To weather the downturn in business, rating agency ICRA plans to extend its rating and research services to small and medium scale enterprises (SMEs).
ICRA, which has marginal exposure to the SME ratings business, is of the view that it has enough capabilities and expertise to service the SME sector. This will also help diversify its revenue streams.
“We have been in the ratings business for a long time. Hence, we can now extend our services to the SME sector and as well as do sectoral research in areas like IT and manufacturing,” Mr Naresh Takkar, Managing Director & CEO, said.
ICRA has been traditionally rating large corporates on their credit risk portfolio.
On the negative rating outlook to the Indian economy given by various rating agencies, Mr Takkar felt that the “intensity and severity” of the downgrades would taper out. There will hardly be any rating upgrades, given the uncertain and the volatile economic situation.
From the credit quality perspective, the ICRA chief said that pharma, consumer goods business, information technology and two-wheeler businesses are doing well. “They have a robust balance sheet. However, this is not getting reflected in stock market valuations because the expectations on these sectors are slightly higher.”
RATE CUTS UNLIKELY
Mr Takkar feels that the progress of the monsoon will weigh on inflation calculations. “The Reserve Bank has been very articulate about the conditions to be met for effecting a rate cut…the response from the fiscal side is lacking.”
Even if there is some reduction in the interest rates, it will not be significant, he added.