“Being a small-scale company has helped us in getting more orders,” said Pramod Patel, managing partner at Reliable Paints. He says his firm is debt-free and relies mainly on internal resources to fund capacity expansion. Sales at listed big companies rose 1.India has more than 45 million SMEs, accounting for nearly 40 per cent of gross domestic product.A survey from RBI shows he is not alone.6 per cent in the year, three times the pace at listed companies, and they increased their gross savings. In contrast, listed companies struggled with shrin-king profits.This has boosted sales of heavy commercial vehicles and, by extension, auto ancillary companies.For Rohan Sharma, business has never been better..
Debt-laden big listed firms, meanwhile, are still reluctant to undertake new investments, and foreign firms can find India’s labyrinthine regulations overwhelming.That’s an encouraging sign for Asia’s third-largest economy, where stressed balance sheets at big firms and heavy reliance on bank credit, which has dried up following a surge in troubled loans, have stymied efforts to revive private investment.Helping power smaller firms has been Prime Minister Narendra Modi’s plan to build 10,000 km of new highways and upgrade another 50,000 km as part of infrastructure spending this fiscal year. Most are unlisted, and their earnings growth has outpaced listed companies for the past three years.Steel Strips Wheels, supplies wheel rims to major automakers, reported a 55 per cent jump in earnings per share in fiscal 2016.
Sales at smaller private firms grew 12 per cent in 2014-15, the central bank survey showed. Sales at his autoparts company in Gujarat are booming and the order book has almost doubled in the past year. The annual study of nearly 240,000 unlisted small- and medium-sized Wax Rolls enterprises (SMEs) found they are saving their way to growth, helping transform India into the world’s fastest-growing large economy in the past two years.His Bhagirath Coach & Metal Fabricators has just invested $120,000 in new machinery and plans to spend up to $1.While higher expenses halved net profit growth at private firms, they still grew at double-digit pace. “We never allowed exuberance to get the better of hard business logic,” Mr Sharma said.4 per cent over the same period. Operating profit of the unlisted firms grew an annual 16. It is planning to expand its capacity as its plant is operating at 95 per cent of capacity. Mr Sharma does not face such constraints
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