New Delhi, May 15 (KNN) Micro, small and medium enterprises (MSMEs) have been adversely affected owing to delayed payments by their customers which include government departments and corporations, said a study report by CRISIL.

The study was conducted to determine the time gap between sales and receipt of payment, so as to understand the significance and extent of the challenge of stretched receivables in the MSME sector.

The global analytical company has analysed the debtor-collection period of 2,400 MSMEs in manufacturing sector including electrical components and equipment, and plastic products, chemicals, pharmaceuticals, engineering and capital goods and auto components and ancillary in 2012-13 (refers to financial year April 1 to March 31).

The results indicate that receivables are stretched the most for electrical components and equipment and plastic manufacturing sectors, followed by enterprises in the chemicals, pharmaceuticals, engineering and capital goods, and auto-component industries.

To manage their tight liquidity position, these MSMEs depend on borrowing from banks and other sources, which erodes their profitability by increasing their interest burden. Thus, timely payment to MSMEs, as per the provision of the MSMED Act, remains essential to release funds tied up in the working capital cycle. (KNN/ST)