CRISIL has assigned its corporate credit rating of ‘CCR AA-’ to Surat Municipal Corporation (SMC). The rating exercise has been carried out under a mandate from the Ministry of Urban Development, Government of India, as part of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM).

The rating reflects SMC’s robust revenue surplus, driven by strong revenue generation; healthy financial risk profile, marked by strong debt protection measures and liquidity; large industrial belt, strengthening the economic base; above-average service coverage; a responsive local administration with robust governance systems; good focus on implementation of reforms under JNNURM; and sound project execution ability. SMC’s revenue surplus increased at a healthy compounded annual growth rate (CAGR) of 24 per cent to Rs.3.44 billion in 2006-07 (refers to financial year, April 1 to March 31), from Rs.1.76 billion in 2003-04. The growth is mainly driven by strong revenues and low debt charges. The rating also factors in the amalgamation of new areas with below-average services into SMC’s service area, resulting in high investment requirements, and underdeveloped non-octroi revenues.

About SMC
SMC was formed in 1966 and is governed by the Bombay Provincial Municipal Corporation Act, 1949. It covers an area of 327 square kilometres and provides a range of civic services to around four million residents of Surat city. The major services provided by SMC are water supply, sewerage, drainage, roads, primary education, health care, and solid waste management. In 2006-07, SMC generated revenue receipts of Rs.8.02 billion.