Registered MSMEs attract strong clients

CRISIL has studied the client profiles of 21,145 micro, small, and medium enterprises (MSMEs) which it rated from January 2011 to May 2014. The study indicates that large corporations and international organisations - typically the strongest customers for MSMEs - find greater comfort in dealing with registered as opposed to unregistered MSMEs. Of the sample studied, public limited companies had the maximum number of corporate and overseas clients, at 36 per cent for publicly-held and 28 per cent for closely-held companies. CRISIL believes that this is due to their higher levels of governance and transparency as compared to unregistered MSMEs.

Private limited companies and registered partnerships held an equal share of 22 per cent each, followed by unregistered MSMEs at 19 per cent. These unregistered enterprises, comprising proprietorship and partnership firms, cater mainly to open-market wholesalers, distributors and retailers. Further, sound governance places the registered MSMEs in a better position to attract funding for their growth prospects through private equity and angel-funding