India’s largest rating agency Crisil said it will soon come out with sectoral indices of the micro, small and medium enterprises (MSME) sector to help the industry as a whole to make better forecast in terms of growth, pricing, risks or any other future indicators.
Crisil Ratings Director Ramraj Pai told media in Mumbai, Crisil will come out with a number of sectoral indices for the SME sector with a view to arrive at better forecasting for them as well as for larger industries. It will help them make better inventory management and cost realisations. These indices would be launched in the next 3 to 4 months.
The agency, which enjoys a dominant share in the MSME rating business with over 65 per cent market share, has over the past three years, when it set up a separate division for this sector, accorded ratings to over 25,000 companies, said Crisil Ratings SME Head Yogesh Dixit.
Dixit said against their average fees of Rs 3 lakh plus, they only charge 20 % from MSMEs, out of which 75 % is subsidised by the MSME Ministry, thus making the payable amount as low as Rs 15,000 by a company.
MSMEs contribute a whopping 99 % of the industrial units in the country, apart from chipping in with 40 % of exports and 45 % of manufacturing output by roll ing out over 8,000 products. Howev er, despite such a huge contribution, net bank credit to the sector has nosedived to 8.6 % last year from around 15 % eight years ago, Dixit informed.
Attributing this low bank fund ac cess to their insular way of running their business, he said, with credit rating, these units can access easy bank credit.
Further compounding their woes is the lack of availability of information and external benchmarks about them, making banks not keen on giv ing loans to them, he said.
Crisil Ratings Director Ramraj Pai noted that ‘what is more striking is that, urban MSMEs are less banked than their rural/semi-urban counterparts. Also, Gujarat is one of the less banked areas, while the southern states are more banked when it comes to MSME funding.’
MSME units, numbering over 13 million, account for the second-larg est employment generation in the country by employing 3 crore people, after farming, and contributes more than 8 % to the overall GDP, said Pai.