OBICUS Survey on the Manufacturing sector - Q4:2016-17

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Published on August 02, 2017

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OBICUS Survey on the Manufacturing sector - Q4:2016-17

Today, the Reserve Bank released results of the 37th round of the Order Books, Inventories and Capacity Utilisation Survey (OBICUS) conducted in April-June 2017 for the quarter January-March 2017. The survey provides a snapshot of demand conditions facing the Indian manufacturing sector¹. Responses were received from 724 companies in this round of the survey.

Highlights:

1) Capacity Utilisation (CU): At the aggregate level, CU rose in a seasonal pick-up and stood at 74.1 per cent in Q4:2016-17, co-moving with the de-trended index of industrial production² (IIP) for manufacturing sector (Chart 1). Seasonally adjusted CU declined marginally in Q4:2016-17.

2) Order Books: New orders recorded a substantial growth in Q4:2016-17 on both, quarter-on-quarter and year-on-year bases (Chart 2).

3) Finished Goods Inventory to Sales Ratio: The finished goods inventory to sales ratio (FGI/S) declined sequentially due to higher growth in sales; the ratio, however, stood at a slightly higher level on a year-on-year basis.

4) Raw Material Inventory to Sales Ratio: The raw material inventory to sales ratio (RMI/S) dipped significantly in Q4:2016-17 from the previous quarter’s level (Chart 3).

ANNEX

Table 1: IIP-Manufacturing and Capacity Utilisation (CU) – (Based on common set of 628 companies in 5 quarters)
Quarter	IIP-Mfg. (Quarterly Average Base 2011-12)	De-trended Quarterly IIP-Manufacturing	CU (in latest survey round)	CU * (Ranges from previous four survey rounds)
Q4:2015-16	123.2	4.4	74.4	74.0 – 74.6
Q1:2016-17	120.3	0.4	71.5	72.7 – 73.6
Q2:2016-17	121.2	0.2	71.0	72.4 – 73.1
Q3:2016-17	120.5	-1.6	72.1	72.7
Q4:2016-17	125.0	1.7	74.1	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 Q4:2016-17.

Table 2: Order Books (Q4:2015-16 to Q4:2016-17) – (Based on common set of 141 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
Q4:2015-16	0.846	0.850	0.788	-2.5	4.7	-8.2	0.3	4.9	2.0
Q1:2016-17	0.785	0.774	0.759	-7.2	-8.9	-3.7	2.5	-3.2	-3.6
Q2:2016-17	0.759	0.792	0.750	-3.3	2.3	-1.1	-3.6	-4.0	-12.1
Q3:2016-17	0.747	0.754	0.762	-1.6	-4.7	1.6	-13.9	-7.1	-11.3
Q4:2016-17	0.765	0.954	0.679	2.5	26.5	-11.0	-9.5	12.3	-13.9
: As required for calculating growth rates in recent 5 quarters. *: Not seasonally adjusted

Table 3: Average Sales and Inventories (Q4:2015-16 to Q4:2016-17) – (Based on common set of 389 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
Q4:2015-16	3.228	1.504	0.620	0.202	0.682	46.6	19.2	21.1
Q1:2016-17	2.826	1.588	0.664	0.234	0.690	56.2	23.5	24.4
Q2:2016-17	3.015	1.635	0.703	0.258	0.673	54.2	23.3	22.3
Q3:2016-17	3.145	1.698	0.659	0.279	0.761	54.0	20.9	24.2
Q4:2016-17	3.547	1.688	0.701	0.283	0.705	47.6	19.8	19.9
RM - Raw Material; WiP - Work in progress; FG - Finished Goods; Inv – Inventory.

¹ The survey responses are those of the respondents. The 36th round of the OBICUS covering 710 manufacturing companies with reference period as October-December 2016 was released on the RBI website on April, 06, 2017.

² IIP is calculated on a fixed base (currently 2011-12=100) whereas the denominator (viz. installed capacity) in CU is updated every quarter. For comparison, the trend component of IIP is removed.