While the Credit Rating essentially refers to relative ranking of debt instruments and/or borrowing programmes of business entities based on probability of default, the term Grading indicates ranking of an entity in terms of performance (both operational & financial), infrastructure, business potential, contribution to the society and so on. It is, though perceived to be used synonymously with rating, but essentially it is a relative assessment of the fundamentals of the entity on a point wise scale (1-5 or 1-8) as opposed to the generic credit rating scale (AAA-D).
Grading Methodologies, scale and definition:
Infomerics Grading of Healthcare Entities is an independent third party assessment of the available facilities, service quality levels, quality of professionals and infrastructure quality.
The gradings are assigned for various types of entities in the healthcare sector namely Large Hospital Chains, Large Hospitals (standalone), Medium & Small sized Hospitals and Nursing Homes. The grading as assigned is for the particular healthcare entity and are not related to the other entities in the group / organisation. This grading exclusively pertains to healthcare related activities and is not applicable to medical colleges. This grading is given for particular region specific and on pan-India basis and hence, it varies.
Usefulness of Grading
For the purpose of Grading of Healthcare Entities, Infomerics undertakes detailed analysis encompassing the following criteria –
1. Promoters & Management
Infomerics analyses the promoter’s financial soundness and resourcefulness, past experience in the healthcare sector, especially Promoter’s track record, criticality of the unit in the group and quality of top & middle management.
2. Operational Highlights
Infomerics takes into account the available infrastructure, location & accessibility, revenue profile & pattern, details of activities & facilities provided, number & profile of doctors, quality of equipment, average occupancy level, empanelment with Third Party Administrators (TPA) and Insurance companies, effectiveness of Out-Patient Department (OPD), procurement procedures for medicines & other tools, ongoing expansions, compliance of regulatory requirements and instances of mishandling & failure in the past .
3. Financial Strength
Infomerics evaluates the financial strength of the entity by considering various parameters such as networth base, debt level, profitability & earning protection, gearing and past debt servicing & suppliers payment track record. The evaluation looks into the resourcefulness of the entity for future growth plans and its ability to manage the resources optimally.
4. Human Resources Management
Infomerics analyses the Human Resource policies pertaining to recruitment, training and retention of medical & other related professionals. The evaluation also takes into account the attrition level amongst professionals and the underlying reasons.
5. Patients Care and Rights
Infomerics evaluates the standard policies adopted by the entity in treatment of the patients and promptness in service. It is a reflection of the healthcare, treatment and rehabilitation provided to the patients. It also takes into account the prevalent safety measures, infection control procedures followed, patient-doctor relationship and management of waste disposal.
6. Future Plans
Infomerics takes into account the growth potential in the catchment area, proposed expansion plans & its relevance in context of future business potential and business threat, if any.
Infomerics uses the grading scale for all types of healthcare entities, except for the medical colleges. This grading is generally given region specific. When the grading is assigned on pan-India basis, then the suitable disclosure is made. For assessment of pharmacies and diagnostic labs relevant parameters such as sample collections, lab facilities available, availability of medicines in stocks would be assessed.
Infomerics Grading of Healthcare Entities assesses the financial strength, quality of various medical services & treatments at a particular point of time. The situation and the circumstances may vary with progression in time which may lead to upgradation / downgradation of the grading assigned. The true benefits of this grading product lies in greater visibility and credibility in the market among the patient community, doctors community and the lenders/investors community because of the structured evaluation and rigorous approval process followed while assigning the grading. This grading product brings with it credibility, reliability and transparency in view of the fact that the grading is being assigned by an Independent Agency.
The initial grading is valid for a period of one year. The entity can get the grading renewed after submission of a written request.
The grading is assigned on a seven-point scale starting from HC-1 to HC-7 with HC-1 being the highest and HC-7 being the lowest.
The detailed Grading scale is furnished hereunder:
Disclaimer: Infomerics grades the healthcare entity on various qualitative and quantitative parameters and does not meant, nor intend to comment on the probability of outcome of any particular treatment and medical procedure.
This is a grading product for management institutions/engineering colleges. It comprises the assessment of the quality of various courses offered based on robustness & adequacy of all the relevant resources (including infrastructure) and the effectiveness of the processes followed in fulfilling the objective of each such courses. The true benefits of this product would be greater visibility and credibility of the institute in the market thereby boosting the confidence of the student community. It reflects the ability of the institute in imparting education for a particular course. The product is uniquely positioned as it comes from an Independent Agency; thus, adding transparency, reliability and credibility to the grading.
(I) Student Community - Typically, students and parents take decisions based on news paper & magazine reports on B Schools/engineering colleges which fluctuate widely, on a year to year basis. A grading from Infomerics Ratings would lend much more stability & reliability to an Institute's credentials.
(II) Corporates - The corporates can give more importance if there is a grading of the course by an independent agency like Infomerics Ratings, thereby enhancing the probability of reputed corporates visiting for campus recruitment in case the grading is on the higher side.
(III) Banks - While extending education loans, Banks will get added comfort if the Institution is graded by Infomerics Ratings , as the chances of students getting placed properly are higher & therefore the loan repayment is more assured.
Disclaimer – Grading assigned by Infomerics is not a recommendation to a student to enroll with an institute, but is an opinion on the capability of the institute to fulfil the objectives of the management education / engineering courses effectively.
MFI Grading is a symbolic indicator of INFOMERICS Ratings' current opinion on the relative capability of the Microfinance Institution (MFI) concerned to manage its microfinance activities in a sustainable manner. The focus of our MFI Grading exercise is on evaluating the institution's business and financial risks. MFI Gradings are assigned on a 8 point scale from ‘IVR 1’ to ‘IVR 8’
|IVR SME 1||Highest|
|IVR SME 2||High|
|IVR SME 3||Above Average|
|IVR SME 4||Average|
|IVR SME 5||Below Average|
|IVR SME 6||Inadequate|
|IVR SME 7||Poor|
|IVR SME 8||Default|
SME Grading is an independent and professional opinion on the fundamentals of the issuer. The grade assigned to a particular entity represents a relative assessment of the 'fundamentals' of that issuer. It is based on a detailed analysis of business fundamentals which provide inputs for investment decision & boosts investor confidence. SME gradings are assigned on a 8 point scale from ‘IVR 1’ to ‘IVR 8' .
|IVR MF 1||Highest|
|IVR MF 2||High|
|IVR MF 3||Above Average|
|IVR MF 4||Average|
|IVR MF 5||Below Average|
|IVR MF 6||Inadequate|
|IVR MF 7||Poor|
|IVR MF 8||Lowest|
After nationalization, Indian banking sector witnessed earmarking of substantial amount of resources for meeting the credit needs of the poor. The banking network underwent an aggressiveexpansion phase. Credit products and programmes have been designed based on the perceived needs of the poor. Programmes also underwent qualitative changes based on the experiences gained. Besides the programmes initiated by the Central Government, a large number of credit-based programmes were introduced by the state governments with large resource allocations.
Microfinance is a financial services for entrepreneurs and small businesses lacking access to banking and related services. The two main mechanisms for the delivery of financial services to such clients are: (1) relationship-based banking for individual entrepreneurs and small businesses; and (2) group-based models, where several entrepreneurs come together to apply for loans and other services as a group. Customers of MFIs do not generally have access to formal banks and depend on informal channels to fulfill their credit needs.
Infomerics MFI grading service is an assessment of the overall performance of the MFI over a set of various parameters. The grading is a current opinion based on the ability of the MFI to conduct its operations in a scalable and sustainable manner. The various parameters are as follows:
|1 ) Management Evaluation||Track record in micro finance business.|
|Profile & quality of top managerial personnel.|
|Human resource management.|
|2) Practices and Strategies||Governance practices.|
|Internal control system.|
|MIS & monitoring system.|
|Process control & audit.|
|Transparency in usage of grants & funds.|
|Strategies & vision.|
|3) Operational Risks||Office outreach.|
|Diversity of products.|
|Lending process & policy.|
|Loan monitoring policy.|
|Risk management system.|
|Recovery mechanism & collection efficiency.|
|Pending litigation, if any.|
|Social & local status.|
|4) Access to Resources||Borrowings composition.|
|Borrowings profile diversity.|
|Cost of borrowings.|
|5) Financial Risk||Accounting policies. Size of capital.|
|Nature of capital & access to grants.|
|Interest rate policy.|
|6) System Scalability||Fund & resource raising ability|