CRISIL SME TRACKER MSMEs

Consumption of electronics in the domestic market is estimated to grow 15-20 per cent to Rs 11-12 trillion, compared with 18-22 per cent growth last fiscal

The sector operates in three key segments -- customer relationship management (CRM), knowledge, and transactions.

Small and medium enterprises (SMEs), which make up as much as 30-35 per cent of the industry, have been hit particularly hard

Long constrained for liquidity, MSMEs now also have to cope with loss of demand, labour shortage, and heightened risk aversion in the financial system due to the Covid-19 pandemic.

The extended lockdown to stem the spread of the Covid-19 pandemic has disrupted supply chains and hampered factory operations.

Small and medium enterprises (SMEs), which account for nearly a third of the industry's revenue, with a varying share in different segments, are expected to be hit hard

In fiscal 2020, CRISIL Research expects domestic demand for specialty chemicals to remain robust, driven by key end-user industries

Agrarian states have a higher percentage of working age population, a chunk of it based in rural areas

CRISIL's analysis shows that the price of kraft paper, which accounts for about 60 per cent of input cost, has surged 12 per cent this fiscal on supply constraints

Micro, small, and medium enterprises (MSMEs) which plough back profits into the business tend to grow faster, compared with peers that don't. CRISIL's analysis of 3,000 rated MSMEs registered as proprietorships and partnership firms shows that 41 per cent had retained profits in 2014-15. The internal accruals allowed these units to manage a prudent mix of debt and equity to fund expansion/modernisation and meet increased working capital requirements. This enhanced their image with lenders, compared with peers which withdrew profits from the business, and allowed these units to raise 20 per cent higher borrowings.Better availability of capital, in turn, led to enhanced capacities and faster revenue growth. In fact, in the three years through fiscal 2015, revenue growth of the firms which had retained profits was double the rate logged by their peers. Operating profit margin (OPM) improved, too. In fiscal 2015, average OPM of the firms which retained profits was 52 per cent higher, compa

However, within the segment, players with a longer track record have a greater chance of securing such funding

Which are the micro, small and medium enterprise (MSME) sectors that would gain from the government's Smart Cities Mission?We believe MSMEs offering healthcare, information technology and IT-enabled services, education, logistics, transport and urban development-related services such as real estate and waste management will be gainers.An analysis of more than 340 CRISIL-rated MSMEs in these sectors shows them posting a healthy topline growth of 16-28 per cent in 2014-15.In January 2016, the government named 20 cities - out of 98 shortlisted for the mission - that would be the first to receive funds to execute their relevant projects.Being localised and of a relatively low value, we believe MSMEs are best placed to win contracts pertaining to the Smart Cities Mission, given their regional experience and local infrastructure.The next two years will also see the remaining 78 cities shortlisted, kicking off their projects after receiving funds. CRISIL therefore foresees MSMEs benefiting si