OBICUS Survey on the Manufacturing sector, Q2:2016-17

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Published on February 08, 2017

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OBICUS Survey on the Manufacturing sector, Q2:2016-17

The 35th round of the Reserve Bank of India’s Order Books, Inventories and Capacity Utilisation Survey (OBICUS) for July–September 2016 (Q2:2016-17) released today, captures data on order books, inventory levels for raw materials and finished goods, and capacity utilisation for 902 companies in the manufacturing sector (Tables 1-3)¹.

Highlights:

1) Capacity Utilisation (CU): At the aggregate level, CU stood at 72.4 per cent, marginally lower than in the previous quarter – but a little higher than a year ago – with broad co-movement with the de-trended manufacturing in the index of industrial production² (IIP) manufacturing (Chart 1).

2) Order Books: New orders recorded a decline sequentially (quarter-on-quarter) as well as on a year-on-year basis and dipped into negative territory in Q2:2016-17 (Chart 2).

3) Inventory to Sales Ratio: The raw material inventory to sales ratio (RMI/S) was lower in Q2:2016-17 both sequentially and from a year ago. The finished goods inventory to sales ratio (FGI/S) also decreased in Q2:2016-17 on a sequential basis, but was broadly at the same level as a year ago (Chart 3).

Overall, movements in capacity utilisation, order books and inventories indicate that demand conditions in the manufacturing sector remained subdued in Q2:2016-17.

ANNEX

Table 1: IIP-Manufacturing and Capacity Utilisation (CU) – (Based on common set of 857 companies in 5 quarters)
Quarter	IIP-Mfg. (Quarterly Average Base 2004-05)	De-trended Quarterly IIP-Manufacturing	CU (in latest survey round)	CU * (Ranges from previous four survey rounds)
Q2:2015-16	187.4	-1.8	71.1	70.6 – 71.4
Q3:2015-16	184.3	-5.4	72.3	72.1 – 72.6
Q4:2015-16	198.9	8.8	74.1	74.1 – 74.2
Q1:2016-17	187.3	-3.3	72.7	72.9
Q2:2016-17	185.8	-5.2	72.4	NA #
*: Since CU is computed based on common set of companies for five quarters, it gets revised in the subsequent four rounds. #: CU is calculated first time for Q2:2016-17.

Table 2: Order Books (Q2:2015-16 to Q2:2016-17) – (Based on common set of 256 companies in 9 quarters)*
Quarter	Amount (₹ Billion)			Q-o-Q Growth (%)**			Y-o-Y Growth (%)
Quarter	Average Backlog Orders	Average New Order Book	Average Pending Orders	Average Backlog Orders	Average New Order Book	Average Pending Orders	Average Backlog Orders	Average New Order Book	Average Pending Orders
Q2:2015-16	1.320	0.864	1.345	-0.3	1.1	1.9	-0.5	-3.3	-3.1
Q3:2015-16	1.353	0.870	1.358	2.5	0.8	0.9	-2.7	5.1	1.4
Q4:2015-16	1.344	0.899	1.235	-0.7	3.3	-9.0	0.5	-7.5	-6.5
Q1:2016-17	1.250	0.868	1.271	-7.0	-3.5	2.9	-5.6	1.6	-3.7
Q2:2016-17	1.277	0.830	1.263	2.2	-4.3	-0.7	-3.3	-3.8	-6.2
: As required for calculating growth rates in recent 5 quarters. *: Not seasonally adjusted

Table 3: Average Sales and Inventories (Q2:2015-16 to Q2:2016-17) – (Based on common set of 557 companies in 5 quarters)
Quarter	Amount (₹ Billion)					Ratio (per cent)
Quarter	Average Sales	Average Total Inv	Average FG Inv	Average WiP Inv	Average RM Inv	Total Inv/Sales	FG Inv/Sales	RM Inv/Sales
Q2:2015-16	5.721	2.926	1.238	0.343	1.344	51.1	21.6	23.5
Q3:2015-16	5.627	2.660	1.192	0.307	1.161	47.3	21.2	20.6
Q4:2015-16	5.760	2.508	1.114	0.267	1.127	43.5	19.3	19.6
Q1:2016-17	5.723	2.751	1.260	0.318	1.173	48.1	22.0	20.5
Q2:2016-17	6.100	2.826	1.296	0.330	1.200	46.3	21.2	19.7
RM - Raw Material; WiP - Work in progress; FG - Finished Goods; Inv – Inventory.

¹ The 34th round of the OBICUS covering 903 manufacturing companies was released on the RBI website on October 4, 2016.

² IIP is calculated on a fixed base (currently, 2004-05=100) whereas the denominator (viz. installed capacity) in CU is updated every quarter. For comparison, the trend component of IIP is removed.