New industrial hubs to arise from Andhra Pradesh split

CRISIL has analysed the growth performance of 405 micro, small, and medium enterprises (MSMEs) rated by it in the erstwhile Andhra Pradesh (AP), now Telangana and AP. Their performance was analysed for the three-year period 2010-11 to 2012-13 (refers to the financial year, April 1 to March 31). The study was conducted to understand MSMEs' growth and regional spread in AP.

The average sales of the sampled MSMEs showed a compound annual growth rate (CAGR) of 30 per cent in the analysis period, driven mainly by growth in the Hyderabad region, an industrial hub that has 84 per cent of Telangana's MSMEs, and by enterprises in Visakhapatnam, a rapidly developing hub that has 36 per cent of the MSMEs in present-day Andhra Pradesh.

  Given the industrial saturation in the Hyderabad region, the AP split is set to open up growth and employment opportunities for MSMEs in both the new states, helping them emerge as supplementary manufacturing hubs. CRISIL believes that government initiatives to create investments in the emerging districts of the two states will play a crucial role in catalysing their future growth.

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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.