Covid recovery SMEs see 10% year-on-year sales growth: Report – SME News

A survey report covering a sample of over 39,000 SMEs in India on Friday showed that over 50 per cent of the enterprises, during the May 2021-March 2024 period, saw a year-on-year sales growth of over 10 per cent during the May 2021-March 2024 period. The MSME Sampark 2024 report by SME-focused NBFC UGRO Capital and Dun & Bradstreet studied a sample of SMEs across seven sectors, namely light engineering, food processing, electrical equipment, chemicals, automotive components, hospitality and healthcare over a three-year period. The surveyed SMEs had a turnover of less than Rs 100 crore.

Highlighting the improvement in access to credit, the report noted an increase in the share of working capital loans in 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 increased formalisation, access to credit and support from financial institutions, SMEs are paving the way for a stronger, more prosperous India,” said Shachindra Nath, Founder and Managing Director, UGRO Capital.

The report added that the debt-to-turnover ratio of SMEs also improved in the quarter ending March 2024 compared to the quarter ending September 2023.

“This improvement is visible in companies with turnover below Rs 5 crore in light engineering, food processing, hospitality and healthcare sectors. It differs in the remaining three sectors, i.e. electrical equipment (turnover of Rs 10-20 crore), chemicals (turnover of Rs 5-10 crore) and auto components (turnover of Rs 10-20 crore),” the report said.

Further, the share of standard term loans increased from 57 per cent in 2020 to 88 per cent in 2023, along with an increase in the share of larger loans (above Rs 10 lakh) from 19 per cent in 2020 to 40 per cent in 2023 for micro enterprises, reflecting lenders’ confidence in SMEs.

“SMEs will need access to credit and technology to grow and innovate. SMEs contribute around 30% to India’s GDP, but their share in non-food credit remains relatively low at around 6.0% in fiscal 2024. Government initiatives to digitise and incorporate SMEs’ ​​digital footprints in credit decisions are expected to further improve their access to credit, technology and markets,” said Avinash Gupta, Managing Director and CEO – India, Dun & Bradstreet.

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