MSMEs in service sector generate more profits than in manufacturing: Study

New Delhi, Oct 29 (KNN) MSMEs in the service sector have done better than their counter parts in the manufacturing sector in terms of profitability as per a study done by CRISIL.
 
The CRISIL study which covered several thousand MSMEs for the years 2009-10, 2010-11, and 2011-12 found that the profitability in the manufacturing sector has declined.
 
The operating profit before depreciation, interest, and tax (OPBDIT) margin of service enterprises improved to 11.34 per cent in 2011-12 from 10.84 per cent in 2010-11 and 11.04 per cent in 2009-10.
 
In comparison, MSME profitability in the manufacturing sector declined from 8.51 per cent in 2009-10 to 8.13 per cent in 2010-11, and stagnated thereafter. Operating profit in the trading sector too remained low at 3.32 per cent in 2009-10 and 2010-11, and declined to 3.28 per cent in 2011-12.

Manufacturing enterprises have been facing demand slowdown along with poor infrastructure and power crisis in many parts of the country.
 
However, MSMEs in the service sector are leaner in terms of investment and are also able to customise their offerings quickly as per changing client needs and the rapidly evolving economic environment.

Service-sector enterprises also face lesser challenges in terms of managing the required inventory levels and accompanying costs.