The second quarter of FY10 may be the upturn point for MSMEs in India, says an industry body
The positive sentiment built up in second quarter of FY10 among the micro, small and medium enterprises(MSME) companies is expected to carry forward into the third and the fourth quarter, says an industry body. According to a Confederation of Indian Industries (CII) survey, there is a positive shift in turnover and order booking during the second quarter of FY10 compared to the first quarter.
“It appears that the worst of the crisis period is over and a turnaround seems within sight for most of the industry,” said Salil Singhal, chairman, CII National MSME Council.
An assessment of the expectations of the MSMEs for the third quarter of FY10 revealed that 54% respondents expect an increase in turnover, 43% respondents expect an increase in production and 45% respondents expect an increase in their order bookings, the survey said. Also, 31% and 37% of respondents expect an increase of their export and profitability, respectively, compared to the second quarter of 2009-2010, the survey added.
The survey also highlighted that during the second quarter, nearly 45% respondents registered an increase in turnover; 42% reported an increase in production and 38% increase in order-booking compared to the previous quarter.
Most MSME companies are profiting due to the various incentives announced by the Union government and the Reserve Bank of India (RBI).
And beneficial impacts were expected from the first and second stimulus packages that the government has given.
Also, initiatives such as special monthly meeting of state level bankers’ committees (SLBCs), enhancement in the guarantee cover under credit guarantee scheme from 50% to 85% for loans up to Rs5,00,000 and Rs50 billion credit from RBI to Export-Import Bank of India for pre- and post-shipment credit, may have a beneficial impact and contribute towards easing the liquidity position for the MSMEs, the survey pointed out.
–Aditya Kshirsagar firstname.lastname@example.org