With banks insisting on credit ratings for extension of loans at lower interests, spinning mills in Tirupur and its hinterland have adopted a consultative approach for effective representation of company-related data to credit agencies for procuring the best possible rating. To help mills present the company’s financials and strengths in a scientific manner for optimising credit ratings, the Texpreneurs Forum, comprising different textile sector stakeholders, has engaged a group of experts for consultations.

The aim of engaging the experts and having an interaction with them is to make units understand what parameters credit rating agencies look for when computing the ratings for respective companies. Unless a company knows such details, it might miss giving key data which otherwise could boost the credit rating to higher levels than the eventual figures assigned to them.

Optimisation of credit ratings would bring immense benefits to spinning mills which are highly capital intensive in operations. A higher rating would 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. Units in Tirupur need to concentrate on reducing the working capital intensity so that their fund requirements 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.