At a time when state government is putting in all efforts to promote Micro Small and Medium Enterprises (MSMEs) by way of the upcoming seventh edition of Vibrant Gujarat Global Investors’ Summit 2015, data released by the Union Ministry for MSMEs on Monday show that there are over 48,000 sick units in Gujarat, which is nearly one-fifth of the total MSMEs registered with the state government.
As per the data compiled by the Reserve Bank of India (RBI) from scheduled commercial banks, Gujarat has a total of 48,000 sick MSME units (end of March 2014) which is second only to Uttar Pradesh (63,268 units). This information was part of the written reply given in the Lok Sabha about the National Manufacturing Competitiveness Programme, by Union Minister for MSMEs, Kalraj Mishra.
The number of sick MSME units in Gujarat has more than doubled in a space of 12 months. At the end of March 2013, the number of sick units in the state was just 20,452 units. The deteriorating financial condition of MSMEs is more glaring when the numbers of sick units in 2012 (107 units) and 2011 (4321 units) are compared with those of March 2014.
A senior official of the Small Industries Development Bank of India (SIDBI) which is one of the biggest lenders to MSME units in Gujarat says that the non-performing assets of MSME units have grown by 5-6 percent compared to last year.
The ticket size of loans given to MSMEs in Gujarat is anywhere between Rs 1 to Rs 2.5 crore. “We are facing a lot of problems with regard to providing loans to MSME units in Gujarat is concerned. Every year we have been lending more to MSME units in the state, but the quantum of NPAs (non-performing assets) among have simultaneously been on the rise.
Real-estate, manufacturing, chemicals, textiles and hospitality are some of the sectors where MSMEs have been badly affected by NPAs in Gujarat,” said the SIDBI official requesting anonymity.
According to the latest state government figures for the year 2013-14, there are 2.61 lakh registered MSME units in Gujarat, employing over 21.6 lakh people in the state. Ahmedabad, Surat, Rajkot, Vadodara, Bharuch, Jamnagar, Bhavnagar and Valsad are the major multi-product MSME clusters in the state.
However the state government points to the rising investments by MSMEs in the state. According to state government figures, the total investment done by MSMEs in Gujarat, between the year 2010-2014, stood at USD 7.7 billion or over Rs 47,000 crore.
A survey conducted by the Gujarat government just before the 2013 edition of the Vibrant Gujarat summit showed that closure rate of MSMEs in Gujarat was at five percent.
“MSMEs of Gujarat is one of the dominant themes of this year’s Vibrant Gujarat. According to the fourth census of MSMEs, Gujarat stands first in terms of the asset base of the MSME sector. We are looking to showcase this sector to a global audience,” said a state government official. This year the state government is making 10 short films that will showcase the
success stories of home-bred MSMEs of the state during the Vibrant Gujarat summit.
Though the financial condition of exiting units have been deteriorating, the number of MOUs (memorandum of understanding) signed by MSME units during the Vibrant Gujarat summit have been on a rise. Compared to the 1921 MoUs signed in 2009 edition of the summit, the number of MoUs increased to 4494 and 12886 during the 2011 and 2013 editions of the summit, state figures from the MSME division of Industries Commissioner Office, Gujarat.
Apart from Gujarat and Uttar Pradesh, Tamil Nadu (43,743 units), Maharashtra (43000) and Andhra Pradesh (41845 units) were among the top five states having the maximum number of sick MSME units. There are a total of over 4 lakh sick MSME units in the country as on March 2014.