MSME sales soar in south India

CRISIL has analysed the performance of 5,890 micro, small, and medium enterprises (MSMEs) across India from 2010-11 to 2012-13 (refers to the financial year April 1 to March 31). The analysis reveals that the average sales of these CRISIL-rated enterprises grew to Rs 2,243.43 lakh in 2012-13, from Rs 1,506.83 lakh in 2010-11, at a compound annual growth rate (CAGR) of 22.02 per cent over this three-year period. This in turn was surpassed by the 32.87 per cent CAGR of the nearly 1,200 CRISIL-rated MSMEs in south India - i.e., Tamil Nadu, Kerala, Karnataka and Andhra Pradesh (including Telangana). Average MSME sales in these states grew to Rs 3,299.53 lakh in 2012-13, from Rs 1,882.83 lakh in 2010-11.

As the figure indicates, the key contributors to south India's growth story are mainly MSMEs from the information technology or IT (43 per cent), agro-processing (35 per cent), and pharmaceutical (28 per cent) sectors. Sales growth in the agro-processing sector was driven mainly by pulses (53 per cent), cashew (33 per cent), and paddy (30 per cent). Hyderabad emerged as the key growth driver in both IT (42 per cent) and pharmaceuticals (36 per cent), followed by Chennai (37 per cent) and (14 per cent) respectively for these two industries.

A supportive industrial development policy for these sectors - a major generator of export revenue and employment - can thus prove vital for the growth of south India's overall MSME segment.

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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 50,000 MSMEs in India. This fortnightly tracker presents to our readers insights on MSMEs, a key element of the Indian economy.