Long Live Indian MSMEs

The market might have decided to move southwards with the sustained bearish sentiment that is mainly due to hike in interest rate and food inflation, but the medium and small enterprises continues to dream big.

The young and potential MSMEs are largely aiming to go global. And in the quest of turning big, they are considering ‘innovation’ as the key initiative. Some futuristic small firms are seriously queuing up for patenting their product-technology. While some are planning to foray in new markets, exchanging brandings, creating value-addition for premium, equity financing and acquiring similar-sized firms in China, Korea, Philipines or Taiwan. And some are even eyeing at forging joint ventures with Western players in retail, infrastructure, ITes and financial businesses. Its needless to say that foreign financiers are considering infrastructure, retail financing, green energy, power, oil & gas and renewable resources as sectors to grow in the coming years in India. But the spotlight repeatedly goes on to agriculture, floriculture, food-processing, commodities and related sectors that is earning huge appreciation from various financial institutions.

Everyone believes that small players have large role to play in this year. They are armed with indigenous technology, cost-effective strategies, counter-recession guidelines and hands full of financing institutions that are ready to hand-hold them. Ask any MSME merger specialist about PE investments for this year and huge numbers would be perceived. Indeed, the perception is based on last year’s growth. Last year, PE investors from domestic as well as overseas, invested close to $6150 million, up 66 per cent, against 2009. And it will perform even better in 2011. The mood is quite upbeat among small players. The mindset is taking u-turn, leaving behind the decades-old conservatism. Small firms are increasingly sharing their books of accounts with PE investors or strategic investors. Inclusion of young generations is changing the dynamics of businesses by instilling professionalism, adding technology, branding products, utilizing every resource. More and more India-based funds are being generated that are set to give tough fight to Chinese and Japanese MSMEs. No single bank or financial institution can afford to avoid MSMEs that have huge potential. Even a small firm with a size of Rs. One crore can raise up to Rs Five crore, by offering unique revenue model. But not all small firms have the capacity to deal with the financial institutions and negotiate at ease.

Raising funds isn’t enough to grow big in the long-run. It requires right friend who could walk along in your adversities to turn into opportunities. Many MSME firms are feared of sharing dreams to their advisors, and in the process, they lose out the opportunity. Eminent and efficient advisors would talk and leverage on value-creation and stress on relationship building, because when you grow big the organization’s value structure would only distinguish set itself unique than its peer players. It’s too imminent to identify right partner for inclusive growth. It’s all about finding symbiotic relationships with advisor that can change the overview of the business.