CRISIL SME Tracker: MSMEs offer working capital opportunity for lenders

CRISIL's interactions with MSMEs show working capital worries building because of limited avenues to raise finance at reasonable rates

Healthy orders from original equipment manufacturers (OEMs) are increasing the working capital requirement of micro, small and medium enterprises (MSMEs) in the auto component sector, an analysis of over 200 MSMEs rated by CRISIL shows.

“That’s a great opportunity for banks re-entering MSME lending after a two-year hiatus,” says T Raj Sekhar, Director, SME Ratings, CRISIL. “Many MSMEs in this sector cater to top-rated OEMs and Tier-I/Tier-II suppliers, which should comfort banks.”

OEMs, which account for over 65 per cent of the auto component sector demand, are clocking growth across vehicle segments (see chart). CRISIL’s interactions with MSMEs show working capital worries