MSME Rating Performance and Credit Rating

Presentation by Shailesh Waghmare Head Marketing - SME

About ONICRA
Independent corporate body incorporated in 1993, an established player in Performance and Credit Rating in Indian market The only organized platform in India for individual credit risk assessment / management and Information exchange Acknowledged as pioneers of Individual Credit Rating in the Economic Survey of India 1993-94 issued by Ministry of Finance, Government of India A Government accredited Rating Agency for MSMEs, by Ministry of MSME through National Small Industries Corporation (NSIC) and recognized by Indian Banks Association (IBA), for Financial and Performance Rating National Skills Registry (NSR) Certified Employment Background Screening agency

Our Vision

To be the fountainhead of information exchange and solutions to enable our customers to manage financial risk and build successful lasting individual relationship

Snapshot
Technology Services Network

Business to Business Services

Delivering rating reports of individuals to our clients in Banking, Insurance and Telecom segments, helping them in taking credit decisions Background Checks (including Identity, Professional, Educational, Criminal, Health or Reference Checks) have helped our clients to reduce the risk of employee frauds

B2B
Comprehensive Credit & Performance Rating Report to MSME units have helped them in increasing their Acceptability & Credibility with Vendors, Suppliers, Banks & Financial Institutions, etc. Financial & Performance Rating reports help our clients to Indentify the right channel partners

ONICRAs Experience
The following factors have differentiated Onicra from the rest in the Industry: Coverage: We have a nationwide network of 150 inter connected Offices, covering over 400 Locations. Synergy: Onicra officials across India have worked in close co-ordination with the Large Corporates Zonal/Regional Offices and Branches to reach out to the Vendors. Activity Level: We have actively conducted Vendor Cluster Meetings, Seminars, Awareness Programs, etc where existing and prospective Vendors have been educated on the benefits and requirement of Rating. Focus: Our keen interest on Vendor Ratings as a Business Vertical within the Company has brought in innovativeness of strategy and speed of action.

ONICRA Advantages
Rated over 6000 Associates / Vendors / MSME Units Rated among top 2 agencies for MSME Rating in India One of the fastest growing Credit Rating agency with approx 100% growth YOY MoU with 24 leading Banks and Financial Institutions including PSU Banks, State Financial Corporations, Regional Banks, Rural / Gramin Banks, etc. Empanelled with Navel Dock Yard, Mumbai Lowest Turn Around Time (TAT) in the industry Nationwide infrastructure to meet the ever-growing needs of our customers, covering 400 locations

Working Relationship with Banks & FIs

1. 2. 3. 4. 5. 6. 7. 8. 9. Bank of Rajasthan Bank of India Punjab National Bank Allahabad Bank United Bank of India Union Bank of India Central Bank of India State Bank of Mysore State Bank of Hyderabad 13. Andhra Bank 14. Karur Vysya Bank 15. Oriental Bank of Commerce 16. UCO Bank 17. Andhra Pradesh State Financial Corporation 18. Karnataka State Finance Corporation 19. Jammu & Kashmir Bank 20. IDBI Bank 21. Citizen Cooperative Bank 22. Pachim Banga Gramin Bank 23. Orissa State Financial Corporation* 24. Assam Gramin Vikas Bank

10. State Bank of Travancore 11. Tamilnad Mercantile Bank 12. Punjab & Sindh Bank

MSME Rating Services

NSIC ONICRA PERFORMANCE & CREDIT RATING FOR Micro & Small Enterprises

Challenges Faced by MSMEs & Role of Onicra

Challenges for MSMEs Role of Onicra

Evaluate Current Business Model

Securing Credit from Banks and FIs Lack of Faith By Buyers & Suppliers

Provide Input for Growth

Doubts on Creditworthiness & Credibility

Opportunities & Challenges By Market

Identify Areas of Focus & Improvement

Identify Opportunities & Threats - SWOT

Introduction
NSIC ONICRA Performance & Credit Rating Scheme: Comprehensive Credit & Scheme: Performance Rating Report to MSME units have helped them in increasing their Acceptability & Credibility with Vendors, Suppliers, Banks & Financial Institutions, etc. Understanding the urgency faced by the MSME units, Ministry of MSME, Government of India through National Small Industries Corporation (NSIC) has signed a Memorandum of Understanding with us to provide Performance and Credit Rating services. The scheme was launched by the Honorable Finance Minister and is approved by Indian Banks Association (IBA). The Ministry of MSME is offering a subsidy of 75% on the ONICRA Rating Fee.

Scheme Features:

Turnover based Fee Structure

Turnover based Fee Structure

Rating Approved by Indian Banks Association (IBA)

Scheme implemented through National Small Industries Corporation (NSIC)

Benefits of ONICRA Rating to MSMEs

 Adds credibility to the status of the MSME  Helps to deal with large companies  Motivation to adopt good governance practices  Help in Marketing and serve as first point to generate interest among potential trading partners  Tool for self correction & self improvement  Increases credit acceptability with banks and financial institutions  Concession in interest rate on NSICs Raw Material Assistance / BG Scheme  Creates confidence among buyers and suppliers by establishing credibility & goodwill

Value Proposition for MSMEs

Enhances acceptability with banks, lenders and financial institutions. This gives fast access to credit at low Acceptabili interest rates. ty with Banks & Financial Institutions Creating Awarenes s Awareness is created about the strengths, weaknesses, opportunities and threats. This helps in identifying areas where improvements are needed.

Benefits of NSIC Onicra Rating

Confidence amongst Buyers & Suppliers

Credibility and goodwill is established while undertaking business transactions.

Highlights strengths and weaknesses of the existing operations and recommends corrective measures.

Increased Productivit y

Risk Management

Highlights parameters measuring operational, financial, business and management risks.

Value Proposition Banks & FIs

 Second Opinion - Third Party unbiased opinion  An additional input to make lending decisions  Comfort level for a prudent decision-making  Reduction in information asymmetry in the MSME sector  Warning signals through periodic rating review  Focus can be driven towards exposure on low risk accounts  Cost and time effective method of processing

Rating Scale

Performance Capability
Highest High Moderate Weak Poor

Financial Strength
High SE 1A SE 2A SE 3A SE 4A SE 5A Moderate SE 1B SE 2B SE 3B SE 4B SE 5B Low SE 1C SE 2C SE 3C SE 4C SE 5C

Rating Process
Pre Site Visit
Submission of list of the required documents to the applicant for the rating process Agreement for a suitable date for the site visit

Site Visit
Meeting with the applicant along with the structured questionnaire (this questionnaire includes the basic details of the applicant along with their family background, existing business, risk taking capacity, synergy in the business) Feedback from existing Bankers through Bankers questionnaire Factory inspection Assessment of the assets employed, working conditions, process flows, etc. Collection of documents, not yet collected

Post Site Visit

Reference Check Customer Satisfaction verification Supplier Feedback Financial Analysis Submission of Analysis to Rating Committee Approval of Analysis & Assignment of Rating Generation of Final Report

Detailed Process Flow

Request for Rating Financials + Other info Pre-Analysis Formalize Assignment

Login with NSIC

Additional Information

In depth Analysis

Meet Institution & Site Visit

Detail Questionnaire

Industry Data

Draft Report & Rating Proposal

Rating Committee

Rating Appealed

Publish Rating

Institution advised on draft report

Documents Required
SSI Registration Certificate Partnership Deed or Memorandum & Articles of Association List of all directors or partners with their age, address, net worth, income tax return, qualification and experience Copy of audited accounts for the last three years Authority letter to sign the application Nature of advance & security provided, in relation to the loan/credit facility availed from banks In case of new project/expansion, Project Report containing a brief project profile, cost of project, sources of finance Brief about products manufactured, end users, marketing tie-up & orders in hand Details of subsidies & tax concessions available Quality certificates & export awards won Membership of any associations Details about factories and its ownership Any other information that would enable us to understand your business better

MSME Rating Report

Status of the Unit

3600 Analysis

Deliverables & Report Content

Company Profile Brief Profile & Constitution Common Stock Line of Business Other Business of Promoters Details of Promoters Performance Capacity Utilization Customer Satisfaction Supplier Satisfaction Banking Relationship Infrastructure Available Measures to improve Rating of Unit Rating of Promoters SWOT Analysis Financial Analysis & Key Findings
Key Financial Data Comparative Common Size Statement Financial Ratios Liquidity, Profitability, Leverage, Turnover, Coverage DU Point Analysis Working Capital Management Recommendations

Summery of Financial Analysis Grid Chart

Compliance Maintenance of Accounts Internal Controls Basic Facilities

Interpretation of Scores
Credit & Life Style

Impact of Rating on MSME Units

In a survey done on impact of credit rating on companies, there was data available to show that rated units had:

Survey Highlights Impact of Ratings on MSME Units

Higher Customer Recognition Increased Customer Queries Increase in Sales Increased Exports Better Interest Rates Enhanced Credit Limits Improvement in Quality Increased Capacity Utilization

67 45

60

24 10

23

22

16

Percentage

Benefits in Marketing

Bhartiya Valves Pvt. Ltd. is rated SE2A by NSIC IBA ONICRA (Govt. of India Sponsored) Performance & Credit Rating which connotes High Performance Capability & High Financial Strength.

Customers Feedback
The Credit Rating of our operational & financial performance by ONICRA was a great learning experience. This process has been very methodical & systematically approached rating system and has revealed certain hidden facts leading to our knowledge enhancement. We are getting exciting response from our bankers towards enhancing our credit limits on request. Mr. Deepak Gupta C D Engineering Company - Ghaziabad

The performance and Credit rating initiated by NSIC is of tremendous help to Small Scale Units. The entire exercise conducted by ONICRA was very systematic and disciplined and the report facilitated in strengthening relationships with our bank. The rating helped us in availing an enhanced credit limit from our bank. We would highly appreciate this gesture of your and seek to further strengthen this relationship. Ashok Arora MD Arora Enterprises Pvt . Ltd. - Amritsar

Thank You!
For Further Queries, Kindly Contact:

ONICRA Credit Rating Agency of India Ltd. Corporate Office: 11th Floor, Vatika City Point, Gurgaon 122 002 Fax: 0124 3076033

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