A survey report covering a sample of more than 39,000 MSMEs in India on Friday said over 50 per cent of the enterprises, in their post-Covid recovery, saw more than 10 per cent year-over-year growth in sales from May 2021 to March 2024. The MSME Sampark report 2024 by MSME-focused NBFC UGRO Capital and Dun & Bradstreet studied the MSME sample across seven sectors viz., light engineering, food processing, electrical equipment, chemicals, auto components, hospitality, and healthcare over a three-year timeframe. The MSMEs studied were under Rs 100 crore turnover.
Highlighting improvement in credit access, the report noted an increase in the proportion of working capital loans to total secured debt (working capital and long-term secured loans) from 66 per cent in Q1 2023 to 71 per cent in Q4 2023.
“With enhanced formalisation, credit access, and support from financial institutions, MSMEs are leading the way toward a stronger, more prosperous India,” said Shachindra Nath, Founder and Managing Director, of UGRO Capital.
The report added that the debt-to-turnover ratio of MSMEs has also improved for the quarter ending March 2024 compared to the quarter ending September 2023.
“This improvement is evident in firms with a turnover of less than Rs 5 crore in the light engineering, food processing, hospitality, and healthcare sectors. This varies across the other three sectors, i.e. electrical equipment (Rs 10-20 crore turnover), chemicals (Rs 5-10 crore turnover), and auto components (Rs 10-20 crore turnover),” the report said.
Further, the share of regular term loans also increased from 57 per cent in 2020 to 88 per cent in 2023, along with the rise in the proportion of larger ticket loans (more than Rs 10 lakhs) from 19 per cent in 2020 to 40 per cent in 2023 for micro enterprises, reflecting lenders’ confidence in MSMEs.
“To grow and innovate MSMEs would need access to credit and technology. MSMEs contribute around 30% to India’s GDP, but their share in non-food credit remains relatively low at around 6.0% in FY24. Government initiatives aimed at digitalisation and incorporating MSMEs’ digital footprints into credit decisions are expected to further enhance their access to credit, technology, and markets,” said Avinash Gupta, MD & CEO – India, Dun & Bradstreet.