acquired, sold or disposed of during the year. Individual assets costing 

less than Rs. 5,000 are depreciated in full in the year of acquisition. Depreciation on Time 

share Sterling Holiday Resorts has been provided on the basis of duration of the rights. 

f) Employee Benefits:- Employment benefits are provided in the form of Provident Fund, 

Pension Scheme and Gratuity. Liability for employers’ contribution for Provident Fund and 

Pension Fund Scheme is provided on accrual basis. Provision for Gratuity is made on the 

basis of Actuarial Valuation Certificate as per AS-15 (revised 2005). 

g) Miscellaneous Expenditure:- Shares Issue Expenses are fully charged to the revenue during 

the year. 

h) Deferred Tax:- The Company provides for Deferred Tax Liability as per Accounting Standard 

No. 22 relating to “Accounting for Taxes on Income” issued by the Institute of Chartered 

Accountants of India. 

149

i) Foreign Currency Transaction:- Transactions in Foreign Currency are recorded at the 

exchange rate prevailing at the time of transaction. Foreign Currency assets & liabilities as 

on the Balance Sheet date are restated in the accounts on the basis of exchange rates 

prevailing at the close of the year and exchange difference arising therefrom is capitalised or 

charged to the Profit & Loss Account as the case may be. 

2. Contingent Liabilities not provided for:- 

Guarantee of Rs. 122.50 Thousand Only (Previous Year Rs. NIL) given by UTI Bank against Counter 

Guarantee of the Company to the Bank in favour of Asst. Commissioner of Customs. 

3. SME’s Disclosure:- 

Sundry Creditors do not include any amounts due to Micro, Small & Medium Enterprises (SMEs) 

within the meaning of The Micro, Small and Medium Enterprises Development Act, 2006. 

4. Shares Issue Expenses are fully amortised during the year as against the earlier practice of 

amortising the same equally over a period of ten years starting from the year in which such expenses 

are incurred. As a result of this change, shares issue expenses written off for the year are higher by 

Rs. 407.54 Thousand Only resulting in a decrease in profit to that extent. 

5. Computation of Net Profit in accordance with Section 349 of the Companies Act, 1956 

for calculation of commission payable to the Managing Director:- 



Profit before Tax 11,821.74 0.00 

Add : Managerial Remuneration 1,527.76 0.00 

Add : Directors’ Sittings Fees 9.00 0.00 

Add : Loss on Sale of Assets 495.14 0.00 

Add : Depreciation as Profit & Loss Account 7,090.81 0.00 

20,944.45 0.00 

Less : Depreciation as per Sec. 350 7,090.81 0.00 

Net Profit as per Sec. 349 of the Companies Act, 1956 13,853.64 0.00 

Commission payable to the Managing Director u/s 198 

of the Companies Act, 1956 @ 1% of the above profit 138.54 0.00 

150


6. Remuneration to Auditors:- 

151 



For services as Auditors, including quarterly audits 60.54 16.84 

For Tax Audit 8.30 3.36 

For Other Services 22.45 - 

Reimbursement of out of pocket expenses 5.00 - 

96.29 20.20 

7. Expenditure in foreign currency during the year:- 



(i) Foreign Travel 2,873.74 2,463.92 

(ii) Overseas Salary 24,198.87 10,945.54 

(iii) Brokerage & Commission 241.21 209.02 

Total 27,313.82 13,618.48 

8. Earnings in foreign exchange during the year:- 



(i) Professional & Consultancy Fees 76,983.38 54,779.57 

Total 76,983.38 54,779.57 

9. The net Deferred Tax Asset / (Liability) has been arrived at as follows: 



Depreciation (1,293.32) (1,455.45) 

Provision for Gratuity 415.97 314.54 

10. Segment Reporting:- 

(877.35) (1,140.91) 






a) Professional Services 73,318.83 64,905.52 

b) Sales 18,743.68 1,156.24 

Segment Total 92,062.51 66,061.76 


a) Professional Services Division 12,879.62 10,974.33 

b) Sales 3,292.62 195.50 


Non-Operating Income over Expenses 2,879.09 214.38 

Profit before Depreciation, Interest & Tax 19,051.33 11,384.21 

Depreciation (7,090.81) (5,141.98) 

Profit before Interest & Tax 11,960.52 6,242.23 

Interest Paid (138.78) (1,514.48) 


Provision for Taxes (513.65) (1,621.03) 

Profit after Tax 11,308.09 3,106.72

Notes to Segment Reporting:- 

a) For management purpose the Company has two reportable segments. Accordingly revenue earned through 

rendering services of Software Development and Sales & Service Charges are represented as above. 

b) Fixed assets used in the Company’s business or Liabilities contracted have not been identified to the said 

reportable segments as the fixed assets and services are used interchangeably. 

11. Earning Per Share:- 






Basic Earning Per Share (Rupees) 2.26 1.04 

12. Related Party Disclosure:- 


(Rs. in (Rs. in 

thousand) thousand) 

ICRA Management Associate NIL 0.00 0.00 

Consulting Services 

ICRA LIMITED Holding Co. Professional Fees received/receivable 265.00 0.00 

Loan Taken 0.00 2,500.00 


Rs. 2500 thousand (Previous year 

Rs. 2500 thousand)) 

Interest Paid 113.27 164.01 

Share Capital Issued 20,000.00 22,500.00 

Amount Receivable 143.10 0.00 

Amount Payable 0.00 2,500.00 

ICRA Online Associate Loan 4,200.00 0.00 

Limited 


Rs. 4200 thousand (Previous year Rs. NIL)) 

Interest received on Loan 242.42 0.00 

Professional Receipts 150.68 0.00 

Assets Rental Income 1,242.04 0.00 

Amount Receivable (Net) 8,579.66 0.00 

Mr. P.K. Guha Managing Managerial Remuneration 1,833.79 1,650.28 

Director 

13. Previous year figures have been regrouped/rearranged wherever considered necessary to make them 

comparable with those of the current year. 



Pijush Kumar Gupta (Prateep Kumar Guha) (P.K. Choudhury) 










152






State Code 21 


II. 

III. 

IV. 



Public Issue 0.00 

Right Issue 0.00 

Bonus Issue 0.00 








Reserve and Surplus 11,680.09 

Secured Loans 305.19 

Unsecured Loans 0.00 

Deferred Tax Liability (Net) 877.35 



Investments 0.00 


Misc. Expenditure 0.00 

Accumulated Losses 0.00 





Profit/Loss Before Tax 11,821.74 

Profit/Loss After Tax 11,308.09 





Item Code No. 85249904.10 


Item Code No. 


Item Code No. 


Dealing in Computer 

Software, Software 

Development, Consultancy 

and Training 


(Prateep Kumar Guha) 

(P.K. Choudhury) 


Director 





153




Increase/Decrease Increase/Decrease 




Depreciation (7,090.81) (5,141.98) 

Provision for Retirement Benefits 301.33 934.46 

(Profit) / Loss on sale of fixed assets (495.14) (546.80) 

Miscellaneous Expenditure written off 202.50 (189.40) 

Interest recd. on Loans / Deposits 1,445.39 189.54 

Non Operating Income (Other than Intt. and Dividend) 1,433.70 24.84 

Interest Paid on Loans (138.78) 5,141.98 

Previous Year Adjustments 46.71 - 



Trade & other Receivables 

Sundry Debtors 8.71 (8,230.36) 

Loans (4,226.12) (0.05) 

Advances 315.44 (123.35) 

Sundry Deposits 988.00 (225.00) 

Other Current Assets (123.78) - 


Sundry Creditors (4,390.49) 6,427.91 

Advances 1,522.90 2,308.79 

Other Liabilities 680.52 (287.21) 

Cash generated from operations 2,301.82 5,011.12 

Taxes Paid (1,624.20) (1,073.94) 

Net Cash from Operating Activities 677.62 3,937.18 




Other Income (1,433.70) (24.84) 

Net Cash used in Investing Activities 2,673.01 1,407.60 

154


Contd... 



Increase/Decrease Increase/Decrease 


Increase in Share Capital 20000.00 22500.00 

Secured Loan (316.36) (299.96) 

Unsecured Loan (2,500.00) (13,860.00) 

Interest recd. on Loans (1445.39) (189.54) 

Interest Paid on Loans 138.78 (5141.98) 

Net Cash from Financing Activities 15,877.03 3,008.52 


Cash and Cash Equivalents (Opening balance) 8,978.28 624.98 

Cash and Cash Equivalents (Closing balance) 28,205.94 8,978.28 



(Prateep Kumar Guha) 



Director 



155

An inside view of the BPO Office of ICRA Online in Kolkata 

Members of the ICRA Online team in Mumbai 

156

annual 

report 



ICRA ONLINE 

LIMITED

Mutual Fund Awards Function, Mumbai, 2007 

From left: Mr. Pradeep Gokhale and Mr. M. Venugopal 

Manghat of Tata Mutual Fund and Mr. Uday Kotak of Kotak 

Mahindra Bank 

From left: Mr. Ritesh Jain, Head–Fixed Income, Kotak AMC, 

and Mr. Frederic Amoudru, Chief Executive and Country 

Manager, BNP Paribas 

From left: Mr. N. Mohan Raj, CEO, LIC Mutual Fund, with 

Mr. D.N. Ghosh, Chairman, ICRA 

From left: Mr. Sandeep Neema, Fund Manager, JM Financial 

Asset Management, and Mr. P.K. Choudhury, Chairman, 

ICRA Online 

From left: Mr. Stephen Manallack, CEO, Australia India 

Business Council, in conversation with Mr. D.N. Ghosh, 

Chairman, ICRA 

From left: Mr. Aditya Agarwal, Joint Managing Director, ICRA 

Online, in conversation with Mr. Naresh Takkar, Managing 

Director, ICRA 

158

ANNUAL REPORT 2006-2007 • ICRA ONLINE LIMITED 


Asst. Company Secretary 


Bankers 

Mr. P. K. Choudhury, Chairman 

Mr. A.K. Basu 

Mr. R. Raghuttama Rao 

Mr. Prateep Kumar Guha 

Mr. Aditya Agarwal, Joint Managing Director 

Mr. Arvind A. Sudra 

N. M. Raiji & Co. 

E-7/14, Vasant Vihar 

New Delhi - 110 057 

Bank of India 

C.B.D. Belapur, Navi Mumbai 

ICICI Bank Limited 

Vashi, Navi Mumbai 



FMC Fortuna, A-10 & 11, 3rd Floor 

234/3A, A.J.C. Bose Road 


502 B, Wing A, Great Eastern Chambers 

Plot No. 28, Sector-XI, C.B.D. Belapur 

Navi Mumbai-400 614 

Maharashtra, India 

Tel.: +91-22-67816100 

Fax.: +91-22-27563057 

Website: www.icraonline.com 

e-mail: enquiry@icraonline.co.in 

159


To 

The Members, 


Your Directors are pleased to present the Eighth Annual Report on the business and operations of 

your Company together with the Audited Statement of Accounts for the financial year ended 

March 31, 2007. 

Financial Results 

Your Company reported significant improvement in performance during the year under review with 

Income from Operations increasing by 126.67% to Rs. 66.98 million as compared with Rs. 29.55 

million in the previous year. During the financial year 2006-07, Profit after Tax rose to Rs. 12.73 

million from Rs. 1.91 million in the previous year, an increase of 565.88%. The financial results for 

the year ended March 31, 2007 are summarised in the following table. 

Particulars 2006-07 (Rs.’000) 2005-06 (Rs.’000) 

Income from Operations 66,978.78 29,548.38 


Total Income 67,142.02 29,620.98 

Profit before Interest, Depreciation and Taxes 18,151.27 3,746.05 

Interest (783.03) (118.09) 

Depreciation (2,587.01) (1608.55) 

Profit/(Loss) before Tax 14,781.23 2,019.41 

Provision for Taxes (2,055.09) (108.22) 

Profit/(Loss) after Tax 12,726.14 1,911.19 

Taxes for Previous Years 0.00 0.00 

Prior Period Adjustments (63.36) (822.74) 

Actuarial Gain/(Loss) on Retirements Benefits (48.64) 0.00 

Profit/(Loss) brought forward from Previous Year (13,510.69) (14,599.14) 

Balance carried to Balance Sheet (896.55) (13,510.69) 

160



Chart: Trend in Revenue and Profit after Tax (PAT) 

70 

60 

50 

(in Rs. 

million) 

40 

30 

20 

10 

REVENUE 

PAT 

0 

2004-05 2005-06 2006-07 

Dividend 

The Board of Directors of your Company does not propose any dividend on Equity Shares or on the 

9% Cumulative Preference Shares for 2006-07. 


During the year under review, the performance of all Divisions of your Company improved 

significantly, in terms of both turnover and profitability. 

Information Products and Services 

The Information Products and Services Division of your Company continued to perform well and 

added a substantial number of new clients during the year under review. Your Company now caters to 

a large number of Mutual Fund Houses operating in India. The flagship product of your Company 

MFI Explorer continued to lead the market during the year under review and had over 200 clients as on 

March 31, 2007. 

Your Company is focusing on providing research reports and working on adding other value-added 

products to its existing bouquet so as to widen its product range. 

The fourth annual ICRA Mutual Fund Awards function was held in Mumbai in March 2007 and was 

attended by a host of eminent persons from the Banking and Financial Services sector. The annual 

awards are given out to the best performing Funds, with the ranking being done on the basis of a 

methodology developed jointly by ICRA Limited and your Company. This year your Company added a 

“Fund House of the Year” award both in the Equity and Debt categories. 

Software Products and Services 

This Division of your Company reported significant improvement in performance during the year under 

review and was able to obtain orders from some of the prominent players in the Mutual Funds industry. 

161


MFI Office Manager, the main product of this Division, was successfully implemented at various client 

sites during the year stated. Your Company won a prestigious assignment to implement MFI Office 

Manager from an entity belonging to a very large multinational bank during the year under review. 

The software developed by your Company for back office operations of insurance broking firms also 

did well during the year under review. Your Company launched an asset allocation and financial 

planning product, MFI Portfolio Builder, during the year. The product seeks to empower financial 

planners by providing them with a handy tool to support their advice model. 

Your Company is working on implementing best practices for software development and implementation. 

Business Process Outsourcing 

The BPO Division of your company reported a 445.85% growth in Revenues to Rs. 35.01 million in 

2006-07 as compared with the previous financial year. The growth came from the significantly higher 

number of outsourced processes managed by the Division, primarily in the area of accounting and 

finance. The BPO Division of your Company also built up significant capabilities in Information 

Technology (IT) infrastructure and process orientation while also focusing on augmenting its resource 

base with qualified professionals. Rapid growth and strong focus on managing costs translated into a 

significant improvement in the BPO Division’s operating profit metrices during the year under review. 

While attrition is a key problem faced by the Indian BPO industry, the entrepreneurial spirit of the 

entire team and a work environment that emphasises autonomy and open work culture have ensured 

that the Division maintains a retention rate that is much higher than the industry average. We believe 

the Division is well placed to be able to exploit the opportunities coming up in the BPO space and 

exhibit significant growth in the coming years. 

M-SERVE Business Solutions Pvt. Ltd. (a Joint Venture of your Company) 

Your Company holds 25,000 Equity Shares of Rs. 10 each aggregating Rs. 2,50,000/- in M-Serve 

Business Solutions Pvt. Ltd. That company did not conduct any business during the financial year 

under review. 

Future Prospects 

Your Company is very optimistic about its future performance, and it is expected that its revenues will 

grow further during the current financial year. 

You will be pleased to know that your Company is taking steps to ensure that it builds on its 

leadership positions in the various product segments it operates in. It therefore intends to come up 

with a wide range of innovative products and services, and aggressively market them in the coming 

years. Besides, your Company is keen on entering the overseas markets in a big way, leveraging the 

experience gained so far. 

Additional Information 

The additional information required in accordance with sub-section (1)(e) of Section 217 of the 

Companies Act, 1956, read with the Company (Disclosure of Particulars in the Report of the Board of 

Directors) Rules, 1988, in respect of Research and Development, Technology Absorption, 

Conservation of Energy, and Foreign Exchange Earning and Outgo is presented below: 

162



Conservation of Energy 

The operations of the company involve only low energy consumption. However, adequate measures have 

been taken to reduce energy consumption. 

Research & Development 

The Company has in-house staff for Research and Development activities. 

Technology Absorption, Adaption and Innovation 

The Company has in-house technical staff and follows the policy of absorbing any new technology 

required immediately after sourcing it for the first time. 

Foreign Exchange Earning and Outgo 

F.Y. 2006-07 F.Y. 2005-06 

Foreign Exchange Earning 32,912,100.00 2,610,190.00 

Foreign Exchange Outgo 806,720.00 41,820.00 

(Amount in Rs.) 

Registered Office of the Company 

Pursuant to the Special Resolution passed by the members of your Company at the General Meeting held 

on October 17, 2005 and further to the order of the Company Law Board dated March 14, 2006, the 

Registered Office of your Company has been shifted from the “State of Maharashtra” to the “State of 

West Bengal” with effect from April 21, 2006. 

Directors 

Pursuant to the provisions of Section 256 of the Companies Act, 1956 and the Articles of Association 

of your Company, Mr. P. K. Choudhury and Mr. R. Raghuttama Rao will retire by rotation at the 

conclusion of the Eighth Annual General Meeting, and being eligible offer themselves for reappointment. 


Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm: 

(i) that in the preparation of the Annual Accounts for the financial year ended March 31, 2007, the 

applicable Accounting Standards have been followed along with proper explanation relating to 

material departures, if any; 

(ii) that the Directors have selected such accounting policies and applied them consistently and made 

judgements and estimates that were 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 Profit and Loss of the 

Company for the year under review; 

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting 

records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of 

the Company and for preventing and detecting fraud and other irregularities; 

163


(iv) that the Directors have prepared the Annual Accounts for the financial year ended March 31, 2007 

on a “going concern” basis. 

Auditors 

M/s N. M. Raiji & Co., Chartered Accountants, the Auditors of your Company, will retire at the 

conclusion of the forthcoming Annual General Meeting. However, as they have expressed their 

unwillingness to continue, it is proposed that M/s Pijush Gupta & Co., Chartered Accountants, be 

appointed the new Auditors of your Company. 


The notes to the accounts referred to in the Auditor’s Report are self explanatory and therefore, 

do not call for any further comments on the Auditors’ Report under Section 217(3) of the Companies 

Act, 1956. 

Deposit 

Your Company has not accepted any Deposits from the public during the year under review. 


There is no employee whose detail is required to be furnished in terms of sub-section (2A) of Section 

217 of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975. 


The Directors place on record their appreciation of the support and co-operation of ICRA Limited, 

Bankers of your Company, suppliers and customers, who have continued to support the operations of 

your Company in various ways. 

The Directors appreciate the services rendered by employees at all levels of your Company. 

Last but not the least, your Directors deeply acknowledge the continued trust and confidence you 

have placed in the Company. 

For and on behalf of the Board of Directors 

Place : Navi Mumbai 


P.K. Choudhury 

Chairman 

164



To 

The Members of the ICRA Online Limited 

1. We have audited the attached Balance Sheet of ICRA Online Limited, as at March 31, 2007 

and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that 

date annexed thereto. These financial statements are the responsibility of the Company’s 

management. Our responsibility is to express an opinion on these financial statements based on 

our audit. 


standards require that we plan and perform the audit to obtain reasonable assurance about 

whether the financial statements are free of material misstatements. An audit includes examining, 





3. As required by the Companies (Auditor’s Report) (Amendment) Order, 2004 issued by the 

Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 

1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of 

the said order. 

4. Further to our comments in the Annexure referred to above, we report that: 

(i) 

We have obtained all the information and explanations, which to the best of our knowledge 

and belief were necessary for the purpose of our audit; 

(ii) In our opinion, proper books of account as required by law have been kept by the Company 

so far as appears from our examination of those books; 

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report 

are in agreement with the books of accounts; 

(iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with 

by this report comply with the accounting standards referred to in sub-section (3C) of section 

211 of the Companies Act, 1956; 

(v) On the basis of the written representation received from the Directors as on March 31, 2007 

and taken on record by the Board of Directors, we report that none of the Directors is 

disqualified as on March 31, 2007 from being appointed as a director in terms of Clause (g) 

of sub-section (1) of Section 274 of the Companies Act, 1956; 

165


(vi) In our opinion and to the best of our information and according to the explanations given to us, 

the said accounts give the information required by the Companies Act, 1956, in the manner so 



(a) In case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2007; 

(b) In case of Profit and Loss Account, of the Profit for the year ended on that date; and 

(c) In the case of Cash Flow Statement, of the Cash Flows for the year ended on that date. 

For N.M. Raiji & Co. 



Date: May 12, 2007 

(S.N. Shivakumar) 

Partner 

M. No.: 88113 

166


Annexures to the Auditors’ Report 

Annexure referred to in the Auditors’ Report to the Members of 


Companies (Auditor’s Report) (Amendment) Order, 2004 

i) (a) The Company has maintained proper records showing full particulars including quantitative 


(b) 

(c) 

A major portion of fixed assets has been physically verified by the management during the year. 

In our opinion, the frequency of verification of the fixed assets by the management is reasonable 

having regard to the size of the Company and the nature of its assets. No material discrepancies 

were noticed during such verification. 

During the year Data Processing Equipment costing Rs. 21,26,682 (WDV Rs.1,30,730) and 

Furniture and Fixtures costing Rs. 29,400 (WDV Rs. NIL) have been sold. There is no effect on 

going concern assumption. 

ii) 

iii) (a) 

(b) 

(c) 

(d) 

(e) 

iv) 

Clauses (ii) (a) to (ii) (c) of paragraph 4 of the Order are not applicable to the company. 

During the year, the company has not granted any fresh loans, secured or unsecured, to 

companies, firms or other parties covered in the register maintained under section 301 of the 

Companies Act, 1956; and 

Since company has not granted any fresh loans, secured or unsecured, to companies, firms 

or other parties covered in the register maintained under section 301 of the Companies Act, 

1956 during the year & accordingly, clauses (iii) (b) to (iii) (d) of paragraph 4 of the Order 

are not applicable to the company for the current year; and 

During the year company has taken unsecured loan of Rs. 40 lakh from M/s ICRA Limited and 

Rs. 42 lakh from ICRA Techno Analytics Limited repayable within the maximum period of 36 

months at 11.25% p.a. compounded every quarter of the financial year; and 

The rate of interest and other terms and conditions of loan taken by the company are not 

prejudicial to the interest of the company; and 

The company is paying interest on the amount of loan regularly. 

There is an adequate internal control procedure commensurate with the size of the Company 

and the nature of the business, with regard to purchase of fixed assets and for the sale of 

services. Further, on the basis of our examination of the books and records of the company, 

and according to the information and explanations given to us, we have neither come across 

nor have been informed of any continuing failure to correct major weakness in the aforesaid 

internal control procedures. 

v) In our opinion and according to the information and explanations given to us, there are no 

contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need 

to be entered in the register required to be maintained under that Section. Accordingly, clause 

(v) (b) of paragraph 4 of the order is not applicable. 

vi) 

The Company has not accepted any deposits from the public. Accordingly, clause (vi) of 

paragraph 4 of the Order is not applicable. 

167


vii) 

viii) 

ix) (a) 

(b) 

In our opinion, the company has an internal audit system commensurate with its size and nature 

of its business. 

Clause (viii) of paragraph 4 of the Order is not applicable to the company. 

According to the information and explanations given to us and the records of the Company 

examined by us, in our opinion, the Company is regular in depositing the undisputed 

statutory dues including provident fund, investor education and protection fund, income tax, 

sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory 

dues as applicable with the appropriate authorities. There are no outstanding dues in respect 

of the above items that are more than six months as at the balance sheet date. 

According to the information and explanations given to us and the records of the Company 

examined by us, there is no amount pending on account of dues of sales tax, income tax, 

excise duty and cess as at 31st March, 2007 which have not been deposited on account of a 

dispute. 

x) The accumulated losses of the company as at 31st March, 2007 are not more than 50% of 

its net worth i.e. share capital and reserves. 

xi) 

xii) 

xiii) 

xiv) 

xv) 

xvi) 

xvii) 

xviii) 

According to the books of account and records of the company examined by us and the 

information and explanations given to us, the company has not defaulted in repayment of 

dues to any financial institution or bank or debenture holders during the year. 

Based on our examination and according to the information and explanations given to us, 

the Company has not granted any loans and advances on the basis of security by way of 

pledge of share, debentures and other securities. 

The provisions of any special statue applicable to chit fund/nidhi/mutual benefit fund/ 

societies are not applicable to the company. Accordingly, clause (xiii) of paragraph 4 of the 

Order is not applicable. 

The company is not a dealer or trader in shares, securities, debentures and other investments. 

Accordingly, clause (xiv) of paragraph 4 of the Order is not applicable. 

In our opinion and according to the information and explanations given to us the Company 

has not given any guarantee for loans taken by others from bank or financial institutions 

during the year. 

In our opinion, and according to the information and explanations given to us, on an overall 

basis, the terms loan have been applied for the purposes for which obtained. 

On the basis of an overall examination of the balance sheet of the company, in our opinion and 

according to the information and explanations given to us, there are no funds raised on a short 

term basis which have been used for long term investment, and vice versa. 

The company has not made any preferential allotment of shares to parties and companies 

covered in the register maintained under section 301 of the Companies Act, 1956 during the 

year and therefore clause (xviii) of paragraph 4 of the Order is not applicable to the company 

for the current year. 

168



xix) 

xx) 

xxi) 

The company has not issued any debentures during the year and therefore clause (xix) of 

paragraph 4 of the Order is not applicable to the company for the current year. 

The company has not raised any money by public issue during the year therefore clause (xx) 

of paragraph 4 of the Order is not applicable to the company for the current year. 

During the course of our examination of the books of account and records of the company, 

carried out in accordance with the generally accepted auditing practices in India, to the best 

of our knowledge and belief and according to the information and explanations given to us, 

we have neither come across any instance of fraud on or by the company, noticed or 

reported during the year nor have we been informed of such case by the management. 

For N.M. Raiji & Co. 



(S.N. Shivakumar) 

Date: May 12, 2007 Partner 

M. No.:88113 

169

Balance Sheet 





Rs. 

Rs. 




(b) Reserves and Surplus (2) 2,339.47 2,339.47 

27,558.34 27,558.34 


- Unsecured Loans 10,000.00 1,800.00 

iii) Deferred Tax Liability (Net) 893.32 0.00 

Total 38,451.66 29,358.34 



(a) Gross Block 18,463.46 12,394.38 

(b) Less: Depreciation 9,968.92 9,407.26 

Net Block 8,494.54 2,987.12 

Capital Work in Progress 0.00 673.85 

8,494.54 3,660.97 

ii) Investments (4) 250.00 250.00 





(d) Loans & Advances (8) 6,343.43 2,581.70 

44,746.90 16,412.50 


(a) Liabilities 16,710.87 7,062.42 

(b) Provisions 1,918.88 539.20 

18,629.75 7,601.62 


iv) Miscellaneous Expenditure (10) 2,693.42 3,125.80 


v) Profit & Loss Account 896.55 13,510.69 

Total 38,451.66 29,358.34 





for N. M. Raiji & Co., 


(S. N. Shivakumar) (Aditya Agarwal) (P. K. Choudhury) 

Designation : Partner Jt. MANAGING DIRECTOR CHAIRMAN 

M. No.: 88113 


( Arvind A. Sudra) 


Asst. COMPANY SECRETARY 

170






No. Rs. Rs. 

INCOME 




Sales & Services Charges 4,152.34 4,577.15 


Other Incomes (11) 163.24 72.60 

67,142.02 29,620.98 

EXPENDITURE 




48,990.75 25,874.93 


Depreciation (2,587.01) (1,608.55) 


Interest Paid (783.03) (118.09) 


Income Tax (980.10) 0.00 

Deferred Tax (893.32) 0.00 

Fringe Benefit Tax (181.67) (108.22) 


Prior Period Adjustments (63.36) (822.74) 

Actuarial Gain / (Loss) on Retirement Benefits (48.64) 0.00 

Balance Brought Forward from Last Year (13,510.69) (14,599.14) 

PROFIT AVAILABLE FOR APPROPRIATIONS (896.55) (13,510.69) 


Balance Carried to Balance Sheet (896.55) (13,510.69) 

(896.55) (13,510.69) 







(S.N. Shivakumar) (Aditya Agarwal) (P. K. Choudhury) 


M. No.: 88113 



(Arvind A. Sudra) 


171






Rs. 

Rs. 


AUTHORISED 

22,50,000 Equity Shares of Rs. 10 each 

(Previous Year 22,50,000) 22,500.00 22,500.00 

3,50,000 9% Redeemable Preference Shares of Rs. 10 each 

(Previous Year 3,50,000) 3,500.00 3,500.00 


22,17,558 Equity Shares of Rs. 10 each fully paid up 

held by the Holding Company (Previous Year 22,17,558, held 

by the Holding Company 22,03,587) 22,175.58 22,175.58 

3,04,329 9% Redeemable Preference Shares of Rs.10 each 



Share Premium Account 2,339.47 2,339.47 

2,339.47 2,339.47 

172








1 Data Processing 5,886.29 2,423.73 (2,126.68) 6,183.34 4,450.45 983.72 (1,995.95) 3,438.22 2,745.12 1,435.84 

Equipment 

2 Intangible Assets - 4,470.44 4,899.04 0.00 9,369.48 3,565.77 1,153.44 0.00 4,719.21 4,650.27 904.67 

Softwares 

3 Furniture & Fixtures 1,321.20 609.94 (29.40) 1,901.74 1,121.17 349.42 (29.40) 1,441.19 460.55 200.03 

4 Office Equipment 409.21 257.17 0.00 666.38 154.60 71.93 0.00 226.53 439.85 254.61 

5 Air Conditioners 305.59 35.28 0.00 340.87 113.62 28.50 0.00 142.12 198.75 191.97 

6 Vehicles 1.65 0.00 0.00 1.65 1.65 0.00 0.00 1.65 0.00 0.00 

Total 12,394.38 8,225.16 (2,156.08) 18,463.46 9,407.26 2,587.01 (2,025.35) 9,968.92 8,494.54 2,987.12 

Capital Work in 673.85 (673.85) 0.00 0.00 0.00 

Progress 

Grand Total 13,068.23 8,225.16 (2,829.93) 18,463.46 9,407.26 2,587.01 (2,025.35) 9,968.92 8,494.54 2,987.12 

Previous Year ending 11,019.57 1,374.81 0.00 12,394.38 6,975.97 1,608.55 822.74 9,407.26 2,987.12 

March 31, 2006 

173



Non-Trade Investments - at cost (Long Term) 





1) Quoted & fully paid up in 

a. Shares 

0 0.00 0.00 0.00 0.00 

b. Taxable Bonds 0 0.00 0.00 0.00 0.00 

c. Mutual Funds 0 0.00 0.00 0.00 0.00 

Sub Total (1) 0.00 0.00 

Aggregate Market Value of Quoted Investments 0.00 0.00 

2) Unquoted & fully paid up in 

a. Shares 

i M-Serve Business Solution Pvt. Ltd. 10 25,000.00 25,000.00 250.00 250.00 

b. Taxable Bonds (Capital Gain 0 0.00 0.00 0.00 0.00 

Exemption Schemes) 

c. Taxfree Bonds 0 0.00 0.00 0.00 0.00 

250.00 250.00 

Less:- Provision for Diminution in 0 0 0 0.00 0.00 

Value of Investments 

Sub Total (2) 250.00 250.00 

Grand Total (1+2) 250.00 250.00 

174





Rs. 

Rs. 



- Unsecured 


- Considered Doubtful 0.00 579.49 

9,685.20 3,536.54 

Others 

- Unsecured 


28,384.83 12,848.42 

Less Provision for Doubtful Debts 0.00 (579.49) 

{Exclusive of Service Tax} 

of Rs. NIL (Previous Year Rs. NIL)} 28,384.83 12,268.93 


Cash in Hand 95.96 29.68 





- With Scheduled Banks 5,997.33 500.00 

10,018.64 1,561.87 


0.00 0.00 

0.00 0.00 


Loans to Staff (Secured Considered Good) 1,141.09 91.40 

{Includes Rs. 984 thousand due from a Director 

(Previous Year Rs. NIL) Maximum Balance during 

the year Rs. 1000 thousand (Previous Year Rs. NIL)} 

Advances Recoverable in cash or 

in kind or for value to be received 

- Unsecured, Considered Good 466.95 204.93 


- Unsecured, Considered Good 1,435.40 326.10 


{(Includes Rs. 2983.77 thousand for TDS 


Fringe Benefit Tax Paid in Advance 166.55 0.00 

6,343.43 2,581.70 

175




Rs. 

Rs. 






Sub Total (A) 16,710.87 7,062.42 

B. PROVISIONS 

Provision for Income Tax 980.10 0.00 

Provision for Fringe Benefit Tax 181.67 4.51 


Sub Total (B) 1,918.88 539.20 

Grand Total (A+B) 18,629.75 7,601.62 






Sub Total (A) 1.19 1.78 

B. Deferred Revenue Expenditure 



Sub Total (B) 2,692.23 3,124.02 

Grand Total (A+B) 2,693.42 3,125.80 

176



Interest 149.20 28.09 




Interest on Staff Loans 3.33 0.00 

Foreign Exchange Gain 1.31 0.00 


163.24 72.60 


Salaries & Allowances 26,293.56 15,849.74 

Managing Director’s Remuneration 1,873.21 1,139.83 

Contribution to Provident Fund 871.30 98.19 




{including payment to a Director Rs. 2.03 thousand 



Recruitment Expenses 69.13 0.00 

32,190.30 18,117.56 


Rent 2,553.78 354.03 

Rates & Taxes 15.00 5.00 

Repairs and Maintenance 2,088.22 115.70 

Postage & Telephone 904.37 511.91 

Internet and Network Charges 1,912.64 829.38 

Electricity & Water Expenses 1,192.63 287.25 

Printing & Stationery 429.89 112.43 


Books & Periodicals 23.98 15.67 

9,261.59 2,253.13 



{includes Rs. 525.31 thousand for Directors’ 








Bank Interest & Charges 28.27 22.62 

Technical Knowhow Fees 708.96 0.00 

Preliminary Expenses Written Off 0.59 0.59 

Deferred Revenue Expenses Written Off 384.70 391.83 

Bad Debts / Advances Written Off 929.92 198.90 

Provision for Doubtful Debts (579.49) 0.00 


Foreign Exchange Loss 386.92 15.83 

Provision for Royalty 0.00 538.63 



7,538.86 5,504.24 

177 

Schedules Annexed to and forming an integral part of 




Rs. 

Rs.


1 Significant Accounting Policies:- 


and in accordance with Generally Accepted Accounting Principles and the provisions of the 


b) i) Revenue Recognition: - Revenue from professional services consists of revenue earned 

from services performed for software development, Licencing fee, web Development & 

hosting, etc. which is recognised as and when services are performed. However, in case of 

assignments which are in process at the end of the year, the revenue is recognised using 

the percentage of completion method of accounting. Unbilled revenue is included in 

debtors which represents amounts recognised based on services performed in advance of 

billings, in accordance with contract terms. 

ii) Revenue from Content Sales and Service Charges variable Licence Fees are recognised over 

the period in which such services are rendered. 

iii) Income from Information Services is recognised in the year in which such assignments are 

carried out. 

iv) Income from BPO Services are recognised in the year in which such assignments are 

carried out. 

v) The income, if any, from Investment in shares/units is accounted for in the year in which it 

is declared. 

c) Fixed Assets: - Fixed Assets are stated at cost which comprises of purchase price, duties and 

any directly attributable cost of bringing the asset to its working condition for intended use. 

d) Depreciation: - Depreciation on the assets is provided on written down value method at 

the prevailing rates and in the manner as prescribed in Schedule XIV of the Companies 

Act, 1956 except the cost of softwares used for licensing which is amortised on Straight 

Line Method in three years from the date of capitalisation. Depreciation is provided on 

pro-rata basis on the assets acquired, sold or disposed of during the year. Individual assets 

costing less than Rs. 5,000 are depreciated in full in the year of acquisition. 

e) Investments: - Investments are stated at lower of Cost and Fair Market Value. Provision for 



f) Retirement Benefits: - Retirement benefits are provided in the form of Provident Fund, Pension 

Scheme, Gratuity and Leave Encashment. At present, contributions to Provident Fund and 

Pension Fund are being deposited with the Provident Fund Department. Provisions for 

Gratuity and Provision for Leave Encashment are made in the accounts on actuarial 

valuation basis. 

g) Miscellaneous Expenditure: - Preliminary Expenses are amortised equally over a period of 

ten years starting from the year in which such expenses are incurred. 

h) Deferred Tax:- The Company has provided Deferred Tax Liability as per Accounting 

Standard No. 22 relating to “Accounting for Taxes on Income” issued by the Institute of 

Chartered Accountants of India. 

i) Foreign Currency Transactions:- Transactions in foreign currencies are accounted for at the 

prevailing exchange rates on the date of the transaction. The gains or losses arising out of 

subsequent fluctuations are accounted for on the date of Balance Sheet and on actual 

payments/realisations. 


Contingent Liability on account of claims against the company not acknowledged as debt by the 

company for Rs. NIL (Previous Year Rs. NIL). 

178


3 Deferred Tax:- Deferred Tax Liability is recognised for the tax losses and depreciation allowances carried 

forward to the extent that realisation to related tax benefit through future taxable profits is probable based on 

management estimates. As a matter of prudence the Company has recognised Deferred Tax Liability to the 

extent of Rs. 8,93,323 transferred to the debit of Profit & Loss Account. 

4 Gratuity and leave valuation for the period has been made on the basis of actuarial valuation as per revised 

AS-15 and separate valuation certification obtained from the actuary on March 31, 2007. 

5 An amount of Rs. 51,762.57 is included in Loss on Sale of Assets but the asset was lost due to theft. 

6 Dividend on Redeemable preference share:- Because of insufficient profit, provision for preference dividend 

has not been made. 




Jt. Managing Director: 

Salary 1,428.01 1,139.83 

Commission 326.20 0.00 


Leave encashment 119.00 0.00 

1,968.25 1,139.83 

8 Computation of Net Profit in accordance with section 349 of the Companies Act, 1956 for 

calculation of commission payable to the Jt. Managing Director:- 




Add: Managerial Remuneration & Perquisites 1,968.25 1,139.83 

Add: Directors’ Sitting Fees 21.00 9.00 

Add: Loss on Sale of Assets 128.32 0.00 

Add: Provision for doubtful debts (Net) (579.49) 0.00 

Add: Depreciation as per P&L A/c. 2,587.01 1,608.55 

18,906.32 4,776.79 

Less: Depreciation as per sec. 350 of the Companies Act, 1956 (2,587.01) (1,608.55) 

Less: Profit on Sale/Disposal of Assets (9.40) 0.00 

Net Profit as per sec. 349 of the Companies Act, 1956 16,309.91 3,168.25 

Commission Payable to the Jt. Managing Director u/s 198 of the 

Companies Act, 1956 @2% of the above profit 326.20 63.36 



Branch Auditors 

Particulars 2006-07 2005-06 2006-07 

(Rs. in thousand) (Rs. in thousand) (Rs. in thousand) 

Audit Fees 59.99 29.59 0.00 

Tax Audit Fees 0.60 11.22 0.00 

Out of Pocket Expenses 176.86 77.13 0.00 

Total 237.45 117.95 0.00 

179




(i) Technical Knowhow 708.96 0.00 

(ii) Foreign Travel 97.76 41.82 

Total 806.72 41.82 




(i) Others 32,912.10 2,610.19 

Total 32,912.10 2,610.19 


180 






a) Information Services 15,231.40 10,584.74 

b) B.P.O. Services 35,014.96 6,414.70 

c) Professional Services 12,580.08 7,971.79 

d) Sales & Service Charges 4,152.34 4,577.15 

Segment Total 66,978.78 29,548.38 


a) Information Services Division 6,506.07 2,737.75 

b) B.P.O. Services Division 10,951.43 963.29 

c) Professional Services Division (725.55) (2,384.69) 

d) Sales & Service Charges 1,256.08 2,357.04 


Non-Operating Income over Expenses 163.24 72.66 

Profit before Depreciation, Interest & Tax 18,151.27 3,746.05 

Depreciation (2,587.01) (1,608.55) 

Profit before Interest & Tax 15,564.26 2,137.50 

Interest Paid (783.03) (118.09) 


Provision for Taxes (2,055.09) (108.22) 


Notes to Segment Reporting:- 

a) For management purpose the Company has four reportable segments. Accordingly revenue earned 

through (a) Rendering services of Information, (b) BPO Services, (c) Professional Services and (d) Sales & 

Service Charges are represented as above. 

b) Fixed assets used in the Company’s business or Liabilities contracted have not been identified to the said 

reportable segments as the fixed assets and services are used interchangeably.








Basic Earning Per Share 5.74 0.86 

14 Related Party Disclosure 




Consulting 

Services Limited Associate Professional Services Used 123.54 0.00 

Sales & Service Charges 0.00 20.00 

Net Amount Payable 174.99 0 

ICRA Techno Analytics Associate Loan Taken 4200.00 0.00 

Limited (Formerly 

(Maximum loan amount 

M/s Computer during the year Rs. 4200 

Exchange 

thousand (Previous Year Rs. NIL)) 

Private Limited) 


Professional Services Used 150.68 0.00 

Equipment Hiring Charges Paid 1242.04 0.00 

Net Amount Payable 8579.66 0.00 

ICRA Limited Holding Company Professional Services Rendered 0.00 291.00 

BPO Services Rendered 599.91 3804.51 

Information Services Rendered 0.00 240.00 

Loan Taken 5,800.00 1800.00 

(Maximum loan amount during 

the year Rs. 5800 thousand 

(Previous Year Rs. 1800 thousand)) 

Information Services Receivable 323.40 0.00 


Deferred Revenue Expenses 384.71 391.83 

Professional Services Used 0.00 1500.25 

Royalty Paid 0.00 538.63 

Net Amount Payable 5,827.01 3730.61 

Mr. Aditya Agarwal Jt. Managing Director Remuneration Paid 1,968.25 1,139.83 

Loan Given 984.00 0.00 

(Maximum loan amount 

during the year 

Rs. 1000 thousand 

(Previous Year Rs. NIL)) 


16 Previous year figures have been regrouped/rearranged wherever considered necessary to make them 

comparable with those of the current year. 





181 

(S. N. Shivakumar) (Aditya Agarwal) (P.K. Choudhury) 


M.No.: 88113 




Asst. COMPANY SECRETARY

Statement Pursuant to Part IV of Schedule VI of the Companies Act, 1956 




State Code 21 


II. 

III. 



Public Issue 0.00 

Right Issue 0.00 

Bonus Issue 0.00 

Private Placement 0.00 







Reserve & Surplus 2,339.47 

Secured Loans 0.00 

Unsecured Loans 10,000.00 



Investments 250.00 


Misc. Expenditure 2,693.42 

Accumulated Losses 896.55 

IV. 





Profit/Loss before Tax 14,781.23 

Profit/Loss after Tax 12,726.14 





Item Code No. 




Item Code No. 85249113 


Software Services 

Item Code No. 



BPO Services 


(Aditya Agarwal) 

Jt. MANAGING DIRECTOR 


CHAIRMAN 





182







Profit before Tax 14781.23 2019.41 


Depreciation 2587.01 1608.55 


(Profit) / Loss on sale of fixed assets 118.92 0.00 

Miscellaneous Expenditure written off 432.38 432.38 

Non-Operating Income (Other than Intt. and Dividend) (153.84) (72.60) 

Interest Paid on Loans 783.03 118.09 

Previous Year Adjustments (63.36) 0.00 

Actuarial Gain on Retirement Benefits (48.64) 0.00 

Operating Profit before Working Capital changes 18659.15 4388.18 



Sundry Debtors (16115.90) (7148.12) 

Loans (1049.69) (42.25) 

Advances (262.02) 183.01 

Sundry Deposits (1109.30) (127.10) 


Sundry Creditors 4173.31 (432.13) 

Advances 1746.17 893.28 

Other Liabilities 3728.97 1775.67 

Cash generated from operations 9770.69 (509.46) 

Taxes Paid (1345.23) (1047.87) 

Net Cash from Operating Activities 8425.46 (1557.33) 


Purchase of Fixed Assets (8225.16) (2048.66) 

Sale of Fixed Assets 685.66 0.00 


Net Cash used in Investing Activities (7385.66) (1976.06) 

183

Contd... 



Unsecured Loan 8200.00 1800.00 

Interest Paid on Loans (783.03) (118.09) 

Net Cash from Financing Activities 7416.97 1681.91 

Net Increase/(decrease) in Cash and Cash Equivalents 8456.77 (1851.48) 

Cash and Cash Equivalents (Opening balance) 1561.87 3413.35 

Cash and Cash Equivalents (Closing balance) 10018.64 1561.87 

Net Increase/(decrease) in Cash and Cash Equivalents 8456.77 (1851.48) 





(S. N. Shivakumar) (Aditya Agarwal) (P.K. Choudhury) 

Designation: Partner Jt. MANAGING DIRECTOR CHAIRMAN 

M. No.: 88113 





184

ICRA LIMITED 

REGISTERED OFFICE 

1105, 11th Floor, 

Kailash Building, 

26, Kasturba Gandhi Marg, 


Tel.: (91-11) 23357940-50 

Fax: (91-11) 23357014 

CORPORATE OFFICE 

Building No. 8, 2nd Floor, Tower A, 

DLF Cyber City, Phase II, 


India 

Tel.: (91-124) 4545300 

Fax: (91-124) 4545350 

E-mail: info@icraindia.com 

OTHER OFFICES 

Mumbai 

Electric Mansion, 3rd Floor, 

Appasaheb Marathe Marg, Prabhadevi, 

Mumbai 400025 

Tel.: (91-22) 24331046/53/62/74/86/87, 24362044, 24329109 

Fax: (91-22) 24331390 

Chennai 

Karumuttu Centre, 5th Floor, 

634, Anna Salai, Nandanam, 

Chennai 600035 

Tel.: (91-44) 24340043/9659/8080/24330724/3293/3294 

Fax: (91-44) 24343663 

Kolkata 

FMC Fortuna, A-10 & 11, 3rd Floor, 

234/3A, A.J.C. Bose Road, 

Kolkata 700020 

Tel.: (91-33) 22876617/8839, 22800008 

Fax: (91-33) 22870728 

Bangalore 

Vayudooth Chambers, 2nd Floor, Trinity Circle, 

15-16 M.G. Road, 

Bangalore 560001 

Tel.: (91-80) 25597401/4049/25327803 

Fax: (91-80) 25594065 

Ahmedabad 

907-908, Sakar II, 

Ellisbridge, Opp. Town Hall, 

Ahmedabad 380006 

Tel.: (91-79) 26585049, 26582008/5494 

Fax: (91-79) 26584924 

Hyderabad 

301, CONCOURSE, 3rd Floor, 

No. 7-1-58, Ameerpet, 

Hyderabad 500016 

Tel.: (91-40) 23735061/23737251 

Fax: (91-40) 23735152 

Pune 

5A, 5th Floor, Symphony, 

S.No. 210, CTS 3202, 

Range Hills Road, Shivajinagar, 

Pune 411020 

Tel.: (91-20) 25520194-96 

Fax: (91-20) 25539231 

Roots Advertising Services Pvt. Ltd.

Annual Report 2006-07 - ICRA

Create successful ePaper yourself

Delete template?

Save as template?