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The demand conditions as reflected in the net response for production, order books, capacity utilisation, imports and exports have further weakened in Q2:2012-13. However, the outlook for Q3: 2012-13 showed a marginal..

16 Nov 2012

MUMBAI (Commodity Online): India manufacturing activity which declined in September is now witnessing a sharp decline in capacity utilization levels.

The demand conditions as reflected in the net response for production, order books, capacity utilisation, imports and exports have further weakened in Q2:2012-13. However, the outlook for Q3: 2012-13 showed a marginal improvement, according to November monthly bulletin released by Reserve Bank of India quoting survey results among selected companies in India.

On several business parameters Indian industry is going through a tough period, according to RBI report. ptimism level for overall financial situation declined further in the assessment quarter. Marginal improvement is expected for the ensuing quarter.

Sentiment on availability of finance followed a similar trend. Cost of external finance and cost of raw material were perceived to rise but by a lower percentage of respondents as compared to the previous quarter. The profit margin which had been declining for the last few quarters is expected to remain at the same level in Q3:2012-13.

The Business Expectation Index, a measure that gives a single snapshot of the industrial outlook, showed moderation for the assessment quarter and reached a level seen at the onset of financial crisis in Q3:2008-09. However the outlook for Q3:2012-13 was marginally better.

Average new orders of respondent companies increased in Q1: 2012-13 over the previous quarter. The higher year-on-year growth was partially caused by the lower base.

Capacity utilisation level which had increased in Q4: 2011-12 moderated substantially in Q1: 2012-13. The current capacity utilisation level is the lowest in last 13 quarters.

Both finished goods inventory to sales ratio and raw materials inventory to sales ratio increased in Q1: 2012-13 over the previous quarter


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