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CRISIL has analysed the profitability trend of 8,500 micro, small, and medium enterprises (MSMEs) from 2009-10 to 2011-12 (refers to financial year, April 1 to March 31). The analysis reveals that MSMEs held on to their profit margins tenaciously in these tough times. In fact, their OPBDIT* margin actually improved from 7.13 per cent to 7.30 per cent. However, OPBDT** dropped from 4.99 per cent to 4.76 per cent due to high financial costs necessitated by longer working capital cycles and hikes in interest rates.
Due to income from extraordinary sources, PAT*** margin improved from 3.68 per cent in 2009-10 to 4.04 per cent in 2011-12, indicating that MSMEs could sufficiently support their income profile to maintain viability. Increase in PAT margin in tough times is also indicative of an encouraging trend towards better compliance and operational transparency.
