Highly Confidential | All Rights Reserved © SMERA Ratings Limited SMERA Ratings Limited Helping Participants of Financial Markets Understand Risk Better
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Highly Confidential | All Rights Reserved © SMERA Ratings Limited
SMERA Ratings Limited Helping Participants of Financial Markets Understand Risk Better
Flow of the presentation
Who We Are?
What can SMERA Ratings do for MSMEs?
Why credit rating of MSMEs?
Impact of MSME Rating
Introduction to Vendor Grading
Highly Confidential | All Rights Reserved © SMERA Ratings Limited
SMERA - World’s First MSME Focused Rating Agency
An initiative of Ministry of Finance, began operations in 2005
Promoted by Institutions: Enjoys the backing of Dun & Bradstreet, SIDBI and 10 Public & Private Sector Banks including ICICI Bank, State Bank of India and Standard Chartered Bank
Pioneered the concept of SME Ratings in India that covers more than 1.5 lakh SMEs Completed 41,832 ratings till date
Technical Assistance of Rs 10.54 Cr by DFID, UK under the World Bank Project on SME Financing & Development
Recognised by IFC as a novel and sustainable initiative to increase credit flow to the MSME sector
Highly Confidential | All Rights Reserved © SMERA Ratings Limited
Promoters
Small Industries Development Bank of India (SIDBI)
SIDBI is the principal financial institution for the promotion, financing and
development of entities in the MSME sector in India for over 25 years
Dun & Bradstreet Information Services India Private Limited
Dun & Bradstreet (D&B) is the world’s leading provider of business
information and risk management solutions
Shareholders
SMERA’s Journey
2005-2008 2009-2011 2012-2014 2015-2017
•SMERA commenced operations by
offering SME Ratings
•Received technical assistance under the
World Bank / Department for
International Development (DFID)
•Accredited by SEBI for rating of capital
market instruments
•Accreditation from RBI for Bank Loan
Ratings
•Completed 15000 Ratings
•Announced 70th MFI Grading 1000 Bank
Loan Ratings completed
•Received award from Association of
Development Financing Institutions in Asia
•Recognized by International Finance
Corporation (IFC)
•NSIC – D&B – SMERA Ratings launched
•MOUs signed with 40 banks
•1st Commercial Paper rated
•Completed 2000 Bank Loan Ratings
•Permanent Registration with SEBI &
Completed 40,000 ratings
SMERA’s Journey
SMERA Offerings
Bank Loan Ratings. Fund/ Non Fund
Bonds/ NCD/ CP Ratings
Fixed Deposit Ratings
SMERA - D&B - NSIC Ratings
MSE Ratings, MFI and COCA
MNRE, IREDA Grading
SMERA Industry Risk Service
Vendor and Delaer Assessment
SMERA Portfolio - Industry & Geography
Industry Distribution
0
1000
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7000
8000 A
uto
An
cilla
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s El
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rica
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Foo
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Agr
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Met
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al P
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ham
aceu
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Pri
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& P
ub
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Serv
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Te
xtile
s Tr
ader
s C
ivil
& C
on
stru
ctio
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Ele
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Ele
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s Pa
per
& P
acka
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oo
d &
Wo
od
Pro
du
cts
Gem
s &
Jew
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ry
IT &
ITES
P
last
ics
Ru
bb
er &
Ru
bb
er P
rod
uct
s A
lum
iniu
m
Oth
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Geographic Distribution
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9000
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An
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Gu
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Har
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Jhar
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Karn
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Kera
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Mad
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Pra
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Mah
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a
No
rth
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ssa
Pu
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Raj
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Tam
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enga
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MSME Credit Rating – Benefits
An independent, trusted third party opinion on capabilities and credit-worthiness of Micro and Small
Enterprises
Availability of credit at attractive interest
Recognition in global trade
Prompt sanctions of Credit from Banks and Financial Institutions
Subsidized rating fee structure for Micro and Small Enterprises
Meet the requirement of reputed buyers like Ministry of Defense*
Enable Micro and Small Enterprises to ascertain the strengths and weaknesses of their existing
operations and take corrective measures
*For select product categories
Dun & Bradstreet Information Services
Benefits of Rating to MSME’s
Lower approval time
Faster disbursement
of funds
Greater willingness by banks
and financial institutions to
lend to better credit profile SSI
borrowers
Interest rates linked to rating of SSI
Higher rated customers can access
funds at lower rates.
Lower transaction costs
Information
asymmetry problems
reduced
Credit rating can simplify
lending norms
In some cases, collateral
requirements may also be
relaxed
Credit
terms
Fund
Access
Speed
Simplified
Norms
Perception
SMERA Survey
Out of the respondents who had a bank facility at the time of applying for the rating, 21% got a benefit of lower interest rate
This number is significant because only the high rated SMEs get interest rate benefit and rating is one of the many criteria a
bank uses for deciding the interest rate
Out of all the respondents who applied for a bank 73% believe that a SMERA rating has helped them in getting the fresh loan or enhancement
4%
79%
17%
Did the bank reduce the interest rate on your loan after the rating from SMERA?
Application under process No Yes
73%
27%
Did the SME rating from SMERA help in getting a fresh bank loan or enhancement of the amount?
Yes No
*Based on a sample of 510
Testimonials
Lakshmi Cottage Industry
Mr. N. Sudersanan
"We have received interest rate discount of 0.25% from Indian Overseas Bank because of the good ratings."
Crescent Scientific Pvt. Ltd
Mr. V S Iyer
"The SMERA Ratings has been an useful improvement tool for us since it rates our company for its performance and capability."
Revital Cryogenic & Biotech Systems
Mr. Manoj Goyal
"The SMERA rating report provides
detailed information of our capabilities
and has added much value."
Rating Scale
Rating Symbol Definition
SMERA MSME 1 Highest credit worthiness in relation to other MSMEs
SMERA MSME 2 High credit worthiness in relation to other MSMEs
SMERA MSME 3 Good credit worthiness in relation to other MSMEs
SMERA MSME 4 Above-average credit worthiness in relation to other MSMEs
SMERA MSME 5 Average credit worthiness in relation to other MSMEs
SMERA MSME 6 Below-average credit worthiness in relation to other MSMEs
SMERA MSME 7 Weak credit worthiness in relation to other MSMEs
SMERA MSME 8 Poor credit worthiness in relation to other MSMEs
Industry
• Industry
• Sub Industry
• End user Industry
• Type of business activity
Operations
• Product
• Major Customer & Suppliers
• Geographical Spread
• Major Raw Material
• Total Employees
Technology
• Process Technology
• Production Capacity
• Pollution Control
• IT System (SAP/ERP/Tally)
Management
• Years in existence
• Qualification & Experience
• Succession Plans
• Change in legal status
• Net worth
Financial
• Total Turnover
• Tangible Net Worth
• Growth Trend
• Profit Margins
• Returns
• Working Capital Cycle
• Leverage ratio
• Cash Flow
Rating Criteria - Parameters
Highly Confidential | All Rights Reserved © SMERA Ratings Limited
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