Aug 22: Micro and small enterprises (MSEs) have shown optimism about their business in Q2FY19 (July to September) according to CRISIL. CriSidEx, the only lead-lag indicator of business sentiment among MSEs rose to 127 in Q1FY19 compared to 121 in Q4FY18.
CriSidEx is based on survey across India and reflects the sentiments felt by the industry.For Q2FY19, 60% of the respondents from the manufacturing sector and 53% from the services sector expect positive momentum to continue. In services sector-IT/ITeS, logistics, traders professional services, healthcare, human resources services, construction and real estate were the most optimistic.
In manufacturing, respondents from auto components, pharmaceuticals, metals & mining, chemicals,leather & leather goods, and gems & jewellery were the most optimistic.
For April-June, 45% of MSEs surveyed reported an increase in order book compared with 38% in JanuaryMarch.
Respondents from gems & jewellery, chemicals, leather & leather goods and food products sectors reported an increase in order book. But in the pharmaceuticals and auto components sectors, the proportion of respondents saying their order books have increased was smaller compared with January-March.
Respondents from sectors such as IT/ITeS, traders, logistics, human resources, construction & real estate, and professional services providers witnessed an increase in order book, while a sizeable proportion of those in power & utilities saw a decrease compared with the January-March quarter. Interestingly, in media, while the proportion of respondents claiming an increase in order book was higher, the share of those who saw a decrease was also up on-quarter.
MSEs expect order book to be positive for Q2. In manufacturing, gems and jewellery, metals and mining, pharmaceuticals, engineering and capital goods and textiles expect increase in order book. In services, real estate and construction, professional service providers, traders, healthcare and ITT/ITeS segments have a positive outlook.
For export oriented units, order book sentiment is positive. Pharmaceuticals, metals and mining, engineering and capital goods, leather and leather goods, and textiles and services (IT/ITeS and logistics) remain positive. Not much change was reported in import plans of MSE. Production is expected to rise in Q2 for majority of the companies.
Majority (71%) felt hiring activity in Q2 will remain largely unchanged. Hiring activity may rise in pharmaceuticals, food producs, gems and jewellery, engineering and capital goods, auto components, metals and minign, leather and leather goods, IT/ITeS, health care, construction and real estate, human resources and professional services.
Credit growth is expected to increase in Q2 especially in Rs 10 lakh to Rs 1 crore ticket size while there is stagnancy in the unorganised segment (ticket size below Rs 10 lakh) and medium enterprises (ticket size Rs 1 to Rs 5 cr).
Non-Performing Assets of MSE’s will remain high in Q2 according to lenders and interest rates are expected to rise.