Manufacturing may be hit Q2: Survey
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The manufacturing sector is expected to register lower growth during July-September quarter compared to previous quarters, mainly due to the rupee depreciation and slowdown in demand, a survey by industry body Ficci said today.
Rupee depreciation has presumably affected the sector's competitiveness severely over the last few months, the Ficci's quarterly survey on manufacturing said.
According to the survey, which drew responses from 418 manufacturing units and associations, 46 per cent respondents expects that the sector's growth would be low in the second quarter of this fiscal.
The manufacturing sector which constitutes over 75 per cent of the factory output, did not perform well as it grew a meagre 2.5 per cent, as against 6.3 per cent in May, 2011.
Over 67 per cent respondents said they were affected by rupee depreciation in the last few months. "Rupee depreciation has led to increased cost of their imported raw materials and inputs by 5-25 per cent in last few months," it said.
Sectors which have been affected more by the depreciation are automotive, electronics, capital goods, chemicals and textiles.
As against this, only 42 per cent respondents said the depreciation has helped in improving their exports.
"The demand conditions remained subdued in the economy for the manufacturing sector in Q2 compared to previous quarters," it said.
The survey also said capacity utilisation in Q2 has remained low.
During the July-September quarter, only 35 per cent respondents reported that their capacity utilisation was higher than last year compared to 44 per cent reporting so in previous quarters.
As compared to 38 per cent participants who had reported plans for capacity addition in next 6 months, in Q2 only 28 per cent respondents reported so.
Over 70 per cent said that they have no plans to hire new workforce in the next three months.
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