FICCI’s latest quarterly survey on manufacturing has projected subdued growth in key sectors such as automotive, capital goods, metal and chemicals in the third quarter.
Nevertheless, the survey projects an overall modest recovery in manufacturing sector growth in the third quarter of 2012-13 (October-December 2012-13). Though the growth is expected to be low, some recovery is expected as the overall business environment improves with the announcement of number of reform measures by Government, it said.
The chamber survey pointed out that five out of 12 sectors were likely to witness low (less than five per cent) growth and four sectors to witness moderate growth (less than 10 per cent and greater than five per cent).
The sectors likely to witness low growth are chemicals, textiles, machine tools, metals and automotive, while tyre, ceramics and electronics were likely to witness strong growth of over 10 per cent in the third quarter.
According to the FICCI survey, which covered 364 manufacturing units and associations, a modest recovery in the third quarter for the sector is expected, as demand conditions reflected in order books show marginal improvement.
It gauged the expectations of manufacturers for the third quarter for major sectors such as textiles, capital goods, metals, chemicals, tyres, cement, electronics, automotive, leather & footwear, machine tools, FMCG & food, ceramics, etc.
Around 45 per cent respondents said they expected production to be higher in the quarter under review vis-à-vis last year.
The survey noted that athoughwhile the demand conditions remain subdued but a marginal improvement has been seen in the third quarter for 2012-13 as compared with second quarter of 2012-13.
In the third quarter, over 33 per cent respondents reported higher order books for October-December 2012-13 as compared with 31 per cent in the sector quarter of 2012-13.
“The above outlook is also borne out by the fact that recently both IIP and Index of Eight Core Industries have shown some upturn in growth,” it said.
Around 33 per cent respondents reported plans for capacity addition in the next six months as compared with 28 per cent in the previous survey.
However, except a few sectors such as leather, where majority of the firms plan to add new capacities, in other sectors only a few companies had any new capacity addition plans, the survey said.
“This indicates that investment will not pick up at least in the next two to three months,” it added.
Around 70 per cent respondents do not expect to hire new workforce in next three months indicating that investors may still be wary of expansion plans.
Around 34 per cent respondents reported that their capacity utilisation was higher in the third quarter vis-à-vis last year.
richa.mishra@thehindu.co.in