Page 138 - CW E-Magazine (28-11-2023)

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FICCI MANUFACTURING SURVEY

Accelerated growth momentum in Q2 likely

to continue in manufacturing sector

FICCI’s latest quarterly survey on Table 1: Current average capacity utili- Table 2: Growth expectations for Q2 FY24
manufacturing reveals that momentum sation levels (%) Sector Growth expectation
of growth has accelerated in Q2 Sectors Avg. capacity Automotive & automotive Strong
of FY24, which is likely to continue utilisation components
for the subsequent quarters of FY24 Automotive & auto components 74 Capital goods & construc- Moderate
as well, notwithstanding slowdown in Capital goods & construction 77 tion equipment
developed nations. In Q1 FY24, 57% of equipment 80 Cement Moderately strong
Cement
Chemicals, fertilizers &
Moderate
the respondents reported higher pro- Chemicals, fertilizers & petro- 68 pharmaceuticals
duction levels. Further, over 79% of chemicals Electronics & white goods Strong
respondents shared higher level of pro- Electronics & white goods 74 Machine tools Strong
duction in Q2 FY24. This assessment is Machine tools 73 Metals & metal products Moderate
also refl ective in order books as 80% of Metal & metal products 78 Miscellaneous Moderate
the respondents in Q2 FY24 have had Miscellaneous 68 Textiles, apparels & tech- Moderate
Paper & paper products
90
higher number of orders and demand Textiles, apparels & technical 76 nical textiles
conditions continue to be optimistic. textiles Paper & Paper products Moderate
Total 74 Very Strong >20%; Strong 10-20%; Moderate
FICCI’s latest quarterly survey As reported in survey. 5-10%; Low < 5%.
assessed the performance and sentiments In terms of major constraints, around 38% of the respondents looking
of manufacturers for Q2 FY24 for ten demand comes out to be the major con- at hiring additional workforce in the
major sectors namely Automotive & straint and limiting factor to realise the next three months. 59% respondents
auto components, Capital goods & con- true potential of manufacturing sector reported that they have witnessed some
struction equipment, Cement, Chemi- in India, with over 40% respondents marginal increase in the interest rates
cals, fertilizers and pharmaceuticals, highlighting inadequate demand as a over the previous quarter.
Electronics & white goods, Machine signifi cant constraint. Whether it is
tools, Metal & metal products, Textiles, domestic demand or exports, this Sectoral growth
Apparels & technical textiles, Paper, remains a major limiting factor. Some Based on responses, electronics &
and Miscellaneous. Responses have other constraints, though not major hite goods, cement, automotive and
been drawn from over 380 manufactur- ones, are high raw material prices, machine tools have displayed strong
ing units from both the large and SME increased cost of fi nance, logistics, and growth and are clear outperformers,
segments, with a combined annual other supply chain disruptions. whereas, sectors like capital goods &
turnover of over Rs. 4.88-lakh crores. construction machinery, chemicals,
Inventories & exports textiles, metals, paper and other sectors
Capacity addition & utilisation 85% of the respondents had either have displayed moderate growth.
The existing average capacity utili- more or the same level of inventory in
sation in manufacturing is around 74%, Q2 FY24, compared to the previous Production costs
which refl ects a sustained economic quarter. On the export front, perfor- There seems to be some moderation
activity in the sector. This is slightly mance seems to be better than previous in the cost pressures on manufacturers
higher than 73% capacity utilisation quarters as over 48% of the respondents in Q2 FY24. The cost of production as
reported for previous quarters. The future reported higher exports in Q2 FY24 a percentage of sales for manufacturers
investment outlook has also improved, as compared to the 33% in Q1 FY24. in the survey has risen for 58% respon-
as compared to the previous quarter, as However, further improvement in dents, as compared to 77% respon-
over 57% of respondents reported plans export demand is required in the light dents for the previous quarter. Nonetheless,
for investments and expansions in the of country’s growth aspiration. high raw material prices and high
coming six months. This is also a slight energy cost are the two main factors
improvement over the previous survey. The hiring outlook looks stable with contributing to the high production costs.

138 Chemical Weekly November 28, 2023

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