Financial management

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Lakshmi

Student

1380 Points Posted on 17 July 2010

Public issue of debentures and pvt placement to mutual funds now require that the issue be rated by a credit rating agency like CRISIL (Credit Rating and Information Services of India Ltd.). The credit rating is given after evaluating factors like track record of the company profitability, debt servicing capacity, credit worthiness and the perceived risk of lending.

So my question is if the company is newly formed then how the CRISIL will issue the rate as the newly formed company won't have the track record ? How the rate will be issued ?

Pls help me to find the answer

Thank you

Replies (3)

Sunil Liladhar Kotak

Manager (F & A)

1303 Points Posted on 17 July 2010

Dear Lakshmi,

The rating also has lot to do with the type of management the company has.

Each every factor might be having a particular weightage & based on that the rating couls be issued. However in case some of factors are missing like the previous track record then the rating will get negatively affected to that extent

I do not know much of this. but this is what i presume the picture couls be.

Lakshmi

Student

1380 Points Posted on 18 July 2010

Thank you sir for ur response

CA Shiv

Business Controller

2693 Points Posted on 19 July 2010

IT depends on the factors like the financial stength, Directors, MD etc. Also they can see many ratios like debt equity, loans, Current and Quick ratio etc. So for the first 2-3 years it is difficult to predict the rating on the past records....