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About Micro & Small Enterprises Rating
The Micro & Small Enterprises Rating is an independent, unbiased, and objective opinion on the credit-worthiness of the rated entity relative to other MSEs. The report also provides levels of financial strength and operating performance of the rated entity. This assessment is arrived through a rigorous process of analysis of financials, inspection, interaction with management, and analysis of business & industry risk factors. Lenders and Institutional buyers depend on the Rating and the Rating Report, to take informed decisions before approving a loan or awarding a purchase order.
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Rating Scale
The Rating scale of SMEs is based on Performance and Credit Parameters of an SME in relation to other SMEs

The Rating scale also provides an opinion on the Operating Performance of an SME

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Execution Process

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Benefits
Benefits to Rated Entity
Establish mutual trust with the counterparty (buyer / lender)
Understand own strengths and areas of improvement
Gain negotiation power for fair terms of transaction based on mutually acceptable information
Benefits to Lenders
Understand Rating factors
Understand strengths and areas of improvements of borrower
Faster loan processing and decisions
All necessary data and information needed for appraisal at one place
Benefits to Corporates
Identify and approve vendors based on their operational and financial strengths
Decide on credit terms for dealers and buyers based on independent opinion on creditworthiness
Home > Fee
Fee
Product |
Turnover Category |
Annual Fee * |
SMERA-D&B SME Rating |
T1 (< 50 lakh) |
₹ 39,900 |
T2 (50 - 200 lakh) |
₹ 49,900 |
T3 (> 200 lakh) |
₹ 59,900 |
* The annual fee is exclusive of GST.
Home > FAQs
Frequently Asked Questions
The Government of India has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in terms of which the definition of micro, small and medium enterprises is as under:
Manufacturing Sector
(Enterprises engaged in the manufacture or production, processing or preservation of goods) |
Services Sector
(Enterprises engaged in providing or rendering of services) |
Investment in plant and machinery
- Micro Enterprise - Does not exceed Rs.25 lakh
- Small Enterprise - Is more than Rs.25 lakh but does not exceed Rs.5 crore
- Medium Enterprise - Is more than Rs.5 crore but does not exceed Rs.10 crore |
Investment in equipment
- Micro Enterprise - Does not exceed Rs.10 lakh
- Small Enterprise - Is more than Rs.10 lakh but does not exceed Rs.2 crore
- Medium Enterprise - Is more than Rs.2 crore but does not exceed Rs.5 crore |
Any Micro and Small Enterprise can avail of the MSE Ratings, provided:
- It has an Udyog Aadhaar Number
- It has at least one year's financial statements
MSE Rating |
Bank Loan Rating |
Assigned to MSE Unit or Enterprise - hence this is an Enterprise rating |
Assigned to a specific bank loan or working capital facility |
Regulated by the Ministry of MSME through The National Small Industries Corporation Limited (NSIC) |
Regulated by the Reserve Bank of India (RBI) |
In the first year of rating, a subsidy support of up to 75% of the rating fee is available |
No subsidy is available for rating the bank loan facilities |
An 8-point Rating scale that is unique to the MSE sector |
A 20-point Rating scale that is similar to the one used for bond market instruments |
One-time activity; Rating is valid for one year. No surveillance process |
Involves surveillance throughout the life of the rated facility |
A SMERA rating enables the MSE unit to have deeper understanding of the strengths, weaknesses and risk factors of its business. As part of the rating process, the MSE is benchmarked vis-a-vis other MSEs of the country, providing the MSE with inputs on areas of improvement. Thus, the rating exercise acts as a self-improvement tool.
A rating agency has no interest beyond the rating fee that it charges for its rating service. To keep the rating opinion independent and unbiased, the rating fee is decided before the rating exercise commences and is paid in full (limited to 25% of the applicable rating fee wherever subsidy is available) by the enterprise in advance. The rating agency does not get involved in any advisory role or loan syndication with any lender or investor. Employees of a rating agency are prohibited from investing or trading in instruments issued by the entities rated by that agency. The rating is not assigned by an individual, but by a Rating Committee. Thus, the outcome of the exercise does not rest with any one individual.
MSEs that have taken cognizance of the areas of improvement highlighted in the Rating Report and acted upon the same, have seen tangible benefits. By working on the areas of improvement, these entities have benefitted. Few examples include:
- A manufacturing enterprise from Ahmedabad, that caters to Chemical, Refinery, Pharmaceutical and Food Industry, demonstrated improvement in its capital structure and working capital management after taking cognizance of the areas of improvements mentioned in the SMERA Rating Report. The company was in operations for nine years and operated on low capital base. The company ploughed back profits into the business and improved its capital structure. Further, the company took note of the low current ratio and started improving its working capital management. The company reduced the working capital exposure and attained better working capital cycle. This resulted in improvement in current ratio to 1.99 times (FY2012-13) from 1.26 times (FY2004-05). The rating of the enterprise improved to 'Highest' from 'Above Average' category. This enabled the enterprise to negotiate a lower interest rate with its bank.
- A Coimbatore based enterprise which is into construction of industrial buildings, residential apartments and other civil works got an interest rate concession of 0.25% from its banker. In addition, having a SMERA Rating helped the client in getting adequate and timely credit.
- A technology firm in Hyderabad, got a term loan and working capital facility of Rs.58, 00,000 (Rupees Fifty Eight Lakh only) from a PSU bank after submitting the SMERA Rating Report.
- A manufacturing company from Faridabad, Haryana which is into manufacturing of steel and special alloy products had limited product range and operational capacities. The company catered only to domestic sales and hence was unable to meet the diversified needs of its customers. The concerns in the rating report were taken into consideration by the company and they scaled up its business and expanded the business volume to more than Rs.77 crore. This was a result of continuous addition to the production line, entering the overseas market and also catering to its domestic customers.
The step of undergoing a rating exercise, in itself, is a positive one for any MSE. It demonstrates openness of the promoter / management to an independent assessment and feedback. SMERA believes that, the following measures will help a rated unit derive maximum benefits:
- Share and discuss the Rating Report with key personnel within the organisation. This will help the key employees understand the unit's strengths and areas for improvement
- Display the Rating Certificate in a high footfall area (usually the reception/ entrance) of the office that can be viewed by employees, bankers, suppliers, customers and other visitors
- Share the Rating with
- Bankers and potential lenders: This will help understand and arrive at a fair pricing of loans and bank facilities. It may also help in expediting the unit's loan proposals with lenders
- Existing and prospective buyers: The rating includes a comment on the financial strength and operating performance. This provides comfort to buyers on the execution ability of the rated unit.
- Work on the areas of improvement: MSEs that are truly enterprising and have growth aspirations can rely on the Rating Report and work on the areas of improvement for sustainable, long term benefits.
While every enterprise is unique in its own way, some of the commonly found good practices amongst higher rated MSEs include:
- Making debt repayment and paying statutory dues on time - A healthy track record of timely payment of debt and other statutory dues indicates financial discipline and overall compliance respectively.
- Maintaining high standards of disclosures and good quality book-keeping - The transparency and disclosure-levels adopted by an MSE demonstrates good governance. In addition, maintaining good book-keeping standards is indicative of the accounting quality.
- Avoiding excessive debt - An MSE should refrain from borrowing unnecessarily. Instead, managing the existing credit lines responsibly and judiciously is viewed positively in a rating exercise.
Any enterprise needs to objectively and independently validate the gains and improvements achieved in its business over a period of time. An annual review of the rating will help MSEs to update the rating report with their current business and financial performance. This will be required by all counterparties to continue to extend the benefits.
Ministry of MSME, through NSIC, has designed and developed a databank for MSMEs (www.msmedatabank.in). The entry of records in this database is validated collectively through Aadhar Number, Udyog Aadhaar Number and PAN. Only authorized personnel of institutions that are approved by or empanelled with NSIC can upload data and information pertaining to MSMEs. After the completion of the rating exercise, SMERA uploads the information about the MSMEs on this portal. Further, the data so uploaded can be accessed only by officials of the Ministry of MSME and NSIC. This is a one of its kind database that the Government of India is building that will provide authentic data and information on MSMEs to policy-makers. Over a period of time, the data will provide valuable insights on MSMEs and their challenges to policy-makers.
The D-U-N-S® Number helps one make informed decision. An MSE can nurture its business reputation and improve profitability through D-U-N-S® Number in the following ways:
- Enhances the legitimacy of the MSE's business with potential customers and suppliers
- May position the MSE to negotiate better terms from suppliers or financial institutions because the MSE's credit profile contains more and better information
- Presents a more robust profile to potential partners when the MSE is moving into new ventures or markets
The turnaround time for a rating exercise is around 8 to 10 days after the site inspection and receipt of all documents.
MSE Rating is valid for one year.
No. MSE Rating is one-time exercise.
Yes, all accepted ratings will be displayed on SMERA's website and/or other publications. Unaccepted ratings are not published by SMERA.
No, SMERA MSE Ratings will not replace the internal ratings of the lending institution. However, SMERA MSE Ratings supplement the internal ratings.
The MSE unit pays only 25% of the rating fee to SMERA. The remaining 75% of the rating fee is collected by SMERA directly from NSIC once the rating exercise is complete.
As per current guidelines, the NSIC subsidy on rating fees can be availed only in the first year of the rating of the MSE unit.
SMERA does not assist or arrange any banking facility with banks or financial institutions. SMERA's role is limited to providing an independent, unbiased rating opinion about the rated enterprise.
No. MSE Rating does not automatically qualify the rated unit for other schemes (for e.g.: Financing for Procurement of Raw Material, Single point Registration for Government Purchase, and so on) offered by NSIC. NSIC runs several schemes for enhancing the competitiveness of the MSEs. These schemes are run independent of each other and the MSEs desirous of availing benefits of various schemes have to independently apply to NSIC for the same.
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About New Credibility Enterprise Score
SMERA New Credibility Enterprise Score reflects the ability of a new enterprise to be sustainable and its present state of creditworthiness. The Government of India has introduced many schemes to encourage development of new enterprises. India needs such enterprises for continuous and sustainable economic growth, and to overcome the challenges of large scale employment creation. India offers huge opportunities to such enterprises given the size and diversity of the country, new possibilities offered by technology, and India's competitive advantage over similar economies.
However, these entities face tremendous challenges in raising funds on fair terms. Equity is expensive, and the VCs/PEs segment caters to a niche segment that covers very few sectors such as technology and ecommerce. As a result, a large number of new enterprises engaged in manufacturing, trading and exports languish simply due to lack of bank funding.
Banks, on the other hand, stay shy of building relations with new enterprises due to lack of credible information and mutual trust. In India, penetration of banking services is very low. Most of the new enterprises lack reliable data of past banking conduct and payment track record for bankers to take lending decision confidently. And even if such data is available, one needs to ascertain if the new enterprises will be willing to pay. However, many a times, the information available is not substantial enough to conclude whether the enterprise will be able to sustain in the long run.
SMERA New Enterprise Credibility Score is a unique solution created for the Indian market to address the issue of lending to new enterprises. We believe this will help take the Make-in-India movement to grassroot level.
SMERA combines the power of data, analytics and its ability to physically verify the claims of the new enterprise through site visits to not only eliminate the risk of fraud but also help the lender understand the ability of the enterprise to withstand threats and take advantage of opportunities.
SMERA New Enterprise Credibility Score is assigned on a 100-point scale on which 100 denotes the best score and reflects high confidence on the enterprise's ability to sustain and grow. To assign the score, SMERA uses a unique scoring model tested with a large number of dataset. SMERA will also speak to the management of the company and conduct site visits.
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Scoring
SMERA New Enterprise Scoring scale reflects the Sustainability & Credibility of the scored New Enterprise (NE) relative to other New Enterprises:

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Execution Process

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Benefits
Benefits for New Enterprises
Establish credibility with lenders, suppliers and customers
Higher score will facilitate financing for growth
Overcome the challenge of having complete financial statements
Understand strengths and areas of improvements
Visibility to the business and brand building opportunities
Access to multiple lenders, insurance and service providers
Finance companies will contact the promoter to provide their services to the listed SMERA enterprises
Complementary D-U-N-S* number that is recognised globally
Benefits for Bankers
Credible report for lending decisions
Establish credibility of the enterpriser
Checked and verified enterprise details
Meaningful insights from data and research based approach
Access to information on loan requirements of new enterprises on pan-India basis
Access to inputs on business - type of enterprise, activity, industry, access and application of finance
Red flags, if any
Home > Fee
Fee
Product |
Annual Fee * |
New Enterprise Credibility Score |
₹ 39,900 |
* The annual fee is exclusive of GST.
Home > About Product
About Credit Due Diligence for Micro & Small Enterprises
Credit Due Diligence for Micro & Small Enterprises is anindependent verification of primary details / material facts of a business entity including a physical site inspection. The Due Diligence exercisehelps the banks and financial institutions take an informed credit decision on the entity’s borrowing requirementsandfacilitates quickprocessing of loans.
Credit Due Diligence is a comprehensive report highlighting key strengths and weaknesses of the entity includingbackground information, ownership and management profile, business and financial profile,industry overview etc.It helps stakeholders establishmanagement’s ability to run the business successfully in a dynamic environment.An MSE can use this report to build confidence and mutual trust amongst all its stakeholders mainly lenders, suppliers, vendors and customers.
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Process

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Request Sample Report
Please do share your contact details below and we will share a sample report for this product.
Home > Benefits
Benefits
Assists lenders’ and investorsin taking an informed credit / investment decision.
Accelerates the loan sanction process.
A reliable source of all the relevant information regarding an investment decision for the banker.
An independent assessment of the overall risk associated with the entity
Brand building opportunities for MSE amongst its stakeholders through third party, independent verification.
Home > Fee
Fee
Product |
Turnover Category |
Annual Fee * |
Credit Due Diligence for Small & Medium Enterprises |
T1 (<50 lakh) |
₹ 39,900 /- |
T2 (50-200 lakh) |
₹ 49,900 /- |
T3 (>200 lakh) |
₹ 59,900 /- |
* The annual fee is exclusive of GST.