Highly Confidential | All Rights Reserved © SMERA Ratings Limited

Opportunity Landscape for SMEs

AGENDA

• Introduction of SMERA• SME - Sector Overview• Growth Opportunities for SMEs• SMERA’s Bankers’ Terminal

AGENDA

• Introduction of SMERA• SME - Sector Overview• Growth Opportunities for SMEs• SMERA’s Bankers’ Terminal

SMERA’s Experience

q An initiative of Ministry of Finance, began operations in 2005

q World’s first MSME focused rating agency

q Promoted by Institutions: Enjoys the backing of Dun & Bradstreet, SIDBI and 10 Public & Private Sector Banks including ICICI Bank, State Bank of India and Standard Chartered Bank

q Pioneered the concept of SME Ratings in India that covers more than 1.5 lakh SMEs q Rated more than 43,000 SMEs till dateq Recognised by IFC as a novel and sustainable initiative to increase credit flow to the MSME sector

Highly Confidential | All Rights Reserved © SMERA Ratings Limited

Industry

• Industry• Sub Industry• End user

Industry• Type of

business activity

Operations

• Product• Major

Customer & Suppliers

• Geographical Spread

• Major Raw Material

• Total Employees

Technology

• Process Technology

• Production Capacity

• Pollution Control

• IT System (SAP/ERP/Tally)

Management

• Years in existence

• Qualification & Experience

• Succession Plans

• Change in legal status

• Net worth

Financial

• Total Turnover• Tangible Net

Worth• Growth Trend• Profit Margins• Returns• Working

Capital Cycle• Leverage ratio• Cash Flow

Rating Criteria - Parameters

Rating Scale

Rating Symbol Definition

SMERA SME 1 Highest credit worthiness in relation to other SMEs

SMERA SME 2 High credit worthiness in relation to other SMEs

SMERA SME 3 Good credit worthiness in relation to other SMEs

SMERA SME 4 Above-average credit worthiness in relation to other SMEs

SMERA SME 5 Average credit worthiness in relation to other SMEs

SMERA SME 6 Below-average credit worthiness in relation to other SMEs

SMERA SME 7 Weak credit worthiness in relation to other SMEs

SMERA SME 8 Poor credit worthiness in relation to other SMEs

SME Credit Rating – Benefits

• Lower cost of finance and preferential treatment by SMERA’s partner Banks• 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

• Complimentary D-U-N-S* Number that is recognised globally

For the Rated Entity

• Understand Rating factors• Understand Strengths and Areas of improvements of the borrower• Faster loan processing and lending decisions• All necessary information needed for credit appraisal at one place

For Lenders

• Identify and approve vendors based on their financial strength and operating performance

• Decide on credit terms for dealers and buyers on independent opinion on credit worthiness

For Corporate Entities

Voice of Customer

SMERA Portfolio - Industry & Geography

Industry Distribution Geographic Distribution

Rated units in more than 200 industries and sub industries

AGENDA

• Introduction of SMERA• SME - Sector Overview• Growth Opportunities for SMEs• SMERA’s Bankers’ Terminal

What’s an SME

NEG

Manufacturing Sector - Investment in plant

& machinery

Does not exceed twenty five lakh

rupees

More than twenty five lakh rupees but

does not exceed five crore rupees

More than five crore rupees but does not exceed ten crore rupees

Service Sector - Investment in

equipment

Does not exceed ten lakh rupees

More than ten lakh rupees but does not

exceed two crore rupees

More than two crore rupees but does not exceed five core rupees

Micro Enterprise

Small Enterprise

Medium Enterprise

SME Distribution in India

• Around 50 million MSMEs• 7.57 million registered MSMEs• 3.81 million MSMEs registered since

Sept’15• ~1.5 lakh MSMEs are rated by Credit

Rating Agencies

SMEs in Headlines

NEG

Source: thehindubusinessline.com

Mkt Cap of SMEs listed on BSE is Rs 19,665.60 crores as on 23rd November 2017

SMERA is proud to be a part of growth journey of many of these SMEs

SME Growth Case Study - GTIL

Rs in millions

• A SMERA rated SME• Product portfolio includes – textiles,

apparels, yarn, etc.• Strength – Continuous Innovation• Export contributes ~60% to revenue• Sales CAGR 24.46% and Net Profit

grew by 35.56%

SMERA rated GTIL as MSE2 in 2017Previous year’s rating was MSE3

AGENDA

• Introduction of SMERA• SME - Sector Overview• Growth Opportunities for SMEs• SMERA’s Bankers’ Terminal

Multiple Platforms for Growth

Growth Opportunities for SMEs

NEG

• Government Initiatives• B2B Ecommerce• Amalgamation of ecommerce & mcommerce• Improving SME lending with growth in FinTech firms• Small Financed Banks and NBFCs– focused lending to MSMEs• Growth Sectors

Government Initiatives

B2B Ecommerce

Amalgamation of ecommerce & mcommerce

FinTech Lending Platforms

Financial Institutions

High Growth Sectors & Opportunities (1/3)

These sectors will likely see double digit growth in

the next 5 years

High Growth Sectors & Opportunities (2/3)

These sectors will likely see 8-10%

growth in the next 5 years

High Growth Sectors & Opportunities (3/3)

These sectors will likely see upto

8% growth in the next 5 years

Other Prominent sectors will be:• Gems & Jewellery• Energy• Infrastructure• Power

AGENDA

• Introduction of SMERA• SME - Sector Overview• Growth Opportunities for SMEs• SMERA’s Bankers’ Terminal

Bankers’ Terminal

qAccess to multiple lenders

qVisibility and brand building opportunity

qFaster access to loans

qConfidence building amongst

stakeholders

Bankers’ Terminal

Knowledge Center

Prospecting bySMERA Sales

Team

SMERA Verified