Wednesday, September 17, 2014: According to the study by CRISIL, the MSMEs with diversified customer base, a widespread geographic outreach and differentiated product/service profile have a higher compound annual growth rate (CAGR) of 23 per cent with emphasis over the average sales growth to Rs. 217.3 million in 2013-14 and Rs. 144.4 million sales growth in 2011-12.
In comparison, enterprises with product, customer or geographic concentration had lower CAGR of 19 per cent with an average sales growth of Rs. 15.95 million in 2013-14 and Rs. 113.4 million growth in 2011-12.
The study was performed over 493 micro, small, and medium enterprises (MSMEs) rated by it in 2013-14 (financial year April 1 to March 31). The diversification trend was more visible with private companies with around 80 per cent following it whereas in proprietorship and partnership firms, 70 per cent adapted the change.
The study thus reflects an opposite relationship between MSME-growth and concentration. Enterprises with wide range of customers and large geographical reach with a diversified line of products get an edge in the market.
