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Issues and Opportunities


This chapter highlights the issues and growth opportunities of the small and medium enterprises (SMEs) belonging to the chemical, pharmaceutical and textile industry in the Mumbai cluster.

Opinions of SMEs operating in the cluster

Among the various opinions expressed by the respondents, the opinion that brand building would provide better marketing prospects was ranked very high. Thus it can be inferred that the SMEs are waking up to the idea of branding their products so as to garner higher margins, venture into newer areas and to grow rapidly. The other opinions that were ranked high were ‘the need to increase spending on R&D and IT’ and the challenge posed by the prevailing liquidity crunch coupled with high interest rates.

Cluster benefits

According to the survey results, the Mumbai cluster provides various benefits such as quality upgradation, easy availability of funds, enhanced infrastructure support etc to the companies operating in the cluster. Though the benefits derived by the respondent SMEs were more or less evenly spread; quality upgradation was rated as a key benefit that accrues to the companies in a cluster. Almost 70% respondents, indicated that cluster helps in improving the overall product, process and technological quality.

It is evident from the survey that being in the cluster enables the respondent companies greater access to both technical and operational know how, sharing of expertise, developing efficient processes among others. The benefit of quality up gradation was realised mainly by pharmaceutical and textile SMEs. Almost 80% respondents each in the pharmaceutical and textile sector indicated that cluster assists in improving the overall product, process and technological quality.

Future plans

As per the survey, capacity expansion and entering new markets were among the top future plans of the respondent SMEs in the Mumbai cluster. Approximately 96% respondents cited capacity expansion as part of their future plan. All the respondents in the textile and pharmaceutical industry have indicated capacity expansion as part of their future plan.

Section A: Chemical Industry

Opinions of chemical SMEs in the Mumbai cluster

Among the various opinions expressed by the respondent SMEs, the prevailing need to increase spending on R&D and IT was ranked the highest. Other high ranking opinions were; the challenge posed by the prevailing liquidity crunch coupled with high interest rates and the need to increase focus on brand building so as to enhance the marketing prospects.

Industry obstacles

Anti-dumping activities, a steep tax structure, high raw material/fuel prices, and stringent environmental norms are the major factors that hinder the growth of SMEs operating in the chemical industry in the cluster. The survey results revealed that higher raw material/fuel prices and stringent environmental norms were considered as the two key factors that hindered chemical industry’s growth.

Expected business growth

Majority of the respondents (about 52%) expect their business to grow between 10-20% during FY10 and FY11 . Among the others, 18% expect their business to grow by 0-10%, and 15% expect their business to grow by 20-30%. The remaining 15% respondents are quite optimistic about their business growth and expect their businesses to grow by over 30% in FY10 and FY11.

Industry growth prospects

The growth rate of the chemical industry, according to majority of the survey respondents (60%), is expected between 0-10% in the next 4-5 years. Among the rest, 10% respondents expect the industry growth to be more optimistic at above 20%, 13% expect the industry to grow between 11-20%, and 17% respondents expect the growth to be stagnant.

Cluster benefits

In the survey quality upgradation, liberal taxes and duties, easy availability of funds emerged as the benefits enjoyed by chemical companies in the Mumbai cluster. Among these benefits, companies found quality upgradation to be the biggest benefit derived from the cluster.

Future plans

Replace: Some of the future plans of the chemical SME’s include capacity expansion, entering new markets and modernisation. As per the survey, approximately 88% of the respondent SME’s indicated capacity expansion as part of their future plan while approximately 83% of the respondent SME’s indicated entering new markets as part of their future plan.

Section B: Pharmaceutical Industry

Opinions of pharmaceutical SMEs in the Mumbai cluster

The survey revealed the various opinions expressed by the respondent SMEs in the cluster. These opinions include: need for huge capital infusion, lack of adequate technology, significance of brand building initiatives, high interest rates, realisation of receivables, need to propel R&D and IT expenditure etc. Among these opinions, ‘the need to increase spending on R&D and IT’ was ranked as the highest. Realisation of receivables and brand building were the other high ranking opinions expressed by the respondent SMEs in the cluster.

Expected business growth

Though majority (66%) of the respondents in the survey were not very optimistic about the industry growth prospect; they come across as fairly positive with regards to their individual growth. Among the respondents in the survey, 48% companies expected to grow between 15% - 30% in FY10 and 45% companies anticipated the same growth rate for FY11.

Industry growth prospects

The respondent SMEs in the survey perceive the growth prospects of the pharmaceutical industry to be fairly stable. According to the survey results, 66% of the respondent pharmaceutical companies in the Mumbai cluster project the pharmaceutical industry to grow by 0-10% in the next 4-5 years.

Cluster benefits

As per the respondent companies in the survey, the cluster provides various benefits that aid in their business operations. Approximately 80% of the respondent companies perceived quality upgradation as a benefit along with other benefits provided by the cluster. Approximately 66% respondents indicated easy availability of funds as a one of the benefits derived from the cluster.

Future plans

As per the respondents in the survey, the pharmaceutical companies in the Mumbai cluster have plans for capacity expansion and tapping new markets in the future.

All the respondent pharmaceutical SMEs in the survey cited capacity expansion as part of their future plans.

Section C: Textile Industry

Opinions of textile SMEs in the Mumbai cluster

Among the various opinions expressed by the respondents, the opinion that brand building would provide better marketing prospects was ranked the highest.

The other opinions that were ranked high were the need to increase spending on R&D and IT and the challenge posed by the prevailing liquidity crunch coupled with high interest rates.

Expected business growth

Majority of the respondents (about 57%) expect their own business to grow by 10-20% during FY10 and FY11. Of the remaining, nearly 21% have an optimistic outlook and expect their business to grow by more than 30% whereas merely 4% of the respondents expect their business to grow below 10% during FY10 and FY11.

Industry growth prospects

According to the survey respondents’ feedback on the textile industry’s growth prospects, a majority 57% project the industry growth between 0-10% for the next 4-5 years. Around 27% of the remaining respondents are more optimistic about the growth prospects of the textile industry and expect the industry to grow in the range of 10% to 20% whereas merely 3% of the respondents expect the growth in the industry to be stagnant over the next four to five years.

Cluster benefits

The Mumbai cluster provides many benefits for the companies operating in the textile industry reveals the results of the survey. As per the respondents, quality upgradation and better logistical & infrastructural support are the major benefits provided by the Mumbai cluster to the companies in textile industry. The least important benefit provided by the cluster to the textile companies, as per the respondents is the sharing of sector specific skills by the companies in the cluster among themselves.

Future plans

Capacity expansion and entering new markets are at the most prominent features in the future plan of the respondent companies. All the respondent companies in the survey indicate capacity expansion and entering new markets as part of their future plans.