Credit support to Crisil-rated SMEs grew 30 per cent against the sector average of 20 per cent during the last two years. A study by the rating agency also indicated that rated SMEs had saved upwards of Rs 175 crore in interest cost alone, with interest rate reductions ranging between 0.5 per cent and 1.25 per cent annually.
Crisil said the analysis provided insights into three crucial issues facing the sector such as rising interest rates, bank finance and delayed payments from large customers.
SMEs are vulnerable to high interest rates as a one per cent increase in interest rates would lead to a decline of 14 per cent, on average, in SMEs' profits. While banks have been lending to the SME sector, there was still scope for additional funding, which could be as large as Rs 50,000 crore annually, it said.
Moreover, SMEs with large corporate customers, in general, faced a delay of at least 30-45 days in receiving payments from them. SMEs could enhance profitability by over 15 per cent if they received payments from large customers in time, Crisil said.
Ms Roopa Kudva, Managing Director and CEO, Crisil Ltd, said “Crisil is the market leader in SME ratings, with a market share of over 50 per cent.”
“A Crisil SME rating is available for Rs 7,500, owing to specific subsidy support offered by the Ministry of Micro Small and Medium Enterprises, through the National Small Industries Corporation (NSIC) for the first year. The rating enjoys wide acceptability,” she said.
According to NSIC Chairman-cum-Managing Director, Dr H.P. Kumar, “The concept of external ratings has helped micro, small and medium enterprises achieve an independent identity, access funds, attract foreign interest and develop growth strategies.
“This is a unique scheme devised by NSIC for MSMES in the international financial sector. The role played by rating agencies including Crisil in this space is praiseworthy especially in the last two years when the number of Crisil rated MSMEs have grown exponentially.”