Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Rating Rationale
Acuité has reaffirmed its short term rating of ‘ACUITE A1+’ (read as ACUITE A one plus) on the Rs. 1200.00 Cr. commercial paper program of The National Small Industries Corporation Limited (NSIC).
Rationale for Rating
The rating factors in the support that NSIC receives from Government of India (GoI) by the way of 100 percent ownership. NSIC plays an important role as a nodal government agency and provides support to MSME’s. The rating further factors in comfortable capitalization and liquidity profile of NSIC. NSIC’s revenue stream remains diversified majorly comprising of sale of goods and services and interest income from credit facilities extended to MSME’s. The rating considers NSIC’s secured nature of loan assets which are backed by Bank Guarantees. Going forward, continued GoI support, business growth and profitability would be key credit monitorables.
About the company
New Delhi based NSIC, established in 1955, is a Government of India undertaking, set up under the aegis of Ministry of Micro, Small and Medium Enterprises (MSME Ministry). The ISO 9001-2015 certified company lays emphasis on growth and development of MSMEs across India through various schemes focusing on areas like procurement of raw material, marketing, credit, skill development and technology, among others. It operates through a countrywide network of more than 160 offices technical centres in the country. Apart from commercial activities, it also undertakes promotional activities to achieve its objective of promoting and nurturing the MSME sector. NSIC is registered as an NBFC – ND – SI with Reserve Bank of India (RBI) and acts as a nodal agency for several schemes of the Ministry of MSME. The directors of this company are Mr. Ashok Ahirwar , Mr. Kalandi Charan Samal, Mr. Mercy Epao, Mr. Kartikeya Sinha, Mr. Subhransu Sekhar Achary, Ms. Simmi Chaudhary and Mr. Gaurav Gulati.
Unsupported Rating
Not Applicable.
Analytical Approach
Acuité has considered the standalone business and financial risk profile of NSIC. The rating factors in the strategic importance of NSIC in the development of the MSME sector and Government of India’s ownership.
Key Rating Drivers
Strength
Strong backing by Government of India for development of MSME sector
MSME sector is of significant importance to the Government of India (GoI) given the pivotal role played by the sector in India’s economic growth. The sector accounts for ~40 per cent of the overall exports from India, ~45 per cent of the manufacturing output and contributes nearly 30 percent to GDP. NSIC plays a critical role in promoting and supporting the MSME segment through a combination of commercial activities and implementing Government’s schemes for the sector. Apart from operational and management support, NSIC also benefits from being a 100 percent government-owned entity providing easy access to funding. Apart from regular bank lines, it has also been able to raise long-term funds for up to 40 years from foreign institutions such as KFW, Germany based on sovereign guarantees.
Acuité believes that NSIC will continue to play a key role in the development of the MSME segment and benefit from the GoI’s strong support.
Diversified revenue streams and comfortable liquidity profile
NSIC provides integrated support to MSMEs by providing raw material assistance, marketing support, credit support, and technology and training activities. NSIC derived ~85 per cent of its operating revenue from the sale of products and services during FY2026. Other revenue streams include interest earned through credit facilities extended for raw material procurement, which accounted for ~10 percent; processing fees ~2 per cent. Further, its income is supported by grants received from the government for implementing promotional schemes.
NSIC extends advances to MSMEs for procurement of raw material against bank guarantees. As per its credit policy, NSIC advances loans of up to 95 per cent of the value of the bank guarantee. Since the exposures are covered by bank guarantees, overall asset quality has been satisfactory. The exposure to a single borrower is up to a maximum of Rs 8 Cr. with 90 days maturity and is rolled over subject to borrowers’ satisfactory credit discipline. Since the exposures are mostly short term in nature, borrowings are also mainly short term borrowings. A major portion of the resources is raised through short term bank lines from a mix of foreign and domestic banks.
Acuité believes that NSIC will maintain a stable credit profile on the back of its diversified product mix, a prudent policy of lending against bank guarantee and availability of adequate liquidity cushion
Weakness
Future growth prospects linked to GoI support amidst increasing competition in key revenue segments
NSIC largely depends on government’s budgetary allocation for promotion of various government schemes. The quantum of grants and subsidies from the government is a key determinant of its operational performance. Further, NSIC derives a major part of its revenue through its raw material assistance scheme. It acts as an aggregator procuring raw material such as coal, iron, steel, cement and paraffin among others from government companies including Coal India Limited, Steel Authority of India Limited, Hindustan Copper Limited in bulk and provides the same to MSMEs at competitive rates. The emergence of private players with similar business models adds to the competitive intensity of this segment. The increasing number of banks and NBFCs focusing on SME lending further adds to the increasingly competitive landscape.
Against the backdrop of increasing competition in its key revenue segments like raw material procurement, NSIC will have to depend on other government-funded schemes to scale up its revenue and profitability. Hence, Acuité believes that the level of government support will be a key driving force for NSIC’s future growth.
Rating Sensitivity
Potential triggers (individual or collective) for an upward rating action:
Not Applicable.
Potential triggers (individual or collective) for a downward rating action:
Deterioration in profitability metrics & Debt to equity above 3 times.
Impact of any material changes in the market environment on business operations.
Liquidity Position
Strong
The liquidity profile of the company is strong. The company generated a net cash accrual of Rs. 169.62Cr. as on as on 31st March 2026 against Rs.2.50 Cr. debt repayment obligations in the same period. The NCA are expected to be in the range of ~Rs.190 Cr. to Rs.220 Cr. during FY27-FY28 against the repayment obligation of ~Rs.2.50 Cr. during the same period.The current ratio of the company stood similar at 1.63 times as on 31st March 2026 against 1.65 times as on 31st March 2025. Further the cash and bank balances stood at Rs. 104.60 Cr. in FY26 as against Rs.85.41 Cr. in FY25. Acuite believes that the company’s liquidity profile remains strong, supported by healthy accruals and comfortable coverage of debt obligations.
Outlook: Not Applicable.
Other Factors affecting Rating
None.
Key Financials - Standalone / Originator
Particulars
Unit
FY26(Actual)
FY25(Actual)
Total Assets
Rs. Cr.
3716.61
3355.24
Total Income*
Rs. Cr.
3865.78
3520.63
PAT
Rs. Cr.
159.19
146.30
Net Worth
Rs. Cr.
1572.88
1459.08
Return on Average Assets (RoAA)
(%)
4.50
4.48
Return on Average Net Worth (RoNW)
(%)
10.50
10.43
Debt/Equity
Times
1.09
1.02
*Total income equals to Net Interest Income plus other income
Status of non-cooperation with previous CRA (if applicable):
Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Contacts
List of instruments and names of regulators of the instruments
