SMERA RATING RESEARCH PROJECT

Introduction

SMERA is the only rating agency dedicated to provide comprehensive, transparent and
reliable rating for specifically SME units in India. SMERA Ratings categorize SMEs based
on size; this enables rational comparison of companies of the same size, thus ensuring
that the smaller companies are not at a disadvantage while applying for credit.

SMERA Rating Research Project aims to assess and quantify the value add of SMERA
rating on access to finance for Small Businesses in India. The Small Enterprise Finance
Center (SEFC) of the Institute of Finance Management and Research (IFMR) in Chennai
and Massachusetts Institute of Technology (MIT) in US will implement the independent
project with full scientific approach.

Scope of the Project

• The project will be conducted in three cities across the country- Delhi, Mumbai
and Chennai.
• The participants SMEs will participate in the baseline survey followed by two
follow-up surveys at six month’s interval each.
• The participants will be divided into two groups (Control and Treatment) by
SEFC.
• SMERA will provide rating immediately to half of the participating companies,
who fall under the Treatment Group with 20% discount on rating fees. The
companies that fall in the Control Group will be rated after one year with higher
discount (50 %) on rating fees.
• The improvement in performance of the business will be assessed over the
project period to determine the impact of the rating.
We appreciate your interest to participate in the study. Please find our discounted
rates (in case of possessing a SSI registration) for the volunteers of the study below.

Rating Fee

1. For SMEs other than registered SSIs

Catego Networth Current Fee Treatment Treatment Control group-

ry payable group first group second first year only
(Rs.) year (20%) year (40%) (50%)
A 20 Crore 61,798 Not eligible Not eligible Not eligible
B 5 Crore to 20 44,944 35,955 26,966 22,472
Crore)
C 1 Crore to 5 33,708 Not eligible Not eligible Not eligible
Crore)
D upto 1 Crore 22,472 17,978 13,483 11,236
Including 12.36% service tax

2. For SMEs registered as SSI units and eligible for subsidy under NSIC-
SMERA Performance & Credit Rating (The fees and inclusion under NSIC Scheme is
subject to any change NSIC may effect during the period of the study.)

a. Current rating fee (in Rs)

Category Networth Turnover

Application for SMERA Rating Research Project

 < 50 lakh 50-200 lakh >200 lakh
A > Rs. 20 Crore 36,798 31,798 21,798
B 5 Crore to 20 Crore 19,994 14,944 11,236
C 1 Crore to 5 Crore) 8,708 8,427 8,427
D upto 1 Crore 5,618 5,618 5,618
Including 12.36% service tax

b. Discounted rating fee (in Rs)

Treatment Treatment Control group-
group first year group second first year only
(20%) year (40%)** (50%)
B Category SME
<50 Lakh Turnover 15,995 26,966 9,997
50-200 Lakh 11,955 26,966 7,472
Turnover
>200 Lakh Turnover 8,989 26,966 5,618
D Category SME
<50 Lakh Turnover 4,494 13,483 2,809
50-200 Lakh 4,494 13,483 2,809
Turnover
>200 Lakh Turnover 4,494 13,483 2,809
Including 12.36% service tax
** Subsidy is not available during the second year of rating

Application process
Please fill the application form and send the completed form to our contact officer in
Mumbai, Chennai or Delhi before 15th of July 2007. 150 applicants from each
category (B and D) would be selected on first come first serve basis. The
nonrefundable fee payment will be collected after the identification of the treatment
and control groups. Please do not make any payments with the application. After the
identification of the treatment and control groups; all the 19 documents mentioned in
Annexure 3 must be submitted by the treatment group latest by the end July 2007.

Mumbai Chennai Delhi

Mr. Sanjay Kher Mr. Virendra Goyal Mr. Sumeet Mehta

Seagull House, 1st Floor,
Plot No.6, Shivaji Colony,
Andheri – Kurla Road,
Chakala, Andheri (East),
Mumbai – 400 099
Tel: 022 – 6452 4371
Fax: 022 – 6714 1142
Email:
info_mumbai@smera.in
Eldorado Building,
No. 112, 7th Floor,
Nungambakkam High Road,
Nungambakkam,
Chennai – 600 034
Tel: 044 – 2823 4848/ 2122
Fax: 044 – 2821 1414
Email:
info_chennai@smera.in
Ground Floor,
Videocon Tower,
E-1, Rani Jhansi Road,
Jhandewalan Extension,
New Delhi – 110 055
Tel: 011-6452 4231
Fax: 011-3052 0144
E-mail: info_delhi@smera.in

Documents to be submitted with the application form

Please submit the following documents out of the 19 documents specified in the
Annexure 3 with the application form. Rest of the documents would be collected from
you after the identification of the treatment and control groups latest by the end of July
2007.
1. Copy of audited accounts for the latest three financial years

Application for SMERA Rating Research Project

 2. Copy of insurance policies along with annexure (stock, plant and machinery,
building etc)
3. List of all Partners / Directors with Age, Address, Qualifications, Experience
and details (Name of Co, Line of Business and address of Co) where they
have interest (shareholding) in other Co.
4. Individual Networth Statement of Proprietor / all partners / all directors as
format enclosed.
5. Copy of valid Small Scale Industry Registration Certificate.
6. Bank Statement of a/c for one year for all the Loans (For EMI Based Loans)
7. Sanction Letter of Credit from Existing Bank

About SEFC

The SEFC is one of the five research Centers in IFMR aiming to advance the research
and practice of small enterprise financing and development in India to ultimately
develop a vibrant SME sector. The Center:
• Conducts and facilitates systematic, rigorous research projects at the small
enterprise level as well as the SME banking level in partnership with banks,
financial organizations and NGOs
• Offers regular advanced financial training courses for the Indian banking sector
in partnership with the Financial Services Volunteer Corps (FSVC).
For more information on the center, please visit http://www.ifmr.ac.in/sefc

Application for SMERA Rating Research Project

 Please Answer the Following Questions
1. Please tick the appropriate box for the source from which you get to know
about this project

i. Industrial/ Association Magazine (Mention the

name)____________________________ [ ]

ii. SMERA Website [ ]

iii. Friends [
]

iv. Others (Please specify) _________________________________________________ [

]

2. What is the current net-worth of the company?

i. More than 20cr (A Category) [ ]

ii. 5 cr to 20 cr (B Category) [ ]

iii. 1cr to 5cr (C category) [ ]

iv. Below 1 cr (D Category) [ ]

Please note that only SMEs in Chennai, Delhi and Mumbai, falling in B and D
category are eligible to participate in the Research Project!

3. What is the current turnover of the company?

i. <50 Lakh Turnover [ ]

ii. 50-200 Lakh Turnover [ ]

iii. >200 Lakh Turnover [ ]

4. Is the company registered and possesses a valid SSI registration certificate

(in order to be eligible to receive the NSIC subsidy)

i. Yes [ ]

ii. No [ ]

Application for SMERA Rating Research Project

 Annexure No 1

FORMAT OF THE REQUEST FOR OBTAINING SMERA RATING

To be printed on the Applicant’s Letter Head

SME Rating Agency of India Ltd.

Seagull House, 1st Floor,
Plot No.6, Shivaji Colony,
Andheri-Kurla Road,
Chakala, Andheri (East),
Mumbai – 400 099

Dear Sir,

I / We desire to get “SME Rating” of my/our unit by SME Rating Agency of India Ltd

I / We attach herewith Application Fee of Rs ________ /- by way of Cheque / DD No ____________ Dated

________.in favour of “SME Rating Agency of India Ltd”.

The Application Form as per Annexure – 2 and the documents as listed out in Annexure – 3 are enclosed
herewith.

I / We certify that the details given in this application are true and correct and no material fact has been
concealed or withheld. Further, I / We consent to accept the rating assigned by SMERA as final.
Signature & company seal __________________________

Name of the Signatory________________________________

Designation __________ ______________________________

Company Name _____________________________________

Address____________________________________________

___________________________________________________

City _________________ Pin ___________________________

Email Id : __________________________

Tel. No.________________________ Fax No. ______________Date ________________

Place _______________________________________________

Note:
1] The application is to be submitted in duplicate. All documents should be submitted complete in all respects
to avoid delay in processing.

Application for SMERA Rating Research Project

 Annexure No 2
APPLICATION FORM

PARTICULARS OF INDUSTRIAL CONCERN

1. Name of the Applicant
and Address of Head
Office Pin code_________ Phone____________Fax___________

* Factory:
Please give address of
all the factories / works Pin code_________ Phone____________Fax___________

Registered Office
Address

Phone____________Contact Person___________

Branches / Others

Pin code___________ Phone__________Fax ___________

2. Constitution:
Proprietorship/ Partnership/ Private
Ltd/ Limited Co./ Coop. Society
3. Established in year:
4. (a) Nature of Industry

Is the unit an SSI Yes / No

(b) Products

5 * Details of Promoters :
S.No.:
Name(s) of Proprietor / Partner / Director:
Address :
Phone Nos / Mobile Nos:
Name of contact Person for SMERA Rating :

Phone No & Mobile No :

6. Name and Address of

Associate Concerns

7 Details of existing borrowings / banking arrangements

Name & Address of Fin. Instts. / Account Nature of Loan Amount
Bank / Lenders (from whom the unit Number assistance & (Rs.)
has availed loan / credit limit) Address / loan limit
& Address availed

* For details please attach separate sheets.

Signature __________________

Application for SMERA Rating Research Project

 Name of the Signatory ________________________ Designation ___________

Annexure No 3

CHECK LIST

1 Copy of the audited accounts for the latest three financial years
(i.e. 2003-04, 2004-05, 2005-06) along with schedules, auditors FY 04 FY 05
report, Director’s report , notes to account and Form 3 CD & 3 3CD & 3CD FY 06 3 CD &
CB, wherever applicable. CB &CB CB
2 Copy of Insurance policies along with annexure (stock, plant &
machinery, building, etc).
3 Banker's confidential letter in sealed envelope from all the
existing Bankers.
4 Production Capacity & Actual Production breakup - Product wise
for FY 2004, 2005 & 2006.
2004 2005 2006
5 Partnership Deed / Memorandum & Article of Association ;
Details of Shareholding / profit-sharing ratio.
6 List of all Partners / Directors with Age, Address, Qualifications ,
Experience and details(Name of Co , Line of Business and
address of Co, )where they have interest(shareholding) in other
Co.(In attached format)
7 Individual Networth Statement of Proprietor / all partners / all
directors along with annexure .
8 List of plant and machineries as on date.

9 Employee base with bifurcation of Contractual & Permanent

employees for the year 2005 and 2006.
2005 2006
10 Copy of Small Scale Industry Registration Certificate.

11 Copy of Central Sales Tax Registration Certificate and State Central State
Sales Tax Reg. certificate. ST ST
12 Brief write-up about products manufactured, end users, Brief of Marke Orders in
marketing tie-up and orders in hands. Product ting Hands
13 Copy of Quality certificates, Pollution Control Certificate ,
awards won, membership of any associations.
14 Details of subsidy, tax concession available to the applicant

15 In case of new project/expansion, copy of the project report

containing a brief project profile, cost of project, source/means of
finance.
16 You may provide any other information for better understanding
of your business.
17 Bank Statement of a/c for one year for all the Loans and Banks) Hire
Cash Term purchases and
Credit Loan Others
18 History of Change in Constitution , Name
( History for Change in Capital for Pvt Ltd and Ltd Co as per
format attached).
19 Sanction Letter of Credit from Existing Bank

*** If any item is not applicable Please strike it off in check list and provide us separately rational for
the same.

Application for SMERA Rating Research Project

 Annexure No 4

CAPACITY AND PRODUCTION OUTPUT SAMPLE FORMAT

PRODUCT NAME : ****************

Period : 2003 to 2004

Actual Output : ***** Units per year
Production Capacity : ***** Units per year

Period : 2004 to 2005

Actual Output : ***** Units per year
Production Capacity : ***** Units per year

Period : 2005 to 2006

Actual Output : ***** Units per year
Production Capacity : ***** Units per year

Annexure No 5

LIST OF ORDERS IN HAND AS ON / /2006 SAMPLE FORMAT

Customer Name Product Description Quantity (in pieces Order Value (in INR)

Annexure No 6

LIST OF PLANT & MACHINERY SAMPLE FORMAT

S.No Descriptio Quantity Year of Installation Original Cost

n
1

Total

Application for SMERA Rating Research Project

 Annexure No 7

Net Worth Statement as on **/**/2006 SAMPLE FORMAT

Whether
AMOUNT IN Charged
S.NO DESCRIPTION
INR(Lakhs) Mortgaged/Hypo
to Bank/FIs
1
Movable Assets
Cash & Bank Balance

Govt. Securities

Shares

Life Insurance Policies

Post Office Annuity Deposited

Jewellery

Investment In Business

Investment in Associate

(Please specify movable assets in detail)

2
Immovable Assets
Land & Building

(Please specify immovable assets in detail)

3 Total Assets (A)

4 Total Liabilities (B)

(Please specify all liabilities in detail)

5 Net Worth (A –B)

Please provide details of personal guarantees offered and the corresponding liabilities.

Annexure No 8

DETAILS OF EMPLOYEES SAMPLE FORMAT

No. of Employees :
Type of Employees Current year Previous year
Permanent Permanent Temporary Temporary
1. Production Workers
2. Other
TOTAL

Application for SMERA Rating Research Project

 Annexure No 9
Banker’s Confidential Report
Please attach to the form a confidential credit report from your principal banker placed in a sealed envelope. This
credit report should be in the following format: (Note: in the following format, “subject” refers to your company as a
client of the bank)

To be printed on Bank’s Letterhead

Date : ________________

To SME Rating Agency of India Ltd

Mumbai

Dear Sir

We submit herewith “Banker’s Report” as required by you, for our client M/s ________________________
__________________________________ (Your company name with address).

With respect to the above mentioned subject we state as under:

• How long has the subject been your customer? Are the dealings with the subject and its sister companies
satisfactory?
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________

Has the interest payment from the subject been timely? Have their been any defaults by the subject or its
sister companies? If yes, please give the details during last one year.
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
______________________________________________________________________________________

• A brief profile of the subject’s financial relationships with its suppliers and customers (any dishonoring of
cheques due to insufficient fund) during last one year.
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
____________

Loan Particulars:
Amount Sanctioned / Amount Disbursed Amount overdrawn
Limit (Rs in _________) (Rs in _______) as of current date (Rs in _________)
Cash Credit/Working
Capital Demand Loan
Any other Fund based
Non-fund Based
Yours truly,

Authorised Signatory
For __________________Bank

Application for SMERA Rating Research Project

 Annexure No 10

Background Information on Chief Executive Officer/Proprietor/Partners/ Directors

Name :_ ________________________ Designation :_ ________
Address : __________________________
Telephone : ________________________ Email ID :_
Passport No : ____________________________ DOB / Age : ____________
Education
Qualifications : ________________________________________________________________________
Date of Joining the Subject : ______ Date on which assumed the Current Position : ___
Whether Founder of Subject : Yes/ Years in Related Field ___ Total Experience: ___
Whether active in day to day Operations/ Business : Yes/ No
Whether retired/ Resigned : __________________________________________________________________
Past Work Experience :
1 .Name of the Company: __ Last Position Held : ____ Period _
2. Name of the Company: __________________________ Last Position Held : ____________ Period ________

Other Directorships (Please give particulars)

___________________________________________________________________________________________

Annexure No 11
History of Change of Capital for Private Limited and Limited Company

Please provide details of Change in Capital in below format

DATE OF CHANGE :
CAPITAL TYPE : Authorized Capital
NATURE OF CHANGE : Increased
FROM : Initial Capital as per MOA
TO : ****

DATE OF CHANGE :
CAPITAL TYPE : Paid-up Capital
NATURE OF CHANGE : Increased
FROM : ****
TO : ****
CONSIDERATION : Cash /Right issue/Bonus

Application for SMERA Rating Research Project