Corporate India well positioned to weather any slowdown

An analysis of CRISIL's rating trends indicates that the credit quality of CRISIL-rated corporates is stronger than it has been at any time in the recent past. This bears out the predictions made in CRISIL's October 2004 Ratings Round Up. An improvement in credit quality has been witnessed across all sectors covered by CRISIL.

The analysis also indicates a sustainable improvement in the balance sheets of CRISIL-rated companies, and predicts a continuation of strengthened credit quality over the medium term. Although high oil prices or a slowdown in global economy might lead to deceleration in growth, CRISIL expects the strong credit quality of Indian corporate to hold through the medium term.

MCR at all-time high with improving corporate credit
CRISIL's modified credit ratio (MCR) is defined as the ratio of upgrades plus reaffirmations to downgrades plus reaffirmations. Given that CRISIL's rating portfolio encompasses all the key sectors of the Indian economy, and includes most of the top players in each segment, CRISIL's MCR is a reliable indicator of systemic credit quality trends, and a measure of underlying business fundamentals. In FY05 (April 2004 to March 2005), CRISIL's annual MCR for long-term ratings hit an all-time high of 1.16, passing the previous high of 1.06 recorded in FY95. This improvement reflects 26 upgrades and 2 downgrades in CRISIL's long-term ratings portfolio in FY05. (See table at the end)