New credit rating tool for MSMEs in Telangana

Rating agencies now rate MSMEs on the basis of parametres they have for other types of institutions, which are far above the threshold of many MSMEs.

Hyderabad: The Telangana Industrial Health Clinic Limited (TIHCL), the State support fintec NBFC for revival and rehabilitation of manufacturing MSMEs, is now developing a new credit rating tool for MSMEs, among various other initiatives to help the sector. This will be the first-of-its-kind initiative and will take into consideration various factors that are likely to induce stress in a unit.

Speaking to Telangana Today, TIHCL adviser Dr B Yerram Raju said the effort is to ensure that industrial units do not turn sick. The rating will also point out factors that need to be focused on to ensure that the financial health does not slip. “Rating agencies now rate MSMEs on the basis of parametres they have for other types of institutions, which are far above the threshold of many MSMEs. When they go through this, there is a likelihood of the MSMEs falling short of the parametres,” he said stressing the need for a special rating.

“Many think of entrepreneurs as a different breed that is devoid of any other expenses. That is not the case. The expenses vary with different age groups. We will look at funds needed to meet these expenses and the quantum of resources that can be apportioned for production, technology and other factors,” he said. The work is on and it will take about a year for the rating system to be in place. “We will also develop a health score for industries,” he said.

The TIHCL now has data on about 100 units and the goal is to have it for 500-600 units so that Artificial Intelligence and Machine Learning can be used to gauge financial health trends, he said. TIHCL is now working on a Covid loan assistance programme (CLAP). “Industries are afraid of declaring themselves as sick. They are afraid that their creditors will not pay them their bills or their debtors will pressurise for payments. In this scenario, we reach out to the units and counsel them on the best way out,” he said adding that food processing, plastics and manufacturing had been hit severely due to Covid.

It has 68 success stories in three years and saved employment of 1,469 workers, saved physical assets of Rs 88 crore and prevented assets worth Rs 1.3 crore from going under the hammer.

New support

The Telangana government recently released a grant assistance of Rs 10 crore. TIHCL has also applied for funding from various international agencies. “We are looking to raise about Rs 50 crore from international agencies over the next three years,” he said.

New desks

TIHCL has put up desks at Pashamylaram and Gandhi Nagar, Patencheru and other industrial areas. Its executives interact with the units and try to resolve them or escalate the issues to the head office for further support. It will extend the service to other industrial areas even as it plans to recruit more interns.

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