CRISIL analysed about 4,500 MSMEs, comprising companies and firms in equal measure, over fiscal 2013-15. The analysis revealed that the companies saw a compound annual growth rate (CAGR) of 16 per cent, while the firms grew at 10 per cent.
Furthermore, about 67 per cent of the companies had a stable customer base, with a vintage of more than five years, as against 50 per cent for firms. Notably, about 85 per cent of CRISIL’s top-rated MSMEs have shown stability in their customer base with a vintage of more than five years, as it is one of the rating yardsticks for evaluating the performance of an entity.
CRISIL believes this could be a plausible reason large why corporates prefer to deal with companies – they are perceived to be more transparent in their transactions. A legal constitution will usher in greater transparency in the sector, helping MSMEs raise funds and build stronger relationships with stakeholders.
Source: Business Standard