SIDBI Finds 2 Our 3 MSMEs Will Survive During COVID-Lockdown

Two out of three Micro, Small and Medium Enterprises (MSMEs) are well placed to sail through the nationwide lockdown while 31 percent are very strongly positioned, said TransUnion CIBIL and SIDBI MSME pulse shows.

The report findings are based on a scenario testing done from past events like the implementation of GST and the IL&FS crisis, the report observed that the structurally stronger MSMEs are likely to be least impacted during the lockdown.

"While the impact of the lockdown may be more pronounced than that of the earlier events, but the core essence of the simulation study highlights that structurally stronger MSMEs will be the least impacted," the MSME Pulse report said.

The findings of the study on the structural position of MSMEs prior to the lockdown concludes that ''63 percent -- or almost 2 out of 3 active MSMEs -- are in the structurally strong risk segment of CMR (CIBIL MSME Risk) 1 to 5 and are well placed to surge through this lockdown.''

The report also noted that from the 63 percent, about 31 percent are very strongly positioned, with CMR 1 to 5, and working capital utilisation levels of less than 70 percent.

The remaining 37 percent of active MSMEs are seen in the CMR 6-10 segment, which is at high risk. Within this segment, about 22 percent are at highest risk, with more than 70 percent utilisation levels, the study said.

The outbreak of the Covid-19 pandemic will impact the profitability of MSMEs due to the declining market demand and rising operating costs in the new way of working.