Resilient MSMEs in small cities face growth moderation

CRISIL has analysed the sales performance of 8,500 micro, small, and medium enterprises (MSMEs) from 2009-10 to 2011-12 (refers to financial year, April 1 to March 31). The analysis reveals that the sales of enterprises in non-metropolitan cities registered steep growth of 22 per cent in 2010-11. However, the growth trajectory got moderated in the subsequent year, 2011-12, to 15.1 per cent. Comparatively, sales of MSMEs in the 8 metropolitan cities of Mumbai, Delhi, Chennai, Kolkata, Bengaluru, Hyderabad, Ahmedabad and Pune grew by 5.4 per cent in 2010-11. They registered growth of 9.6 percent in the following year, 2011-12.

Despite volatility in the overall economic environment with heightened concerns on high inflation and high rate of interest in the last couple of years, MSMEs in the non-metro locations continued their growth march, albeit with a moderated trajectory. On the other hand, enterprises in the metro locations continued to move up from their relatively lower pace of growth by capitalising on their locational advantages of being in a large market and seizing opportunities emerging in the service sector.

Note: The analysis is based on the latest audited financial statements of CRISIL-rated MSMEs. Most enterprises finalise their audited financials by the end of the second quarter, after the closure of the financial year. CRISIL rates over 45,000 MSMEs in India.This fortnightly tracker presents to our readers insights on MSMEs, a key element of the Indian economy.