SME Times News Bureau | 13 May, 2019
Industry
body FICCI's latest
'Quarterly Survey on Manufacturing' highlights a continued positive sentiment
for manufacturing sector in Q4 of 2018-19.
Overall
sentiment in the manufacturing sector remains positive as the proportion of
respondents reporting higher output growth (around 54%) during the
January-March 2018-19 has remained same as compared to Q-3 of 2018-19, noted
FICCI Survey.
First
time in last many quarters, the overall capacity utilization in manufacturing
has witnessed an increase to 80% in Q-4 2018-19. It was hovering at 75% for
last many quarters, as per the survey.
On
hiring front, the outlook for the sector seems to have slightly improved for
near future. While
in Q-4 of 2017-18, 70% respondents mentioned that they were not likely to hire
additional workforce, this percentage has come down to 62.5% for Q-4 of
2018-19.
Going
forward it is expected that hiring scenario will improve further. 37.5% in Q-4
of 2018-19 as compared to 30% in Q-4 of 2017-18 are looking at hiring more
people now, noted the Survey.
FICCI's
latest quarterly survey assessed the sentiments of manufacturers for Q-4
(January-March 2018-19) for twelve major sectors namely automotive, capital
goods, cement and ceramics, chemicals, fertilizers and pharmaceuticals, electronics
& electricals, leather and footwear, metal & metal products, paper
products, textiles, textile machinery, tyre and miscellaneous.
Responses
have been drawn from over 300 manufacturing units from both large and SME
segments with a combined annual turnover of over Rs 3.56 lakh crore.
In
terms of order books, 44% of the respondents in January-March 2019 are
expecting higher number of orders against 43% in October-December 2018-19.
The
cost of production as a percentage of sales for manufacturers in the survey has
risen for 72% respondents. This, of course, is significantly higher than the
percentage of 62% for previous year. This is primarily due to increased cost of
raw materials, wages, power cost, rising crude oil prices, increase in finance
cost and rupee depreciation.
The
overall capacity utilization in manufacturing has witnessed a slight increase
to 80% in Q-4 2018-19. The average capacity utilization for the manufacturing
sector in the last few quarters has been around 75% only as per the survey.
The
future investment outlook, though moderate, is slightly better than that was
perceived in Q-4 of 2017-18. 40% respondents reported plans for capacity
additions for the next six months as compared to 47% in Q-3 of 2018-19.
High
raw material prices, high cost of finance, uncertainty of demand, shortage of
skilled labor, high imports, requirement of technology upgradation, low
domestic and global demand, excess capacities, delay in disbursements of state
and central subsidies and competing countries such as Bangladesh and Vietnam
enjoying lower wage cost and export benefits resulting in erosion of
competitiveness of Indian exporters are some of the major constraints which are
affecting expansion plans of the respondents.
In
all the sectors covered in the survey namely Automotive, Capital Goods, Cement
and Ceramics, Chemicals, Fertilizers and Pharmaceuticals, Electronics &
Electricals, Leather and Footwear, Metals & Metal Products, Paper Products,
Textiles and Textiles Machinery average capacity utilization has either
increased or remained almost same in Q-4 of 2018-19 as compared to Q-3 2018-19.