Diversification can boost MSMEs revenues: CRISIL study

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A study done by Credit Rating Information Services of India Limited (CRISIL) has found that Micro, Small and Medium Enterprises (MSMEs) can improve their revenues and boost their competitive advantages by diversifying across products, customers and geographies.

The study found that average sales of MSMEs with a diversified product/service, customer and geography base grew by 18 per cent in 2013-14, far higher than the 10 per cent growth chalked up by players with limited diversification.

CRISIL study said that diversification enables an MSME to have a stable revenue stream and, therefore, heightens its competitive advantage vis-à-vis industry peers.

The CRISIL analysis involved about 13,000 MSMEs rated on the basis of their 2013-14 (financial year April 1-March 31) financials.

60 per cent of MSMEs with a diversified profile had a longer track record (more than 10 years) and were backed by their promoters’ extensive experience, compared with only 45 per cent for MSMEs with a non-diversified profile, revealed the study

Thus, track record and promoters’ experience are key factors that enable MSMEs to diversify and, thereby, demonstrate their ability to achieve high scalability and maintain a healthy growth trajectory.

SMEStreet Desk

SMEStreet is fast growing platform dedicated to entrepreneurs from small and medium sized businesses (SMEs). Committed to facilitate Knowledge & Networking for Business Growth, SMEStreet offers value added content which shows the actual voice of Indian MSMEs.

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