India Ratings has entered into a memorandum of understanding with the National Small Industries Corporation (NSIC), the nodal agency for rating of Micro & Small Enterprises (MSEs). Recognising the importance of MSEs to the Indian economy, Ind-Ra intends to extend the benefits of its expertise to the MSE sector.
Ind-Ra rates MSEs on a separate scale suited to the special requirements of the sector. The MSEs can use the rating for their various needs, including working capital bank loans and term loans. The MSE rating is irrespective of the tenor of the loan and is an entity rating.
The exercise involves a detailed business and financial analysis,besides management discussion.
Benefits Of Rating For MSEs
Enhanced acceptability with investors: Ind-Ra is recognised by statutory bodies such as RBI, SEBI and the National Housing Bank. A number of banks offer interest rate concessions based on the MSE ratings, thereby offering a scope for cheaper credit.
Increased visibility with business partners: Given its strong domestic and global market presence, Ind-Ra (a Fitch Group Company) is relied upon by various business organisations for the evaluation of their suppliers or customers.
Ind-Ra is part of Fitch Group, which rates entities in more than 90 countries. A credit view from the agency is sought by global investors as also large organisations which may be your customers and suppliers.
Scope for improvement: The rating is also a comparative exercise which evaluates the relative ranking of the entity across industries. This covers important risk factors and concern/areas for improvement for the rated entities, thus providing a valuable third-party feedback.
Benefits For Banks
It is an independent third-party opinion.
It entails no cost to banks and a marginal cost to their customers (a substantial part of the fee comes from NSIC through a subsidy for first time rating).
It helps benchmark the internal credit practices of a bank.
It facilitates a lending decision in terms of quantum of loan, price, margin, security.
Benefits For Large Corporates
- Evaluation of vendors/dealers would aid corporates in suitable vendor selection/risk management policies.
- Availability of cheaper credit for vendors would reduce their input costs.
For MSE Sector
- MSE rating will improve credit flow, transparency, discipline and best practices in the sector.
Rating Process (For Registered MSEs)
To get your entity rated, download the application form and send the completed form along with the payment and preliminary information/documents as indicated. Ind-Ra may ask for additional information, if required, during the course of the rating process.
The rating process is expected to be completed in four weeks from the date of submission of complete information. Please click here to download the application form.
Rating Scale Of MSEs On Performance And Credit Parameters Under The Performance & Credit Rating Scheme
|IND MSE 1||Highest credit worthiness in relation to other MSEs|
|IND MSE 2||High credit worthiness in relation to other MSEs|
|IND MSE 3||Good credit worthiness in relation to other MSEs|
|IND MSE 4||Above average credit worthiness in relation to other MSEs|
|IND MSE 5||Average credit worthiness in relation to other MSEs|
|IND MSE 6||Below Average credit worthiness in relation to other MSEs|
|IND MSE 7||Weak credit worthiness in relation to other MSEs|
|IND MSE 8||Poor credit worthiness in relation to other MSEs|
Financial Strength To Be Indicated By The Following
- Above average
- Below average
Operating Performance To Be Indicated By
Rating Scale For SMEs Not Falling In The Purview Of The PCRS Is Given Below:
India SME Rating Definition SME 1 Highest SME 2 High SME 3 Above Average SME 4 Average SME 5 Below Average SME 6 Inadequate SME 7 Poor SME 8 Default
|India SME Rating||Definition|
|SME 3||Above Average|
|SME 5||Below Average|
Rating Fees For MSEs
For registered MSEs, Ind-Ra’s fee schedule is as follows:
|Turnover (Rs. Lakh)|
|100 – Upto 200||Above 200|
|Rating Fees (INR)||40,000||53,334|
|Subsidy from NSIC (INR)||30,000||40,000|
The subsidy is given by the Ministry of MSME through NSIC, the coordinating agency for this scheme.
For clarifications/details on any aspect of ratings, please get in touch with any of Ind-Ra's offices.