Services have an edge over manufacturing

CRISIL has analysed the sales growth of 9,200 micro, small, and medium enterprises (MSMEs) in the manufacturing and service sectors. Their performance was analysed for the period from 2009-10 to 2011-12 (refers to financial year, April 1 to March 31). The analysis reveals that MSMEs in the service sector performed marginally better than their counterparts in the manufacturing sector. Service sector MSMEs achieved sales growth at a compound annual growth rate (CAGR) of 30.46 per cent, whereas manufacturing MSMEs registered a CAGR of 29.42 per cent in the evaluation period.

Growth of service-sector enterprises was driven mainly by MSMEs operating in the trading segment. Their high growth rate of 35.20 per cent can be partially attributed to the highly volume-driven nature of their business and the impact of inflation in the value of goods traded. In comparison, MSMEs in segments like hospitality, transport, education, broking, and consulting registered a growth rate of 24.66 per cent. The sample does not include key service sectors such as banking, financial services, and insurance (BFSI), as these activities are generally not undertaken by MSMEs, owing to their small size of operations.

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.