Sun, May 28, 2017 | updated 03:54 PM IST

FICCI survey on Indian manufacturing products upturn in Quarter 2

Updated: Aug 26, 2016 11:25 IST      
FICCI survey on Indian manufacturing products upturn in Quarter 2
New Delhi [India], Aug.26 (ANI): FICCI's latest quarterly survey on manufacturing indicates an improved outlook for the sector in quarter 2 of 2016-17 (July-September) buoyed by the improved outlook in exports.

The survey had earlier indicated a slowdown for the first quarter of 2016-17, which seems to be waning.

The proportion of respondents expecting higher growth during the July-September quarter has risen to 55 percent as against 53 percent for April-June quarter 2016-17, although, it remains much below the percentage of 60 percent for January-March quarter of the previous fiscal.

The slight improvement in the outlook for manufacturing production in second quarter of the current financial year is attributable to various factors, including somewhat better outlook for exports compared to previous quarters, and better outlook on domestic demand front too, noted FICCI Survey.

The survey that gauges the expectations of manufacturers for Q-2 (July-September 2016-17) for thirteen major sectors namely auto, capital goods, cement and ceramics, chemicals, electronics and electricals, food products, leather and footwear, machine tools, metal and metal products, metal forging, paper products, textiles and technical textiles and textiles machinery, has shown slight improvement in manufacturing sector over the last few quarters due to number of initiatives taken by Government in the last few months.

Responses have been drawn from 308 manufacturing units from both large and SME segments with a combined annual turnover of over ?4 lac crore.

Quarter

Percentage of respondents expecting higher production in the quarter vis-a-vis respective last year's quarter

Q-2 (2016-17)

55%

Q-1 (2016-17)

53%

Q-4 (2015-16)

60%

Q-3 (2015-16)

55%

Q-2 (2015-16)

63%

Q-1 (2015-16)

44%

Q-4 (2014-15)

52%

Q-3 (2014-15)

50%

Q-2 (2014-15)

62%

Q-1 (2014-15)

50%

Q-4 (2013-14)

56%

Q-3 (2013-14)

52%

Q-2 (2013-14)

48%

Q-1 (2013-14)

35%

In terms of order books, almost half (49%) respondents reported higher order books for the quarter July - September 2016-17 which is more than that of the previous quarter (38%).

The milder improvement for the quarter gets reflected in terms of investment as for Q-2 2016-17, 73% respondents as against 75% respondents in previous quarter reported that they don't have any plans for capacity additions for the next six months. Though the proportion standing against expansion plans is still considerably high but is comparatively lower on a quarter-on-quarter basis. Uncertain economic environment, unfavourable market conditions, competition from imports, delayed clearances, inadequate infrastructure (especially availability of power) and cost escalation are some of the major constraints which are affecting the expansion plans of the respondents. The average capacity utilization as reported in the survey for the total manufacturing sector is around 76% for Q-1 2016-17, marginally above the 74% for Q-4 2015-16.

Table: Current Average Capacity Utilization Levels As Reported in Survey

Sector

Average Capacity Utilization (%) in Q-4 2015-16

Average Capacity Utilization (%) in Q-1 2016-17

Auto

78

77

Capital Goods

71

80

Cement

80

87.5

Chemicals

87

83

Textiles

79

84

Electronics & Electricals

75

65

Food

70

57

Leather & Footwear

57

60

Metals

68

70

Textiles Machinery

60

50

Tyre*

80

NA

Paper

87

80

Inventory levels remain high with 82% respondents maintaining either more or same levels of inventory as their average inventory levels. This is higher than previous quarter, where 76% respondents reportedly carried either same or more than their average levels of inventory.

Export outlook for second quarter's manufacturing also improved slightly as against the expectations for the first quarter. The proportion of respondents expecting higher exports in the second quarter 2016-17 rose by 5 percentage points to 41% as against 36% in 2016-17.

Hiring outlook remains subdued in manufacturing in coming months as three quarters of the participants in Q-2 2016-17 are unlikely to hire additional workforce in next three months. The proportion remains almost similar to that recorded for Q-1 2016-17 (76%).

Average interest rate paid by the manufacturers still reportedly remains high and sticky. The rate is as high as 15% as per the survey with average interest rate at around 11.5% per annum which is similar to that reported in the previous survey.

Based on expectations in different sectors, the Survey suggests that eight out of thirteen sectors were likely to witness low to moderate growth (less than 10%). Five sectors, namely capital goods, cement and ceramics, chemicals, metal forging and paper products are likely to witness strong growth of over 10% in Q-2 2016-17.

Growth expectations for Q-2 2016-17 compared with Q-2 2015-16

Sector

Growth Expectation

Capital Goods

Strong

Cement and Ceramics

Strong

Chemicals

Strong

Metal Forging

Strong

Paper

Strong

Auto

Moderate

Textiles and Technical Textiles

Moderate

Textiles Machinery

Moderate

Electronics & Electricals

Low

Machine Tools

Low

Food Products

Low

Metals & Metal Products

Low

Leather and Footwear

Low

Note: Strong > 10%; 5% < Moderate < 10%; Low < 5%

The cost of production as a percentage of sales for product for manufacturers in the survey has risen as 49% respondents reported cost escalation while only 16% reported lower production costs.

Key Constraints for Manufacturing Sectors

Given below in tabular format the key constraints for each sector in manufacturing as shared by respondents in the survey.

Capital Goods

Rising raw material prices (Steel etc)

Shortage of working capital

Increased competition faced from imports

Lack of domestic & export demand

Shrinking exports to Africa as many of the African countries, particularly Nigeria, is having foreign Exchange restrictions.

Cement and Ceramics

Duty-free imports of cement

Inadequate domestic coal supplies against coal linkages

Deficiency and high prices of raw materials

Sluggish domestic and export demand

Inverted duty structure

Chemicals

Deficiency of feedstock

Sluggish domestic and export demand

Forging

Inadequate investment in infrastructure

Clearances for coal mining which will in turn give a boost to heavy transport vehicles

Technology up gradation in MSMEs

Paper

Inadequate public investment in infrastructure

High interest rates

High prices and deficiency of key raw materials

Auto

Uncertainty of tax rates and policy interventions related to vehicles

Uncertainty on the long term roadmap for fuel type, vehicular emission and safety regulations for vehicles

Labour-related reforms

Shortage of working capital

Low external demand.

Textiles and Technical Textiles

High prices of raw materials

Inverted duty structure

Labour related reforms

Low domestic and export demand

Competition from imports

Textiles Machinery

High imports of second-hand machinery which are available domestically as well

Availability of TUFS benefit on second hand textile machinery

Need for uniform rate of excise duty on all items of textile machinery and components

Increase in customs duty on textile machinery

Absence of TUFS for the Textile Engineering Industry

Electronics & Electricals

High prices of raw materials

Inverted duty structure

Competition faced from imports

Lower domestic demand

Shortage of working capital finance

Low export demand

Machine Tools

Shortage of working capital

Lower domestic and export demand

Competition faced from imports

Food Products

Rising prices of raw materials

Labour related reforms

Shortage of skilled labour

Lower demand

Metals & Metal Products

Deficiency and high prices of raw materials

Deficiency of power

Lack of domestic and export demand

Competition faced from imports

Shortage of skilled labour

Leather and Footwear

High prices of raw materials

Inverted duty structure

Deficiency of power

Lower domestic and external demand

High cost of premium for both pre- and post-shipment for ECGC guarantee (ANI)

Criminal prosecution by IT Dept. surged by cent pct during Modi regime

Updated: May 27, 2017 19:41 IST      By: Shailesh Yadav

New Delhi [India], May 27 (ANI): Criminal prosecution by the Income Tax Department has witnessed a sharp increase of more than 100 percent during the last three years of Prime Minister Narendra Modi-led Government.

Full Story >>

New Delhi [India], May 27 (ANI): Aiming to empower Nagpur's electric mobility drive, Ola and Mahindra on Friday announced their collaboration with the Government of India in a first-of-its-kind programme to build an electric mass mobility ecosystem in Nagpur, which will bring about a transformational change in the automotive and transportation landscape in the country.

Full Story >>

New Delhi [India], May 27 (ANI-NewsVoir): President of India Pranab Mukherjee received the first copies of the book 'Mann Ki Baat' - A social revolution on Radio, at Rashtrapati Bhavan, New Delhi, on May 26, 2017.

Full Story >>

New Delhi [India], May 27 (ANI-NewsVoir): Indian-American Businessman Nitin Khanna entered California with his Cannabis business, the fastest growing industry in America. As more states legalize recreational use, the demand for premium cannabis is expected to increase. With a population of 39.1 million, California is the largest market in America within this industry; it was also the first state to legalize the medical use of marijuana back in 1996.

Full Story >>

Epson launches express service centres in NCR

Updated: May 27, 2017 09:23 IST     

New Delhi [India], May 27 (ANI): Digital imaging and printing solutions provider Epson on Friday announced the inauguration of two express service centres in Noida and Gurugram.

Full Story >>

Pune (Maharashtra) [India],May 26 (ANI-Businesswire India): Bajaj Finserv, India's most diversified financial company, through its lending arm Bajaj Finance, is offering home loans at just 8.50% for a limited period. The special offer is valid till May 29, 2017.

Full Story >>

Jugnoo takes a big leap in restaurant aggregation

Updated: May 26, 2017 16:51 IST     

New Delhi [India], May 26 (ANI-Newsvoir): Jugnoo, India's leading hyper local startup, offering a diverse range of services like rides, ready to eat meals, restaurant food delivery, grocery and B2B Delivery, records phenomenal growth for its restaurant aggregator vertical, menus.

Full Story >>

GST Bill unanimously approved in Tripura

Updated: May 26, 2017 15:15 IST     

Agartala (Tripura) [India], May 26 (ANI): On the concluding day of the three-day session of the Tripura Assembly on Thursday, the Left-ruled state approved the Goods and Services Tax (GST) Bill unanimously by voice vote.

Full Story >>

Sensex surpasses 31,000 mark, shoots by 255.17 points

Updated: May 26, 2017 14:54 IST     

New Delhi [India], May 26 (ANI): Achieving yet another milestone in just a few hours, the Sensex on Friday saw a significant surge, reaching a fresh all time high of 31,005.20, recording a rise by 255.17 points, with Nifty inching closer to the 9,600-mark.

Full Story >>

New Delhi [India], May 26 (ANI): The most economically developed states are not adequately adding to skill sets, which may result in severe shortages of skilled manpower in the coming years, according to an ASSOCHAM-Thought Arbitrage Paper.

Full Story >>

FICCI to set up StudyinIndia pavilion at NAFSA 2017

Updated: May 26, 2017 13:20 IST     

New Delhi [India], May 26 (ANI): The Federation of Indian Chambers of Commerce and Industry (FICCI), along with the Ministry of Commerce, Government of India and Service Export Promotion Council and in partnership with Education Promotion Society for India will be setting up a 'StudyinIndia' pavilion, leading a delegation of over 50 Indian higher education leaders to the 69th Annual NAFSA conference scheduled to take place from May 28 to June 2 2017, in Los Angeles, U.S.A.

Full Story >>

Atal Pension Yojana registers 53 lakh subscribers

Updated: May 26, 2017 12:36 IST     

New Delhi [India], May 26 (ANI): The subscriber base under the Atal Pension Yojana (APY) reached approximately 53 Lakhs. At present, 235 banks and the Postal Department are involved with the implementation of the scheme. Besides the branches of the banks and CBS-enabled offices of India Post, quite a few banks are sourcing subscribers through their internet banking portals in a paperless environment.

Full Story >>

New Delhi [India], May 26 (ANI): The Central Board of Direct Taxes (CBDT) on Friday issued a clarification on furnishing statements of financial transactions.

Full Story >>

New Delhi [India], May 26 (ANI): The market on Friday witnessed a surge in its trade with the Sensex and Nifty hitting an all time high of 30,862.63 and 9,534.75 respectively.

Full Story >>

New Delhi [India], May 26 (ANI-BusinessWire India): ITC Limited has won the prestigious Porter Prize 2017 award for 'Excellence in Corporate Governance and Integration' and for its exemplary contribution in 'Creating Shared Value'.

Full Story >>

New Delhi [India], May 26 (ANI): C-Zentrix, a Gartner Magic Quadrant for CCI 2016-recognised product company and a cloud-based advance communication management provider on Thursday announced the launch of two new products in its customer engagement solutions portfolio, 'TrixChat' and 'ZenBot'.

Full Story >>

nexGTv now available on Amazon's Fire TV Stick

Updated: May 26, 2017 08:10 IST     

New Delhi [India], May 26 (ANI): nexGTv, a subscription-led video entertainment app on Thursday made its big-screen debut with its launch on Fire TV Stick, a digital streaming device from Amazon, and is now available on Amazon India.

Full Story >>

New Delhi [India], May 25 (ANI-NewsVoir): Rakesh Kapur, Joint Managing Director, Indian Farmers Fertiliser Cooperative Limited (IFFCO), has been elected as the Chairman of the International Fertilizer Association (IFA) at the recent IFA's Annual Conference held from May 22nd - 24th in Marrakech, Morocco in which 1400 participants were present.

Full Story >>

New Delhi [India], May 25 (ANI-NewsVoir): Unveiled at its Insights 2017 customer conference, Epicor Software Corporation, a global provider of industry-specific enterprise software to promote business growth, has introduced the latest version of Epicor ERP, the global enterprise resource planning solution in use today by thousands of customers in 150 countries worldwide.

Full Story >>

New Delhi [India], May 25 (ANI): Credit rating agency ICRA expects Indian GDP and gross value added (GVA) at basic prices to expand by 7.1 percent and 6.9 percent, respectively, in year-on-year (YoY) terms in Q4 FY2017.

Full Story >>