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Industrial Outlook Survey- Q3: 2013-14 (Round 64)

The Industrial Outlook Survey conducted during November-December 2013, provides qualitative assessment of business situation of companies in the Indian manufacturing sector for Q3:2013-14 and their expectations for the ensuing quarter Q4:2013-14. The survey elicited response from 1,223 manufacturing companies.

Highlights:

  1. The assessment of major demand side parameters, as measured by net responses of the companies indicates marginal improvement in sentiments on production, order books, capacity utilisation, exports and imports for Q3:2013-14. The demand outlook for Q4:2013-14, also shows improved optimism.

  2. The perceptions on overall financial situation improved for Q3:2013-14. The outlook for Q4: 2013-14 also shows similar sentiments.

  3. The sentiments on availability of finance from all the three sources viz; internal accruals, banks and other financial institutions, and overseas improved for Q3:2013-14. The sentiments have  improved for Q4:2013-14 as well.

  4. Cost of external finance is perceived to rise in Q4: 2013-14, but percentage of respondents expecting a rise moderated marginally as compared to the previous quarter.

  5. Majority of the respondents reported no change in the levels of raw material and finished goods inventories in both the assessment and expectation quarters.

  6. Cost of raw material is expected to rise in Q4: 2013-14 from the level of previous quarter by a lower percentage of respondents. The sentiment for rise in selling price remained almost unchanged for Q4: 2013-14.

  7. The perception on profit margin continued to remain in the negative terrain but showed some improvement for Q4 of 2013-14.

  8. Majority of the respondents reported no change in salary/other remuneration and around three per cent expect the same to decrease for Q4: 2013-14.

  9. The Business Expectation Index (BEI), a measure that gives a single snapshot of the industrial outlook, improved marginally for Q3: 2013-14, but still remained below the threshold level of 100 separating contraction from expansion. Based on expectation, the index showed an improvement in Q4: 2013-14 over the previous quarter.

Table 1: Assessment and Expectations for Production

(Percentage responses) @

Survey Quarter

Total response

Assessment for Current Quarter

Expectation for Next Quarter

Increase

Decrease

No change

Net response#

Increase

Decrease

No change

Net response

Q3: 2012-13

1388

37.5

18.8

43.7

18.6

46.1

10.4

43.4

35.7

Q4: 2012-13

1301

36.8

18.2

45.0

18.6

46.3

9.2

44.4

37.1

Q1:2013-14

1321

32.0

22.2

45.7

9.8

38.3

13.8

47.9

24.4

Q2:2013-14

1207

31.8

21.0

47.2

10.8

40.6

12.1

47.3

28.5

Q3: 2013-14

1223

31.7

20.2

48.1

11.5

40.8

12.0

47.2

28.9

Q4:2013-14

 

 

 

 

 

42.3

10.2

47.5

32.1

‘Increase’ in production is optimistic.
@: Due to rounding off percentage may not add up to 100. This is applicable for all the tables from 1 to 17.
#: Net Response (NR) is the difference of percentage of the respondents reporting optimism (increase) and that reporting pessimism (decrease).


Table 2: Assessment and Expectations for Order books

(Percentage responses)

Survey Quarter

Total response

Assessment for Current Quarter

Expectation for Next Quarter

Increase

Decrease

No change

Net response

Increase

Decrease

No change

Net response

Q3: 2012-13

1388

32.0

19.2

48.8

12.9

41.2

10.9

48.0

30.3

Q4: 2012-13

1301

32.7

18.6

48.7

14.0

40.0

10.2

49.8

29.8

Q1:2013-14

1321

30.5

20.9

48.6

9.7

35.5

13.2

51.2

22.3

Q2:2013-14

1207

27.9

22.3

49.8

5.5

36.8

11.5

51.8

25.3

Q3:2013-14

1223

28.2

21.2

50.6

7.0

34.7

13.7

51.5

21.0

Q4:2013-14

 

 

 

 

 

38.1

10.5

51.4

27.6

‘Increase’ in order books is optimistic.


Table 3: Assessment and Expectations for Pending Orders

(Percentage responses)

Survey Quarter

Total response

Assessment for Current Quarter

Expectation for Next Quarter

Below Normal

Above Normal

Normal

Net response

Below Normal

Above Normal

Normal

Net response

Q3:2012-13

1388

18.8

4.4

76.8

14.3

14.4

7.0

78.6

7.4

Q4:2012-13

1301

19.3

4.7

75.9

14.6

14.6

4.5

80.9

10.1

Q1:2013-14

1321

19.9

3.6

76.5

16.3

16.9

5.3

77.7

11.6

Q2:2013-14

1207

21.3

3.9

74.8

17.3

15.9

4.4

79.6

11.5

Q3:2013-14

1223

19.2

5.1

75.7

14.1

17.5

3.8

78.8

13.7

Q4:2013-14

 

 

 

 

 

14.2

6.0

79.8

8.1

Pending orders ‘Below Normal’ is optimistic.


Table 4: Assessment and Expectations for Capacity Utilisation

(Percentage responses)

Parameter

Options

Assessment for Current Quarter

Expectation  for Next Quarter

Q4:2012-13

Q1:2013-14

Q2:2013-14

Q3:2013-14

Q1:2013-14

Q2:2013-14

Q3:2013-14

Q4:2013-14

Capacity Utilisation (CU)-(main product)

Increase

23.7

22.6

20.7

20.7

24.9

27.5

26.8

27.2

No Change

60.5

57.1

58.6

59.9

62.0

60.9

60.6

61.9

Decrease

15.9

20.3

20.7

19.4

13.1

11.6

12.6

10.9

Net Response

7.8

2.3

0.0

1.3

11.7

15.9

14.2

16.3

Level of CU (compared to the average in last 4 quarters)

Above normal

10.0

8.7

8.9

8.5

10.5

9.8

9.8

11.1

Normal

71.3

71.0

70.7

69.7

74.5

76.2

75.0

73.4

Below Normal

18.7

20.3

20.4

21.8

15.0

13.9

15.2

15.5

Net Response

-8.7

-11.6

-11.5

-13.3

-4.4

-4.1

-5.3

-4.4

Assessment of Prod. Capacity (with regard to expected demand in next 6 months)

More than adequate

13.4

14.6

15.0

14.7

13.7

13.7

14.8

15.7

Adequate

77.4

76.4

77.0

76.6

78.4

78.4

78.0

77.6

Less than adequate

9.2

9.0

8.1

8.7

7.9

7.9

7.1

6.8

Net Response

4.2

5.7

6.9

5.9

5.7

5.8

7.7

8.9

‘Increase’ in capacity utilisation is optimistic.


Table 5: Assessment and Expectations for Exports

(Percentage responses)

Survey Quarter

Total response

Assessment for Current Quarter

Expectation for Next Quarter

Increase

Decrease

No change

Net response

Increase

Decrease

No change

Net response

Q3:2012-13

1388

24.3

15.0

60.6

9.3

29.0

10.9

60.1

18.0

Q4:2012-13

1301

25.9

15.0

59.1

10.8

28.5

10.1

61.4

18.4

Q1:2013-14

1321

23.8

15.2

61.0

8.6

27.1

10.4

62.5

16.7

Q2:2013-14

1207

24.9

17.1

58.0

7.8

28.6

10.0

61.5

18.6

Q3:2013-14

1223

24.2

13.4

62.4

10.9

27.4

10.9

61.7

16.5

Q4:2013-14

 

 

 

 

 

28.3

8.9

62.8

19.5

‘Increase’ in exports is optimistic.


Table 6: Assessment and Expectations for Imports

(Percentage responses)

Survey Quarter

Total response

Assessment for Current Quarter

Expectation for Next Quarter

Increase

Decrease

No change

Net response

Increase

Decrease

No change

Net response

Q3: 2012-13

1388

19.0

10.2

70.7

8.8

22.1

8.1

69.8

14.0

Q4: 2012-13

1301

19.8

11.5

68.8

8.3

20.9

7.4

71.7

13.5

Q1:2013-14

1321

18.7

10.7

70.6

8.0

20.4

8.5

71.1

11.9

Q2:2013-14

1207

18.3

14.7

67.0

3.6

19.9

8.7

71.4

11.2

Q3:2013-14

1223

19.1

12.0

68.9

7.0

19.0

11.3

69.7

7.7

Q4:2013-14

 

 

 

 

 

20.8

7.3

71.9

13.4

‘Increase’ in imports is optimistic.


Table 7: Assessment and Expectations for level of Inventory (Raw material and Finished goods)

(Percentage responses)

Parameter

Options

Assessment for Quarter

Expectations for Quarter

Q4:2012-13

Q1:2013-14

Q2:2013-14

Q3:2013-14

Q1:2013-14

Q2:2013-14

Q3:2013-14

Q4:2013-14

Inventory of raw material

Below average

7.9

8.0

8.7

8.3

6.3

6.3

6.3

5.3

Average

79.8

78.7

78.7

78.9

84.2

83.6

83.6

83.7

Above average

12.2

13.3

12.6

12.8

9.5

10.2

10.1

11.0

Net Response

-4.3

-5.3

-3.8

-4.6

-3.3

-3.9

-3.9

-5.8

Inventory of Finished goods

Below average

7.4

8.1

7.5

7.3

6.3

7.0

6.2

6.6

Average

76.5

77.3

77.0

75.3

83.1

82.7

82.5

80.8

Above average

16.1

14.7

15.5

17.4

10.6

10.3

11.3

12.6

Net Response

-8.7

-6.6

-8.1

-10.2

-4.3

-3.3

-5.0

-6.0

Inventory of raw material and finished goods ‘Below average’ is optimistic.


Table 8: Assessment and Expectations for Employment Outlook

(Percentage responses)

Survey Quarter

Total response

Assessment for Current Quarter

Expectation for Next Quarter

Increase

Decrease

No change

Net response

Increase

Decrease

No change

Net response

Q3: 2012-13

1388

16.4

9.7

73.9

6.7

19.2

5.9

74.9

13.3

Q4: 2012-13

1301

15.3

9.8

74.9

5.5

17.2

6.9

75.8

10.3

Q1:2013-14

1321

14.4

11.2

74.4

3.2

16.0

8.0

76.1

8.0

Q2:2013-14

1207

11.3

11.5

77.3

-0.2

16.0

8.4

75.6

7.7

Q3:2013-14

1223

13.1

12.7

74.2

0.4

13.3

8.8

77.9

4.5

Q4:2013-14

 

 

 

 

 

14.3

7.4

78.3

7.0

‘Increase’ in employment is optimistic.


Table 9: Assessment and Expectations for Overall Financial Situation

(Percentage responses)

Survey Quarter

Total response

Assessment for Current Quarter

Expectation for Next Quarter

Better

Worsen

No change

Net response

Better

Worsen

No change

Net response

Q3: 2012-13

1388

26.4

13.7

59.9

12.7

34.8

9.0

56.2

25.8

Q4: 2012-13

1301

26.9

15.1

58.0

11.8

34.9

7.9

57.2

27.0

Q1:2013-14

1321

23.3

13.8

63.0

9.5

31.5

9.6

58.9

21.9

Q2:2013-14

1207

21.4

19.5

59.1

1.8

33.2

9.1

57.7

24.1

Q3:2013-14

1223

23.7

17.3

58.9

6.4

29.7

12.4

57.9

17.3

Q4:2013-14

 

 

 

 

 

33.0

9.5

57.5

23.5

‘Better’ overall financial situation is optimistic.


Table 10: Assessment and Expectations for Working Capital Finance Requirement

(Percentage responses)

Survey Quarter

Total response

Assessment for Current Quarter

Expectation for Next Quarter

Increase

Decrease

No change

Net response

Increase

Decrease

No change

Net response

Q3: 2012-13

1388

35.0

5.7

59.4

29.3

37.3

4.4

58.3

32.9

Q4: 2012-13

1301

35.2

6.3

58.5

29.0

35.8

3.8

60.5

32.0

Q1:2013-14

1321

32.1

7.3

60.5

24.8

33.0

6.5

60.4

26.5

Q2:2013-14

1207

32.9

8.1

59.0

24.8

31.0

6.5

62.5

24.5

Q3: 2013-14

1223

33.5

7.2

59.3

26.3

32.7

5.3

61.9

27.4

Q4:2013-14

 

 

 

 

 

35.3

4.7

60.0

30.6

‘Increase’ in working capital finance is optimistic.


Table 11: Assessment and Expectations for Availability of Finance

(Percentage responses)

Parameter

Options

Assessment

Expectations

Q2:2013-14

Q3:2013-14

Q3:2013-14

Q4:2013-14

Availability of finance (from internal accruals)*

Improve

18.3

20.3

23.2

25.0

No Change

66.4

66.9

67.6

68.5

Worsen

15.2

12.7

9.2

6.6

Net Response

3.1

7.6

14.0

18.4

Availability of Finance(from banks & other sources)*

Improve

14.2

17.1

18.2

19.0

No Change

75.6

74.5

75.6

76.2

Worsen

10.3

8.4

6.2

4.8

Net Response

3.9

8.7

12.0

14.2

Availability of Finance (from overseas, if applicable)*

Improve

7.6

10.4

8.9

11.9

No Change

84.6

83.1

85.0

84.2

Worsen

7.8

6.5

6.0

3.9

Net Response

-0.1

3.9

2.9

8.1

Improvement’ in availability of finance is optimistic.
*: These questions are newly added by splitting the question on Availability of Finance (both internal and external sources) in the 61st Round (Jan-March 2013).


Table 12: Assessment and Expectations for Cost of External Finance

(Percentage responses)

Survey Quarter

Total response

Assessment for Current Quarter

Expectation for Next Quarter

Decrease

Increase

No change

Net response

Decrease

Increase

No change

Net response

Q3: 2012-13

1388

5.8

30.3

63.9

-24.4

7.6

28.1

64.3

-20.6

Q4: 2012-13

1301

9.5

27.0

63.5

-17.6

7.5

25.5

67.0

-18.1

Q1:2013-14

1321

10.1

24.6

65.3

-14.5

9.7

24.0

66.3

-14.3

Q2:2013-14

1207

5.0

37.6

57.4

-32.7

9.1

21.5

69.5

-12.4

Q3:2013-14

1223

5.6

37.5

56.9

-32.0

4.9

33.2

61.9

-28.3

Q4:2013-14

 

 

 

 

 

4.4

31.1

64.6

-26.7

‘Decrease’ in cost of external finance is optimistic.


Table 13: Assessment and Expectations for Cost of Raw Material

(Percentage responses)

Survey Quarter

Total response

Assessment for Current Quarter

Expectation for Next Quarter

Decrease

Increase

No change

Net response

Decrease

Increase

No change

Net response

Q3: 2012-13

1388

5.4

56.2

38.4

-50.7

3.5

52.1

44.3

-48.6

Q4: 2012-13

1301

4.3

57.8

37.9

-53.5

3.3

48.3

48.3

-45.0

Q1:2013-14

1321

4.6

54.5

40.9

-49.9

3.6

49.2

47.1

-45.6

Q2:2013-14

1207

2.8

65.0

32.2

-62.2

3.5

46.9

49.6

-43.4

Q3:2013-14

1223

4.2

59.5

36.3

-55.3

3.2

54.6

42.2

-51.5

Q4:2013-14

 

 

 

 

 

2.8

49.1

48.0

-46.3

‘Decrease’ in cost of raw material is optimistic.


Table 14: Assessment and Expectations for Selling Price

(Percentage responses)

Survey Quarter

Total response

Assessment for Current Quarter

Expectation for Next Quarter

Increase

Decrease

No change

Net response

Increase

Decrease

No change

Net response

Q3: 2012-13

1388

22.5

12.3

65.1

10.2

25.6

8.3

66.1

17.3

Q4: 2012-13

1301

22.3

13.2

64.5

9.1

22.8

7.0

70.2

15.8

Q1:2013-14

1321

21.4

14.1

64.5

7.3

23.1

8.1

68.8

14.9

Q2:2013-14

1207

25.1

13.8

61.1

11.3

21.2

9.1

69.7

12.1

Q3:2013-14

1223

22.3

14.5

63.2

7.8

23.4

9.5

67.0

13.9

 

 

 

 

 

 

23.3

8.2

68.5

15.1

‘Increase’ in selling price is optimistic.


Table 15: Assessment and Expectations for Profit Margin

(Percentage responses)

Survey Quarter

Total response

Assessment for Current Quarter

Expectation for Next Quarter

Increase

Decrease

No change

Net response

Increase

Decrease

No change

Net response

Q3: 2012-13

1388

14.5

31.2

54.2

-16.7

20.5

21.8

57.7

-1.3

Q4: 2012-13

1301

16.2

31.5

52.3

-15.3

18.8

20.8

60.4

-2.0

Q1:2013-14

1321

13.5

31.9

54.6

-18.4

17.7

22.7

59.6

-4.9

Q2:2013-14

1207

12.3

36.4

51.3

-24.1

18.6

22.3

59.1

-3.7

Q3:2013-14

1223

12.8

35.2

52.0

-22.4

16.5

25.7

57.8

-9.3

Q4:2013-14

 

 

 

 

 

18.2

22.2

59.7

-4.0

‘Increase’ in profit margin is optimistic.


Table 16: Assessment and Expectations for Overall Business Situation

(Percentage responses)

Survey Quarter

Total response

Assessment for Current Quarter

Expectation for Next Quarter

Better

Worsen

No change

Net response

Better

Worsen

No change

Net response

Q3: 2012-13

1388

32.3

15.0

52.7

17.2

41.4

9.2

49.4

32.2

Q4: 2012-13

1301

32.8

14.4

52.8

18.4

44.8

7.2

48.0

37.5

Q1:2013-14

1321

29.3

16.5

54.2

12.8

39.3

9.7

51.1

29.6

Q2:2013-14

1207

28.2

20.8

51.0

7.4

39.2

9.2

51.6

30.0

Q3:2013-14

1223

28.7

19.0

52.3

9.6

37.4

11.7

50.8

25.7

Q4:2013-14

 

 

 

 

 

40.6

9.1

50.3

31.5

‘Better’ Overall Business Situation is optimistic.


Table 17: Assessment and Expectations for Salary/other remuneration

(Percentage responses)

Parameter

Options

Assessment

Expectations

Q2:2013-14

Q3:2013-14

Q3:2013-14

Q4:2013-14

Salary/other remuneration to employees

Increase

30.3

29.7

22.5

25.3

Decrease

3.4

3.6

2.7

3.2

No Change

66.3

66.8

74.8

71.5

Net Response

26.8

26.1

19.8

22.1


Table 18: Business Expectation Index (BEI)

Quarter

BEI-Assessment Quarter

BEI-Expectation Quarter

Q4: 2011-12

114.9

117.2

Q1: 2012-13

107.4

116.8

Q2: 2012-13

103.8

114.0

Q3: 2012-13

104.5

115.7

Q4: 2012-13

105.6

115.6

Q1:2013-14

101.2

111.6

Q2: 2013-14

97.3

112.7

Q3: 2013-14

98.8

109.9

Q4:2013-14

 

112.7


Table 19: Outlook for important business parameters according to Industries

(Net response in per cent)

 

Production

Order books

Cost of raw material

Cost of finance

Profit Margin

 

Rd63

Rd64

Rd63

Rd64

Rd63

Rd64

Rd63

Rd64

Rd63

Rd64

Food products

39.6

49.1

32.9

37.2

-45.0

-50.5

-22.5

-30.6

-1.0

1.9

Textiles

32.3

21.5

26.6

18.3

-45.8

-36.1

-28.8

-20.9

-10.7

-10.0

Basic Metals & Metal products

18.8

20.8

13.2

18.9

-47.1

-38.5

-25.8

-26.2

-16.3

-10.6

Electrical machinery

26.2

47.6

15.0

42.4

-50.8

-50.0

-27.9

-25.4

-19.0

-1.7

Other Machinery(Non-electrical machinery) & Apparatus

19.4

34.9

15.2

32.7

-54.1

-48.7

-31.8

-24.1

-18.5

-7.5

Transport Equipment

13.0

29.0

12.7

27.0

-48.5

-42.4

-13.4

-26.9

-26.9

-16.9

Fertilizers

36.0

26.9

27.8

38.9

-53.8

-48.0

-16.7

-17.4

0.0

-44.3

Pharmaceuticals  & Medicines

39.0

46.7

24.3

41.4

-58.4

-62.2

-25.0

-28.8

-3.8

-5.3

Basic Chemicals

43.4

39.2

26.5

28.4

-70.7

-54.4

-46.4

-31.6

3.9

11.4

Rubber & Plastic products

49.0

45.0

23.9

38.9

-58.8

-52.5

-34.0

-30.4

3.9

12.1

Paper & Paper products

34.6

39.3

24.0

30.8

-57.7

-55.2

-28.0

-33.3

-3.8

-14.3

Cement

0.0

36.8

-12.5

21.4

-69.6

-52.6

-35.0

-41.2

-21.7

5.9

Wood & wood products

16.7

28.6

-10.0

-16.7

-46.2

-50.0

-33.3

-37.5

-20.0

25.0

Diversified companies

26.4

22.2

26.2

20.8

-40.4

-40.0

-29.1

-28.0

-4.2

3.2

Other industries

28.4

25.0

20.5

22.9

-60.7

-50.6

-29.9

-21.8

-6.6

-15.7

All Industries

28.9

32.1

21.0

27.6

-51.5

-46.3

-28.3

-26.7

-9.3

-4.0


1The 63rd round (Q2:2013-14) survey results were released on October 28, 2013 with the publication “Macroeconomic and Monetary Developments: Second Quarter Review 2013-14” on the RBI Website. The survey results are those of the respondents and are not necessarily shared by the Reserve Bank of India.

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