The Hindu Business Line : Encouraging demand for SMERA's services

There has been an encouraging demand for the services of SME Rating Agency of India Ltd (SMERA), India's first and only rating agency dedicated for the SME sector.

SMERA, set up by SIDBI in association with Dun & Bradstreet (D&B), CIBIL and a clutch of public and private sector banks, began operations on September 5 last year. In the seven months up to March, the company completed rating 102 units. The company has over 225 applications at various stages of assessment for rating.

However, SMERA's CEO, Mr Rajesh Dubey, told Business Line that he had hoped for rating at least 125 units and over 300 rating applications in the pipeline. Next year, with tie-ups with 14 banks for rating acceptance, SMERA hopes to rate at least 3,000 units. Because of a government subsidy, SMERA's fees could be as low as Rs 4,000, Mr Dubey said.

The SME sector appears to view SMERA favourably. Mr Rajkumar Rajappa, President of BHEL Small Scale Industries Association, Tiruchi, a body of 140 small-scale metal fabricators, said that SMERA recently made a presentation to the association. "We are getting overseas enquiries and many of our members will be interested in a rating," he told Business Line.

Mr Thomas Mathew, Director of Timberton Services, a small-scale unit that provides manpower recruitment and training to banks, said the company had wanted to be rated by an external agency, but had found the fees prohibitive. But SMERA cost only Rs 8,000 (against Crisil's Rs 50,000). Mr Mathew said that after the rating, State Bank of India dropped lending rates to Timberton by one percentage point.

Awareness yet to spread

However, it appears that awareness about SMERA is yet to spread. Several small units that Business Line spoke to were either not fully conversant with SMERA's services or had not heard of it at all.

Providing another view, Mr DE Ramakrishnan, President, Industrial and Financial Reconstruction Association for Small and Tiny Enterprises (INFRASTE), a body that represents the SSI sector, cautions that being too euphoric about SMERA could create a false sense that credit flow to the small industries is happening.

Stressing that a few thousand ratings is not going to solve the fundamental problems of SSIs, Mr Ramakrishnan pointed out that the Small and Medium Enterprises Bill has been pending in Parliament since May 2005.