Pandemic impact: MSMEs lost market share to big corporates, says report

Over 25 percent MSMEs lost 3 per cent or more of their respective market share to big corporations during the Covid pandemic, a crisil report said.
MSMEs lost market share to big corporates, says report

MSMEs lost market share to big corporates, says report

Photo : BCCL
Micro, small and medium enterprises (MSMEs), which contribute to more than one-fourth of India's GDP, were a major casualty for the Indian economy during the Covid pandemic as they were most vulnerable due to their size, according to a Crisil report.
Smaller companies' loss turned into gains for bigger corporates as the latter leveraged their positions.
Over 25 percent MSMEs lost 3 per cent or more of their respective market share to big corporations during the Covid pandemic, the report said.
Rating agency Crisil's research wing analysed MSMEs from 69 sectors and 147 clusters having a revenue of Rs 47 lakh crore or a fourth of India's GDP to arrive at the details on how the small businesses fared during the pandemic.
"More than a quarter of India's Micro, Small and Medium Enterprises (MSMEs) lost market share of over 3 per cent due to the Covid-19 pandemic," the report said adding that half of these companies which witnessed a loss of market share also saw a contraction in their operating profit.
It can be noted that the impact of the pandemic on the smaller businesses has been a subject of interest because of their vulnerabilities due to size.
Large corporations leveraged their global presence to procure raw materials, so could eat up a huge chunk of the SME pie, the report said.
Supply chain disruptions impacted small pesticides manufacturers more, while edible oil SMEs lost market share due to an increase in hygiene quotient as the pandemic meant less buyers for oil sold in loose.
Pesticides and edible oil SMEs suffered margin contraction of 1 per cent and 2 per cent, respectively, due to partial pass-through of the increase in raw material costs, which jumped by 60 per cent, Crisil said.
MSMEs in 'essential' segments like pharmaceutical/agricultural millers hardly lost any market share, it said.
On the other side, companies in sectors such as steel pig iron gained share where only SMEs could capitalise on revival in infrastructure demand, as large plants captively consumed their output, it said, adding that tobacco units also gained market share.
Sectors such as transport operators, edible oil, gems and jewellery are the most vulnerable to operating profit losses owing to wafer thin margin of less than 3 per cent and limited input cost pass-through of under 60 per cent, the report said.
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