With banks insisting on credit ratings for extension of loans at lower interests, the spinning mills in Tirupur and its hinterland have started adopting a consultative approach for effective representation of company-related data to credit agencies for procuring best possible rating.
To help the mills present the company’s financials and strengths in a scientific manner for optimising the credit ratings, the Texpreneurs Forum, comprising different textile-sector stakeholders, have engaged a group of experts for consultations.
“Our aim of engaging the experts and have an interaction with them is to make the units understand what all the parameters the credit rating agencies look for when computing the ratings for respective companies.
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“Unless a company knows such details, it might miss giving some key data which otherwise could boost up the credit rating to higher levels than the eventual figures assigned to them,” Prabhu Damodaran, secretary of Texpreneurs Forum, said.
Optimisation of credit ratings would be bringing immense benefits to the spinning mills which were highly capital intensive in operations.
“Higher rating will improve the bargaining power of the units to get loans at much lower interest rates and also will come in handy when asking for enhancement of credit limits,” pointed out S. Dhananjayan, industry consultant and chartered accountant.
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As tips for optimising the credit ratings from within the strengths, Rohit Mahajan, one of the consultants deployed by Texpreneurs Forum, said that the units in Tirupur region need to concentrate on reducing the ‘working capital intensity’ so that fund requirements would come down.
“They also need to infuse fresh equity from their own resources, opt for term loans of longer maturity profile and modernise the existing machinery, all of which will help increase the credit rating,” he added.