Recognising the importance of small-scale industries (SSI) to the Indian economy and with a view to extend the benefits of its expertise to the SSI sector, Ind-Ra has entered into a Memorandum of Understanding (MOU) with the National Small Industries Corporation (NSIC), the nodal agency for SSI ratings.
Ind-Ra SSI group rates the entities on a separate rating scale suited to the special requirements of the sector. The rated SSI can use the rating for its various needs, including working capital bank loans and term loans. The SSI rating is irrespective of the tenure of the loan and is an entity rating.
The SSI group draws on the agency’s rating experience in both domestic and international markets. The exercise involves detailed business and financial analysis, besides one-on-one management meetings.
Benefits of Rating for SSI entities
> Enhanced acceptability with investors: Ratings from Ind-Ra are recognised by all the statutory bodies like the Reserve Bank of India (RBI), the National Housing Bank (NHB), etc. The Indian Banks Association (IBA) has also circulated NSIC-Ind-Ra scheme to all its members. Number of banks have aligned interest rates to the ratings, thereby offering scope for cheaper credit.
> Increased visibility with business partners: Given its strong domestic and global market presence, Ind-Ra has been relied upon by various business organisations for evaluation of their suppliers or customers.
> Credit view from an international rating agency: Ind-Ra is an international agency, rating entities in more than 90 countries. 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 within its own industry as also across industries. This covers important risk factors and concern/areas for improvement for the rated entities, thus providing a valuable and third-party feedback.
Benefits for Banks
Independent and third-party opinion.
No cost for bank and at a marginal cost for their customers (a substantial part of the fee comes from NSIC through subsidy).
Benchmarking of internal credit practices of the bank.
Evolving risk-based approach in SSIs: Rating of SSIs on a different scale would help in grading the units on the basis of risks involved and can be used for designing a risk-based pricing policy for SSIs. This would facilitate a lending decision - quantum of loan, price, margin, security.
Rating of SSI to help in fee-based activity for larger units and other activities like securitization.
For Large Corporates
> Evaluation of vendor/dealers would aid corporates in suitable vendor selection/risk management policies.
> Avability of cheaper credit for vendors would reduce cost of their own inputs.
For SSI sector
> Will improve credit flow, transparency, discipline and best practices.
Rating Process (for registered SSI units)
To get your entity rated, download the application form and send the completed form along with the payment and preliminary information/documents as indicated in the form itself. Ind-Ra may ask for additional information, if required, during the course of the rating process.
The rating process is expected to be complete in four weeks from date of submission of complete information.
SSI Rating Scale
Ind-Ra rates registered SSI units on separate scale. The special rating scale is an alphanumeric one with two components, viz. Financial Strength and Performance Capability. Ratings are assigned on the following rating scale:
For example, a company with highest Performance Capability and highest Financial Strength will be rated 'SE 1A', while one with weakest Performance Capability and lowest Financial Strength will be rated 'SE 5C'.
Rating Fees for SSI units
For registered SSI units, Ind-Ra fee schedule is as follows:
|Rating Fees (INR)
|Service Tax (currently 12.36%)
|Subsidy from NSIC (INR)
|Net fees for SSI (INR)
* The fees above are inclusive of all expenses. The subsidy is given by the Ministry of Small Scale Industry through NSIC, the coordinating agency for this scheme of the ministry.
For clarifications/details on any aspect of SSI ratings, please get in touch with any of the Ind-Ra offices.