MSMEs economic upsurge expected: CII

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 [email protected]

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Domestic freight availability on the road to recovery
While larger road freight operators have already witnessed a 10% growth in freight availability over September 2008, the road logistics segment is expected to witness a positive change in domestic freight availability in the coming months.
 
The commercial vehicle segment was showing a negative demand from October 2008 to June 2009. “The commercial vehicle demand has also witnessed a positive increase on a year-on-year basis from the month of August 2009. With an improvement in the supply side information and in the demand side information, we see a positive change in the freight availability,” said Manoj Mohta, Head, CRISIL Research.
 
While, the capacity utilisation for road operators till September 2008 was as high as 70% -75%, it fell to around 50%-55% between September 2008 to April 2009. “At present, there is a sense of improvement, with the freight availability already improved to 60%-65%, an improvement of 5%-10%, in case of the larger operators. There is a sense of recovery in the domestic demand. However, those operators who are focused on the exim side still face a pressure,” he added.
 
As per CRISIL officials, a positive change has already been witnessed in the spot rates. “The spot rates are indicating an upturn, in some cases the spot rates are higher than the contractual rates,” informed Mr Mohta.
 
 

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Neptune Group to invest Rs10 billion in new office complex
 
Mumbai-based realty company Neptune Group has said that it would invest about Rs10 billion in its upcoming office complex spread over two million sq ft at Kurla, a Mumbai suburb.
 
“Neptune has bought about 17 acres from KEC International Ltd and we will commence the project in the next three months,” said Nayan Bheda, chairman and managing director, Neptune Group.
 
Neptune Group is a Mumbai-based property developer. Its latest project will be one of the city’s largest high-end commercial office complexes.
 
According to Bheda, the firm has roped in renowned architects Foster and Partners of London to design the project. The unique feature of the building is that it is a green building and daylight will be available at each and every corner of the structure, he added. The building will be a multi-rise facility, varying from three floors to seven floors.
 
Foster and Partners have designed a number of major projects around the world, including the London City Hall, the Hong Kong International Airport and the Beijing Capital International Airport.
 
This high-end office space will be leased out to multinational companies and other corporates. The average lease/rent will be Rs 200 per sq ft. According to market sources, the company is also likely to raise money from the capital markets.
 
Among the Neptune Group’s other projects, the Neptune Magnet mall at Bhandup in Mumbai covering one million sq ft will be operational in six months. The group’s proposed IT Park in Thane will be operational within three months.
 

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